Exhibit 10.1

B. The Lenders is willing to make those credit facilities available jointly and severally to the Borrowers upon the terms and subject to the conditions set forth in this Agreement.

Section 1.1 Certain Defined Terms.

As used in this Agreement, the terms defined in the Preamble and Recitals hereto shall have the respective meanings specified therein, and the following terms shall have the following meanings:

"Account" individually and "Accounts" collectively mean all presently existing or hereafter acquired or created accounts, accounts receivable, health care insurance receivables, contract rights, notes, drafts, instruments, acceptances, chattel paper, leases and writings evidencing a monetary obligation or a security interest in, or a lease of, goods, all rights to receive the payment of a monetary obligation or other consideration under present or future contracts (including, without limitation, all rights (whether or not earned by performance) to receive payments under presently existing or hereafter acquired or created letters of credit), or by virtue of property that has been sold, leased, licensed, assigned or otherwise disposed of, services rendered or to be rendered, loans and advances made or other considerations given, by or set forth in or arising out of any present or future chattel paper, note, draft, lease, acceptance, writing, bond, insurance policy, instrument, document or general intangible, and all extensions and renewals of any thereof, all rights under or arising out of present or future contracts, agreements or general interest in goods which gave rise to any or all of the foregoing, including all commercial tort claims, other claims or causes of action now existing or hereafter arising in connection with or under any agreement or document or by operation of law or otherwise, all collateral security of any kind (including, without limitation, real property mortgages and deeds of trust), Supporting Obligations, letter of credit rights and letters of credit given by any Person with respect to any of the foregoing, all books and records in whatever media (paper, electronic or otherwise) recorded or stored, with respect to any or all of the foregoing and all equipment and general intangibles necessary or beneficial to retain, access and/or process the information contained in those books and records, and all Proceeds (cash and non-cash) of the foregoing.

"Account Debtor" means any Person who is obligated on a Receivable and "Account Debtors" mean all Persons who are obligated on the Receivables.

"ACH Settlement Risk Reserve" means any and all reserves which the Lender from time to time establishes, in its sole discretion, with respect to ACH Transactions.

"ACH Transactions" means any cash management or related services by the Lender for the account of any of the Borrowers pursuant to agreement or overdrafts.

"Additional Borrower" means each Person that has executed and delivered an Additional Borrower Joinder Supplement that has been accepted and approved by the Lender.

"Additional Borrower Joinder Supplement" means an Additional Borrower Joinder Supplement in substantially the form attached hereto as EXHIBIT A, with the blanks appropriately completed and executed and delivered by the Additional Borrower and accepted by VSE on behalf of the Borrowers.

"Affiliate" means, with respect to any designated Person, any other Person, (a) directly or indirectly controlling, directly or indirectly controlled by, or under direct or indirect common control with the Person designated, (b) directly or indirectly owning or holding five percent (5%) or more of any equity interest in such designated Person, or (c) five percent (5%) or more of whose stock or other equity interest is directly or indirectly owned or held by such designated Person. For purposes of this definition, the term "control" (including with correlative meanings, the terms "controlling", "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or other equity interests or by contract or otherwise.

"Agreement" means this Business Loan and Security Agreement, as amended, restated, supplemented or otherwise modified in writing in accordance with the provisions of Section 8.2 (Amendments; Waivers).

"Assets" means at any date all assets that, in accordance with GAAP consistently applied, should be classified as assets on a consolidated balance sheet of the Borrowers and their respective Subsidiaries.

"Bankruptcy Code" means Title 11 of the United States Code, as amended from time to time, and any successor Laws.

"Borrower" means each Person defined as a "Borrower" in the preamble of this Agreement and each Additional Borrower; "Borrowers" means the collective reference to all Persons defined as "Borrowers" in the preamble to this Agreement and all Additional Borrowers.

"Borrowing Base" has the meaning described in Section 2.1.3 (Borrowing Base).

"Borrowing Base Deficiency" has the meaning described in Section 2.1.3 (Borrowing Base).

"Borrowing Base Report" has the meaning described in Section 2.1.4 (Borrowing Base Report).

"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in the State are authorized or required to close.

"Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank.

"Capital Expenditure" means an expenditure (whether payable in cash or other property or accrued as a liability) for Fixed or Capital Assets, including, without limitation, the entering into of a Capital Lease.

"Capital Lease" means with respect to any Person any lease of real or personal property, for which the related Lease Obligations have been or should be, in accordance with GAAP consistently applied, capitalized on the balance sheet of that Person.

"Cash Equivalents" means (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit with maturities of one (1) year or less from the date of acquisition of, or money market accounts maintained with, the Lender, any Affiliate of the Lender, or any other domestic commercial bank having capital and surplus in excess of One Hundred Million Dollars ($100,000,000.00) or such other domestic financial institutions or domestic brokerage houses to the extent disclosed to, and approved by, the Lender and (c) commercial paper of a domestic issuer rated at least either A-1 by Standard & Poor's Corporation (or its successor) or P-1 by Moody's Investors Service, Inc. (or its successor) with maturities of six (6) months or less from the date of acquisition.

"Chattel Paper" means a record or records (including, without limitation, electronic chattel paper) that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, or a lease of specific goods; all Supporting Obligations with respect thereto; any returned, rejected or repossessed goods and software covered by any such record or records and all proceeds (in any form including, without limitation, accounts, contract rights, documents, chattel paper, instruments and general intangibles) of such returned, rejected or repossessed goods; and all Proceeds of the foregoing.

"Closing Date" means the Business Day, on which the Lender shall be satisfied that the conditions precedent set forth in Section 5.1 (Conditions to Initial Advance) have been fulfilled or otherwise waived by the Lender.

"Collateral" means all property of each and every Borrower subject from time to time to the Liens of this Agreement, any of the Security Documents and/or any of the other Financing Documents, together with any and all Proceeds and products thereof.

"Collateral Account" has the meaning described in Section 2.1.8 (The Collateral Account).

"Collateral Disclosure List" has the meaning described in Section 3.3 (Collateral Disclosure List).

"Collection" means each check, draft, cash, money, instrument, item, and other remittance in payment or on account of payment of the Accounts or otherwise with respect to any Collateral, including, without limitation, cash proceeds of any returned, rejected or repossessed goods, the sale or lease of which gave rise to an Account, and other proceeds of Collateral; and "Collections" means the collective reference to all of the foregoing.

"Committed Amount" means with respect to the Lender, its Revolving Loan Committed Amount and "Committed Amounts" means collectively the Revolving Loan Committed Amount of the Lender.

"Compliance Certificate" means a periodic Compliance Certificate described in Section 6.1.1 (Financial Statements).

"Commonly Controlled Entity" means an entity, whether or not incorporated, which is under common control with any Borrower within the meaning of Section 414(b) or (c) of the Internal Revenue Code.

"Copyrights" means and includes, in each case whether now existing or hereafter arising, all of each Borrower's rights, title and interest in and to
(a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, copyright applications, and all renewals of any of the foregoing, (b) all income, royalties, damages and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past, current or future infringements of any of the foregoing, (c) the right to sue for past, present and future infringements of any of the foregoing, and (d) all rights corresponding to any of the foregoing throughout the world.

"Credit Facility" means the Revolving Credit Facility or the Letter of Credit Facility, as the case may be and "Credit Facilities" means collectively the Revolving Credit Facility and the Letter of Credit Facility and any and all other credit facilities now or hereafter extended under or secured by this Agreement.

"Current Letter of Credit Obligations" has the meaning set forth in
Section 2.2.5 of this Agreement.

"Default" means an event which, with the giving of notice or lapse of time, or both, could or would constitute an Event of Default under the provisions of this Agreement.

"Documents" means all documents of title or receipts, whether now existing or hereafter acquired or created, and all Proceeds of the foregoing.

"Eligible Receivable" and "Eligible Receivables" mean, at any time of determination thereof, the unpaid portion of each account (net of any returns, discounts, claims, credits, charges, accrued rebates or other allowances, offsets, deductions, counterclaims, disputes or other defenses and reduced by the aggregate amount of all reserves, limits and deductions provided for in this definition and elsewhere in this Agreement) receivable in United States Dollars by a Borrower, provided each account conforms and continues to conform to the following criteria to the satisfaction of the Lender:

(a) the account arose in the ordinary course of a Borrower's business from a bona fide outright sale of Inventory by such Borrower or from services performed by such Borrower;

(b) the account is a valid, legally enforceable obligation of the Account Debtor and requires no further act on the part of any Person under any circumstances to make the account payable by the Account Debtor;

(c) the account is based upon an enforceable order or contract, written or oral, for Inventory shipped or for services performed, and the same were shipped or performed in accordance with such order or contract;

(d) if the account arises from the sale of Inventory, the Inventory the sale of which gave rise to the account has been shipped or delivered to the Account Debtor on an absolute sale basis and not on a bill and hold sale basis, a consignment sale basis, a guaranteed sale basis, a sale or return basis, or on the basis of any other similar understanding;

(e) if the account arises from the performance of services, such services have been fully rendered and do not relate to any warranty claim or obligation;

(f) the account is evidenced by an invoice or other documentation in form acceptable to the Lender, dated no later than the date allowed under any contract governing such account and containing only terms normally offered by the respective Borrower;

(g) the amount shown on the books of a Borrower and on any invoice, certificate, schedule or statement delivered to the Lender is owing to such Borrower and no partial payment has been received unless reflected with that delivery;

(h) the account is not outstanding more than ninety (90) days from the date of the invoice therefore;

(i) the account is not owing by any Account Debtor for which the Lender has deemed fifty percent (50%) or more of such Account Debtor's other accounts (or any portion thereof) due to a Borrower, individually, or all of the Borrowers collectively, to be non-Eligible Receivables;

(j) the Account Debtor has not returned, rejected or refused to retain, or otherwise notified a Borrower of any dispute concerning, or claimed nonconformity of, any of the Inventory or services from the sale or furnishing of which the account arose;

(k) the account is not subject to any present or contingent (and no facts exist which are the basis for any future) offset, claim, deduction or counterclaim, dispute or defense in law or equity on the part of such Account Debtor, or any claim for credits, allowances, or adjustments by the Account Debtor because of returned, inferior, or damaged Inventory or unsatisfactory services, or for any other reason including, without limitation, those arising on account of a breach of any express or implied representation or warranty;

(l) the Account Debtor is not a Subsidiary or Affiliate of any Borrower or an employee, officer, director or shareholder of any Borrower or any Subsidiary or Affiliate of any Borrower, other than any joint venture of the Borrower or any Subsidiary;

(m) the Account Debtor is not incorporated or primarily conducting business or otherwise located in any jurisdiction outside of the United States of America, unless the Account Debtor's obligations with respect to such account are secured by a letter of credit, guaranty or banker's acceptance having terms and from such issuers and confirmation banks as are acceptable to the Lender in its sole and absolute discretion (which letter of credit, guaranty or banker's acceptance is subject to the perfected Lien of the Lender);

(n) as to which none of the following events has occurred with respect to the Account Debtor on such Account:
death or judicial declaration of incompetency of an Account Debtor who is an individual; the filing by or against the Account Debtor of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or similar laws of the United States, any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect; the making of any general assignment by the Account Debtor for the benefit of creditors; the appointment of a receiver or trustee for the Account Debtor or for any of the assets of the Account Debtor, including, without limitation, the appointment of or taking possession by a "custodian," as defined in the Federal Bankruptcy Code; the institution by or against the Account Debtor of any other type of insolvency proceeding (under the bankruptcy laws of the United States or otherwise) or of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of affairs of, the Account Debtor; the sale, assignment, or transfer of all or any material part of the assets of the Account Debtor; the nonpayment generally by the Account Debtor of its debts as they become due; or the cessation of the business of the Account Debtor as a going concern;

(o) no Borrower is indebted in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise, other than trade debt incurred in the ordinary course of business), with the exception of customary credits, adjustments and/or discounts given to an Account Debtor by a Borrower in the ordinary course of its business;

(p) the account does not arise from services under or related to any warranty obligation of a Borrower or out of service charges, finance charges or other fees for the time value of money;

(q) the account is not evidenced by chattel paper or an instrument of any kind and is not secured by any letter of credit;

(r) the title of the respective Borrower to the account is absolute and is not subject to any prior assignment, claim, Lien, or security interest, except Permitted Liens;

(s) no bond or other undertaking by a guarantor or surety has been or is required to be obtained, supporting the account and any of the Account Debtor's obligations in respect of the account;

(t) each Borrower has the full and unqualified right and power to assign and grant a security interest in, and Lien on, the account to the Lender as security and collateral for the payment of the Obligations;

(u) the account does not arise out of a contract with, or order from, an Account Debtor that, by its terms, forbids or makes void or unenforceable the assignment or grant of a security interest by the Borrowers to the Lender, of the account arising from such contract or order;

(v) the account is subject to a Lien in favor of the Lender, which Lien is perfected as to the account by the filing of financing statements and which Lien upon such filing constitutes a first priority security interest and Lien;

(w) the Inventory giving rise to the account was not, at the time of the sale thereof, subject to any Lien, except those in favor of the Lender;

(x) no part of the account represents a retainage;

(y) the Lender in the good faith exercise of its sole and absolute discretion has not deemed the account ineligible because of uncertainty as to the creditworthiness of the Account Debtor or because the Lender otherwise considers the collateral value of such account to the Lender to be impaired or its or their ability to realize such value to be insecure; and

(z) if the Account Debtor is located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit any Borrower to seek judicial enforcement in such state of payment of such Account, that Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year.

In the event of any dispute, under the foregoing criteria, as to whether an account is, or has ceased to be, an Eligible Receivable, the decision of the Lender in the good faith exercise of its sole and absolute discretion shall control.

"Enforcement Costs" means all expenses, charges, costs and fees whatsoever (including, without limitation, reasonable outside and allocated in-house counsel attorney's fees and expenses) of any nature whatsoever paid or incurred by or on behalf of the Lender in connection with (a) any or all of the Obligations, this Agreement and/or any of the other Financing Documents,
(b) the creation, perfection, collection, maintenance, preservation, defense, protection, realization upon, disposition, sale or enforcement of all or any part of the Collateral, this Agreement or any of the other Financing Documents, including, without limitation, those costs and expenses more specifically enumerated in Section 3.6 (Costs) and/or Section 8.7 (Enforcement Costs), and further including, without limitation, amounts paid to lessors, processors, bailees, warehousemen, sureties, judgment creditors and others in possession of or with a Lien against or claimed against the Collateral, and
(c) the monitoring, administration, processing and/or servicing of any or all of the Obligations, the Financing Documents, and/or the Collateral.

"Equipment" means all equipment, machinery, computers, chattels, tools, parts, machine tools, furniture, furnishings, fixtures and supplies of every nature, presently existing or hereafter acquired or created and wherever located, whether or not the same shall be deemed to be affixed to real property, and all of such types of property leased by any Borrower and all of the Borrowers' rights and interests with respect thereto under such leases (including, without limitation, options to purchase), together with all accessions, additions, fittings, accessories, special tools, and improvements thereto and substitutions therefor and all parts and equipment which may be attached to or which are necessary or beneficial for the operation, use and/or disposition of such personal property, all licenses, warranties, franchises and General Intangibles related thereto or necessary or beneficial for the operation, use and/or disposition of the same, together with all Accounts, Chattel Paper, Instruments and other consideration received by any Borrower on account of the sale, lease or other disposition of all or any part of the foregoing, and together with all rights under or arising out of present or future Documents and contracts relating to the foregoing and all Proceeds of the foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

"Euro-Dollar Business Day" means any day on which commercial banks are open for domestic and international business (including dealing in U.S. Dollar Deposits) in London, England and the Commonwealth of Pennsylvania.

"Event of Default" has the meaning described in ARTICLE VII (Default and Rights and Remedies).

"Facilities" means the collective reference to the loan, letter of credit, interest rate protection, foreign exchange risk, cash management, and other credit facilities now or hereafter provided to any one or more of the Borrowers by the Lender under this Agreement or otherwise by the Lender.

"Federal Funds Rate" means for any day of determination, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day) by the Federal Reserve Bank for the next preceding Business Day) by the Federal Reserve Bank of Richmond or, if such rate is not so published for any day that is a Business Day, the average of quotations for such day on such transactions received by the Lender from three (3) federal funds brokers of recognized standing selected by the Lender.

"Fees" means the collective reference to each fee payable to the Lender, under the terms of this Agreement or under the terms of any of the other Financing Documents, including, without limitation, the Revolving Credit Fees, Letter of Credit Fees and the Field Examination Fees.

"Field Examination Fee" and "Field Examination Fees" have the meanings described in Section 2.4.7 (Field Examination Fees).

"Financing Documents" means at any time collectively this Agreement, the Notes, the Security Documents, the Letter of Credit Documents, and any other instrument, agreement or document previously, simultaneously or hereafter executed and delivered by any Borrower, and/or any other Person, singly or jointly with another Person or Persons, evidencing, securing, guarantying or in connection with this Agreement, any Note, any of the Security Documents, any of the Facilities, and/or any of the Obligations.

"Fixed or Capital Assets" of a Person at any date means all assets which would, in accordance with GAAP consistently applied, be classified on the balance sheet of such Person as property, plant or equipment at such date.

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

"General Intangibles" means all general intangibles of every nature, whether presently existing or hereafter acquired or created, and without implying any limitation of the foregoing, further means all books and records, commercial tort claims, other claims (including without limitation all claims for income tax and other refunds), payment intangibles, Supporting Obligations, choses in action, claims, causes of action in tort or equity, contract rights, judgments, customer lists, software, Patents, Trademarks, licensing agreements, rights in intellectual property, goodwill (including goodwill of Borrower's business symbolized by and associated with any and all Trademarks, trademark licenses, Copyrights and/or service marks), royalty payments, licenses, letter-of-credit rights, letters of credit, contractual rights, the right to receive refunds of unearned insurance premiums, rights as lessee under any lease of real or personal property, literary rights, Copyrights, service names, service marks, logos, trade secrets, amounts received as an award in or settlement of a suit in damages, deposit accounts, interests in joint ventures, general or limited partnerships, or limited liability companies or partnerships, rights in applications for any of the foregoing, books and records in whatever media (paper, electronic or otherwise) recorded or stored, with respect to any or all of the foregoing, all Supporting Obligations with respect to any of the foregoing, and all Equipment and General Intangibles necessary or beneficial to retain, access and/or process the information contained in those books and records, and all Proceeds of the foregoing.

"Government Contracts" means any contract with the United States or with any state or political subdivision thereof or any department, agency or instrumentality of the United States, or any state or political subdivision thereof.

"Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any department, agency or instrumentality thereof.

"Hazardous Materials" means (a) any "hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976, as amended from time to time, and regulations promulgated thereunder; (b) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, and regulations promulgated thereunder; (c) any substance the presence of which on any property now or hereafter owned, acquired or operated by any of the Borrowers is prohibited by any Law similar to those set forth in this definition; and
(d) any other substance which by Law requires special handling in its collection, storage, treatment or disposal.

"Hazardous Materials Contamination" means the contamination (whether presently existing or occurring after the date of this Agreement) by Hazardous Materials of any property owned, operated or controlled by any of the Borrowers or for which any of the Borrowers has responsibility, including, without limitation, improvements, facilities, soil, ground water, air or other elements on, or of, any property now or hereafter owned, acquired or operated by any of the Borrowers, and any other contamination by Hazardous Materials for which any of the Borrowers is, or is claimed to be, responsible.

"Indebtedness" of a Person means at any date the total liabilities of such Person at such time determined in accordance with GAAP consistently applied.

"Indebtedness for Borrowed Money" of a Person means at any time the sum at such time of (a) Indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (b) any obligations of such Person in respect of letters of credit, banker's or other acceptances or similar obligations issued or created for the account of such Person, (c) Lease Obligations of such Person with respect to Capital Leases, (d) all liabilities secured by any Lien on any property owned by such Person, to the extent attached to such Person's interest in such property, even though such Person has not assumed or become personally liable for the payment thereof,
(e) obligations of third parties which are being guarantied or indemnified against by such Person or which are secured by the property of such Person;
(f) any obligation of such Person under an employee stock ownership plan or other similar employee benefit plan; (g) any obligation of such Person or a Commonly Controlled Entity to a Multi-employer Plan; and (h) any obligations, liabilities or indebtedness, contingent or otherwise, under or in connection with, any Swap Transaction; but excluding trade and other accounts payable in the ordinary course of business in accordance with customary trade terms and which are not overdue (as determined in accordance with customary trade practices) or which are being disputed in good faith by such Person and for which adequate reserves are being provided on the books of such Person in accordance with GAAP.

"Indemnified Parties" has the meaning set forth in Section 8.16 (Indemnification).

"Instrument" means a negotiable instrument or any other writing which evidences a right to payment of a monetary obligation and is not itself a security agreement or lease and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, and all Supporting Obligations with respect to any of the foregoing and all Proceeds with respect to any of the foregoing.

"Interest Payment Date" means (i) with respect to Revolving Loans which accrue interest based on the Prime Rate the last day of each calendar quarter commencing on September 30, 2007 and continuing thereafter until the Obligations have been irrevocably paid in full (ii) with respect to Revolving Loans which accrue interest based on the LIBOR rate the earlier of the last day of each Interest Period or the last day of each calendar quarter commencing on September 30, 2007 and continuing thereafter until the Obligations have been irrevocably paid in full.

"Interest Period" means the period during which interest at a LIBOR- based Rate, determined as provided in this Agreement, shall be applicable to the Rate Request Amount in question, provided, however, that each such period shall be either one (1), two (2), three (3) or six (6) months which shall be measured from the date specified by the Borrowers in each Rate Request for the commencement of the computation of interest at a LIBOR-based Rate to the numerically corresponding day in the calendar month in which such period terminates (or, if there is numerical Euro-Dollar Business Day of a calendar month, then the last Euro-Dollar Business Day of the calendar month in which such period terminates, or if the numerically corresponding day is not a Euro- Dollar Business Day, then the next succeeding Euro-Dollar Business Day enters a new calendar month, in which case such period shall end on the next preceding Euro-Dollar Business Day) and in no event shall any such period extend beyond the Revolving Credit Termination Date.

"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the Income Tax Regulations issued and proposed to be issued thereunder.

"Inventory" means all goods of Borrower and all right, title and interest of Borrower in and to all of its now owned and hereafter acquired goods and other personal property furnished under any contract of service or intended for sale or lease, including, without limitation, all raw materials, work-in-process, finished goods and materials and supplies of any kind, nature or description which are used or consumed in Borrower's business or are or might be used in connection with the manufacture, packing, shipping, advertising, selling or finishing of such goods and other personal property and all licenses, warranties, franchises, General Intangibles, personal property and all documents of title or documents relating to the same, together with all Accounts, Chattel Paper, Instruments and other consideration received by Borrower on account of the sale, lease or other disposition of all or any part of the foregoing, and together with all rights under or arising out of present or future Documents and contracts relating to the foregoing and all Proceeds of the foregoing.

"Investment Property" means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract or commodity account and all Proceeds of, and Supporting Obligations with respect to, the foregoing.

"Item of Payment" means each check, draft, cash, money, instrument, item, and other remittance in payment or on account of payment of the Receivables or otherwise with respect to any Collateral, including, without limitation, cash proceeds of any returned, rejected or repossessed goods, the sale or lease of which gave rise to a Receivable, and other proceeds of Collateral; and "Items of Payment" means the collective reference to all of the foregoing.

"Laws" means all ordinances, statutes, rules, regulations, orders, injunctions, writs, or decrees of any Governmental Authority.

"Lease Obligations" of a Person means for any period the rental commitments of such Person for such period under leases for real and/or personal property (net of rent from subleases thereof, but including taxes, insurance, maintenance and similar expenses which such Person, as the lessee, is obligated to pay under the terms of said leases, except to the extent that such taxes, insurance, maintenance and similar expenses are payable by sublessees), including rental commitments under Capital Leases.

"Letter of Credit" and "Letters of Credit" shall have the meanings described in Section 2.2.1 (Letters of Credit).

"Letter of Credit Agreement" means the collective reference to each letter of credit application and agreement substantially in the form of the Lender's then standard form of application for letter of credit or such other form as may be approved by the Lender, executed and delivered by any one or more of the Borrowers in connection with the issuance of a Letter of Credit, as the same may from time to time be amended, restated, supplemented or modified; and "Letter of Credit Agreements" means all of the foregoing in effect at any time and from time to time.

"Letter of Credit Documents" means any and all drafts under or purporting to be under a Letter of Credit, any Letter of Credit Agreement, and any other instrument, document or agreement executed and/or delivered by any one or more of the Borrowers or any other Person under, pursuant to or in connection with a Letter of Credit or any Letter of Credit Agreement.

"Letter of Credit Facility" means the facility established pursuant to
Section 2.2 (Letter of Credit Facility).

"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings described in Section 2.2.2 (Letter of Credit Fees).

"Letter of Credit Obligations" means the collective reference to all Obligations of any one or more of the Borrowers with respect to the Letters of Credit and the Letter of Credit Agreements.

"Letter-of-credit right" means a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance.

"Leverage Ratio" means the ratio of Total Liabilities on a specified date to Tangible Net Worth on such date.

"Liabilities" means at any date all liabilities that in accordance with GAAP consistently applied should be classified as liabilities on a consolidated balance sheet of the Borrowers and their respective Subsidiaries.

"LIBOR Amount" means each portion of the Principal Amount bearing interest at a LIBOR-based Rate pursuant to a Rate Request.

"LIBOR-based Rate" means an interest rate fixed for one, two, three or six month periods at a rate equal to the corresponding LIBOR rate (i.e. the one, two, three or six month LIBOR rate) plus the LIBOR Rate Margin in effect on the date of the corresponding Rate Request.

"LIBOR rate" means the London interbank offered rate of major banks for deposits in United States Dollars for a designated period (e.g. on, two, three or six months) as set forth at Telerate Page 3750 at approximately 11:00 a.m. London time on the third Euro-Dollar Business Day preceding the date when the LIBOR-based Rate will be become effective; provided, however, that if such information is not available on Telerate, the "LIBOR rate" shall be determined from information supplied to the Lender by a nationally recognized reporting service for similar information acceptable to the Lender.

"LIBOR Rate Margin" means the amount determined to be in effect from time to time using the chart set forth below. The initial LIBOR Rate Margin will be determined at the Closing Date using the Leverage Ratio calculated by reference to the consolidated balance sheet of VSE most recently received by the Lender. Commencing on the date following the Closing Date when the Lender receives the consolidated balance sheet of VSE in accordance with this Agreement and on each such date thereafter, the LIBOR Rate Margin will be reset based on the Leverage Ratio calculated by reference to such consolidated balance sheet.

LIBOR Rate Margin                   Leverage Ratio
-----------------                   --------------
      2.00%                Equal to or greater than 3.0 to 1.0
      1.75%                Equal to or greater than 1.5 to 1.0 but
                           less than 3.0 to 1.0
      1.25%                Less than 1.5 to 1.0

In the event VSE fails to provide such balance sheet when due, the LIBOR Rate Margin shall be 2.00% until such time as such balance sheets are submitted as required by this Agreement.

"Lien" means any mortgage, deed of trust, deed to secure debt, grant, pledge, security interest, assignment, encumbrance, judgment, lien, financing statement, hypothecation, provision in any instrument or other document for confession of judgment, cognovit or other similar right or other remedy, claim, charge, control over or interest of any kind in real or personal property securing any indebtedness, duties, obligations, and liabilities owed to, or a claimed to be owed to, a Person, all whether perfected or unperfected, avoidable or unavoidable, based on the common law, statute or contract or otherwise, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction, excluding the precautionary filing of any financing statement by any lessor in a true lease transaction, by any bailor in a true bailment transaction or by any consignor in a true consignment transaction under the Uniform Commercial Code of any jurisdiction or the agreement to give any financing statement by any lessee in a true lease transaction, by any bailee in a true bailment transaction or by any consignee in a true consignment transaction.

"Loan" means each of the Revolving Loan and "Loans" means the collective reference to the Revolving Loans.

"Loan Notice" has the meaning described in Section 2.1.2 (Procedure for Making Advances).

"Lockbox" has the meaning described in Section 2.1.8 (The Collateral Account).

"Maximum Rate" has the meaning described in Section 2.4.5 (Maximum Interest Rate).

"Multi-employer Plan" means a Plan that is a Multi-employer plan as defined in Section 4001(a)(3) of ERISA.

"Note" means the Revolving Credit Note and "Notes" means collectively the Revolving Credit Note and any other promissory note which may from time to time evidence all or any portion of the Obligations.

"Obligations" means all present and future, whether now existing or contemplated or hereafter arising, of any one or more of the Borrowers to the Lender under, arising pursuant to, in connection with and/or on account of the provisions of this Agreement, each Note, each Security Document, and/or any of the other Financing Documents, the Loans, and/or any of the Facilities including, without limitation, the principal of, and interest on, each Note, late charges, the Fees, Enforcement Costs, and prepayment fees (if any), letter of credit reimbursement obligations, letter of credit fees or fees charged with respect to any guaranty of any letter of credit; also means all other present and future indebtedness, duties, obligations, and liabilities, whether now existing or contemplated or hereafter arising, of any one or more of the Borrowers to the Lender or its Affiliates of any nature whatsoever, including, without limitation, any indebtedness, duties, obligations, and liabilities, under or in connection with, any Swap Transaction, regardless of whether such indebtedness, duties, obligations, and liabilities be direct, indirect, primary, secondary, joint, several, joint and several, fixed or contingent; and also means any and all renewals, extensions, substitutions, amendments, restatements and rearrangements of any such indebtedness, duties, obligations, and liabilities.

"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).

"Patents" means and includes, in each case whether now existing or hereafter arising, all of each Borrower's rights, title and interest in and to
(a) any and all patents and patent applications, (b) any and all inventions and improvements described and claimed in such patents and patent applications, (c) reissues, divisions, continuations, renewals, extensions and continuations-in-part of any patents and patent applications, (d) income, royalties, damages, claims and payments now or hereafter due and/or payable under and with respect to any patents or patent applications, including, without limitation, damages and payments for past and future infringements,
(e) rights to sue for past, present and future infringements of patents, and
(f) all rights corresponding to any of the foregoing throughout the world.

"PBGC" means the Pension Benefit Guaranty Corporation.

"Permitted Acquisitions" means a shall mean a transaction or series of transactions whereby the Borrowers acquire all or substantially all of the assets of a business, or purchase an equity interest in a business (the "Target"), provided, that (i) such interest shall not be less than eighty-five percent (85%) of the total equity of such business, (ii) the acquisition or purchase price consideration paid by the Borrowers during any twelve (12) month consecutive period shall not be greater than Ten Million Dollars ($10,000,000) in the aggregate; (iii) the acquired entity shall be in a similar line of business as that of the Borrowers; (iv) the acquired entity shall be a going concern, not involved in any material litigation that is not fully covered by reserves and/or insurance and shall have positive net earnings for the previous twelve (12) months; (v) both before and after giving effect to such transaction, no Event of Default shall be continuing or shall occur as a result of such transaction; (vi) the Borrowers will be in compliance with all financial covenants after giving pro forma effect to such transaction; (vii) after giving effect to such transaction there must be at least Five Million Dollars ($5,000,000) of availability under the Revolving Loan; (viii) the Lender shall have received satisfactory evidence that satisfactory arrangements shall have been made for the termination of all Liens encumbering any asset of any of the acquired entities; (ix) no Indebtedness shall be assumed by Borrowers in connection with such transaction; (x) the Lender shall have received and approved complete copies of the Purchase Agreement Documents; and (xi) within 15 days of closing any transaction contemplated hereby, the acquired entity shall be joined to this Agreement as an Additional Borrower by executing and delivering to the Lender an Additional Borrower Joinder Supplement

"Permitted Liens" means: (a) Liens for Taxes which are not delinquent or which the Lender has determined in the exercise of its sole and absolute discretion (i) are being diligently contested in good faith and by appropriate proceedings, and such contest operates to suspend collection of the contested Taxes and enforcement of a Lien, (ii) the respective Borrower has the financial ability to pay, with all penalties and interest, at all times without materially and adversely affecting such Borrower, and (iii) are not, and will not be with appropriate filing, the giving of notice and/or the passage of time, entitled to priority over any Lien of the Lender; (b) deposits or pledges to secure obligations under workers' compensation, social security or similar laws, or under unemployment insurance in the ordinary course of business; (c) Liens securing the Obligations; (d) judgment Liens to the extent the entry of such judgment does not constitute a Default or an Event of Default under the terms of this Agreement or result in the sale or levy of, or execution on, any of the Collateral; (e) Liens to secure the purchase price of Equipment or Inventory in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000); and (f) such other Liens, if any, as are set forth on Schedule 4.1.18 attached hereto and made a part hereof.

"Permitted Uses" means short term working capital of any Borrower's business and to support the issuance of Letters of Credit, and any Permitted Acquisition.

"Person" means and includes an individual, a corporation, a partnership, a joint venture, a limited liability company or partnership, a trust, an unincorporated association, a Governmental Authority, or any other organization or entity.

"Plan" means any pension plan that is covered by Title IV of ERISA and in respect of which any Borrower or a Commonly Controlled Entity is an "employer" as defined in Section 3 of ERISA.

"Post-closing Balance Sheet" has the meaning described in Section 4.1.28 (Post-closing Financial Statements).

"Post-closing Financial Projections" has the meaning described in
Section 4.1.28 (Post-closing Financial Statements).

"Post-Default Rate" means the Prime Rate in effect from time to time, plus two percent (2.0%) per annum.

"Prepayment" means a Revolving Loan Mandatory Prepayment or a Revolving Loan Optional Prepayment, as the case may be, and "Prepayments" mean collectively all Revolving Loan Mandatory Prepayments and all Revolving Loan Optional Prepayments.

"Principal Amount" means the aggregate outstanding principal balance of the Notes.

"Prime-based Rate" means a floating rate of interest equal to the Prime Rate plus the Prime Rate Margin.

"Prime Rate" means the rate of interest established from time to time by the Lender and announced by the Lender as its prime rate. The Prime Rate is not necessarily the lowest or most favorable rate of interest charged by the Lender on extensions of credit to debtors.

"Prime Rate Margin" means the amount determined to be effect form time to time using the charge set forth below. The initial Prime Rate Margin will be determined at the Closing Date using the Leverage Ratio calculated by reference to the consolidated balance sheet of VSE most recently received by the Lender. Commencing on the date following the Closing Date when the Lender receives the consolidated balance sheet of VSE in accordance with this Agreement and on each such date thereafter, the Prime Rate Margin will be reset based on the Leverage Ratio calculated by reference to such consolidated balance sheet.

Prime Rate Margin                 Leverage Ratio
-----------------                 --------------
      .25%              Equal to or greater than 3.0 to 1.0
       0%               Less than 3.0 to 1.0

In the event VSE fails to provide such balance sheets when due, the Prime Rate Margin shall be .25% until such time as such balance sheets are submitted as required by this Agreement.

"Proceeds" has the meaning described in the Uniform Commercial Code as in effect from time to time.

"Purchase Agreement Documents" means collectively any agreement hereafter executed in connection with any Permitted Acquisition and any and all other agreements, documents or instruments (together with any and all amendments, modifications, and supplements thereto, restatements thereof, and substitutes therefor) previously, now or hereafter executed and delivered by Borrower or any other Person in connection with any Permitted Acquisition.

"Rate Request" means VSE's written notice, as agent for the Borrowers to be received by the Lender by 11:00 a.m. Eastern time on the third Euro-Dollar Business Day preceding the date specified in the Rate Request for the commencement of the Interest Period, of (a) its intention to have (i) all or any portion of the Principal Amount which is not then the subject of an Interest Period (other than an Interest Period which is terminating on such Euro-Dollar Business Day), and/or (ii) all or any portion of any Loan which is to be made on such date bear interest at a specified LIBOR-based Rate and (b) the Interest Period desired by the Borrowers in respect to the amount specified.

"Rate Request Amount" means the amount, to be specified by the Borrowers, through their agent VSE, in each Rate Request, which the Borrowers desire bear interest at the specified LIBOR-based Rate.

"Receivable" means one of each Borrower's now owned and hereafter owned, acquired or created Accounts, Chattel Paper, General Intangibles and Instruments; and "Receivables" means all of each Borrower's now or hereafter owned, acquired or created Accounts, Chattel Paper, General Intangibles and Instruments, and all cash and non-cash proceeds and products thereof.

"Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder.

"Responsible Officer" means for each Borrower, its chief executive officer or president or, with respect to financial matters, its chief financial officer, or treasurer.

"Revolving Credit Commitment" means the agreement of the Lender relating to the making the Revolving Loan and advances thereunder subject to and in accordance with the provisions of this Agreement; and "Revolving Credit Commitments" means the collective reference to all the Revolving Credit Commitments of the Lender.

"Revolving Credit Commitment Period" means the period of time from the Closing Date to the Business Day preceding the Revolving Credit Termination Date.

"Revolving Credit Committed Amount" has the meaning described in Section
2.1.1 (Revolving Credit Facility).

"Revolving Credit Expiration Date" means August __, 2009.

"Revolving Credit Facility" means the facility established by the Lender pursuant to Section 2.1 (Revolving Credit Facility).

"Revolving Credit Note" has the meaning described in Section 2.1.5 (Revolving Credit Notes).

"Revolving Credit Termination Date" means the earlier of (a) the Revolving Credit Expiration Date, or (b) the date on which the Revolving Credit Commitments are terminated pursuant to Section 7.2 (Remedies) or otherwise.

"Revolving Credit Fee" and "Revolving Credit Fees" have the meanings described in Section 2.1.10 (Revolving Credit Fee).

"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line Fees" have the meanings described in Section 2.1.10 (Revolving Credit Unused Line Fee).

"Revolving Loan" has the meaning described in Section 2.1.1 (Revolving Credit Facility).

"Revolving Loan Account" has the meaning described in Section 2.1.9 (Revolving Loan Account).

"Revolving Loan Mandatory Prepayment" and "Revolving Loan Mandatory Prepayments" have the meanings described in Section 2.1.6 (Mandatory Prepayments of Revolving Loan).

"Revolving Loan Optional Prepayment" and "Revolving Loan Optional Prepayments" have the meanings described in Section 2.1.7 (Optional Prepayment of Revolving Loan).

"Security Documents" means collectively any assignment, pledge agreement, security agreement, mortgage, deed of trust, deed to secure debt, financing statement and any similar instrument, document or agreement under or pursuant to which a Lien is now or hereafter granted to, or for the benefit of, the Lender on any real or personal property of any Person to secure all or any portion of the Obligations, all as the same may from time to time be amended, restated, supplemented or otherwise modified, including, without limitation, this Agreement.

"Solvent" means when used with respect to any Person that at the time of determination:
(a) the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including, without limitation, contingent liabilities); and

(b) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and

(c) it is then able and expects to be able to pay its debts (including, without limitation, contingent debts and other commitments) as they mature; and

(d) it has capital sufficient to carry on its business as conducted and as proposed to be conducted.

For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

"State" means the Commonwealth of Virginia.

"Subsidiary" means any corporation the majority of the voting shares of which at the time are owned directly by any Borrower and/or by one or more Subsidiaries of any Borrower.

"Supporting Obligation" means a letter-of-credit right, secondary obligation or obligation of a secondary obligor or that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument or investment property.

"Swap Reserve" means any and all reserves which the Lender from time to time establishes, in its sole discretion, with respect to Swap Transactions.

"Swap Transactions" means any interest rate swap transaction, forward rate transaction, treasury lock transaction, interest rate cap, floor or collar transaction, any similar transaction, any option to enter into any of the foregoing, or any combination of any of the foregoing.

"Tangible Net Worth" means, at any date, all amounts which, in accordance with GAAP, would be included under stockholders' equity on the consolidated balance sheet of VSE and Subsidiaries on such date; provided that, in any event, such amounts are to be net of amounts carried on the books of the Borrowers for (a) any write-up in the book value of any assets resulting from a revaluation thereof subsequent to the Closing Date; (b) treasury stock; (c) unamortized debt discount expense; (d) any cost of investments in excess of net assets acquired at any time of acquisition; (e) except as permitted by Section 6.2.6 (Investments, Loans and Other Transactions), loans or advances to any Affiliate of the Borrowers or any Subsidiary; (f) patents, patent applications, copyrights, trademarks, trade names, good will, research and development costs, organizational expenses, capitalized software developments costs and other like intangibles; and (g) any investments in securities which are not actively traded on a national securities exchange.

"Target" has the meaning described in the definition of Permitted Acquisitions.

"Taxes" means all taxes and assessments whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all penalties or interest thereon), which at any time may be assessed, levied, confirmed or imposed by any Governmental Authority on any or all of the Borrowers or any of its or their properties or assets or any part thereof or in respect of any of its or their franchises, businesses, income or profits.

"Trademarks" means and includes in each case whether now existing or hereafter arising, all of each Borrower's rights, title and interest in and to
(a) any and all trademarks (including service marks), trade names and trade styles, and applications for registration thereof and the goodwill of the business symbolized by any of the foregoing, (b) any and all licenses of trademarks, service marks, trade names and/or trade styles, whether as licensor or licensee, (c) any renewals of any and all trademarks, service marks, trade names, trade styles and/or licenses of any of the foregoing, (d) income, royalties, damages and payments now or hereafter due and/or payable with respect thereto, including, without limitation, damages, claims, and payments for past, present and future infringements thereof, (e) rights to sue for past, present and future infringements of any of the foregoing, including the right to settle suits involving claims and demands for royalties owing, and (f) all rights corresponding to any of the foregoing throughout the world.

"Unearned Contract Value" means the difference between (a) the then fully funded dollar value of the contract or subcontract, whether or not earned, and (b) the total amounts previously billed and properly billable for accepted end items or services.

"Uniform Commercial Code" means, unless otherwise provided in this Agreement, the Uniform Commercial Code as adopted by and in effect from time to time in the State or in any other jurisdiction, as applicable.

"Wholly Owned Subsidiary" means any domestic United States corporation all the shares of stock of all classes of which (other than directors' qualifying shares) at the time are owned directly or indirectly by a Borrower and/or by one or more Wholly Owned Subsidiaries of a Borrower.

Section 1.2 Accounting Terms and Other Definitional Provisions. Unless otherwise defined herein, as used in this Agreement and in any certificate, report or other document made or delivered pursuant hereto, accounting terms not otherwise defined herein, and accounting terms only partly defined herein, to the extent not defined, shall have the respective meanings given to them under GAAP, as consistently applied to the applicable Person. All terms used herein which are defined by the Uniform Commercial Code shall have the same meanings as assigned to them by the Uniform Commercial Code unless and to the extent varied by this Agreement. The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule and exhibit references are references to articles, sections or subsections of, or schedules or exhibits to, as the case may be, this Agreement unless otherwise specified. As used herein, the singular number shall include the plural, the plural the singular and the use of the masculine, feminine or neuter gender shall include all genders, as the context may require. Reference to any one or more of the Financing Documents shall mean the same as the foregoing may from time to time be amended, restated, substituted, extended, renewed, supplemented or otherwise modified. Reference in this Agreement and the other Financing Documents to the "Borrower", the "Borrowers", "each Borrower" or otherwise with respect to any one or more of the Borrowers shall mean each and every Borrower and any one or more of the Borrowers, jointly and severally, unless a specific Borrower is expressly identified.

Unless sooner paid, the unpaid Revolving Loan, together with interest accrued and unpaid thereon and all other Obligations shall be due and payable in full on the Revolving Credit Expiration Date. Interest on the Revolving Loan shall be payable on each Interest Payment Date.

In addition, each of the Borrowers hereby irrevocably authorizes the Lender at any time and from time to time, without further request from or notice to the Borrowers, to make advances under the Revolving Loan, and irrevocably authorizes the Lender to establish, without duplication, reserves against the Borrowing Base, which the Lender, in its sole and absolute discretion, deems necessary or appropriate to protect the interests of the Lender under this Agreement, including, without limitation, advances and reserves under the Revolving Loan made to cover debit balances in the Revolving Loan Account, principal of, and/or interest on, any Loan, the Obligations (including, without limitation, any Letter of Credit Obligations), and/or Enforcement Costs, prior to, on, or after the termination of other advances under this Agreement, regardless of whether the outstanding principal amount of the Revolving Loan that the Lender may advance or the Lender may reserve hereunder exceeds the Total Revolving Credit Committed Amount or the Borrowing Base.

The Borrowing Base shall be computed based on the Borrowing Base Report most recently delivered to and accepted by the Lender in its sole and absolute discretion. In the event the Borrowers fail to furnish a Borrowing Base Report required by Section 2.1.4 (Borrowing Base Report), or in the event the Lender believes that a Borrowing Base Report is no longer accurate, the Lender may, in its sole and absolute discretion exercised from time to time and without limiting other rights and remedies under this Agreement, suspend the making of or limit advances under the Revolving Loan. The Borrowing Base shall be subject to reduction by amounts credited to the Collateral Account since the date of the most recent Borrowing Base Report and by the amount of any Receivable which was included in the Borrowing Base but which the Lender determines fails to meet the respective criteria applicable from time to time for Eligible Receivables.

If at any time the total of the aggregate principal amount of the Revolving Loan and Outstanding Letter of Credit Obligations exceeds the Borrowing Base, a borrowing base deficiency ("Borrowing Base Deficiency") shall exist. Each time a Borrowing Base Deficiency exists, the Borrowers at the sole and absolute discretion of the Lender exercised from time to time shall pay the Borrowing Base Deficiency ON DEMAND to the Lender.

Without implying any limitation on the Lender's discretion with respect to the Borrowing Base, the criteria for Eligible Receivables contained in the definition of Eligible Receivables are in part based upon the business operations of the Borrowers existing on or about the Closing Date and upon information and records furnished to the Lender by the Borrowers. If at any time or from time to time hereafter, the business operations of the Borrowers change or such information and records furnished to the Lender is incorrect or misleading, the Lender in its discretion, may at any time and from time to time during the duration of this Agreement change such criteria or add new criteria. The Lender may communicate such changed or additional criteria to the Borrowers from time to time either orally or in writing.

Each of the Borrowers acknowledges and agrees that, if the outstanding principal balance of the Revolving Loan outstanding from time to time exceeds the Revolving Credit Committed Amount, the excess shall bear interest at the rates provided from time to time for advances under the Revolving Loan evidenced by the Revolving Credit Note and shall be payable, with accrued interest, ON DEMAND.

In addition, if so directed by the Lender, the Borrowers shall direct the mailing of all Items of Payment from their Account Debtors to one or more post-office boxes designated by the Lender, or to such other additional or replacement post-office boxes pursuant to the request of the Lender from time to time (collectively, the "Lockbox"). The Lender shall have unrestricted and exclusive access to the Lockbox.

The Borrowers hereby authorize the Lender after the occurrence of a Default to inspect all Items of Payment, endorse all Items of Payment in the name of any or all of the Borrowers, and deposit such Items of Payment in the Collateral Account. The Lender reserves the right, exercised in its sole and absolute discretion from time to time, to provide to the Collateral Account credit prior to final collection of an Item of Payment and to disallow credit for any Item of Payment which is unsatisfactory to the Lender. In the event Items of Payment are returned to the Lender for any reason whatsoever, the Lender may, in the exercise of its discretion from time to time, forward such Items of Payment a second time. Any returned Items of Payment shall be charged back to the Collateral Account, the Revolving Loan Account, or other account, as appropriate.

The Lender will after the occurrence of a Default apply the whole or any part of the collected funds credited to the Collateral Account against the Revolving Loan (or with respect to Items of Payment which are not proceeds of Accounts or Inventory or after an Event of Default, against any of the Obligations) or credit such collected funds to a depository account of any or all of the Borrowers with the Lender, the order and method of such application to be in the sole discretion of the Lender.

Each Letter of Credit shall be issued for purposes acceptable to Lender. The aggregate face amount of all Letters of Credit at any one time outstanding and issued by the Lender pursuant to the provisions of this Agreement, including, without limitation, any and all Post-Expiration Date Letters of Credit, plus the amount of any unpaid Letter of Credit Fees and unpaid Letter of Credit Fees accrued or scheduled to accrue thereon, and less the aggregate amount of all drafts issued under or purporting to have been issued under such Letters of Credit that have been paid by the Lender and for which the Lender has been reimbursed by the Borrowers in full in accordance with Section 2.2.5 (Payments of Letters of Credit) and the Letter of Credit Agreements, and for which the Lender has no further obligation or commitment to restore all or any portion of the amounts drawn and reimbursed, is herein called the "Outstanding Letter of Credit Obligations".

(a) the amount which the Lender has paid or will be required to pay under each draft or draw on a Letter of Credit, whether such demand be in advance of the Lender's payment or for reimbursement for such payment;

(b) any and all reasonable charges and expenses which the Lender may pay or incur relative to the Letter of Credit and/or such draws or drafts; and

(c) interest on the amounts described in (a) and (b) not paid by the Borrowers as and when due and payable under the provisions of (a) and (b) above from the day the same are due and payable until paid in full at a rate per

In addition, the Borrowers hereby promise to pay any and all other Letter of Credit Obligations as and when due and payable in accordance with the provisions of this Agreement and the Letter of Credit Agreements. The obligation of the Borrowers to pay Current Letter of Credit Obligations and all other Letter of Credit Obligations shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrowers or any other account party may have or have had against the beneficiary of such Letter of Credit, the Lender, or any other Person, including, without limitation, any defense based on the failure of any draft or draw to conform to the terms of such Letter of Credit, any draft or other document proving to be forged, fraudulent or invalid, or the legality, validity, regularity or enforceability of such Letter of Credit, any draft or other documents presented with any draft, any Letter of Credit Agreement, this Agreement, or any of the other Financing Documents, all whether or not the Lender had actual or constructive knowledge of the same, and irrespective of any Collateral, security or guarantee therefor or right of offset with respect thereto and irrespective of any other circumstances whatsoever which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrowers for any Letter of Credit Obligations, in bankruptcy or otherwise; provided, however, that the Borrowers shall not be obligated to reimburse the Lender for any wrongful payment under such Letter of Credit made as a result of the Lender's willful misconduct. The obligation of the Borrowers to pay the Letter of Credit Obligations shall not be conditioned or contingent upon the pursuit by the Lender or any other Person at any time of any right or remedy against any Person which may be or become liable in respect of all or any part of such obligation or against any Collateral, security or guarantee therefor or right of offset with respect thereto.

The Letter of Credit Obligations shall continue to be effective, or be reinstated, as the case may be, if at any time payment of all or any portion of the Letter of Credit Obligations is rescinded or must otherwise be restored or returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Person, or upon or as a result of the appointment of a receiver, intervenor, or conservator of, or trustee or similar officer for, any Person, or any substantial part of such Person's property, all as though such payments had not been made.

Except for willful misconduct, the Lender and its branches, Affiliates and/or correspondents, shall not be liable or responsible in any respect for any (a) error, omission, interruption or delay in transmission, dispatch or delivery of any one or more messages or advices in connection with any Letter of Credit, whether transmitted by cable, telegraph, mail or otherwise and despite any cipher or code which may be employed, and/or
(b) action, inaction or omission which may be taken or suffered by it or them in good faith or through inadvertence in identifying or failing to identify any beneficiary or otherwise in connection with any Letter of Credit.

Any Letter of Credit may be amended, modified or revoked only upon the receipt by the Lender from the Borrowers and the beneficiary (including any transferee and/or assignee of the original beneficiary), of a written consent and request therefor.

If any Laws, order of court and/or ruling or regulation of any Governmental Authority of the United States (or any state thereof) and/or any country other than the United States permits a beneficiary under a Letter of Credit to require the Lender and/or any of their respective branches, Affiliates and/or correspondents to pay drafts under or purporting to be under a Letter of Credit after the expiration date of the Letter of Credit, the Borrowers shall reimburse the Lender, as appropriate, for any such payment pursuant to provisions of Section 2.2.6 (Change in Law; Increased Cost).

Except as may otherwise be specifically provided in a Letter of Credit or Letter of Credit Agreement, the laws of the State and the Uniform Customs and Practice for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500 shall govern the Letters of Credit. The Laws, rules, provisions and regulations of the Uniform Customs and Practice for Documentary Credits are hereby incorporated by reference. In the event of a conflict between the Uniform Customs and Practice for Documentary Credits and the laws of the State, the Uniform Customs and Practice for Documentary Credits shall prevail.

Contemporaneously with any prepayment of principal of a LIBOR Amount, a prepayment fee shall be due and payable to the Lender in an amount equal to the product of

(A) the amount so prepaid

(ii) the 360-day interest yield (as of the Business Day immediately preceding the prepayment date and expressed as a decimal) on such Treasury obligation and having, as of the Business Day immediately preceding the prepayment date, a remaining term until maturity approximately equal to the unexpired portion of the Interest Period,

The applicable yields on the Treasury obligations described above shall be determined based upon the Federal Reserve statistical release H.15 published for the applicable determination dates set forth above. Any Treasury obligation selected when the related Interest Period is one year or less shall be United States Treasury Bills. The Lender shall not be obligated or required to have actually reinvested the prepaid amount of the LIBOR Amount in any such Treasury obligation as a condition precedent to the Borrowers' being obligated to pay a prepayment fee as outlined above. The Lender shall not be obligated to accept any prepayment of principal unless it is accompanied by the prepayment fee, if any, due in connection therewith as calculated pursuant to the provisions of this paragraph. No prepayment fee payable in connection herewith shall in any event or under any circumstances be deemed or construed as a penalty.

For administrative convenience, each Borrower hereby irrevocably appoints VSE as the Borrower's attorney-in-fact, with power of substitution (with the prior written consent of the Lender in the exercise of its sole and absolute discretion), in the name of VSE or in the name of the Borrower or otherwise to take any and all actions with respect to the this Agreement, the other Financing Documents, the Obligations and/or the Collateral (including, without limitation, the Proceeds thereof) as VSE may so elect from time to time, including, without limitation, actions to (i) request advances under the Loans, apply for and direct the benefits of Letters of Credits, and direct the Lender to disburse or credit the proceeds of any Loan directly to an account of VSE, any one or more of the Borrowers or otherwise, which direction shall evidence the making of such Loan and shall constitute the acknowledgment by each of the Borrowers of the receipt of the proceeds of such Loan or the benefit of such Letter of Credit, (ii) enter into, execute, deliver, amend, modify, restate, substitute, extend and/or renew this Agreement, any Additional Borrower Joinder Supplement, any other Financing Documents, security agreements, mortgages, deposit account agreements, instruments, certificates, waivers, letter of credit applications, releases, documents and agreements from time to time, and (iii) endorse any check or other item of payment in the name of the Borrower or in the name of VSE. The foregoing appointment is coupled with an interest, cannot be revoked without the prior written consent of the Lender, and may be exercised from time to time through VSE's duly authorized officer, officers or other Person or Persons designated by VSE to act from time to time on behalf of VSE.

Each of the Borrowers hereby irrevocably authorizes each of the Lender to make Loans to any one or more of the Borrowers, and to issue or cause to be issued Letters of Credit for the account of any or all of the Borrowers, pursuant to the provisions of this Agreement upon the written, oral or telephone request of any one or more of the Persons who is from time to time a Responsible Officer of a Borrower under the provisions of the most recent certificate of corporate resolutions and/or incumbency of the Borrowers on file with the Lender and also upon the written, oral or telephone request of any one of the Persons who is from time to time a Responsible Officer of VSE under the provisions of the most recent certificate of corporate resolutions and/or incumbency for VSE on file with the Lender.

The Lender assumes no responsibility or liability for any errors, mistakes, and/or discrepancies in the oral, telephonic, written or other transmissions of any instructions, orders, requests and confirmations between the Lender and the Borrowers in connection with the Credit Facilities, any Loan, any Letter of Credit or any other transaction in connection with the provisions of this Agreement. Without implying any limitation on the joint and several nature of the Obligations, the Lender agrees that, notwithstanding any other provision of this Agreement, the Borrowers may create reasonable inter- company indebtedness between or among the Borrowers with respect to the allocation of the benefits and proceeds of the advances and Credit Facilities under this Agreement. The Borrowers agree among themselves, and the Lender consents to that agreement, that each Borrower shall have rights of contribution from all of the other Borrowers to the extent such Borrower incurs Obligations in excess of the proceeds of the Loans received by, or allocated to purposes for the direct benefit of, such Borrower. All such indebtedness and rights shall be, and are hereby agreed by the Borrowers to be, subordinate in priority and payment to the indefeasible repayment in full in cash of the Obligations, and, unless the Lender agrees in writing otherwise, shall not be exercised or repaid in whole or in part until all of the Obligations have been indefeasibly paid in full in cash. The Borrowers agree that all of such inter-company indebtedness and rights of contribution are part of the Collateral and secure the Obligations. Each Borrower hereby waives all rights of counterclaim, recoupment and offset between or among themselves arising on account of that indebtedness and otherwise. Each Borrower shall not evidence the inter-company indebtedness or rights of contribution by note or other instrument, and shall not secure such indebtedness or rights of contribution with any Lien or security. Notwithstanding anything contained in this Agreement to the contrary, the amount covered by each Borrower under the Obligations (including, without limitation, Section 2.4.9 (Guaranty)) shall be limited to an aggregate amount (after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Borrower in respect of the Obligations) which, together with other amounts owing by such Borrowers to the Lender under the Obligations, is equal to the largest amount that would not be subject to avoidance under the Bankruptcy Code or any applicable provisions of any applicable, comparable state or other Laws.

(i) the due and punctual payment in full (and not merely the collectibility) by the other Borrowers of the Obligations, including unpaid and accrued interest thereon, in each case when due and payable, all according to the terms of this Agreement, the Notes and the other Financing Documents;

(ii) the due and punctual payment in full (and not merely the collectibility) by the other Borrowers of all other sums and charges which may at any time be due and payable in accordance with this Agreement, the Notes or any of the other Financing Documents;

(iii) the due and punctual performance by the other Borrowers of all of the other terms, covenants and conditions contained in the Financing Documents; and

(iv) all the other Obligations of the other Borrowers.
(b) The obligations and liabilities of each Borrower as a guarantor under this Section 2.4.9 shall be absolute and unconditional and joint and several, irrespective of the genuineness, validity, priority, regularity or enforceability of this Agreement, any of the Notes or any of the Financing Documents or any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or guarantor. Each Borrower in its capacity as a guarantor expressly agrees that the Lender may, in their sole and absolute discretion, without notice to or further assent of such Borrower and without in any way releasing, affecting or in any way impairing the joint and several obligations and liabilities of such Borrower as a guarantor hereunder:

(i) waive compliance with, or any defaults under, or grant any other indulgences under or with respect to any of the Financing Documents;

(ii) modify, amend, change or terminate any provisions of any of the Financing Documents;

(iii) grant extensions or renewals of or with respect to the Credit Facilities, the Notes or any of the other Financing Documents;

(iv) effect any release, subordination, compromise or settlement in connection with this Agreement, any of the Notes or any of the other Financing Documents;

(v) agree to the substitution, exchange, release or other disposition of the Collateral or any part thereof, or any other collateral for the Loan or to the subordination of any lien or security interest therein;

(vi) make advances for the purpose of performing any term, provision or covenant contained in this Agreement, any of the Notes or any of the other Financing Documents with respect to which the Borrowers shall then be in default;

(vii) make future advances pursuant to this Agreement or any of the other Financing Documents;

(viii) assign, pledge, hypothecate or otherwise transfer the Revolving Credit Commitments, the Obligations, the Notes, any of the other Financing Documents or any interest therein, all as and to the extent permitted by the provisions of this Agreement;
(ix) deal in all respects with the other Borrowers as if this Section 2.4.9 were not in effect;

(x) effect any release, compromise or settlement with any of the other Borrowers, whether in their capacity as a Borrower or as a guarantor under this Section 2.4.9, or any other guarantor; and

(xi) provide debtor-in-possession financing or allow use of cash collateral in proceedings under the Bankruptcy Code, it being expressly agreed by all Borrowers that any such financing and/or use would be part of the Obligations.

(c) The obligations and liabilities of each Borrower, as guarantor under this Section 2.4.9, shall be primary, direct and immediate, shall not be subject to any counterclaim, recoupment, set off, reduction or defense based upon any claim that a Borrower may have against any one or more of the other Borrowers, the Lender and/or any other guarantor and shall not be conditional or contingent upon pursuit or enforcement by the Lender of any remedies it may have against the Borrowers with respect to this Agreement, the Notes or any of the other Financing Documents, whether pursuant to the terms thereof or by operation of law. Without limiting the generality of the foregoing, the Lender shall not be required to make any demand upon any of the Borrowers, or to sell the Collateral or otherwise pursue, enforce or exhaust its or their remedies against the Borrowers or the Collateral either before, concurrently with or after pursuing or enforcing its rights and remedies hereunder. Any one or more successive or concurrent actions or proceedings may be brought against each Borrower under this Section 2.4.9, either in the same action, if any, brought against any one or more of the Borrowers or in separate actions or proceedings, as often as the Lender may deem expedient or advisable. Without limiting the foregoing, it is specifically understood that any modification, limitation or discharge of any of the liabilities or obligations of any one or more of the Borrowers, any other guarantor or any obligor under any of the Financing Documents, arising out of, or by virtue of, any bankruptcy, arrangement, reorganization or similar proceeding for relief of debtors under federal or state law initiated by or against any one or more of the Borrowers, in their respective capacities as borrowers and guarantors under this Section 2.4.9, or under any of the Financing Documents shall not modify, limit, lessen, reduce, impair, discharge, or otherwise affect the liability of each Borrower under this
Section 2.4.9 in any manner whatsoever, and this Section 2.4.9 shall remain and continue in full force and effect. It is the intent and purpose of this
Section 2.4.9 that each Borrower shall and does hereby waive all rights and benefits which might accrue to any other guarantor by reason of any such proceeding, and the Borrowers agree that they shall be liable for the full amount of the obligations and liabilities under this Section 2.4.9, regardless of, and irrespective to, any modification, limitation or discharge of the liability of any one or more of the Borrowers, any other guarantor or any obligor under any of the Financing Documents, that may result from any such proceedings.

(d) Each Borrower, as guarantor under this
Section 2.4.9, hereby unconditionally, jointly and severally, irrevocably and expressly waives:

(i) presentment and demand for payment of the Obligations and protest of non-payment;

(ii) notice of acceptance of this Section 2.4.9 and of presentment, demand and protest thereof;

(iii) notice of any default hereunder or under the Notes or any of the other Financing Documents and notice of all indulgences;

(iv) notice of any increase in the amount of any portion of or all of the indebtedness guaranteed by this Section 2.4.9;

(v) demand for observance, performance or enforcement of any of the terms or provisions of this
Section 2.4.9, the Notes or any of the other Financing Documents;

(vi) all errors and omissions in connection with the Lender's administration of all indebtedness guaranteed by this Section 2.4.9, except errors and omissions resulting from acts of bad faith;

(vii) any right or claim of right to cause a marshalling of the assets of any one or more of the other Borrowers;

(viii) any act or omission of the Lender which changes the scope of the risk as guarantor hereunder; and
(ix) all other notices and demands otherwise required by law which the Borrower may lawfully waive. Within ten (10) days following any request of the Lender so to do, each Borrower will furnish the Lender and such other persons as the Lender may direct with a written certificate, duly acknowledged stating in detail whether or not any credits, offsets or defenses exist with respect to this Section 2.4.9.

In the event that any of the Borrowers shall acquire after the Closing Date any letters of credit, Investment Property, Chattel Paper, Documents or Instruments, each such Borrower shall promptly so notify the Lender and deliver the originals of all of the foregoing to the Lender promptly and in any event within ten (10) days of each acquisition.

All letters of credit, Investment Property, Chattel Paper, Documents and Instruments shall be delivered to the Lender endorsed and/or assigned as required by the pledge, assignment and security agreement and/or as the Lender may require and, if applicable, shall be accompanied by blank irrevocable and unconditional stock or bond powers.

(a) customary fees and expenses incurred by Lender in preparing, reviewing, negotiating and finalizing the Financing Documents from time to time (including, without limitation, reasonable attorneys' fees incurred in connection with preparing, reviewing, negotiating, and finalizing any of the Financing Documents, including, any amendments and supplements thereto);

(b) all filing and/or recording taxes or fees;

(c) all costs of Lien and record searches;

(d) reasonable attorneys' fees in connection with all legal opinions required; and

(e) all related costs, fees and expenses.

(a) a certificate of good standing certified by the Secretary of State, or other appropriate Governmental Authority, of the state of incorporation of such Borrower;

(b) a certified copy from the appropriate Governmental Authority under which such Borrower is organized, of such Borrower's recorded limited partnership certificate and all recorded amendments thereto;

(c) a certificate of qualification to do business for such Borrower certified by the Secretary of State or other Governmental Authority of each state in which such Borrower conducts business;

(d) a certificate dated as of the Closing Date by the Secretary or an Assistant Secretary of such Borrower covering:

(i) true and complete copies of that Borrower's corporate charter, bylaws, and all amendments thereto;

(ii) the incumbency, authority and signatures of the officers of such Borrower authorized to sign this Agreement and the other Financing Documents to which such Borrower is a party; and

(iii) the identity of such Borrower's current directors, common stock holders and other equity holders, as well as their respective percentage ownership interests.

5.2.6 Legal Matters.

All legal documents incident to each advance under the Loans and each of the Letters of Credit shall be reasonably satisfactory to counsel for the Lender.

(a) Annual Statements and Certificates. The Borrowers shall furnish to the Lender as soon as available, but in no event more than ninety (90) days after the close of the Borrowers' fiscal years, (i) a copy of the annual financial statement in reasonable detail satisfactory to the Lender relating to the Borrowers and their Subsidiaries, prepared in accordance with GAAP and examined and certified by independent certified public accountants satisfactory to the Lender, which financial statement shall include a consolidated and consolidating balance sheet of the Borrowers and their Subsidiaries as of the end of such fiscal year and consolidated and consolidating statements of income, cash flows and changes in shareholders equity of the Borrowers and their Subsidiaries for such fiscal year, and (ii) a Compliance Certificate, in substantially the form attached to this Agreement as EXHIBIT C, containing a detailed computation of each financial covenant in this Agreement which is applicable for the period reported, a certification that no change has occurred to the information contained in the Collateral Disclosure List (except as set forth in any schedule attached to the certification), each prepared by a Responsible Officer of the Borrowers in a format acceptable to the Lender and (iii) if issued, a management letter in the form prepared by the Borrowers' independent certified public accountants.

(b) Quarterly Statements and Certificates. The Borrowers shall furnish to the Lender as soon as available, but in no event more than forty-five (45) days after the close of the Borrowers' fiscal quarters, consolidated and consolidating balance sheets of the Borrowers and its Subsidiaries as of the close of such period, consolidated and consolidating income, cash flows and changes in shareholders equity statements for such period, and a Compliance Certificate, in substantially the form attached to this Agreement as EXHIBIT C, containing a detailed computation of each financial covenant in this Agreement which is applicable for the period reported, a certification that no change has occurred to the information contained in the Collateral Disclosure List (except as set forth on any schedule attached to the certification), each prepared by a Responsible Officer of or on behalf of each Borrower in a format acceptable to the Lender, all as prepared and certified by a Responsible Officer of the Borrowers and accompanied by a certificate of that officer stating whether any event has occurred which constitutes a Default or an Event of Default hereunder, and, if so, stating the facts with respect thereto.
(c) Monthly Reports. The Borrowers shall furnish to the Lender within twenty (20) days after the end of each fiscal month, a Borrowing Base Report, and a report containing the following information:
(i) a detailed aging schedule of all Receivables by Account Debtor, in such detail, and accompanied by such supporting information, as the Lender may from time to time reasonably request;

(ii) a detailed aging of all accounts payable by supplier, in such detail, and accompanied by such supporting information, as the Lender may from time to time reasonably request; and

(iii) such other information as the Lender may reasonably request.
(d) Contract Backlog Report. With the annual financial statements to be delivered hereunder or at such other times as the Lender may request, reports relating to the Receivable included in any Borrowing Base Report submitted during such quarter setting forth a description of contracts giving rise to such Receivable, the percentage of completion of the work to be performed with respect to such contracts, the amounts billed under such contracts and the amounts remaining to be billed, in form and detail satisfactory to the Lender.

(e) Government Contract Audits. Promptly after any Borrower's receipt thereof, notice of any final decision of a contracting officer disallowing costs aggregating more than One Hundred Thousand Dollars ($100,000), which disallowed costs arising out of any audit of such Borrower's contract with a Governmental Authority.

(f) Additional Reports and Information. The Borrowers shall furnish to the Lender promptly, such additional information, reports or statements as the Lender may from time to time reasonably request.

                      6.1.3     Recordkeeping, Rights of Inspection, Field
                                ------------------------------------------
Examination, Etc.
-----------------
                             (a)        Each of the Borrowers shall, and shall

cause each of its Subsidiaries to, maintain (i) a standard system of accounting in accordance with GAAP, and (ii) proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its properties, business and activities.

(b) Each of the Borrowers shall, and shall cause each of its Subsidiaries to, permit authorized representatives of the Lender to visit and inspect the properties of the Borrowers and its Subsidiaries, to review, audit, check and inspect the Collateral at any time with or without notice, to review, audit, check and inspect the Borrowers' other books of record at any time with or without notice and to make abstracts and photocopies thereof, and to discuss the affairs, finances and accounts of the Borrowers and their Subsidiaries, with the officers, directors, employees and other representatives of the Borrowers and their Subsidiaries and their respective accountants, all at such times during normal business hours and other reasonable times and as often as the Lender may reasonably request.

(c) Each of the Borrowers hereby irrevocably authorizes and directs all accountants and auditors employed by any of the Borrowers and/or any of their Subsidiaries at any time prior to the repayment in full of the Obligations to exhibit and deliver to the Lender copies of any and all of the financial statements, trial balances, management letters, or other accounting records of any nature of any or all of the Borrowers and/or any or all of their respective Subsidiaries in the accountant's or auditor's possession, and to disclose to the Lender any information they may have concerning the financial status and business operations of any or all of the Borrowers and/or any or all of their respective Subsidiaries. Further, each of the Borrowers hereby authorizes all Governmental Authorities to furnish to the Lender copies of reports or examinations relating to any and all of the Borrowers and/or any or all Subsidiaries, whether made by the Borrowers or otherwise.

(d) Any and all reasonable costs and expenses incurred by, or on behalf of, the Lender in connection with the conduct of any of the foregoing, including, without limitation, travel, lodging, meals, and other shall be part of the Enforcement Costs and shall be payable to the Lender upon demand. The Borrowers acknowledge and agree that such expenses may include, but shall not be limited to, any and all out-of-pocket costs and expenses of the Lender's employees and agents in, and when, traveling to any of the Borrowers' facilities.

(d) any event, development or circumstance whereby the financial statements furnished hereunder fail in any material respect to present fairly, in accordance with GAAP, the financial condition and operational results of any of the Borrowers or any of their respective Subsidiaries;

(e) any default under any contract with any Governmental Authority or any event which if not corrected could give rise to a default under any such contract or a termination for convenience;

(f) any judicial, administrative or arbitral proceeding pending against any of the Borrowers or any of their respective Subsidiaries and any judicial or administrative proceeding known by any of the Borrowers to be threatened against any Borrower or any Subsidiary which, if adversely decided, could materially adversely affect the financial condition or operations (present or prospective) of any Borrower or any Subsidiary;

(g) the receipt by any of the Borrowers or any Subsidiary of any notice, claim or demand from any Governmental Authority which alleges that any of the Borrowers or any Subsidiary is in violation of any of the terms of, or has failed to comply with any applicable material Laws regulating its operation and business, including, but not limited to, the Occupational Safety and Health Act and the Environmental Protection Act; and

(h) any other development in the business or affairs of any of the Borrowers or any of their respective Subsidiaries which may be materially adverse; in each case describing in detail satisfactory to the Lender the nature thereof and the action the Borrowers propose to take with respect thereto.

(a) give notice to the Lender immediately upon acquiring knowledge of the presence of any Hazardous Materials or any Hazardous Materials Contamination on any property owned, operated or controlled by any Borrower or for which any Borrower is, or is claimed to be, responsible (provided that such notice shall not be required for Hazardous Materials placed or stored on such property in accordance with applicable Laws in the ordinary course (including, without limitation, quantity) of a Borrower's line of business expressly described in this Agreement), with a full description thereof;

(b) promptly comply with any Laws requiring the removal, treatment or disposal of Hazardous Materials or Hazardous Materials Contamination and provide the Lender with satisfactory evidence of such compliance;

(c) provide the Lender, within thirty (30) days after a demand by the Lender, with a bond, letter of credit or similar financial assurance evidencing to the Lender's satisfaction that the necessary funds are available to pay the cost of removing, treating, and disposing of such Hazardous Materials or Hazardous Materials Contamination and discharging any Lien which may be established as a result thereof on any property owned, operated or controlled by any Borrower or for which any Borrower is, or is claimed to be, responsible; and

(d) as part of the Obligations, defend, indemnify and hold harmless the Lender and its agents, employees, trustees, successors and assigns from any and all claims which may now or in the future (whether before or after the termination of this Agreement) be asserted as a result of the presence of any Hazardous Materials or any Hazardous Materials Contamination on any property owned, operated or controlled by any Borrower for which any Borrower is, or is claimed to be, responsible. Each Borrower acknowledges and agrees that this indemnification shall survive the termination of this Agreement and the Revolving Credit Commitments and the payment and performance of all of the other Obligations.

6.1.13 Disclosure of Significant Transactions. Each of the Borrowers shall deliver to the Lender a written notice describing in detail each transaction by it involving the purchase, sale, lease, or other acquisition or loss or casualty to or disposition of an interest in Fixed or Capital Assets (other than Capital Expenditures permitted by Section 6.2.20 of this Agreement) which exceeds Two Hundred Fifty Thousand Dollars ($250,000.00), said notices to be delivered to the Lender within thirty (30) days of the occurrence of each such transaction.

(b) Net Income. The Borrowers will maintain, on a consolidated basis and tested as of the last day of each of Borrowers' fiscal quarters for the four (4) quarter period ending on that date, consolidated net income (after the payment or provision for payment of income taxes), less the amount of dividends declared in such period of not less than $1.00.

(i) any advance to an officer or employee of any Borrower or any Subsidiary, provided that the aggregate amount of all such advances by all of the Borrowers and their Subsidiaries (taken as a whole) outstanding at any time shall not exceed at any time outstanding the aggregate principal sum of (i) Seven Hundred Fifty Thousand Dollars ($750,000) for all such loans by the Borrower, plus (ii) reasonable advances for anticipated business expenses of employees that would be reimbursed to such employees under such Borrower's expense reimbursement policy, and (b) loans from VSE to Affiliates, not exceeding an aggregate outstanding principal amount at any time of Two Million Dollars ($2,000,000);

(ii) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;

(iii) any investment in Cash Equivalents, which are pledged to the Lender, as collateral and security for the Obligations;

(iv) trade credit extended to customers in the ordinary course of business; and

(v) investments in any Targets pursuant to any Permitted Acquisition.

(a) change the method of accounting employed in the preparation of any financial statements furnished to the Lender under the provisions of Section 6.1.1 (Financial Statements), unless required to conform to GAAP and on the condition that the Borrowers' accountants shall furnish such information as the Lender may request to reconcile the changes with the Borrowers' prior financial statements

(b) change its fiscal year from a year ending on December 31st.

Any written notice of the sale, disposition or other intended action by the Lender with respect to the Collateral which is sent by regular mail, postage prepaid, to the Borrowers at the address set forth in
Section 8.1 (Notices), or such other address of the Borrowers which may from time to time be shown on the Lender's records, at least ten (10) days prior to such sale, disposition or other action, shall constitute commercially reasonable notice to the Borrowers. The Lender may alternatively or additionally give such notice in any other commercially reasonable manner. Nothing in this Agreement shall require the Lender to give any notice not required by applicable Laws.

If any consent, approval, or authorization of any state, municipal or other Governmental Authority or of any other Person or of any Person having any interest therein, should be necessary to effectuate any sale or other disposition of the Collateral, the Borrowers agree to execute all such applications and other instruments, and to take all other action, as may be required in connection with securing any such consent, approval or authorization.

The Borrowers recognize that the Lender may be unable to effect a public sale of all or a part of the Collateral consisting of Investment Property by reason of certain prohibitions contained in the Securities Act of 1933, as amended, and other applicable Federal and state Laws. The Lender may, therefore, in its discretion, take such steps as it may deem appropriate to comply with such Laws and may, for example, at any sale of the Collateral consisting of securities restrict the prospective bidders or purchasers as to their number, nature of business and investment intention, including, without limitation, a requirement that the Persons making such purchases represent and agree to the satisfaction of the Lender that they are purchasing such securities for their account, for investment, and not with a view to the distribution or resale of any thereof. The Borrowers covenant and agree to do or cause to be done promptly all such acts and things as the Lender may request from time to time and as may be necessary to offer and/or sell the securities or any part thereof in a manner which is valid and binding and in conformance with all applicable Laws. Upon any such sale or disposition, the Lender shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral consisting of securities so sold.

(a) request any Account Debtor obligated on any of the Accounts to make payments thereon directly to the Lender, with the Lender taking control of the Proceeds thereof;
(b) compromise, extend or renew any of the Collateral or deal with the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of all or any part of the Collateral;
(d) copy, transcribe, or remove from any place of business of any Borrower or any Subsidiary all books, records, ledger sheets, correspondence, invoices and documents, relating to or evidencing any of the Collateral or without cost or expense to the Lender, make such use of any Borrower's or any Subsidiary's place(s) of business as may be reasonably necessary to administer, control and collect the Collateral;
(e) repair, alter or supply goods if necessary to fulfill in whole or in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals, extensions, discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings to enforce collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange or adjust claims in respect of any of the Collateral or any legal proceedings brought in respect thereof;
(i) endorse or sign the name of any Borrower upon any Items of Payment, certificates of title, Instruments, Investment Property, stock powers, documents, documents of title, financing statements, assignments, notices or other writing relating to or part of the Collateral and on any proof of claim in bankruptcy against an Account Debtor;
(j) clear Inventory through customs in the Lender's or any Borrower's name and to sign and deliver to customs officials powers of attorney in any Borrower's name for such purpose;
(k) notify the Post Office authorities to change the address for the delivery of mail to the Borrowers to such address or Post Office Box as the Lender may designate and receive and open all mail addressed to any of the Borrowers; and
(l) take any other action necessary or beneficial to realize upon or dispose of the Collateral or to carry out the terms of this Agreement.

Borrowers:        VSE Corporation
                  2550 Huntington Avenue
                  Alexandria, Virginia 22303
                  Attention:  R.J. Hannah

Lender:           Citizens Bank of Pennsylvania
                  8521 Leesburg Pike, Suite 405
                  Vienna, Virginia 22182
                  Attention:  Leslie Grizzard

with a copy to:   Troutman Sanders LLP
                  1660 International Drive, Suite 600
                  McLean, Virginia 22102
                  Attention:  Richard M. Pollak, Esq.

By written notice, each party to this Agreement may change the address to which notice is given to that party, provided that such changed notice shall include a street address to which notices may be delivered by overnight courier in the ordinary course on any Business Day.

(a) proceed against any one or more of the Borrowers with or without proceeding against any other Person
(including, without limitation, any one or more of the Guarantors) who may be liable (by endorsement, guaranty, indemnity or otherwise) for all or any part of the Obligations;

(b) proceed against any one or more of the Borrowers with or without proceeding under any of the other Financing Documents or against any Collateral or other collateral and security for all or any part of the Obligations;

(c) without reducing or impairing the obligation of the Borrowers and without notice, release or compromise with any guarantor or other Person liable for all or any part of the Obligations under the Financing Documents or otherwise;

(d) without reducing or impairing the obligations of the Borrowers and without notice thereof:

(i) fail to perfect the Lien in any or all Collateral or to release any or all the Collateral or to accept substitute Collateral;

(ii) approve the making of advances under the Revolving Loan under this Agreement;

(iii) waive any provision of this Agreement or the other Financing Documents;

(iv) exercise or fail to exercise rights of set-off or other rights; or

(v) accept partial payments or extend from time to time the maturity of all or any part of the Obligations.

(a) the validity, legality and enforceability of the remaining provisions shall remain effective and binding on the parties thereto and shall not be affected or impaired thereby;

(b) the obligation to be fulfilled shall be reduced to the limit of such validity;

(c) if such provision or part thereof pertains to repayment of the Obligations, then, at the sole and absolute discretion of the Lender, all of the Obligations of the Borrowers to the Lender shall become immediately due and payable; and

(d) if the affected provision or part thereof does not pertain to repayment of the Obligations, but operates or would prospectively operate to invalidate this Agreement in whole or in part, then such provision or part thereof only shall be void, and the remainder of this Agreement shall remain operative and in full force and effect.

This waiver is knowingly, willingly and voluntarily made by the Borrowers and the Lender, and the Borrowers and the Lender hereby represent that no representations of fact or opinion have been made by any individual to induce this waiver of trial by jury or to in any way modify or nullify its effect. The Borrowers and the Lender further represent that they have been represented in the signing of this Agreement and in the making of this waiver by independent legal counsel, selected of their own free will, and that they have had the opportunity to discuss this waiver with counsel.

By inspecting the Collateral or any other properties of the Borrowers or by accepting or approving anything required to be observed, performed or fulfilled by the Borrowers or to be given to the Lender pursuant to this Agreement or any of the other Financing Documents, the Lender shall not be deemed to have warranted or represented the condition, sufficiency, legality, effectiveness or legal effect of the same, and such acceptance or approval shall not constitute any warranty or representation with respect thereto by the Lender.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, each of the parties hereto have executed and delivered this Business Loan and Security Agreement under their respective seals as of the day and year first written above.

WITNESS/ATTEST:                 VSE CORPORATION

/s/ R. J. Hannah                    /s/ D. M. Ervine
_________________________       By: ____________________________(Seal)
                                    Name: D. M. Ervine
                                    Title: Chairman, President and CEO/COO

WITNESS/ATTEST:                 ENERGETICS INCORPORATED

/s/ R. J. Hannah                    /s/ D. M. Ervine
_________________________       By: ____________________________(Seal)
                                    Name: D. M. Ervine
                                    Title: Chairman of the Board

WITNESS/ATTEST:                 VSE SERVICES INTERNATIONAL, INC.

/s/ R. J. Hannah                    /s/ D. M. Ervine
_________________________       By: ____________________________(Seal)
                                    Name: D. M. Ervine
                                    Title: Chairman of the Board

WITNESS/ATTEST:                 INTEGRATED CONCEPTS AND RESEARCH
                                CORPORATION

/s/ R. J. Hannah                    /s/ D. M. Ervine
_________________________       By: ____________________________(Seal)
                                    Name: D. M. Ervine
                                    Title: Chairman of the Board

WITNESS:                        CITIZENS BANK OF PENNSYLVANIA

/s/ Laurie Louis                    /s/ Leslie Grizzard
_________________________       By:____________________________(Seal)
                                   Name: Leslie Grizzard
                                   Title: Senior Vice President

Schedule 4.1.8          Litigation
Schedule 4.1.11         Indebtedness for Borrowed Money
Schedule 4.1.16         Employee Relations
Schedule 4.1.18         Perfection and Priority of Collateral

BUSINESS LOAN AND SECURITY AGREEMENT                                           1

RECITALS                                                                       1

AGREEMENTS                                                                     1

ARTICLE I DEFINITIONS                                                          1
Section 1.1     Certain Defined Terms.                                         1
Section 1.2     Accounting Terms and Other Definitional Provisions.           19

ARTICLE II THE CREDIT FACILITIES                                              19
Section 2.1     The Revolving Credit Facility.                                19
2.1.1   Revolving Credit Facility.                                            19
2.1.2   Procedure for Making Advances Under the Revolving Loan; Lender
        Protection Loans.                                                     19
2.1.3   Borrowing Base.                                                       20
2.1.4   Borrowing Base Report.                                                21
2.1.5   Revolving Credit Note.                                                21
2.1.6   Mandatory Prepayments of Revolving Loan.                              21
2.1.7   Optional Prepayments of Revolving Loan.                               22
2.1.8   The Collateral Account.                                               22
2.1.9   Revolving Loan Account.                                               22
2.1.10  Revolving Credit Unused Line Fee.                                     23
2.1.11  Optional Reduction of Total Revolving Credit Committed Amount.        23
Section 2.2     The Letter of Credit Facility.                                24
2.2.1   Letters of Credit.                                                    24
2.2.2   Letter of Credit Fees.                                                24
2.2.3   Terms of Letters of Credit; Post-Expiration Date Letters of
        Credit.                                                               24
2.2.4   Procedures for Letters of Credit.                                     25
2.2.5   Payments of Letters of Credit.                                        26
2.2.6   Change in Law; Increased Cost.                                        27
2.2.7   General Letter of Credit Provisions.                                  27
Section 2.3     Interest.                                                     28
2.3.1   General Provisions.                                                   28
2.3.2   Inability to Determine Rate.                                          28
2.3.3   Indemnity.                                                            29
2.3.4   Payment of Interest.                                                  30
Section 2.4     General Financing Provisions.                                 30
2.4.1   Borrowers' Representatives.                                           30
2.4.2   Use of Proceeds of the Loans.                                         32
2.4.3   Field Examination Fees.                                               32
2.4.4   Computation of Interest and Fees.                                     32
2.4.5   Maximum Interest Rate.                                                32
2.4.6   Payments.                                                             32
2.4.7   Liens; Setoff.                                                        33
2.4.8   Requirements of Law.                                                  33
2.4.9   Guaranty.                                                             33
2.4.10  ACH Transactions and Swap Transactions.                               36

ARTICLE III THE COLLATERAL                                                    36
Section 3.1     Debt and Obligations Secured.                                 36
Section 3.2     Grant of Liens.                                               37
Section 3.3     Collateral Disclosure List.                                   37
Section 3.4     Personal Property.                                            37
3.4.1   Investment Property, Chattel Paper, Promissory Notes, etc.            37
3.4.2   Patents, Copyrights and Other Property Requiring Additional Steps
        to Perfect.                                                           38
3.4.3   Government Contracts Requiring Additional Steps to Perfect.           38
Section 3.5     Record Searches.                                              38
Section 3.6     Costs.                                                        38
Section 3.7     Release.                                                      39
Section 3.8     Inconsistent Provisions.                                      39

ARTICLE IV REPRESENTATIONS AND WARRANTIES                                     39
Section 4.1     Representations and Warranties.                               39
4.1.1   Subsidiaries.                                                         39
4.1.2   Good Standing.                                                        39
4.1.3   Power and Authority.                                                  39
4.1.4   Binding Agreements.                                                   40
4.1.5   No Defaults, Violations.                                              40
4.1.6   Compliance with Laws.                                                 40
4.1.7   Investment Company Act.                                               40
4.1.8   Litigation.                                                           40
4.1.9   Financial Condition.                                                  40
4.1.10  Full Disclosure.                                                      41
4.1.11  Indebtedness for Borrowed Money.                                      41
4.1.12  Taxes.                                                                41
4.1.13  ERISA.                                                                41
4.1.14  Title to Properties.                                                  42
4.1.15  Patents, Trademarks, Etc.                                             42
4.1.16  Employee Relations.                                                   42
4.1.17  Presence of Hazardous Materials or Hazardous Materials
        Contamination.                                                        43
4.1.18  Perfection and Priority of Collateral.                                43
4.1.19  Places of Business and Location of Collateral.                        43
4.1.20  Business Names and Addresses.                                         43
4.1.21  Equipment.                                                            43
4.1.22  Inventory.                                                            43
4.1.23  Accounts.                                                             44
4.1.24  Compliance with Eligibility Standards.                                44
4.1.25  Solvency                                                              44
4.1.26  Claims and Investigations.                                            44
4.1.27  Government Contract Obligations.                                      44
4.1.28  Post-closing Financial Statements.                                    45
Section 4.2     Survival; Updates of Representations and Warranties.          45

ARTICLE V CONDITIONS PRECEDENT                                                45
Section 5.1     Conditions to the Initial Advance and Initial Letter
                of Credit.                                                    45
5.1.1   Organizational Documents - Borrowers                                  45
5.1.2   Consents, Licenses, Approvals, Etc.                                   46
5.1.3   Note.                                                                 46
5.1.4   Financing Documents and Collateral.                                   46
5.1.5   Other Documents, Etc.                                                 46
5.1.6   Payment of Fees.                                                      46
5.1.7   Collateral Disclosure List.                                           46
5.1.8   Recordings and Filings.                                               46
5.1.9   Insurance Certificate.                                                47
5.1.10  Landlord's Waivers.                                                   47
Section 5.2     Conditions to all Extensions of Credit.                       47
5.2.1   Compliance.                                                           47
5.2.2   Borrowing Base.                                                       47
5.2.3   Default.                                                              47
5.2.4   Representations and Warranties.                                       47
5.2.5   Adverse Change.                                                       47
5.2.6   Legal Matters.                                                        48

ARTICLE VI COVENANTS OF THE BORROWERS                                         48
Section 6.1     Affirmative Covenants.                                        48
6.1.1   Financial Statements.                                                 48
6.1.2   Reports to SEC and to Stockholders.                                   49
6.1.3   Recordkeeping, Rights of Inspection, Field Examination, Etc.          49
6.1.4   Corporate Existence.                                                  50
6.1.5   Compliance with Laws.                                                 50
6.1.6   Preservation of Properties.                                           50
6.1.7   Line of Business.                                                     51
6.1.8   Insurance.                                                            51
6.1.9   Taxes.                                                                51
6.1.10  ERISA.                                                                51
6.1.11  Notification of Events of Default and Adverse Developments.           52
6.1.12  Hazardous Materials; Contamination.                                   52
6.1.13  Disclosure of Significant Transactions.                               53
6.1.14  Financial Covenants.                                                  53
6.1.15  Collection of Receivables.                                            54
6.1.16  Assignments of Receivables.                                           54
6.1.17  Government Accounts.                                                  54
6.1.18  Notice of Returned Goods, etc.                                        55
6.1.19  Inventory.                                                            55
6.1.20  Insurance With Respect to Equipment and Inventory.                    55
6.1.21  Maintenance of the Collateral.                                        55
6.1.22  Equipment.                                                            56
6.1.23  Defense of Title and Further Assurances.                              56
6.1.24  Business Names; Locations.                                            56
6.1.25  Subsequent Opinion of Counsel as to Recording Requirements.           57
6.1.26  Use of Premises and Equipment.                                        57
6.1.27  Protection of Collateral.                                             57
Section 6.2     Negative Covenants.                                           57
6.2.1   Capital Structure, Merger, Acquisition or Sale of Assets.             57
6.2.2   Subsidiaries.                                                         58
6.2.3   Issuance of Stock.                                                    58
6.2.4   Purchase or Redemption of Securities, Dividend Restrictions.          58
6.2.5   Indebtedness.                                                         58
6.2.6   Investments, Loans and Other Transactions.                            59
6.2.7   Stock of Subsidiaries.                                                59
6.2.8   Liens.                                                                59
6.2.9   Transactions with Affiliates.                                         60
6.2.10  Other Businesses.                                                     60
6.2.11  ERISA Compliance.                                                     60
6.2.12  Prohibition on Hazardous Materials.                                   60
6.2.13  Method of Accounting; Fiscal Year.                                    60
6.2.14  Compensation.                                                         61
6.2.15  Transfer of Collateral.                                               61
6.2.16  Sale and Leaseback.                                                   61
6.2.17  Disposition of Collateral.                                            61
6.2.18  Capital Expenditures                                                  61

ARTICLE VII DEFAULT AND RIGHTS AND REMEDIES                                   61
Section 7.1     Events of Default.                                            61
7.1.1   Failure to Pay.                                                       61
7.1.2   Breach of Representations and Warranties.                             61
7.1.3   Failure to Comply with Covenants.                                     62
7.1.4   Default Under Other Financing Documents or Obligations.               62
7.1.5   Receiver; Bankruptcy.                                                 62
7.1.6   Involuntary Bankruptcy, etc.                                          62
7.1.7   Judgment.                                                             63
7.1.8   Execution; Attachment.                                                63
7.1.9   Default Under Other Borrowings.                                       63
7.1.10  Challenge to Agreements.                                              63
7.1.11  Material Adverse Change.                                              63
7.1.12  Impairment of Position.                                               63
7.1.13  Collateral Inadequacy.                                                63
7.1.14  Change in Ownership.                                                  63
7.1.15  Liquidation, Termination, Dissolution, Change in Management, etc.     64
7.1.16  De-Listing of Stock.                                                  64
7.1.17  Government Default.                                                   64
Section 7.2     Remedies.                                                     64
7.2.1   Acceleration.                                                         64
7.2.2   Further Advances.                                                     64
7.2.3   Uniform Commercial Code.                                              65
7.2.4   Specific Rights With Regard to Collateral.                            65
7.2.5   Application of Proceeds.                                              66
7.2.6   Performance by Lender.                                                67
7.2.7   Other Remedies.                                                       67

ARTICLE VIII MISCELLANEOUS                                                    67
Section 8.1     Notices.                                                      67
Section 8.2     Amendments; Waivers.                                          68
8.2.1   In General.                                                           68
Section 8.3     Cumulative Remedies.                                          68
Section 8.4     Severability.                                                 69
Section 8.5     Successors and Assigns.                                       69
Section 8.6     Continuing Agreements.                                        69
Section 8.7     Enforcement Costs.                                            70
Section 8.8     Applicable Law; Jurisdiction.                                 70
8.8.1   Applicable Law.                                                       70
8.8.2   Submission to Jurisdiction.                                           70
8.8.3   Appointment of Agent for Service of Process.                          71
8.8.4   Service of Process.                                                   71
Section 8.9     Duplicate Originals and Counterparts.                         71
Section 8.10    Headings.                                                     71
Section 8.11    No Agency.                                                    71
Section 8.12    Date of Payment.                                              72
Section 8.13    Entire Agreement.                                             72
Section 8.14    Waiver of Trial by Jury.                                      72
Section 8.15    Liability of the Lender.                                      72
Section 8.16    Indemnification.                                              72

LIST OF EXHIBITS                                                              75

LIST OF SCHEDULES                                                             76

TABLE OF CONTENTS                                                              1



       ________________________________________________________________

BUSINESS LOAN AND SECURITY AGREEMENT

Dated

August 14, 2007

By and Among

VSE CORPORATION,

ENERGETICS INCORPORATED,

VSE SERVICES INTERNATIONAL, INC.

INTEGRATED CONCEPTS AND RESEARCH CORPORATION

as Borrowers,

CITIZENS BANK OF PENNSYLVANIA,

THIS FIRST AMENDMENT TO BUSINESS LOAN AND SECURITY AGREEMENT (this "Agreement") made as of the 21st day of May, 2008 by and among VSE CORPORATION, a corporation organized under the laws of the State of Delaware ("VSE"), ENERGETICS INCORPORATED, a corporation organized under the laws of the State of Maryland ("Energetics"), VSE SERVICES INTERNATIONAL, INC., a corporation organized under the laws of the State of Delaware ("VSI"), INTEGRATED CONCEPTS AND RESEARCH CORPORATION, a corporation organized under the laws of the District of Columbia ("ICRC"), G&B SOLUTIONS, INC., a corporation organized under the laws of the Commonwealth of Virginia ("G&B"), jointly and severally (each of VSE, Energetics, VSI, ICRC and G&B a "Borrower"; and collectively, the "Borrowers") and CITIZENS BANK OF PENNSYLVANIA, a bank chartered in the State of Pennsylvania, its successors and assigns (the "Lender").

B. The Loan is currently evidenced by that certain Revolving Promissory Note, dated August 14, 2007, from VSE, Energetics, VSI, and ICRC in favor of the Lender in the maximum principal amount of Twenty-Five Million Dollars ($25,000,000) (as amended from time to time, is hereinafter called the "Note").

C. Pursuant to that certain Additional Borrower Joinder Supplement dated April 14, 2008 by and among VSE, Energetics, VSI, ICRC, G&B and Lender, G&B was added as a party to each of the Financing Documents.

D. The Borrowers have requested that the Lender increase the maximum principal amount of the Loan and revise other provisions of the Business Loan Agreement and the Lender has agreed on the condition, among others, that this Agreement be executed and delivered by the Borrowers to the Lender.

E. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Business Loan Agreement.

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

1. Recitals. The parties hereto acknowledge and agree that the above Recitals are true and correct in all respects and that the same are incorporated herein and made a part hereof by reference.

2. Definitions.
(a) The following defined terms set forth in Section 1.1 of the Business Loan Agreement are amended and restated in their entirety as follows:

"Fees" means the collective reference to each fee payable to the Lender, under the terms of this Agreement or under the terms of any of the other Financing Documents, including, without limitation, the Revolving Credit Unused Line Fees, Letter of Credit Fees and the Field Examination Fees.

"Leverage Ratio" means the ratio of Total Funded Debt on a specified date to EBITDA for the four (4) quarter period then ending on such date.

"LIBOR rate" means the London interbank offered rate of major banks for deposits in United States Dollars for a designated period (e.g. one, two, three or six months) as set forth at Telerate Page 3750 at approximately 11:00 a.m. London time on the third Euro-Dollar Business Day preceding the date when the LIBOR-based Rate will be become effective; provided, however, that if such information is not available on Telerate, the "LIBOR rate" shall be determined from information supplied to the Lender by a nationally recognized reporting service for similar information acceptable to the Lender.

"LIBOR Rate Margin" means the amount determined to be in effect from time to time using the chart set forth below. The initial LIBOR Rate Margin will be determined at the Supplemental Closing Date using the Leverage Ratio calculated by reference to the consolidated financial statements of VSE most recently received by the Lender. Commencing on the date following the Supplemental Closing Date when the Lender receives the consolidated financial statements of VSE in accordance with this Agreement and on each such date thereafter, the LIBOR Rate Margin will be reset based on the Leverage Ratio calculated by reference to such consolidated financial statements.

LIBOR Rate Margin              Leverage Ratio
-----------------              --------------
      1.25%                 Less than 1.0 to 1.0
      1.75%                 Equal to or greater than 1.0 to 1.0 but
                            less than 2.0 to 1.0
      2.00%                 Equal to or greater than 2.0 to 1.0

In the event VSE fails to provide such consolidated financial statements when due, the LIBOR Rate Margin shall be 2.00% until such time as such consolidated financial statements are submitted as required by this Agreement.

"Obligations" means all present and future, whether now existing or contemplated or hereafter arising, of any one or more of the Borrowers to the Lender under, arising pursuant to, in connection with and/or on account of the provisions of this Agreement, each Note, each Security Document, and/or any of the other Financing Documents, the Loans, and/or any of the Facilities including, without limitation, the principal of, and interest on, each Note, late charges, the Fees, Enforcement Costs, and prepayment fees (if any), letter of credit reimbursement obligations, letter of credit fees or fees charged with respect to any guaranty of any letter of credit; also means all other present and future indebtedness, duties, obligations, and liabilities, whether now existing or contemplated or hereafter arising, of any one or more of the Borrowers to the Lender or its Affiliates of any nature whatsoever, including, without limitation, any indebtedness, duties, obligations, and liabilities, under or in connection with, any Swap Transaction or Bank Products, regardless of whether such indebtedness, duties, obligations, and liabilities be direct, indirect, primary, secondary, joint, several, joint and several, fixed or contingent; and also means any and all renewals, extensions, substitutions, amendments, restatements and rearrangements of any such indebtedness, duties, obligations, and liabilities.

"Prime Rate Margin" means zero percent (0.0%).

"Revolving Credit Expiration Date" means May 21, 2010.
(b) The following defined terms are added in alphabetical order to Section 1.1 of the Business Loan Agreement:

"Bank Products" shall mean any (i) commercial credit card, purchase card and merchant card services, or other commercial credit card services or facilities, (ii) cash management services or facilities, (iii) foreign investment or exchange products or services or (iv) products under any non- speculative hedging agreement or arrangement, extended to any Borrower by Lender or any Affiliate of Lender, from time to time.

"EBITDA" means as to Borrowers for any period of determination thereof, the sum of (a) net profit (or loss) determined in accordance with GAAP consistently applied, plus (b) interest expense and income tax provisions for such period, plus (c) depreciation and amortization of assets for such period, plus (d) non-cash stock compensation, plus (e) non-cash non-recurring charges, as approved in writing by the Lender prior to the due date of the Compliance Certificate as required under Sections 6.1.1(a) (Annual Statements and Certificates) and 6.1.1(b) (Quarterly Statements and Certificates), minus any non-cash gains to the extent included in net income. EBITDA shall be determined on a rolling basis, based on the four (4) quarter period then ending. EBITDA from any Permitted Acquisitions will be included on a pro forma basis.

"Fixed Charge Coverage Ratio" means as to Borrowers for any period of determination thereof the ratio of (a) the sum of (i) EBITDA, plus
(ii) operating lease payments (including rent), minus (iii) cash taxes, minus
(iv) dividends, minus (v) share repurchases to (b) Fixed Charges.

"Fixed Charges" means as to Borrowers for any period of determination thereof, the sum of (i) scheduled or required principal payments on all Indebtedness for Borrowed Money of Borrowers, plus (ii) all operating lease payments (including rent), plus (iii) cash interest expense, plus (iv) any earn out payments of Borrowers.

"Supplemental Closing Date" means May 21, 2008.

"Total Funded Debt" means as to Borrowers for any period of determination thereof the sum of (i) all Indebtedness for Borrowed Money of Borrowers, plus
(ii) any accrued earn out payments of Borrowers (net of any Cash Equivalents for purposes of calculating accrued earn out payments of Borrowers).

"Unused Fee Margin" means that per annum percentage rate determined by Lender from time to time in accordance with the chart set forth below.

Revolving Credit Unused Line Fee          Leverage Ratio
--------------------------------          --------------
            0.10%                    Less than 1.0 to 1.0
            0.15%                    Equal to or greater than 1.0
                                     to 1.0 but less than 2.0 to 1.0
            0.20%                    Equal to or greater than 2.0 to 1.0

3. Revolving Credit Facility. Section 2.1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:

2.1.1 Revolving Credit Facility.

Subject to and upon the provisions of this Agreement, the Lender establishes a revolving credit facility in favor of the Borrowers. The aggregate of all advances under the Revolving Credit Facility is sometimes referred to in this Agreement collectively as the "Revolving Loan". The Lender's "Revolving Credit Committed Amount" is $35,000,000. During the Revolving Credit Commitment Period, any or all of the Borrowers may request advances under the Revolving Credit Facility in accordance with the provisions of this Agreement; provided that after giving effect to any Borrower's request the aggregate outstanding principal balance of the Revolving Loan and all Letter of Credit Obligations would not exceed the lesser of (i) the Revolving Credit Committed Amount or (ii) the Borrowing Base.

Unless sooner paid, the unpaid Revolving Loan, together with interest accrued and unpaid thereon and all other Obligations shall be due and payable in full on the Revolving Credit Expiration Date. Interest on the Revolving Loan shall be payable on each Interest Payment Date.

4. Revolving Credit Unused Line Fee. Section 2.1.10 of the Loan Agreement is hereby amended and restated in its entirety as follows:

2.1.10 Revolving Credit Unused Line Fee.

Borrowers shall pay to Lender a revolving credit facility fee (collectively, the "Revolving Credit Unused Line Fees" and individually, a "Revolving Credit Unused Line Fee") in an amount equal to the Unused Fee Margin multiplied by the average daily unused and undisbursed portion of the Revolving Credit Committed Amount in effect from time to time accruing during each calendar quarter. For purposes of clarification, the face amount of outstanding Letters of Credit shall be considered usage of the Revolving Credit Committed Amount. The accrued and unpaid portion of the Revolving Credit Unused Line Fee shall be paid by Borrowers to Lender on the last day of each calendar quarter, commencing on the first such date following the Supplemental Closing Date, and on the Revolving Credit Termination Date.

5. Financial Statements. Section 6.1.1 of Business Loan Agreement is hereby amended as follows:

(a) Section 6.1.1(c) is hereby amended and restated in its entirety as follows:
(c) Quarterly Reports. The Borrowers shall furnish to the Lender within twenty (20) days after the end of each fiscal quarter, a Borrowing Base Report, and a report containing the following information:

(i) a detailed aging schedule of all Receivables by Account Debtor, in such detail, and accompanied by such supporting information, as the Lender may from time to time reasonably request;

(ii) a detailed aging of all accounts payable by supplier, in such detail, and accompanied by such supporting information, as the Lender may from time to time reasonably request; and

(iii) such other information as the Lender may reasonably request.

(b) Section 6.1.1(g) is hereby added its entirety immediately after Section 6.1.1(f) as follows:

(g) Annual Projections. The Borrowers shall furnish to the Lender as soon as available, but in no event less than forty-five (45) days after the end of each fiscal year, management prepared annual financial projections on a consolidated basis for the Borrowers for the immediately succeeding fiscal year.

6. Financial Covenants. Section 6.1.14 of the Business Loan Agreement is hereby amended and restated in its entirety as follows:

6.1.14 Financial Covenants.

(a) Leverage Ratio. Borrowers will maintain, on a consolidated basis and tested as of the last day of each of Borrowers' fiscal quarters, commencing on March 31, 2008, for the four (4) quarter period ending on that date, a Leverage Ratio of not greater than 3.00 to 1.00.

(b) Fixed Charge Coverage Ratio. Borrowers will maintain, on a consolidated basis and tested as of the last day of each of Borrowers' fiscal quarters, commencing on March 31, 2008, for the four (4) quarter period ending on that date, a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00.

(c) Profitability. Borrowers will maintain, on a consolidated basis and tested as of the last day of each of Borrowers' fiscal quarters, commencing on March 31, 2008, for the four (4) quarter period ending on that date, net income, minus cash dividends declared by Borrowers during such period, in excess of $1.00.

7. Exhibits to Loan Agreement. Exhibit B (Revolving Credit Note) to the Business Loan Agreement is hereby replaced in its entirety with the form attached hereto as Exhibit A.

8. Conditions Precedent. This Agreement shall be deemed effective by Lender upon the satisfaction by Borrowers of each of the following:
(a) the due execution and delivery to Lender of this Agreement by each party hereto;

(b) the due execution and delivery to Lender of that certain Amended and Restated Revolving Promissory Note, dated as of the date hereof, by each Borrower in favor of Lender;

(c) the due execution and delivery to Lender of the Collateral Disclosure List by each party thereto;

(d) a legal opinion letter from Borrowers' counsel, Arent Fox, dated as of the date hereof;

(e) proof that the Borrowers have paid all fees, costs and expenses to the Lender in connection with this Agreement, including, but not limited to, the Lender's attorneys fees; and

(f) such other information, instruments, opinions, documents, certificates and reports as the Lender may deem necessary.

9. Representations. The Borrowers hereby confirm that:

(a) The representations, warranties and covenants set forth in Articles IV and VI of the Business Loan Agreement, are true and correct as of the date hereof; and

(b) The Borrowers have no defenses, rights of setoff, claims, counterclaims, or causes of action of any kind or nature whatsoever against the Lender, or any agent, attorney, legal representative, predecessor-in-interest, or affiliate of the Lender, directly or indirectly in any manner connected with, pursuant to, or by virtue of the Obligations or any of the Financing Documents, and TO THE EXTENT ANY SUCH DEFENSES, RIGHTS OF SETOFF, CLAIMS, COUNTERCLAIMS, OR CAUSES OF ACTION EXIST, SUCH DEFENSES, RIGHTS, CLAIMS, COUNTERCLAIMS, AND CAUSES OF ACTION ARE HEREBY FOREVER WAIVED, DISCHARGED AND RELEASED.

10. Counterparts. This Agreement may be executed in any number of duplicate originals or counterparts, each of which duplicate original or counterpart shall be deemed to be an original and all taken together shall constitute one and the same instrument.

11. Financing Documents; Governing Law; Etc. This Agreement is one of the Financing Documents defined in the Business Loan Agreement and shall be governed and construed in accordance with the laws of the Commonwealth of Virginia. The headings and captions in this Agreement are for the convenience of the parties only and are not a part of this Agreement.

12. Acknowledgments. Each Borrower hereby confirms to Lender the enforceability and validity of each of the Financing Documents. In addition, each Borrower hereby agrees to the execution and delivery of this Agreement and the terms and provisions, covenants or agreements contained in this Agreement shall not in any manner release, impair, lessen, modify, waive or otherwise limit the joint and several liability and obligations of the Borrowers under the terms of any of the Financing Documents, except as otherwise specifically set forth in this Agreement.

13. Modifications. This Agreement may not be supplemented, changed, waived, discharged, terminated, modified or amended, except by written instrument executed by the parties.

[signatures are on the following page.]

IN WITNESS WHEREOF, each of the parties hereto have executed and delivered this Agreement under their respective seals as of the day and year first written above.

                                BORROWERS:

WITNESS/ATTEST:                 VSE CORPORATION

/s/ R. J. Hannah                   /s/ M. A. Gauthier
_________________________       By:________________________(Seal)
                                   Name: Maurice A. Gauthier
                                   Title: CEO, President, and COO

WITNESS/ATTEST:                 ENERGETICS INCORPORATED

/s/ R. J. Hannah                   /s/ D. M. Ervine
_________________________       By:________________________(Seal)
                                   Name: D. M. Ervine
                                   Title: Chairman of the Board

WITNESS/ATTEST:                 VSE SERVICES INTERNATIONAL, INC.

/s/ R. J. Hannah                   /s/ D. M. Ervine
_________________________       By:________________________(Seal)
                                   Name: D. M. Ervine
                                   Title: Chairman of the Board

WITNESS/ATTEST:                 INTEGRATED CONCEPTS AND RESEARCH
                                CORPORATION

/s/ R. J. Hannah                   /s/ D. M. Ervine
_________________________       By:________________________(Seal)
                                   Name: D. M. Ervine
                                   Title: Chairman of the Board

WITNESS:                        G&B SOLUTIONS, INC.

/s/ R. J. Hannah                   /s/ D. M. Ervine
_________________________       By:________________________(Seal)
                                   Name: D. M. Ervine
                                   Title: Chairman of the Board


                                LENDER:
WITNESS:                        CITIZENS BANK OF PENNSYLVANIA

                                   /s/ Owen Burman
_________________________       By:_________________________(Seal)
                                   Name: Owen Burman
                                   Title: Vice President

Exhibit 10.3
SEVERANCE AND MUTUAL PROTECTION AGREEMENT

This Severance and Mutual Protection Agreement ("Agreement") is by and between VSE Corporation ("Employer") and Thomas M. Kiernan ("Employee"). Employer and Employee will be referred to collectively as the "Parties."

Employer is in the business of creating, sustaining, and improving the systems, equipment, and processes of government through core competencies in legacy systems sustainment, obsolescence management, prototyping, reverse engineering, technology insertion, supply chain management, foreign military sales, management consulting, and process improvement, and providing innovative services and technologies including program management to help its customers succeed in the engineering, energy, environment, information technology, infrastructure and defense services markets (collectively, the "Employer Business"). Employee acknowledges that in connection with Employee's employment with Employer, Employee will have access to and will obtain knowledge about Corporate Opportunities and Confidential Information of Employer as defined below; and will develop relationships with actual and potential customers, contractors, vendors, suppliers and employees. Employer acknowledges that Employee holds a key position with Employer and Employer wishes to provide an incentive for Employee to remain employed and protection in the event Employee is terminated without Cause or resigns for a Good Reason as defined below.

In consideration for Employee's initial and/or continued employment with Employer, and for the promises contained in this Agreement, and for other good and valuable consideration, the Parties agree to the following terms:

1. Duty of Loyalty: Employee agrees that during Employee's employment with Employer, Employee has a duty of undivided loyalty to Employer, and Employee will not engage in any conduct that violates this duty of loyalty or that presents a conflict between Employee's own personal interests and the interests of Employer.

2. Corporate Opportunities: During Employee's employment with Employer, Employee promptly will inform Employer in writing of all opportunities he becomes aware of that, given the nature of Employer Business, reasonably would be of interest to Employer for consideration ("Corporate Opportunities"). During and after Employee's employment with Employer, Employee will not directly or indirectly use, disclose, divert, exploit, trade upon, solicit, participate in or otherwise benefit from any of such Corporate Opportunities for himself or any other party, unless Employer expressly forever disclaims any interest in such opportunity in a written document signed by an authorized representative of Employer.

3. Nondisclosure: Except as required by law or as authorized in the performance of Employee's duties for Employer and for the benefit of Employer, during and after employment with Employer, Employee will not directly or indirectly disclose or use any Confidential Information. For the purposes of this Agreement, "Confidential Information" means information about Employer and/or its parents, subsidiaries and affiliated entities (collectively "Affiliates") and its and their business, operations, finances, personnel and customers, that is not in the public domain and that Employee obtained in the course of employment with Employer and includes without limitation information constituting or relating to trade secrets; Corporate Opportunities; strategic plans; marketing plans; financial information; bid information; contract information; personnel information; actual and potential customers; customer lists; carrier information; contact lists; passwords, source codes and other similar information. Information does not lose its protection as Confidential Information if it was disclosed by Employee or any other person in violation of an obligation not to disclose such information.

4. Nonsolicitation of Employees: During Employee's employment with Employer and for a period of two (2) years thereafter, Employee will not, for the benefit of Employee or any other person or entity besides Employer, whether as an employee, consultant, independent contractor, officer, director, shareholder (except as a shareholder of a publicly traded company in which Employee owns less than 5% of the stock), owner, member, partner or in any other capacity, directly or indirectly solicit for hire, any person who then is, an employee of Employer; The foregoing sentence will only prohibit such conduct where the purpose or effect of such conduct is directly or indirectly to encourage, assist, permit, facilitate, result in, or cause the person (aa) to cease, curtail or refrain from entering into such a relationship with Employer; or (bb) to enter into such a relationship with any other person engaged in a Competing Business. For the purposes of this Agreement, a "Competing Business" is any enterprise engaged in the Employer Business. Such provision will not prohibit assisting with the hiring of Employer's employee(s) if such employee(s) respond to a public job posting, provided Employee does not direct Employer's employee(s) to the existence of such job posting.

5. Third Party Board membership. Notwithstanding paragraph 1 above, Employer shall permit Employee to serve as a member of the Board of Directors of an unrelated company, provided such membership (1) is not with a company which substantially is in the same Employer Business and is commonly viewed as a competitor of Employer and (2) such membership does not pose a conflict of interest with Employee's duty of loyalty to the Employer. Employee shall request written consent in writing to serve on such a Board and Employer shall grant reasonable consent in writing.

6. Reasonableness and Remedies: Employee acknowledges that the provisions of this Agreement are reasonable and necessary for the legitimate business interests of Employer. Employee further agrees that in the event Employee materially breaches any provision of this Agreement, Employer may suffer irreparable injury that could not be adequately remedied by money damages alone, and thus Employer would be entitled to seek and receive appropriate injunctive relief in addition to all other relief that a court may deem proper, including without limitation money damages.

7. Employment Status: Nothing in this Agreement will guarantee that Employee will be employed by Employer for a definite period of time, or alter the at-will employment relationship between the Parties. Either party may terminate their relationship at any time for any lawful reason with or without Cause or Good Reason as defined below.

8. Severance Benefits: If at any time during Employee's employment with Employer, Employer terminates Employee's employment without Cause or Employee resigns for a Good Reason, Employer will provide Employee with a severance benefit equal to continuation of Employee's base salary for twelve months (12) months from the date of termination plus the pro-rated value up to the date of termination of any additional compensation plans for which Employee was then a participant, including but not limited to, the Corporate Performance Bonus Plan, Deferred Supplemental Compensation Plan, the Restricted Stock Plan (with automatic vesting as of the date of termination) and all accrued annual leave earned during the period up to such termination date, less applicable withholdings and deductions, payable in installments in accordance with Employer's payroll practices (the "Severance Benefits"). Employee's entitlement to the Severance Benefits will be conditional upon (i) Employee's execution of a separation agreement and mutual general release mutually agreed upon by the Parties; and (ii) Employee's continuing compliance with all of the terms of this Agreement.

For the purposes of this Agreement, "Cause" shall mean Employee has (A) engaged in gross negligence or willful misconduct in the performance of Employee's duties; (B) willfully engaged in conduct that Employee knows or, based on facts known to Employee, should know is materially injurious to Employer or any of its Affiliates; (C) materially breached any provision of this Agreement; (D) been convicted of, or entered a plea bargain or settlement admitting guilt for, fraud, embezzlement, or any other felony (but specifically excluding felonies involving a traffic violation); or (E) materially violated any substantial policy of Employer, but in each case only if Employer has provided written notice to Employee within 90 days after the condition providing the basis for such Cause first exists and if such Cause has not been corrected or cured by Employee (if cureable) within 30 days after Employee has received written notice from Employer of Employer's intent to terminate Employee's employment for Cause and specifying in detail the basis for such termination.

For the purposes of this Agreement, "Good Reason" means (A) a material diminution in Employee's base salary rate; (B) a material diminution in Employee's authority, duties or responsibilities; (C) a material change in the geographic location at which Employee must perform Employee's duties; or (D) any other material breach of this Agreement by Employer, but in each case only if Employee has provided written notice to Employer within 90 days after the condition providing the basis for such Good Reason first exists and if such Good Reason has not been corrected or cured by Employer (if cureable) within 30 days after Employer has received written notice from Employee of Employee's intent to terminate Employee's employment for Good Reason and specifying in detail the basis for such termination.

9. Change in Control. **Note: Would like to discuss what compensation benefits there are, if any, for Officers if there is a change in control.**

10. Severability: The invalidity of any provision of this Agreement will not affect the validity of any remaining provisions. The court will modify any invalid provisions to make them valid to the maximum extent permitted by law.

11. Choice of Law: This Agreement will be governed by the law of the Commonwealth of Virginia, without reference to the principles of conflicts of law in that state.

12. Waiver: The failure of either party to enforce any provision of this Agreement shall not in any way be construed as a waiver of such provision in that instance or as to any future violation of that provision, nor will it affect the non-breaching party's right to enforce that provision or any other provision of the Agreement.

13. Successors and Assigns: This Agreement will be binding upon and will inure to the benefit of each of the Parties and their respective successors and assigns. Employer may assign its rights and obligations under this Agreement to its successors and assigns. Employee may not assign Employee's rights and obligations under this Agreement without the prior written consent of Employer.

14. Section 409A: To the extent that such requirements are applicable, this Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code ("Section 409A") and shall be interpreted and administered in accordance with that intent. If any provision of the Agreement would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the conflict. Further, for purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying the deferral election rules under Section 409A and the exclusion from Section 409A for certain short-term deferral amounts. Anything to the contrary herein notwithstanding, in the event that any such benefit or payment is deemed to not comply with Section 409A, Employer and Employee agree to renegotiate in good faith any such benefit or payment so that either (i) Section 409A will not apply or (ii) compliance with Section 409A will be achieved. Notwithstanding the above, if Executive qualifies as a "specified employee," as defined in Section 409A, and incurs a separation from service for any reason other than death and becomes entitled to a distribution under this Agreement, then to the extent required by Section 409A, no distribution otherwise payable to Executive during the first six (6) months after the date of such separation from service, shall be paid to Executive until the date which is one day after the date which is six (6) months after the date of such separation from service (or, if earlier, the date of Executive's death).

15. Entire Agreement: This Agreement represents the entire agreement of the parties, and supersedes all other agreements, discussions or understandings of the parties concerning the subject matter. This Agreement may not be amended except in a written amendment signed by both Parties.

The Parties have duly signed this Agreement, intending to be legally bound.

EMPLOYEE                                      VSE CORPORATION


Thomas M. Kiernan                             /s/ M. A. Gauthier
______________________________                _________________________________
Print Name                                    Signature

/s/ Thomas M. Kiernan                         M. A. Gauthier, CEO/President/COO
_____________________________                 _________________________________
Sign Name                                     Printed Name and Title

November 6, 2008                              November 7, 2008
_____________________________                 _________________________________
Date                                          Date