Document:

Untitled Document

Exhibit
  10.3

AMENDED
  AND RESTATED

  EMPLOYMENT AGREEMENT

          THIS
  AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered
  into as of the 30th day of March, 2004, by and between MFA MORTGAGE INVESTMENTS,
  INC., a Maryland corporation (“MFA”), and RONALD A. FREYDBERG, an
  individual residing at 3 Red Roof Drive, Rye Brook, New York 10573 (the “Executive”).

W
  I T N E S S E T H :

WHEREAS,
  MFA and the Executive entered into an employment agreement, effective as of
  August 1, 2002 (the “Employment Agreement”); 

WHEREAS,
  MFA and the Executive desire to extend the period of employment set forth in
  the Employment Agreement to July 31, 2006 on the same terms and conditions as
  are otherwise set forth in the Employment Agreement; and 

WHEREAS,
  the Executive wishes to continue serving MFA and MFA wishes to secure the continued
  exclusive services of the Executive under the terms and conditions described
  below. 

NOW
  THEREFORE, in consideration of the foregoing premises and the mutual agreements
  herein contained, the parties hereto agree to amend and restate the Employment
  Agreement in its entirety to read as follows: 

     1.
  Term of Employment. 

          (a)
  MFA hereby employs the Executive, and the Executive hereby accepts employment
  with MFA, in the positions and with the duties and responsibilities as set forth
  in Paragraph 2 below for the Term of Employment, subject to the terms and
  conditions of this Agreement. 

          (b)
  The Term of Employment under this Agreement shall include the Initial Term and
  each Renewal Term. The Initial Term commenced as of August 1, 2002 and shall
  continue until July 31, 2006. The Term of Employment shall automatically renew
  for a one-year period (each such renewal, a “Renewal Term”) at the
  end of the Initial Term and each Renewal Term, unless either party shall give
  notice to the other not less than six months prior to the end of the Initial
  Term or any Renewal Term, as the case may be, of his or its intent not to renew
  such Initial Term or Renewal Term, as the case may be. 

     2.
  Position; Duties and Responsibilities. 

          (a)
  During the Term of Employment, the Executive shall be employed as Executive
  Vice President of MFA, reporting to the President and Chief Executive Officer
  of MFA (the “CEO”), with such duties and day-to-day management responsibilities
  as are customarily performed by persons holding such offices at similarly situated
  mortgage REITs and such other duties as may be mutually agreed upon between
  the Executive and the CEO. 

          (b)
  During the Term of Employment, the Executive shall, without additional compensation,
  also (i) serve on the board of directors of, serve as an officer of, and/or
  perform such executive and consulting services for, or on behalf of, such subsidiaries
  or affiliates of MFA as the CEO and/or the Board of Directors of MFA (the “Board
  of Directors”) may, from time to time, request. MFA and such subsidiaries
  and affiliates are hereinafter referred to, collectively, as the “Company.”
  For purposes of this Agreement, the term “affiliate” shall have the
  meaning ascribed thereto in Rule 12b-2 under the Securities Exchange Act of
  1934, as amended (the “Act”). 

          (c)
  During the Term of Employment, the Executive shall serve MFA faithfully, diligently
  and to the best of his ability and shall devote substantially all of his time
  and efforts to his employment and the performance of his duties under this Agreement.
  Nothing herein shall preclude the Executive from engaging in charitable and
  community affairs and managing his personal financial and legal affairs, so
  long as such activities do not materially interfere with his carrying out his
  duties and responsibilities under this Agreement. 

  1

 

     3.
  Compensation. 

          (a)
  Base Salary. During the Term of Employment, the Executive shall be entitled
  to receive an annualized base salary (the "Base Salary”) equal to
  the product of .20% times MFA’s Tangible Net Worth; provided, that the
  maximum aggregate amount of Base Salary payable to the Executive in any 12-month
  period from August 1st of one year through July 31st of the next year shall
  not exceed $750,000. The Base Salary shall be calculated semi-annually on June
  30 and December 31 of each year (each, a “Calculation Period”) and
  shall be paid during the subsequent six-month period commencing August 1 and
  February 1, respectively (each, a “Payment Period”), in accordance
  with MFA’s normal payroll practices. For example, if the Base Salary determined
  as of June 30, 2002 is $688,000, approximately one-twelfth of that amount will
  be paid to the Executive each month during the Payment Period commencing on
  August 1, 2002 and ending on January 31, 2003, and payments of the Base Salary
  for the Payment Period commencing on February 1, 2003 and ending on July 31,
  2003 will be based on the calculation of Tangible Net Worth as of December 31,
  2002. If MFA’s annualized Return on Equity for any Calculation Period shall
  be less than 10%, then the Base Salary for the next following Payment Period
  shall be reduced (i) to the product of .19% times MFA’s Tangible Net Worth
  if the annualized Return on Equity is less than 10% but equal to or greater
  than 5%, and (ii) to the product of .18% times MFA’s Tangible Net Worth
  if the annualized Return on Equity is less than 5%. An illustration of the method
  of calculating the Base Salary and Return on Equity is provided in Schedule
  I hereto. 

          (b)
  Performance Bonus. The Executive shall be eligible to receive an annual
  performance bonus in such amount, in such manner and at such time as shall be
  determined by the Compensation Committee of the Board of Directors or the Board
  of Directors, as the case may be. 

          (c)
  Long-Term Incentive Program. The Executive shall be eligible to receive
  such stock option, restricted stock or dividend equivalent rights grants as
  the Compensation Committee of the Board of Directors or the Board of Directors,
  as the case may be, shall deem appropriate. 

          (d)
  Annual Review. The Compensation Committee of the Board of Directors or
  the Board of Directors, as the case may be, shall, at least annually, review
  the Executive’s entire compensation package to determine whether it continues
  to meet MFA’s compensation objectives. 

     4.
  Employee Benefit Programs and Fringe Benefits. 

          During
  the Term of Employment, the Executive shall be entitled to five weeks of vacation
  each calendar year and to participate in all executive incentive and employee
  benefit programs of MFA now or hereafter made available to MFA’s senior
  executives or salaried employees generally, as such programs may be in effect
  from time to time. MFA shall reimburse the Executive for any and all necessary,
  customary and usual business expenses, properly receipted in accordance with
  MFA’s policies, incurred by Executive in connection with his employment.

     5.
  Termination of Employment. 

          (a)
  Termination Due to Death or Disability. If the Executive's employment
  is terminated during the Term of Employment by reason of the Executive’s
  death or Disability, the Executive’s Term of Employment shall terminate
  automatically without further obligations to the Executive, his legal representative
  or his estate, as the case may be, under this Agreement except for (i) any compensation
  earned but not yet paid, including and without limitation, any amount of Base
  Salary accrued or earned but unpaid and any other payments payable to the Executive
  pursuant to Paragraph 5(e) below, which amounts shall be promptly paid in a
  lump sum to the Executive, his legal representative or his estate, as the case
  may be, and (ii) continued payment on a monthly basis of the Executive’s
  then current Base Salary, as calculated pursuant to Paragraph 3(a) above, for
  a period of one year following the date of such termination, which shall be
  paid to the Executive, his legal representative or his estate, as the case may
  be. In the event of such termination due to his Disability, Executive’s
  health insurance coverage shall be continued at MFA’s expense for the duration
  of such Disability; provided, that, if such coverage cannot be provided under
  MFA’s health insurance policy for the duration of such Disability, such
  coverage or the cost of comparable coverage shall be provided by MFA until the
  Executive’s attainment of age 65 or such later date through which coverage
  is permissible under MFA’s health insurance policy. 

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          (b)
  Termination Without Cause or for Good Reason. In the event the Executive's
  employment is terminated by MFA without Cause including by notice of MFA’s
  determination not to renew the Initial Term or any Renewal Term pursuant to
  Paragraph 1(b)) or by the Executive for Good Reason, unless any such termination
  is preceded by the Executive’s giving notice of his determination not to
  renew the Initial Term or any Renewal Term pursuant to Paragraph 1(b), the Executive
  shall be entitled to both continued payments of his then current Base Salary
  and continued health insurance coverage at MFA’s expense, until the later
  to occur of (i) the expiration of the Term of Employment, or (ii) the first
  anniversary of such termination of employment, such Base Salary being payable
  at the same time such amounts would have been payable to the Executive had his
  employment not terminated. 

          (c)
  Termination by MFA for Cause or Voluntary Termination by the Executive.
  In the event the Executive's employment is terminated by MFA for Cause, or is
  terminated by the Executive on his own initiative for other than a Good Reason
  (including pursuant to Paragraph 1(b)), the Executive shall be entitled to any
  compensation earned but not yet paid, including and without limitation, any
  amount of Base Salary accrued or earned but unpaid and any other payments payable
  to the Executive pursuant to Paragraph 5(e) below, as of the date of termination.

          (d)
  Termination Related to Change in Control. In the event of (1) the termination
  of the Executive's employment by MFA without Cause that occurs both within two
  months before and in anticipation of a Change in Control, (2) the resignation
  of his employment by the Executive for any reason within three months following
  a Change in Control, or (3) the termination of the Executive’s employment
  by MFA other than for Cause or the Employee’s resignation of his employment
  for Good Reason within twelve months following a Change in Control,

	(i) 	 	 MFA
shall pay to Executive in a lump sum,  within 30 days following the  termination  of
employment,  an amount equal to  300% of the sum of (a) the  Executive's  then  current
Base Salary and (b) the  Executive's  bonus for the  immediately  preceding year; 

	(ii) 	 	 all
of the Executive's  outstanding stock options shall immediately vest in full and become
exercisable for a period of  90 days from the date of  termination  but in no event
beyond the date on which any such option  would have expired had  the Executive's
employment not terminated; and 

	(iii) 	 	 the
Executive  shall continue to participate in all health,  life  insurance,  retirement and
other benefit  programs at  MFA's expense for the balance of the Term of  Employment,  to
the same extent as though the  Executive's  employment had  not terminated. 

The
  Executive, in his sole and absolute discretion, may elect to reduce any such
  payment in order to avoid imposition of the excise tax under Section 4999 of
  the Internal Revenue Code of 1986, as amended. 

          (e)
  Other Payments. Upon the termination of the Executive's employment, in
  addition to the amounts payable under any Paragraph above, the Executive shall
  be entitled to receive the following: 

	(i) 	 	 any
annual bonus earned during one or more preceding years but not paid; 

	(ii) 	 	 any
vested deferred compensation (including any interest accrued on such deferred amounts); 

	(iii) 	 	 reimbursement
for reasonable business expenses incurred but not yet reimbursed by MFA; and 

	(iv) 	 	 any
other  benefits to which the  Executive  or his legal  representative  may be entitled
under  applicable  plans and  programs of MFA, as provided in Paragraph 4 above. 

          (f)
  No Mitigation; No Offset. In the event of any termination of the Executive's
  employment under this Agreement, he shall be under no obligation to seek other
  employment or otherwise in any way to mitigate the amount of any payment provided
  for in this Paragraph 5, and there shall be no offset against amounts due him
  under this Agreement on account of any remuneration attributable to any subsequent
  employment that he may obtain. 

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     6.
  Definitions. 

          For
  purposes of this Agreement, the following terms shall be defined as set forth
  below: 

          (a)
  Cause. “Cause” shall mean the Executive's (i) conviction, or
  entry of a guilty plea or a plea of nolo contendre with respect to, a felony,
  a crime of moral turpitude or any crime committed against the Company, (ii)
  engagement in willful misconduct, willful or gross negligence, or fraud, embezzlement
  or misappropriation relating to significant amounts, in each case in connection
  with the performance of his duties under this Agreement; (iii) failure to adhere
  to the lawful directions of the CEO and/or the Board of Directors that are reasonably
  consistent with his duties and position provided for herein; (iv) breach in
  any material respect of any of the provisions of Paragraph 7 of this Agreement
  resulting in material and demonstrable economic injury to MFA; (v) chronic or
  persistent substance abuse that materially and adversely affects his performance
  of his duties under this Agreement; or (vi) breach in any material respect of
  the terms and provisions of this Agreement resulting in material and demonstrable
  economic injury to MFA. Notwithstanding the foregoing, (i) the Executive shall
  be given written notice of any action or failure to act that is alleged to constitute
  Cause (a “Default”), and an opportunity for 20 business days from
  the date of such notice in which to cure such Default, such period to be subject
  to extension in the discretion of the CEO or, in his absence, the Board of Directors;
  and (ii) regardless of whether the Executive is able to cure any Default, the
  Executive shall not be deemed to have been terminated for Cause without (x)
  reasonable prior written notice to the Executive setting forth the reasons for
  the decision to terminate the Executive for Cause, (y) an opportunity for the
  Executive, together with his counsel, to be heard by the CEO or, in his absence,
  the Board of Directors, and (z) delivery to the Executive of a notice of termination
  approved by said CEO or, in his absence, the Board of Directors, stating his
  or its good faith opinion that the Executive has engaged in actions or conduct
  described in the preceding sentence, which notice specifies the particulars
  of such action or conduct in reasonable detail; provided, however, MFA may suspend
  the Executive with pay until such time as his right to appear before the CEO
  or the Board of Directors, as the case may be, has been exercised, so long as
  such appearance is within two (2) weeks of the date of suspension.

          (b)
  Change in Control. A "Change in Control" shall mean the occurrence
  of any one of the following events: 

	(i) 	 	 any
“person,” as such term is used in Sections  13(d) and 14(d) of the Act (other
than MFA, any of its affiliates or any  trustee,  fiduciary or other person or entity
holding  securities under any employee benefit plan or trust of MFA or any  of its
affiliates)  together with all affiliates and  “associates” (as such term is
defined in Rule 12b-2 under the Act)  of such person,  shall become the “beneficial
owner” (as such term is defined in Rule 13d-3 under the Act),  directly or
indirectly,  of  securities  of MFA  representing  30% or more of either  (A) the
combined  voting  power of MFA's then  outstanding  securities having the right to vote
in an election of the Board of Directors  (“voting  securities”) or (B)  the
then  outstanding  shares of common  stock of MFA  (“Shares”)  (in  either
such case  other  than as a result of an  acquisition of securities directly from MFA); or 

	(ii) 	 	 persons
who, as of the  effective  date of MFA's Second  Amended and Restated 1997 Stock Option
Plan,  constitute  MFA's  Board of Directors (the “Incumbent  Directors”) cease
for any reason,  including,  without limitation,  as a result of a  tender  offer,  proxy
contest,  merger or  similar  transaction,  to  constitute  at least a  majority  of the
Board of  Directors,  provided  that any person  becoming a Director of MFA  subsequent
to the  effective  date whose  election or  nomination for election was approved by a
vote of at least a majority of the Incumbent  Directors shall, for purposes of  the Plan,
be considered an Incumbent Director; or 

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	(iii)
      	 	
        there shall occur (A) any consolidation or merger of MFA or any subsidiary
        where the shareholders of MFA, immediately prior to the consolidation
        or merger, would not, immediately after the consolidation or merger, beneficially
        own (as such term is defined in Rule 13d-3 under the Act), directly or
        indirectly, shares representing in the aggregate 50% or more of the voting
        securities of the corporation issuing cash or securities in the consolidation
        or merger (or of its ultimate parent corporation, if any), (B) any sale,
        lease, exchange or other transfer (in one transaction or a series of transactions
        contemplated or arranged by any party as a single plan) of all or substantially
        all of the assets of MFA or (C) any plan or proposal for the liquidation
        or dissolution of MFA. 

	 	 	 
	 	 	Notwithstanding
      the foregoing, a “Change in Control” shall not be deemed to have
      occurred for purposes of the foregoing clause (i) solely as the result of
      an acquisition of securities by MFA which, by reducing the number of Shares
      or other voting securities outstanding, increases (x) the proportionate
      number of Shares beneficially owned by any person to 30% or more of the
      Shares then outstanding or (y) the proportionate voting power represented
      by the voting securities beneficially owned by any person to 30% or more
      of the combined voting power of all then outstanding voting securities;
      provided, however, that, if any person referred to in clause (x) or (y)
      of this sentence shall thereafter become the beneficial owner of any additional
      Shares or other voting securities (other than pursuant to a stock split,
      stock dividend, or similar transaction), then a “Change in Control”
      shall be deemed to have occurred for purposes of this Paragraph 6(b).
    

          (c)
  Disability. “Disability” shall mean the Executive's inability
  for a period of six consecutive months, to render substantially the services
  provided for in this Agreement by reason of mental or physical disability, whether
  resulting from illness, accident or otherwise, other than by reason of chronic
  or persistent abuse of any substance (such as narcotics or alcohol).

          (d)
  Good Reason. “Good Reason” shall mean: 

	(i) 	 	 a
material diminution in the Executive's title, duties or responsibilities; 

	(ii) 	 	 relocation
of the Executive's place of employment without his consent outside the New York City
metropolitan area; 

	(iii) 	 	 the
failure of MFA to pay within thirty (30) business days any payment due from MFA; 

	(iv) 	 	 the
failure of MFA to pay  within a  reasonable  period  after the date when  amounts  are
required  to be paid to the  Executive under any benefit programs or plans; or 

	(v) 	 	 the
failure by MFA to honor any of its material obligations herein. 

          (e)
  Non Cash Items. “Non
  Cash Items”
  shall mean depreciation, non cash merger expenses, gains/losses on asset sales,
  and impairment charges. 

          (f)
  Return on Equity. “Return
  on Equity”
  shall mean six months GAAP net income plus (minus) certain Non Cash Items divided
  by average Tangible Net Worth, annualized. 

          (g)
  Tangible Net Worth. “Tangible
  Net Worth”
  shall mean stockholder equity less goodwill. 

     7.
  Covenant Not To Compete. 

          The
  Executive will not, without the prior written consent of MFA, manage, operate,
  control or be connected as a stockholder (other than as a holder of shares publicly
  traded on a stock exchange or the NASDAQ National Market System, provided that
  the Executive shall not own more than five percent of the outstanding shares
  of any publicly traded company) or partner with, or as an officer, director,
  employee or consultant of, any mortgage REIT for a period of one year following
  termination of his employment with MFA. During such one-year period, the Executive
  shall not solicit any employees of the Company to work for any mortgage REIT.
  Except as otherwise

5

 

 required
  by law, the Executive shall keep confidential all materials, files, reports,
  correspondence, records and other documents (collectively the “Company
  Materials”) used, prepared or made available to him in connection with
  his employment by MFA and which have not otherwise been made available to the
  public, and upon termination of his employment shall return such Company Materials
  to MFA. The Executive acknowledges that MFA may seek injunctive relief or other
  specific enforcement of its rights under this Paragraph. 

     8.
  Indemnification. 

          MFA
  shall indemnify the Executive to the fullest extent permitted by Maryland law
  in effect as of the date hereof in connection with the Executive’s duties
  with the Company, against all costs, expenses, liabilities and losses (including,
  without limitation, attorneys’ fees, judgments, fines, penalties, ERISA
  excise taxes and amounts paid in settlement) actually and reasonably incurred
  by the Executive in connection with an action, suit or proceeding.

     9.
  Assignability; Binding Nature. 

          This
  Agreement shall inure to the benefit of MFA and the Executive and their respective
  successors, heirs (in the case of the Executive) and assigns. No rights or obligations
  of MFA under this Agreement may be assigned or transferred by MFA except that
  any such rights or obligations may be assigned or transferred pursuant to a
  merger or consolidation in which MFA is not the continuing entity, or the sale
  or liquidation of all or substantially all of the assets of MFA, provided that
  the assignee or transferee is the successor to all or substantially all of the
  assets of MFA and such assignee or transferee assumes the liabilities, obligations
  and duties of MFA, as contained in this Agreement, either contractually or as
  a matter of law. This Agreement shall not be assignable by the Executive.

     10.
  Representation. 

          MFA
  represents and warrants that it is fully authorized and empowered to enter into
  this Agreement and that its entering into this Agreement and the performance
  of its obligations under this Agreement will not violate any agreement between
  MFA and any other person, firm or organization or any law or governmental regulation.

     11.
  Entire Agreement. 

This
  Agreement contains the entire agreement between MFA and the Executive concerning
  the subject matter hereof and supersedes all prior agreements, understandings,
  discussions, negotiations and undertakings, whether written or oral, between
  them with respect thereto. 

     12.
  Amendment or Waiver. 

          This
  Agreement cannot be changed, modified or amended without the consent in writing
  of both the Executive and MFA. No waiver by either MFA or the Executive at any
  time of any breach by the other party of any condition or provision of this
  Agreement shall be deemed a waiver of a similar or dissimilar condition or provision
  at the same or at any prior or subsequent time. Any waiver must be in writing
  and signed by the Executive or an authorized officer of MFA, as the case may
  be. 

     13.
  Severability. 

          In
  the event that any provision or portion of this Agreement shall be determined
  to be invalid or unenforceable for any reason, in whole or in part, the remaining
  provisions of this Agreement shall be unaffected thereby and shall remain in
  full force and effect to the fullest extent permitted by law.

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     14.
  Reasonableness. 

          To
  the extent that any provision or portion of this Agreement is determined to
  be unenforceable by a court of law or equity, that provision or portion of this
  Agreement shall nevertheless be enforceable to the extent that such court determines
  is reasonable. 

     15.
  Survivorship. 

          The
  respective rights and obligations of the parties hereunder shall survive any
  termination of this Agreement to the extent necessary to the intended preservation
  of such rights and obligations. 

     16.
  Governing Law. 

     This
  Agreement and all rights thereunder, and any controversies or disputes arising
  with respect thereto, shall be governed by and construed and interpreted in
  accordance with the laws of the State of New York, applicable to agreements
  made and to be performed entirely within such State, without regard to conflict
  of laws provisions thereof that would apply the law of any other jurisdiction.

     17.
  Notices. 

          Any
  notice given to either party shall be in writing and shall be deemed to have
  been given when delivered personally or sent by certified or registered mail,
  postage prepaid, return receipt requested, duly addressed to the party concerned,
  if to MFA, at its principal office, and if to the Executive, at the address
  of the Executive shown on MFA’s records or at such other address as such
  party may give notice of. 

     18.
  Headings. 

          The
  headings of the paragraphs contained in this Agreement are for convenience only
  and shall not be deemed to control or affect the meaning or construction of
  any provision of this Agreement. 

     19.
  Counterparts. 

          This
  Agreement may be executed in two or more counterparts. 

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          IN
  WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
  first written above. 

	 	MFA
      MORTGAGE INVESTMENTS, INC.
	 	 	 
	 	By: 	/s/ Stewart
      Zimmerman
	 	Name:
       	Stewart Zimmerman
	 	Title:
       	President and
      Chief Executive Officer
	 	 	 
	 	 	/s/ Ronald
      A. Freydberg
	 	 	Ronald A. Freydberg

8Exhibit 10.1

                             EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made and entered into as of March 10, 2004,
by and between VSE Corporation, a Delaware corporation ("Employer"), and Thomas
G. Dacus ("Employee");

     WHEREAS, Employee currently is employed by Employer as Director of the
Federal Group,

     WHEREAS, Employee has rendered many years of good and valuable service to
the Employer and has contributed greatly to Employer' s growth and success;

     WHEREAS, Employer wishes to induce Employee to relocate to the Washington,
DC area and remain in Employer's employ to prevent the significant loss which
Employer would incur if Employee were to leave and to enter the employment of a
competitor;

     WHEREAS, in the current business climate of takeovers and acquisitions,
Employee may be concerned about the continuation of his employment and his
status and responsibilities if a Change in Control (as defined below) occurs,
and Employer is concerned that Employee may be approached by others with
employment opportunities;

     WHEREAS, Employer desires to ensure that, if a Change in Control appears
possible, Employee will be in a secure position from which to objectively engage
in any potential deliberations or negotiations respecting such Change in Control
without fear of any direct or implied threat to employment, status and
responsibilities; and

     WHEREAS, Employee desires to have the foregoing assurances;

     NOW, THEREFORE, in consideration of the mutual promises contained herein,
and for other good and valuable consideration, the adequacy of which is hereby
acknowledged, Employer and Employee, each intending to be legally bound, agree
as follows:

     1.   Term.    The term of Employee's employment hereunder shall commence on
          the date hereof and shall continue until December 31, 2006-, except
          as otherwise provided in Section 7. If the term of Employee's
          employment hereunder shall have continued until December 31, 2006,
          thereafter, such term of Employee's employment hereunder shall be
          deemed to be renewed automatically, on the same terms and conditions
          contained herein, for successive periods of one year each, unless
          and until Employee or the Employer, at least 90 days prior to the
          expiration of the original term or any such extended term, shall
          give written notice to the Employer of intent not to renew the term
          of Employee's employment hereunder. All references herein to the
          "Term" refer to the original term of Employee's employment hereunder
          and all extensions thereof.

     2.   Duties

          (a)  Offices

               During the Term, Employee shall serve as Employer's Director
               of the Federal Group. Employer agrees that Employee will be
               assigned only duties of the type, nature and dignity normally
               assigned to the Group Directors of a corporation of the size,
               stature and nature of Employer.  During the Term, Employee
               shall have, at a minimum, the same perquisites of office as he
               had on the date hereof, and he shall report to the president
               and chief executive officer.

          (b)  Full-Time Basis

               During the Term, Employee shall devote, on a full-time basis,
               his services, skills and abilities to his employment
               hereunder, excepting periods of vacation, illness or
               Disability (as defined below), and excepting any pursuits
               which do not materially interfere with duties hereunder or
               present a conflict of interest with the interests of Employer
               or of any subsidiary thereof ("Subsidiary").

     3.   Compensation

          (a)  Salary

               During the Term, as compensation for services rendered by
               Employee hereunder, Employer shall pay to Employee a base
               salary at the rate of not less than his current annual rate,
               payable in installments in accordance with Employer's policy
               governing salary payments to senior officers generally ("Base
               Salary"). Effective January 1 of every year during the Term,
               Employee's compensation, including Base Salary, will be
               subject to review.

               (b)  Performance Bonus

               Except as otherwise provided in Section 7, in addition to the
               Base Salary, Employee shall be eligible for an annual
               performance bonus as determined by the Board or its
               Compensation Committee ("Performance Bonus"). Any Performance
               Bonus payable pursuant to this Section 3(b) shall be paid
               within 60 days after the end of the fiscal year to which such
               Performance Bonus relates.

          (c)  Other Compensation Plans or Arrangements

               During the Term, Employee shall also be eligible to
               participate in all other currently existing or subsequently
               implemented compensation or benefit plans or arrangements
               available generally to other officers or senior officers of
               Employer, including Employer's "Deferred Supplemental
               Compensation Plan," ESOP/401(k), and any stock grant, stock
               option, stock purchase or similar stock plans or arrangements.

          (d)  Tax Withholdings

               Employer shall withhold from Employee's compensation hereunder
               and pay over to the appropriate governmental agencies all
               payroll taxes, including income, social security, and
               unemployment compensation taxes, required by the federal,
               state and local governments with jurisdiction over Employer.

     4.   Benefits. During the Term, Employee shall be entitled to such
          comparable fringe benefits and perquisites as may be provided to any
          or all of Employer's senior officers pursuant to policies
          established from time to time by the Board. These fringe benefits
          and perquisites shall include holidays, group health insurance,
          short-term and long-term disability insurance, and life insurance,
          vehicle allowances, and supplemental executive health care benefits.
          Also, during the Term, Employee shall be entitled to 30 days paid
          leave per annum and to accrue unused leave from year to year and to
          be reimbursed for the costs of physical examinations up to $1,000
          per annum.

     5.   Expenses and Other Perquisites. Employer shall reimburse Employee
          for all reasonable and proper business expenses incurred by him
          during the Term in the performance of his duties hereunder, in
          accordance with Employer's customary practices for senior officers,
          and provided such business expenses are reasonably documented. Also,
          during the Term, Employer shall continue to provide Employee with an
          office and suitable office fixtures, telephone services, and
          secretarial assistance of a nature appropriate to Employee's
          position and status.

     6.   Exclusive Services, Confidential Information, Business
          Opportunities and Non-Solicitation

          (a)  Exclusive Services

               (i)  During the Term, Employee shall at all times devote his
                    full-time attention, energies, efforts and skills to
                    Employer's business and shall not, directly or indirectly,
                    engage in any other business activity, whether or not for
                    profit, gain or other pecuniary advantages, without the
                    Board's written consent provided that such prior consent
                    shall not be required with respect to (1) business
                    interests that neither compete with Employer or any
                    Subsidiaries nor interfere with Employee's duties and
                    obligations hereunder, and (2) Employee's charitable,
                    eleemosynary, philanthropic or professional association
                    activities.

               (ii) During the Term, Employee shall not, without the Board's
                    prior written consent, directly or indirectly, either as
                    an officer, director, employee, agent, advisor,
                    consultant, principal, stockholder, partner, owner or in
                    any other capacity, on Employee's own behalf or
                    otherwise, in any way engage in, represent, be connected
                    with or have a financial interest in, any business which
                    is, or to his knowledge, is about to become, engaged in
                    the business of providing engineering, management,
                    energy or environmental services to the United States
                    Government or any department, agency, or instrumentality
                    thereof or any state or local governmental agency or to
                    any person, corporation or other entity (collectively a
                    "Person") with which Employer or any Subsidiary is
                    currently or has previously done business or any
                    subsequent line of business developed by Employee or any
                    Subsidiary during the term. Notwithstanding the
                    foregoing, Employee shall be permitted to own passive
                    investments in publicly held companies provided that
                    such investments do not exceed five percent of any such
                    company's outstanding equity.

          (b)  Confidential Information

               During the Term and for the first 24 consecutive months after
               the termination of the Term, Employee shall not disclose or
               use, directly or indirectly, any Confidential Information (as
               defined below). For the purposes of this Agreement,
               "Confidential Information" shall mean all information
               disclosed to Employee, or known by him as a consequence of or
               through his employment with Employer or any Subsidiary, where
               such information is not generally known in the trade or
               industry or was regarded or treated as confidential by
               Employer or any Subsidiary, and where such information refers
               or relates in any manner whatsoever to the business
               activities, processes, services or products of Employer or its
               Subsidiaries. Confidential Information shall include business
               and development plans (whether contemplated, initiated or
               completed), information with respect to the development of
               technical and management services, business contacts, methods
               of operation, results of analysis, business forecasts,
               financial data, costs, revenues, and similar information. Upon
               termination of Term, Employee shall immediately return to
               Employer all of property of Employer or any Subsidiary and
               Confidential Information which is in tangible form, and all
               copies thereof.

          (c)  Business Opportunities

               (i)  During the Term, Employee shall promptly disclose to
                    Employer each business opportunity of a type which,
                    based upon its prospects and relationship to the
                    existing businesses of Employer or any Subsidiary,
                    Employer or any Subsidiary might reasonably consider
                    pursuing. Upon termination of the Term, regardless of
                    the circumstances thereof, Employer shall have the
                    exclusive right to participate in or undertake any such
                    opportunity on its own behalf without any involvement of
                    Employee.

               (ii) During the Term, Employee shall refrain from engaging in
                    any activity, practice or act which conflicts with, or
                    has the potential to conflict with, the interests of
                    Employer or its Subsidiaries, and he shall avoid any
                    acts or omissions which are disloyal to, or competitive
                    with Employer or its Subsidiaries.

          (d)  Non-Solicitation of Employees

               During the Term and for the first 24 consecutive months after
               termination of the Term, Employee shall not, except in the
               course of duties hereunder, directly or indirectly, induce or
               attempt to induce or otherwise counsel, advise, ask or
               encourage any person to leave the employ of Employer or any
               Subsidiary, or solicit or offer employment to any person who
               was employed by Employer or any Subsidiary at any time during
               the twelve-month period preceding the solicitation or offer.

          (e)  Covenant Not To Compete

               (i)  During the period of his employment and for a one (1)
                    year period commencing with the effective date of the
                    termination of Employee's employment with the Company
                    for any reason and under any circumstances, Employee
                    shall not, without the prior written consent of the
                    Company, alone or with others, whether as an owner,
                    stockholder, partner, lender, investor, employee,
                    consultant, contractor, subcontractor or in any other
                    capacity, directly or indirectly:  (a) engage, within a
                    fifty (50) mile radius of any office of the Company, in
                    any business activity that is competitive with the
                    business of the Company or otherwise in conflict with or
                    contrary to the interests of the Company, including
                    without limitation, the business of performing
                    engineering and management services for the United
                    States Government, and services within the tele-
                    communications technologies industries, all as such
                    businesses and services are more particularly described
                    in the then most recent "VSE Corporation Annual Report",
                    (b) solicit any person or entity who then is or was at
                    any time during Employee's employment, a customer of the
                    Company (including without limitation any person or
                    entity who was at any time during Employee's employment
                    solicited to be a customer of the Company where Employee
                    was directly or indirectly involved in such
                    solicitation) to cease doing business as to curtail
                    business with the Company, or (c) solicit any person who
                    then is or was in the preceding six (6) months an
                    employee or independent contractor of the Company to end
                    his or her relationship with the Company or to work for
                    any other person or entity as an employee or independent
                    contractor.

               (ii) For purposes of this Agreement, Employee shall be deemed
                    to engage in competition with Employer if he shall
                    directly or indirectly, either individually or as a
                    stockholder, director, officer, partner, consultant,
                    owner, employee, agent, or in any other capacity,
                    consult with or otherwise assist any person or entity
                    engaged in providing technical and management services
                    to any person or entity which Employer or any
                    Subsidiary, during the Term, has developed or is working
                    to develop.  Notwithstanding anything herein to the
                    contrary, if Employer is in material breach of this
                    Agreement, the provisions of this Section 6 shall not
                    apply.

          (f)  Employee Acknowledgment

               Employee hereby agrees and acknowledges that the restrictions
               imposed upon by the provisions of this Section 6 are fair and
               reasonable considering the nature of Employer's business, and
               are reasonably required for Employer's protection.

          (g)  Invalidity

               If a court of competent jurisdiction or an arbitrator shall
               declare any provision or restriction contained in this Section
               6 as unenforceable or void, the provisions of this Section 6
               shall remain in full force and effect to the extent not so
               declared to be unenforceable or void, and the court may modify
               the invalid provision to make it enforceable to the maximum
               extent permitted by law.

          (h)  Specific Performance

               Employee agrees that if Employee breaches any of the
               provisions of this Section 6, the remedies available at law to
               Employer would be inadequate and in lieu thereof, or in
               addition thereto, Employer shall be entitled to appropriate
               equitable remedies, including specific performance and
               injunctive relief.  Employee agrees not to enter into any
               agreement, either written or oral, which may conflict with
               this Agreement, and Employee authorizes Employer to make known
               the terms of Sections 6 and 7 hereof to any Person, including
               future employers of Employee.

     7.   Termination

          (a)  By Employer

               (i)  Termination for Cause

                    Employer may for Cause (as defined below) terminate the
                    Term at any time by written notice to Employee.  For
                    purposes of this Agreement, the term "Cause" shall mean
                    any one or more of the following:  (1) conduct by
                    Employee which is materially illegal or fraudulent or
                    contrary to Company policy; (2) the breach or violation
                    by Employee of any of the material provisions of this
                    Agreement, provided that Employee must first be given
                    notice by the President or the Board of the alleged
                    breach or violation and 30 days to cure said alleged
                    breach or violation; (3) Employee's use of illegal drugs
                    or abuse of alcohol or authorized drugs which impairs
                    Employee's ability to perform duties hereunder, provided
                    that Employee must be given notice by the President/CEO
                    of such impairment and 60 days to cure the impairment;
                    (4) Employee's knowing and willful neglect of duties or
                    negligence in the performance of duties which materially
                    affects Employer's or any Subsidiary's business,
                    provided that Employee must first be given notice by the
                    President/CEO or the Board of such alleged neglect or
                    negligence and 30 days to cure said alleged neglect or
                    negligence. If a termination occurs pursuant to clause
                    (1) above, the date on which the Term is terminated (the
                    "Termination Date") shall be the date Employee receives
                    notice of termination and, if a termination occurs
                    pursuant to clauses (2), (3) or (4) above, the
                    Termination Date shall be the date on which the
                    specified cure period expires. In any event, as of the
                    Termination Date (in the absence of satisfying the
                    alleged breach or violation within the applicable cure
                    period), Employee shall be relieved of all duties
                    hereunder and Employee shall not be entitled to the
                    accrual or provision of any compensation or benefit,
                    after the Termination Date but Employee shall be
                    entitled to the provision of all compensation and other
                    benefits that shall have accrued as of the Termination
                    Date, including Base Salary, Performance Bonuses, paid
                    leave benefits, Deferred Compensation Units, Deferred
                    Supplemental Compensation to the extent permitted by the
                    plans, and reimbursement of incurred business expenses.

               (ii) Termination Without Cause

                    Employer may, in its sole discretion, without Cause,
                    terminate the Term at any time by providing Employee
                    with (a) 60 days' prior notice thereof and (b) on or
                    prior to the Termination Date, a lump sum severance
                    compensation payment equal to one (1) times the total
                    amount of Employee's Annual Base Salary payable
                    hereunder, based upon the amount in effect as of the
                    effective Termination Date. In such event, Employee
                    shall not be entitled to the accrual or provision of any
                    other compensation or benefit after the Termination Date
                    other than (a) the medical and hospitalization benefits
                    for the first 18 months after the Termination Date or
                    longer if permitted under Employer's policies and
                    procedures; (b) the provision of all compensation and
                    other benefits that shall have accrued as of the
                    Termination Date, including Base Salary, Performance
                    Bonus, paid leave benefits, Deferred Compensation Units,
                    Deferred Supplemental Compensation and reimbursements of
                    incurred expenses; and (c) all stock options or similar
                    rights to acquire capital stock granted by Employer to
                    Employee shall automatically become vested and
                    exercisable in whole or in part.  It is understood and
                    agreed that the expiration or non-renewal of the Term by
                    Employer shall not be considered a termination without
                    Cause for the purposes of this Agreement.

          (b)  Death or Disability

               The Term shall be terminated immediately and automatically
               upon Employee's death or "Disability." The term "Disability"
               shall mean Employee's inability to perform all of the
               essential functions of his position hereunder for a period of
               26 consecutive weeks or for an aggregate of 150 work days
               during any 12-month period by reason of illness, accident or
               any other physical or mental incapacity, as may be permitted
               by applicable law. Employee's capability to continue
               performance of Employee's duties hereunder shall be determined
               by a panel composed of two independent medical doctors
               appointed by the Board and one appointed by the Employee or
               designated representative. If the panel is unable to reach a
               decision, the matter will be referred to arbitration in
               accordance with Section 8. In the event of Employee's death or
               Disability for any period of six consecutive months, Employee
               (or designated beneficiary) will be paid his Base Salary then
               in effect for one full year following the date of death or
               disability.

          (c)  By Employee

               (i)  Employee may, in his sole discretion, without cause,
                    terminate the Term at any time upon 60 days' written
                    notice to Employer. If Employee exercises such
                    termination right, Employer may, at its option, at any
                    time after receiving such notice from Employee, relieve
                    Employee of all duties and terminate the Term at any
                    time prior to the expiration of said notice period, it
                    being understood that such termination would not be
                    considered a termination without Cause pursuant to
                    Section 7(a)(ii) above. If the Term is terminated by
                    Employee or Employer pursuant to this Section 7(c)(i),
                    Employee shall not be entitled to any further Base
                    Salary or the accrual or provision of any compensation
                    or benefits after the Termination Date, except standard
                    medical and hospitalization benefits in accordance with
                    Employer's policy.

               (ii) If, during the Term, a Change of Control (as defined
                    below) occurs, Employee may, in his sole discretion,
                    terminate the Term upon 30 days' notice to Employer. If
                    Employee exercises such termination right, Employer may,
                    at its option, at any time after receiving such notice
                    from Employee, relieve Employee of all duties hereunder
                    and terminate the Term at any time prior to the
                    expiration of said notice period, and such termination
                    shall not be considered a termination without Cause
                    pursuant to Section 7(a)(ii) above. However, if this
                    Agreement is terminated by Employee or Employer pursuant
                    to this Section 7(c)(ii), Employee shall be entitled to
                    (a) payment on or prior to the Termination Date of a
                    lump sum severance compensation payment equal to one (1)
                    times the total amount of Employee's Annual Base Salary
                    payable hereunder, based on the amount in effect as of
                    the Termination Date; (b) continue the medical and
                    hospitalization benefits in accordance with Employer's
                    policy and to payment of all compensation and other
                    benefits that shall have accrued as of the Termination
                    Date, as described in Section 7(a)(ii)(l); and (c) to
                    the automatic vesting and exercisability in whole or in
                    part of all stock options or similar rights to acquire
                    capital stock granted by Employer to Employee; provided
                    that Employee shall not be entitled, after the
                    Termination Date to the accrual or provision of any
                    other compensation payable hereunder, including the
                    Performance Bonus.

          (d)  Change of Control

               For purposes of this Section 7, a "Change of Control" shall be
               deemed to have occurred upon the happening of any of the
               following events:

               (i)  any "person," including a "group," as such terms as
                    defined in Sections 13(d) and 14(d) of the Securities
                    Exchange Act of 1934, as amended, and the rules
                    promulgated thereunder (collectively the "Exchange
                    Act"), other than a trustee or other fiduciary holding
                    voting securities of Employer ("Voting Securities")
                    under any Employer-sponsored benefit plan, becomes the
                    beneficial owner, as defined under the Exchange Act,
                    directly or indirectly, whether by purchase or
                    acquisition or agreement to act in concert or otherwise,
                    of 30% or more of the outstanding Voting Securities;

               (ii) a cash tender or exchange offer is completed for such
                    amount of Voting Securities which, together with the
                    Voting Securities then beneficially owned, directly or
                    indirectly, by the offeror (and affiliates thereof)
                    constitutes 40% or more of the outstanding Voting
                    Securities;

               (iii)except in the case of a merger or consolidation in which
                    (a) Employer is the surviving corporation and (b) the
                    holders of Voting Securities immediately prior to such
                    merger or consolidation beneficially own, directly or
                    indirectly, more than 50% of the outstanding Voting
                    Securities immediately after such merger or
                    consolidation (there being excluded from the number of
                    Voting Securities held by such holders, but not from the
                    outstanding Voting Securities, any Voting Securities
                    received by affiliates of the other constituent
                    corporation(s) in the merger or consolidation in
                    exchange for stock of such other corporation),
                    Employer's shareholders approve an agreement to merge,
                    consolidate, liquidate, or sell all or substantially all
                    of Employer's assets; or

               (iv) two or more directors are elected to the Board without
                    having previously been nominated and approved by the
                    members of the Board incumbent on the day immediately
                    preceding such election. For purposes of this Section 7,
                    "affiliate" of a person or another entity shall mean a
                    person or other entity that directly or indirectly
                    controls, is controlled by, or is under common control
                    with the person or other entity specified.

          (e)  No Duty to Mitigate

               If Employee is entitled to the compensation and other benefits
               provided under Sections 7(a)(ii) or (c)(ii), Employee shall
               have no obligation to seek employment to mitigate damages
               hereunder.

     8.   Arbitration.   Whenever a dispute arises between the parties
          concerning this Agreement or any of the obligations hereunder, or
          Employee's employment generally, Employer and Employee shall use
          their best efforts to resolve the dispute by mutual agreement. If
          any dispute cannot be resolved by Employer and Employee, it shall be
          submitted to arbitration to the exclusion of all other avenues of
          relief and adjudicated pursuant to the American Arbitration
          Association's Rules for Employment Dispute Resolution then in
          effect. The decision of the arbitrator must be in writing and shall
          be final and binding on the parties, and judgment may be entered on
          the arbitrator's award in any court having jurisdiction thereof. The
          arbitrator's authority in granting relief to Employee shall be
          limited to an award of compensation, benefits and unreimbursed
          expenses as described in Sections 3, 4, and 5 above, and to the
          release of Employee from the provisions of Section 6 and the
          arbitrator shall have no authority to award other types of damages
          or relief to Employee, including consequential or punitive damages.
          The arbitrator Shall also have no authority to award consequential
          or punitive damages to Employer for violations of this Agreement by
          Employee. The expenses of the arbitration shall be borne by the
          losing party to the arbitration and the prevailing party shall be
          entitled to recover from the losing party all of its own costs and
          attorneys' fees with respect to the arbitration. Nothing in this
          Section 8 shall be construed to derogate Employer's rights to seek
          legal and equitable relief in a court of competent jurisdiction as
          contemplated by Section 6(h).

     9.   Non-Waiver.    It is understood and agreed that one party's failure at
          any time to require the performance by the other party of any of the
          terms, provisions, covenants or conditions hereof shall in no way
          affect the first party's right thereafter to enforce the same, nor
          shall the waiver by either party of the breach of any term,
          provision, covenant or condition hereof be taken or held to be a
          waiver of any succeeding breach.

     10.  Severability.  If any provision of this Agreement conflicts with
          the law under which this Agreement is to be construed, or if any
          such provision is held invalid or unenforceable by a court of
          competent jurisdiction or any arbitrator, such provision shall be
          deleted from this Agreement and the Agreement shall be construed to
          give full effect to the remaining provision thereof.

     11.  Survivability. Unless otherwise provided herein, upon termination
          of the Term, the provisions of Sections 6(b), (d) and (e) shall
          nevertheless remain in full force and effect.

     12.  Governing Law. This Agreement shall be interpreted, construed and
          governed according to the laws of the Commonwealth of Virginia,
          without regard to the conflict of law provisions thereof.

     13.  Construction.  The paragraph headings and captions contained in
          this Agreement are for convenience only and shall not be construed
          to define, limit or affect the scope or meaning of the provisions
          hereof. All references herein to Sections shall be deemed to refer
          to Sections of this Agreement.

     14.  Entire Agreement.  This Agreement contains and represents the entire
          agreement of Employer and Employee and supersedes all prior
          agreements, representations or understandings, oral or written,
          express or implied with respect to the subject matter hereof. This
          Agreement may not be modified or amended in any way unless in
          writing signed by each of Employer and Employee. No representation,
          promise or inducement has been made by either Employer or Employee
          that is not embodied in this Agreement, and neither Employer nor
          Employee shall be bound by or liable for any alleged representation,
          promise or inducement not specifically set forth herein.

     15.  Assignability. Neither this Agreement nor any rights or
          obligations of Employer or Employee hereunder may be assigned by
          Employer or Employee without the other party's prior written
          consent. Subject to the foregoing, this Agreement shall be binding
          upon and inure to the benefit of Employer and Employee and their
          heirs, successors and assigns.

     16.  Notices.  All notices required or permitted hereunder shall be in
          writing and shall be deemed properly given if delivered personally
          or sent by certified or registered mail, postage prepaid, return
          receipt requested, or sent by telegram, telex, telecopy or similar
          form of telecommunication, and shall be deemed to have been given
          when received. Any such notice or communication shall be addressed:
          (a) if to Employer, to Chief Executive Officer, c/o VSE Corporation,
          2550 Huntington Avenue, Alexandria, Virginia 22303-1499 or (b) if to
          Employee, to the last known home address on file with Employer, or
          to such other address as Employer or Employee shall have furnished
          to the other in writing.

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

                                   VSE CORPORATION
                                a Delaware corporation

Date:  March 10, 2004                   By: /s/ D. M. Ervine
                                            ______________________________
                                            D. M. Ervine
                                            Chairman and Chief Executive
                                            Officer

Date:   March 10, 2004                  By: /s/ T. G. Dacus
                                            ______________________________

                                            T. G. Dacus

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