EXHIBIT 10.45
SEPARATION AGREEMENT AND GENERAL RELEASE
          This Separation Agreement and General Release (“Agreement”) is entered
into by and between John M. Hughes (“Employee”) and Alion Science and Technology
Corporation (“Alion” or the “Company”) as of the latest date of execution by the
parties to this Agreement. This Agreement supersedes any prior employment
agreements or arrangements Employee may have entered into with Alion or its
subsidiaries, affiliates, successors, assigns or predecessors in interest,
including without limitation the Employment Agreement between Employee and Alion
dated June 28, 2007 (the “Employment Agreement”), except as otherwise provided
in this Agreement; provided, however, that the Employee Intellectual Property
Agreement between Employee and Alion, dated December 16, 2002, shall remain in
full force and effect.
          In consideration of the mutual covenants, agreements and
representations contained herein, the adequacy of which is hereby acknowledged,
the parties hereto expressly and intentionally bind themselves as follows:
     1. SEPARATION OF EMPLOYEE
          Employee hereby agrees that he will announce his departure from Alion
and has notified Alion as of February 15, 2008 (the “Notification Date”) that
his employment as Chief Financial Officer of Alion and his status as a full-time
employee will cease. Alion and Employee agree that Employee shall remain an
“adjunct” employee with Alion, as defined in Alion’s policies, in an untitled
position until August 15, 2008 (the “Separation Date”). Employee voluntarily
resigns from employment with the Company effective upon the Separation Date, and
the Company hereby accepts Employee’s resignation. Employee expressly
acknowledges that, upon the occurrence of the Separation Date, he will no longer
be an employee of Alion. Except as provided in Paragraph 2 below, effective as
of the Separation Date, Employee shall not be eligible for further pay or
benefits, including without limitation any benefits under any severance pay plan
applicable to him as an employee of Alion, except as provided in this Agreement.
From the period of the Notification Date through the Separation Date, and except
as otherwise expressly permitted by Alion’s Chief Executive Officer, Employee
shall not perform any work for Alion, shall cease all of his activities in
connection with his duties at Alion, shall have no authority to act on behalf of
or bind Alion and shall not represent to any third party or to any employee,
agent or representative of Alion that he has any title, role or authority to act
for or on behalf of Alion; provided, however, that, up to the Separation Date,
Employee shall provide reasonable assistance and cooperation to Alion at such
times and in such places as Alion may reasonably request. In addition,

 

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effective on the Notification Date, Employee expressly resigns from all offices,
directorships and fiduciary positions with the Company or any related entities.
     2. PAYMENTS BY ALION
          (a) For the period from the Notification Date through the Separation
Date, Employee shall remain on the Company’s payroll at his current annual base
salary. If Employee signs and does not revoke this Agreement, then, subject to
the following paragraph, Alion shall make the following payments (“Severance
Installment Payments”) to Employee:
          (i) Within thirty (30) days of the Separation Date, a payment equal to
$270,000 (“First Severance Installment Payment”), which Employee acknowledges is
equal to one half of Employee’s annual salary and three-fourths of Employee’s
actual bonus for the last complete fiscal year prior to the Separation Date; and
          (ii) Within six months of payment of the First Severance Installment
Payment, a payment equal to $270,000, which Employee acknowledges is equal to
one half of Employee’s annual salary and three-fourths of Employee’s actual
bonus for the last complete fiscal year prior to the Separation Date.
          Notwithstanding the foregoing, the Company’s obligation to pay
Severance Installment Payments pursuant to this Paragraph 2(a), to the extent
not already paid, shall cease immediately and such payments will be forfeited if
Employee violates any condition described in Paragraph 5, 6, 7 or 8.
          (b) (i) In addition to the severance payments set forth above, the
Company shall pay to Employee the amount equal to all amounts due for the
following vested and prorated unvested shares of phantom stock under the Amended
and Restated Alion Science and Technology Corporation Phantom Stock Plan and the
Amended and Restated Alion Science and Technology Corporation Performance Shares
and Retention Phantom Stock Plan (collectively, the “Plans”) and the Phantom
Stock Agreements of Employee (the “Phantom Stock Payment”):

              Number of         Current   Full Grant Date   Shares   Vesting
Date
February 11, 2003
  2,500   February 11, 2008
November 11, 2003
  1,359.62   November 11, 2008
February 1, 2005
  45,445   February 1, 2008
February 1, 2005
  30,297   February 1, 2008
November 9, 2005
  13,931.46   November 9, 2010
November 9, 2005
  11,145.17   November 9, 2008
November 14, 2006
  10,238.91   November 14, 2009
November 11, 2007
  2,496.88   November 11, 2010
Total:
  117,414.04    

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          (ii) The per share value of all of the above phantom stock shall be
fixed at $40.05, notwithstanding any valuations of the phantom stock preceding
or subsequent to the date of this Agreement.
          (iii) The Company shall pay to Employee the Phantom Stock Payment in
accordance with the following schedule: (aa) The amount of $1,000,000 shall be
paid no later than December 31, 2008; and (bb) All remaining amounts shall be
paid no later than March 14, 2009.
          (iv) All Phantom Stock Payments shall be subject to approval by the
Company’s Compensation Committee or Board of Directors no later than May 16,
2008, such approval to be evidenced by a written certification by the Company’s
General Counsel to Employee’s counsel. In the event that the Company’s
Compensation Committee or Board of Directors fails to approve the Phantom Stock
Payments, Employee may, at his option, revoke this Agreement. Upon such approval
and certification thereof, and subject to the conditions set forth in
Section 4(c)(ii) below, this Agreement shall be binding as of the date of the
execution of this Agreement.
          (c) In addition to the above payments, the Company shall pay to
Employee, contemporaneously with the payment set forth in Paragraph 2(a)(i)
above, all outstanding and accrued Paid Time Off (“PTO”). In addition, Employee
shall be paid amounts currently held on his behalf in the Alion Non-Qualified
Deferred Compensation Plan in accordance with the terms of such plan.
          (d) Employee shall be permitted to continue the use of the automobile
under the Company’s current automobile lease for Employee until the Separation
Date. On or before close of business on the Separation Date, Employee shall
return the automobile, along with all accessories purchased or reimbursed by the
Company, to the Company’s Director of Human Resources. As of one (1) day after
the Separation Date, any insurance coverage on behalf of Employee with regard to
such automobile shall cease at the Company’s discretion.
          (e) Except as provided in this Agreement or under the terms of an
applicable employee benefit plan, no further payments shall be made to Employee.
          (f) The Company shall withhold such tax, payroll and other amounts
from payments under this Agreement as Employee authorizes or the Company
reasonably believes to be required by law. Employee shall be solely responsible
for payment of his own taxes, including any taxes arising under Internal Revenue
Code Section 409A. The Company has not provided and will not provide tax advice
to Employee.
     3. EMPLOYMENT BENEFITS
          (a) Employee agrees and acknowledges that his participation in any
401(k) Plan, short-term and long-term Disability Plans, or any other benefit
plans made available to him as an Alion employee, and his participation in and
entitlement to any

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and all other benefits in which he is currently enrolled, but which are not
specifically addressed in this Agreement, will terminate on the Separation Date.
          (b) Employee’s participation in the Alion medical, dental, vision and
other insurance plans shall cease as of the Notification Date; provided that, to
the extent that Employee is eligible for and elects to receive medical and/or
dental benefits pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”) for himself and/or any qualifying beneficiaries,
the Company shall pay on Employee’s behalf, or reimburse Employee for, the
amount of the applicable COBRA that exceeds the amount of premium payable by
Employee for the same level of coverage immediately prior to the effective date
of termination. Any such COBRA premium payment by the Company that constitutes
taxable income to Employee shall be grossed up by the Company, assuming an
applicable income tax rate of forty percent (40%). Payments under this paragraph
shall cease at the earlier of (i) the end of the first month in which Employee
is no longer eligible for COBRA for any reason (other than death or eligibility
for Medicare, provided that COBRA coverage continues for any qualified
beneficiary), or (ii) Eighteen (18) months after the Notification Date. Employee
shall notify the Company as soon as practicable after he ceases to be eligible
for COBRA coverage due to coverage under the group health plan of another
employer.
          (c) Except as otherwise provided in this Agreement, Employee waives
any right of participation in, or additional benefits under, the employee
benefit, fringe benefit and compensation plans of Alion with respect to any
period after the Separation Date.
     4. GENERAL RELEASE BY EMPLOYEE
          (a) Employee hereby releases and forever discharges Alion, its
subsidiaries, affiliates, insurers, predecessors, successors, and assigns, and
the directors, officers, shareholders, employees, representatives and agents of
each of the foregoing (collectively “Releasees”) of and from the following:
          (i) Any and all claims, demands, and liabilities whatsoever of every
name and nature (other than those arising directly out of this Agreement),
including, without limitation, those with respect to Employee’s employment by
Alion, or the terms and conditions of employment, benefits or compensation, or
termination of his employment, which Employee has or ever had against Releasees;
and
          (ii) Without limitation, any and all claims known or unknown as of the
date of execution of this Agreement for tortious injury, breach of contract,
and/or wrongful discharge (including, without limitation, any claim for
violation of public policy or constructive discharge), any personal gain with
respect to any claim arising under the qui tam provisions of the False Claims
Act, 31 U.S.C. 3730 or any other whistleblower claim, all claims for infliction
of emotional distress, all claims for slander, libel, or defamation of
character, and all claims for reinstatement, back pay, front pay, compensatory
or punitive damages,

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severance pay, attorneys’ fees, or costs, as related to Employee’s employment by
Alion, or the terms and conditions or termination of his employment, benefits or
compensation, or termination of such employment; and
          (iii) Without limitation, any and all claims known or unknown based
upon any allegation of employment discrimination, including, without limitation,
discrimination on the basis of race, color, sex, sexual orientation, age
(including any claim pursuant to the federal Age Discrimination in Employment
Act), religion, disability, national origin or any other classification
protected under applicable law.
          (b) It is agreed and understood that this release is a GENERAL RELEASE
to be construed in the broadest possible manner consistent with applicable law.
          (c) Employee acknowledges and agrees that Employee:
          (i) has not filed or pursued any claim released hereby against any
Releasee by filing a lawsuit in any local, state or federal court for or on
account of anything which has occurred up to the present time as a result of
Employee’s employment or termination of employment, and Employee shall not seek
reinstatement or future employment with, or damages of any nature, severance
pay, attorneys’ fees, or costs from any Releasee; and
          (ii) has been given the opportunity, if he so desires, to consider
this Agreement for twenty-one (21) days before executing it. Any change made to
the Agreement during the 21-day period, whether material or not, will not
restart the running of the 21-day period. In the event that Employee executes
this Agreement within twenty-one (21) days of the date of its delivery to him,
he acknowledges that such decision was entirely voluntary and that he had the
opportunity to consider this Agreement for the entire twenty-one (21) day
period. For a period of seven (7) days from the date of the execution of this
Agreement, Employee shall retain the right to revoke this Agreement in
accordance with 29 U.S.C. § 626 by written notice to Alion, c/o Kathy Madaleno,
Director of Human Resources, 1750 Tysons Boulevard, Suite 1300, McLean, Virginia
22102. This Agreement shall not become effective or enforceable until the
expiration of such revocation period; and
          (iii) has been and is advised to consult an attorney regarding this
Agreement prior to executing it and that he has been given sufficient time to do
so; and
          (iv) has received full and adequate consideration for this General
Release; and
          (v) fully understands and acknowledges the significance and
consequences of this Agreement and represents by his signature that the terms of
this Agreement are fully understood and voluntarily accepted by him. This

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Agreement has been individually negotiated by Employee and is not part of a
group exit incentive or other group employment termination program.
          (d) Excluded from this General Release are any claims or rights which
cannot be waived by law, including the right to challenge the enforceability of
this Agreement and the Employee’s right to file a charge with an administrative
agency or participate in any agency investigation where that agency expressly
prohibits such a waiver. However, Employee is waiving his right to recover any
money or to reinstatement with any Releasee in connection with such a charge or
investigation. Employee is also waiving his right to recover money in connection
with a charge filed by any other individual or by the Equal Employment
Opportunity Commission or any other federal, state or local agency.
          (e) This General Release becoming and remaining effective shall be a
condition precedent to Employee obtaining any payments or benefits under this
Agreement.
     5. NONDISCLOSURE OF INFORMATION; RETURN OF PROPERTY
          (a) Employee shall keep secret and confidential and shall not disclose
to any third party, in any fashion or for any purpose whatsoever, any
information regarding Alion which is (i) not available to the general public,
and/or (ii) not generally known outside the Company, and (iii) is considered
proprietary to or a trade secret of the Company, to which he has or will have
had access at any time during the course of his employment by the Company,
including, without limitation, any information relating to: the Company’s
business or operations; its plans, strategies, prospects or objectives; its
products, technology, processes or specifications; its research and development
operations or plans; its customers and customer lists; its manufacturing,
distribution, sales, service, support and marketing practices and operations;
its financial condition and results of operations; its operational strengths and
weaknesses; and, its personnel and compensation policies and procedures.
          (b) Employee agrees to return to Alion, on the Notification Date or at
such later time as Alion may allow in its sole discretion, (i) all documents,
data, material, details and copies thereof in any form (electronic or hard copy)
that are the property of Alion or were created using Alion resources or during
any hours worked for Alion including, without limitation, any data referred to
in the immediately preceding Paragraph; and (ii) all other Alion property
including, without limitation, all computer equipment (except as otherwise
agreed, but including electronic information and/or software on Alion-provided
computer equipment to be retained by Employee) and associated passwords,
property passes, keys, credit cards, business cards and identification badges.
     6. NO DETRIMENTAL COMMUNICATIONS
          Employee agrees that he will not make, disclose or cause to be
disclosed any negative, adverse, false or derogatory comments or statements
about Releasees

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with regard to any product or service provided by Releasees, about Releasees’
prospects for the future, or about Releasees in general. Alion agrees that no
authorized officer of Alion will disclose or cause to be disclosed outside of
Releasees any negative, adverse, false or derogatory comments or statements
about Employee. The parties agree that this provision will not be construed so
as to bar any person from providing full and truthful testimony in response to a
summons, court or administrative order or subpoena, or as otherwise provided by
law, or discussion of matters affecting Employee with the Company’s outside
legal and accounting representatives. For the limited purposes of this Paragraph
only, the term “Releasees” shall mean only the directors, chief executive
officer and executive and senior vice presidents of Alion.
     7. FUTURE ASSISTANCE
          Alion may seek the assistance and cooperation of Employee in
connection with any audit, investigation, litigation or proceeding arising out
of matters within the knowledge of Employee and related to his position as an
employee of Alion, and in any such instance, Employee, upon reasonable notice,
shall provide (up to a maximum of 20 hours per month after the Separation Date)
such assistance, cooperation or testimony, and Alion shall pay Employee’s
reasonable costs and expenses in connection therewith.
     8. NON-COMPETITION; NON-SOLICITATION
          (a) Non-Competition. Employee agrees that, for a period of one and
one-half (1.5) years after the Notification Date, he will not, directly or
indirectly, compete with the Company or its subsidiaries or affiliates by
providing services or by being an officer, director, employee, consultant,
agent, advisor, shareholder or owner to or of any other person, partnership,
association, corporation, or other entity that is a “Competing Business,” except
that he may have an ownership interest of up to two percent (2%) of a Competing
Business which is a public company. As used herein, a “Competing Business” is
any business whose activities relate to the products or services of the same or
similar type as the products or services which are sold (or, pursuant to an
existing business plan, will be sold) to paying customers of the Company or its
subsidiaries or affiliates, and for which Employee had the responsibility to
plan, develop, manage, market, or oversee, or had any such responsibility within
Employee’s most recent twenty-four (24) months of employment with the Company.
Following termination of employment, Employee may request in writing an
exception to the foregoing provision from the Company for prospective
employment, which exception will be granted if the Company, in its sole
discretion, determines that such prospective employment will not unduly or
materially compete with or otherwise interfere with the business of the Company.
          (b) Non-Solicitation of Clients and Others. In addition to the
foregoing, Employee agrees that, for a period of one and one-half (1.5) years
after the Notification Date, he will not, directly or indirectly, intentionally
entice, induce or solicit, or attempt to entice, induce or solicit, any
individual or entity having a current or prospective business relationship with
the Company, whether as a consultant, client, customer or otherwise,

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to terminate or cease such relationship with the Company, or to fail to enter
into or renew such relationship with the Company.
          (c) Non-Solicitation of Employees and Others. In addition to the
foregoing, Employee agrees that, for a one and one-half (1.5) years after the
Notification Date, Employee shall not, on his own behalf or on behalf of any
other person, partnership, association, corporation, or entity: (i) directly,
indirectly, or through a third party hire or cause to be hired; (ii) directly,
indirectly, or through a third party solicit; or (iii) in any manner attempt to
influence or induce any employee of the Company or its subsidiaries or
affiliates to leave the employment of the Company or its subsidiaries or
affiliates, nor shall he use or disclose to any person, partnership,
association, corporation, or other entity any information obtained concerning
the names and addresses the Company’s employees. Employee further agrees and
acknowledges that the Company has confidentiality and non-competition agreements
with certain of its employees, and he agrees that he will not interfere with any
such agreements.
          (d) Survival; Severability. The parties agree that the above
restrictions on competition are completely severable and independent agreements
supported by good and valuable consideration and, as such, shall survive the
termination of this Agreement for whatever reason. The parties further agree
that any invalidity or unenforceability of any one or more of such restrictions
on competition shall not render invalid or unenforceable any remaining
restrictions on competition. Additionally, should a court of competent
jurisdiction determine that the scope of any provision of this Paragraph 8 is
too broad to be enforced as written, the parties intend that the court reform
the provision to such narrower scope as it determines to be reasonable and
enforceable. Employee acknowledges and agrees that the non-competition and
non-solicitation provisions herein are expressly assignable to any successor of
the Company.
     9. GOVERNING LAW; SEVERABILITY
          This Agreement is entered into and shall be construed under the laws
of the Commonwealth of Virginia. In the event any provision of this Agreement is
determined to any extent to be illegal or unenforceable by a duly authorized
court of competent jurisdiction, then the illegal or unenforceable provision
shall be severed from this Agreement. In the event of such severance, the
remainder of this Agreement shall not be affected thereby, and each remaining
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law; provided, however, that the parties expressly acknowledge and
agree that the full waiver and release of all claims by Employee is essential to
effectuate the parties’ intent in entering into this Agreement and that, in the
event the general release of claims set forth in Paragraph 4 is severed, the
parties’ remaining obligations under this Agreement shall be deemed waived
(other than obligations arising under Paragraphs 5 and 8), and any consideration
or value delivered by one party to the other under this Agreement shall
constitute a binding obligation by the recipient to the other; provided,
however, that nothing in this Agreement shall constitute a waiver of Employee’s
right to receive and/or retain those

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Phantom Stocks (and related Phantom Stock payments) that are vested prior to and
including February 11, 2008 in accordance with the terms of the Plans.
     10. WAIVERS
          The failure of either party to require the performance of any term or
obligation of this Agreement, or the waiver by either party of any breach of
this Agreement, shall not prevent any subsequent enforcement of such term or
obligation and shall not be deemed a waiver of any subsequent breach.
     11. AMENDMENTS
          This Agreement may be modified or amended, in whole or in part, only
by the mutual agreement of the parties in writing.
     12. NO OTHER INDUCEMENTS
          This Agreement sets forth the entire understanding of the parties in
connection with the subject matter hereof. Any and all prior negotiations or
discussion, either oral or written, are merged into this Agreement. Neither of
the parties has made any settlement, representation or warranty in connection
herewith (except those expressly set forth in this Agreement) which has been
relied upon by the other party, or which acted as an inducement for the other
party to enter into this Agreement.
     13. PERSONS BOUND BY AGREEMENT
          This Agreement shall be binding upon and inure to the benefit of
Employee and Releasees and their respective successors.
     14. ASSIGNMENT OF INTERESTS
          Employee warrants that he has not assigned, transferred or purported
to assign or transfer any claim against Releasees.
     15. PREVAILING PARTY ENTITLED TO FEES
          In the event that any action or proceeding is initiated to enforce or
interpret the provisions of this Agreement, or to recover for a violation of the
Agreement, the prevailing party in any such action or proceeding shall be
entitled to its costs (including reasonable attorneys’ fees). Nothing in this
Paragraph is intended to, or shall, place any limitation or condition precedent
on Employee’s ability to challenge this Agreement.
     16. CONFIDENTIALITY
          Employee agrees to keep confidential, and not to disclose to any
person or entity, the terms or conditions of this Agreement, except to his
attorney, financial advisors and members of his immediate family, provided they
agree to keep confidential such terms and conditions. In the event that Employee
believes he is compelled by law

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to divulge the terms or conditions of this Agreement, he will notify Alion’s Law
Department of the basis for that belief before actually divulging the
information. Employee hereby confirms that, as of the date of this Agreement, he
has not disclosed the terms or conditions of this Agreement, except as otherwise
provided in this Agreement. Alion also agrees to keep confidential, and not to
disclose, the terms and conditions of this Agreement outside of Releasees, its
attorneys and consultants, unless Company is otherwise required to disclose such
terms and conditions by operation of law or request by a governmental agency, or
as required by any federal or state securities laws or regulations.
     17. CONFLICTS WITH PHANTOM STOCK AGREEMENTS
          The parties agree that to the extent that the provisions of this
Agreement conflict with any of the Phantom Stock Agreements entered into by and
between Alion and Employee, the terms of this Agreement shall prevail and
supersede such Phantom Stock Agreements.
          IN WITNESS WHEREOF, the parties hereby agree to the terms and
conditions of this Agreement as set forth above.
EMPLOYEE:

         
By:
 
/s/ John M. Hughes
  4/24/2008
 
       
 
 
John M. Hughes 
  Date

ALION SCIENCE AND TECHNOLOGY CORPORATION:

         
By:
 
/s/ Stacy Mendler
  4/25/2008
 
       
 
      Date

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