exv10w43



 






Exhibit 10.43




ALION SCIENCE AND TECHNOLOGY CORPORATION




2004 STOCK APPRECIATION RIGHTS PLAN




ARTICLE I

General




          1.1 Plan Name. The name of the plan is the Alion Science and Technology Corporation
2004 Stock Appreciation Rights Plan (the “Plan”).



          1.2 Purpose. The purpose of the Plan is to attract, retain and reward persons
providing services to Alion Science and Technology Corporation (“Alion”), its Affiliates and any
successor corporation(s) thereto (collectively, “the Corporation”) and to motivate such persons to
contribute to the growth and future success of the Corporation.



          1.3 Effective Date; Term. The Plan is effective as of November 9, 2004. No Award
shall be granted under the Plan after the close of business on the day immediately preceding the
eighth (8th) anniversary of the effective date of the Plan. Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall
remain in effect until such Awards have been satisfied or terminated in accordance with the Plan
and the terms of such Awards.



          1.4 Shares Subject to the Plan.



                    (a) Subject to adjustments as provided in Article VI, the shares of Stock that may be used for
reference purposes with respect to SAR Awards granted under the Plan shall not exceed ten percent
(10%) of the shares of Stock outstanding on a fully diluted basis (assuming the exercise of any
outstanding options, warrants and rights including, without limitation, SARs, and assuming the
conversion into Stock of any outstanding securities convertible into Stock) from time to time. If
any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited or otherwise terminated, surrendered or canceled without the delivery
of consideration, the shares of Stock that are used for reference purposes for such Award shall
thereafter be available for further Awards under the Plan.



                    (b) No actual shares of Stock are reserved hereunder. References to shares of Stock are for
accounting and valuation purposes only, and not to grant any voting or other rights associated with
ownership of Stock.



ARTICLE II

Definitions



For purposes of the Plan, the following terms shall be defined as set forth below.




 









 








          2.1 Administrator means the compensation committee of the Board unless the Board
resolves to act itself as the Administrator.



          2.2 Affiliate means any entity, whether now or hereafter existing, which at the time
of reference, controls, is controlled by, or is under common control with, Alion (including, but
not limited to, joint ventures, limited liability companies, and partnerships).



          2.3 Award means any SARs granted pursuant to the Plan.



          2.4 Board means the Board of Directors of Alion.



          2.5 Cause means, for purposes of this Plan:



                    (a) With respect to an individual who is party to a written agreement with the Corporation
which contains a definition of “cause” or “for cause” or words of similar import for purposes of
termination of employment thereunder by the Corporation, “cause” or “for cause” as defined in such
agreement.



                    (b) in all other cases (i) the Participant’s intentional, persistent failure, dereliction, or
refusal to perform such duties as are reasonably assigned to him or her by the officers or
directors of the Corporation; (ii) the Participant’s fraud, dishonesty or other deliberate injury
to the Corporation in the performance of his or her duties on behalf of, or for, the Corporation;
(iii) the Participant’s conviction of a crime which constitutes a felony involving moral turpitude,
fraud or deceit regardless of whether such crime involves the Corporation; (iv) the willful
commission by the Participant of a criminal or other act that causes substantial economic damage to
the Corporation or substantial injury to the business reputation of the Corporation; (v) the
Participant’s material breach of his or her employment or engagement agreement, if any; or (vi) the
Participant’s breach of any material provision of the Participant’s Grant Agreement representing an
Award. For purposes of the Plan, no act, or failure to act, on the part of any person shall be
considered “willful” unless done or omitted to be done by the person other than in good faith and
without reasonable belief that the person’s action or omission was in the best interest of the
Corporation.



          2.6 CEO means the Chief Executive Officer of Alion.



          2.7 Change in Control shall mean and shall be deemed to have occurred if at any time
for whatever reason:




	 	(i)  	any Person (other than the Holder, or any of the Holder’s direct assignees or
transferees), or the Trust, together with their “affiliates” within the meaning of Rule
12b-2 of the Commission under the Exchange Act) shall acquire beneficial ownership
(including beneficial ownership resulting from the formation of a “group” within the
meaning of Rule 13d-5 of the Securities Exchange Commission (“SEC”) under the Exchange
Act) of more than fifty percent (50%) of the combined voting power of the outstanding
capital stock of the Company, ordinarily having the right to vote at any election of
directors;




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	 	(ii)  	there is a sale of all or substantially all of the Company’s assets, directly
or indirectly through one or more transactions whether or not concurrent; or
	 
	 	(iii)  	there is a liquidation or dissolution of the Company.






     For these purposes, the term “Person” shall mean an individual, a corporation,
an association, a joint-stock company, a business trust or other similar
organization, a partnership, a limited liability company, a joint venture, a trust,
an unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.



          2.8 Code means the Internal Revenue Code of 1986, as amended, and any successor Code,
and related rules, regulations and interpretations.



          2.9 Disability of a Participant means the Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than 12 months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Corporation.



          2.10 Fair Market Value of the Stock on any given date means the value as determined by
the Administrator in its sole discretion. Unless otherwise determined by the Administrator, the
value shall be as set forth in the last preceding appraisal of the Common Stock, which shall be
done at least annually.



          2.11 Grant Agreement means the agreement between the Corporation and the Participant
pursuant to which the Corporation authorizes an Award hereunder. Each Grant Agreement entered into
between the Corporation and a Participant with respect to an Award granted under the Plan shall
incorporate the terms of this Plan and shall contain such provisions, consistent with the
provisions of the Plan, as may be established by the Administrator. Provisions in any Grant
Agreement relating to matters such as noncompetition, nonsolicitation and protection of
intellectual property are hereby deemed to be consistent with the Plan.



          2.12 Grant Date means the date on which the Administrator formally acts to grant an
Award to a Participant or such other date as the Administrator shall so designate at the time of
taking such formal action.



          2.13 Participant means any director, officer, employee or consultant of the
Corporation to whom any Award is granted pursuant to the Plan.



          2.14 Payment Date means the first anniversary of the date a Participant’s Award
becomes vested as expressed in the Participant’s Grant Agreement.



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          2.15 SAR means a stock appreciation right, as awarded under Article V.



          2.16 Stock means the voting common stock, $0.01 par value per share, of Alion, subject
to adjustments pursuant to the Plan.



          2.17 Termination of Employment means cessation of performance of services for the
Corporation. For purposes of maintaining a Participant’s continuous status as an employee and
accrual of rights under any Award granted pursuant to the Plan, transfer of an employee among Alion
and any of its Affiliates shall not be considered a Termination of Employment with the Corporation.
For the avoidance of doubt, and by way of example only, if a Participant works for a wholly-owned
subsidiary of Alion, then a sale of the subsidiary by Alion would be regarded as a Termination of
Employment of such Participant for purposes of this Plan, notwithstanding the Participant’s
continued employment with that former subsidiary.



          2.18 Vesting Period means that period of time during which the Award is subject to a
risk of forfeiture. Subject to the forfeiture provisions of Section 5.6 below, Awards shall vest
at a rate of twenty percent (25%) per year on the annual anniversary of the Grant Date. Any Award
which is given to a member of the Board of Directors will vest annually on a pro-rata basis over
the term or remainder of any term which such director is serving from the date of Award.



ARTICLE III

Administration




          3.1 General. The Plan shall be administered by the Administrator. The Administrator
shall have the full and final authority, in its discretion, to interpret conclusively the
provisions of the Plan; to adopt such rules for carrying out the Plan as it may deem advisable; to
decide all questions of fact arising in the application of the Plan; and to make all other
determinations necessary or advisable for the administration of the Plan.



          3.2 Procedure. The Administrator shall meet at such times and places and upon such
notice as it may determine. A majority of the members of the Board or committee serving as
Administrator hereunder shall constitute a quorum. Any acts by the Administrator may be taken at
any meeting at which a quorum is present and shall be by majority vote of those members entitled to
vote. Additionally, any acts reduced to writing or approved in writing by all of the members of
the Board or committee serving as Administrator hereunder shall be valid acts of the Administrator.
Members of the Board or committee who are either eligible for Awards or have been granted Awards
may vote on any matters affecting the administration of the Plan or the grant of Awards pursuant to
the Plan, except that no such member shall act upon the granting of an Award to himself or herself,
but any such member may be counted in determining the existence of a quorum at any meeting of the
Administrator during which action is taken with respect to the granting of an Award to him or her.



          3.3 Duties. The Administrator shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the



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Administrator deems necessary or advisable, all within the Administrator’s sole and absolute
discretion. The Administrator shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not limited to, the
authority to:



                    (a) construe the Plan and any Award under the Plan;



                    (b) select the directors, officers, employees and consultants of the Corporation to whom
Awards may be granted and the time or times at which Awards shall be granted;



                    (c) determine the number of shares of Stock to be covered by or used for reference purposes
for any Award;



                    (d) determine and modify from time to time the terms and conditions, including restrictions,
of any Award and to approve the form of Grant Agreements;



                    (e) impose limitations on Awards, including limitations on transfer provisions; and



                    (f) modify, extend or renew outstanding Awards, or accept the surrender of outstanding Awards
and substitute new Awards.



          3.4 Delegation of Authority. The Administrator hereby delegates to the CEO the
authority to exercise the duties set forth in section 3.3(b), and the amount(s) of any such Awards
made in accordance with such duties, for all officers, employees and consultants of the
Corporation, except for Awards made to executive officers of the Corporation. The CEO shall
exercise this authority in accordance with this Plan, including without limitation sections 1.4,
5.1 and 5.5. The CEO shall provide the Administrator with a detailed written report of all such
Awards made under this delegated authority on a quarterly basis. With respect to executive
officers of the Corporation, the Administrator hereby delegates to the CEO the authority to
nominate persons to receive Awards, which nomination shall be subject to the approval of the
Administrator. The Administrator may revoke or amend the terms of this delegation at any time, but
such revocation shall not invalidate prior actions of the CEO that were consistent with the terms
of the Plan. All Awards are subject to the approval of the Administrator.



          3.5 Limited Liability. To the maximum extent permitted by law, no member of the Board
or committee serving as Administrator hereunder shall be liable for any action taken or decision
made in good faith relating to the Plan or any Award.



          3.6 Indemnification. To the maximum extent permitted by law and by the Corporation’s
charter and by-laws, the members of the Board or committee serving as Administrator hereunder shall
be indemnified by the Corporation in respect of all their activities under the Plan.



          3.7 Effect of Administrator’s Decision. All actions taken and decisions and
determinations made by the Administrator on all matters relating to the Plan pursuant to the



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powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and
shall be conclusive and binding on all parties concerned, including the Corporation, its
stockholders, any Participants in the Plan and any other employee of the Corporation, and their
respective successors in interest.



ARTICLE IV

Eligibility and Participation




          4.1 Eligibility. Directors, officers, employees and consultants of, or to, as the
case may be, the Corporation who, in the opinion of the Administrator, are responsible for the
continued growth and development and future success of the business shall be eligible to
participate in the Plan.



          4.2 Participation. An eligible individual shall become a Participant hereunder when
he or she is granted an Award hereunder, as evidenced by a Grant Agreement executed by the
Corporation and the Participant.



ARTICLE V

Stock Appreciation Rights




          5.1 Award of SARs. Subject to the other applicable provisions of the Plan, the
Administrator may at any time and from time to time grant SARs to eligible participants, as it
determines. Notwithstanding the foregoing to the contrary, no grant of SARs may be made to any
“Disqualified Person” (within the meaning of sections 409(p)(4) and 4979A of the Code) for any
period during which the Corporation maintains an employee stock ownership plan. Any grant of SARs
made in violation of this edict shall be null and void ab initio. In addition, no grant of SARs
may be made to any eligible individual if and to the extent that such grant would cause such
individual to become a Disqualified Person. SARs shall be evidenced by Grant Agreements, executed
by the Corporation and the Participant, stating the number of SARs and the terms and conditions of
such SARs, in such form as the Administrator may from time to time determine. The Participant
shall have none of the rights of a stockholder with respect to any shares of Stock represented by a
SAR.



          5.2 Amount of Payment Upon Maturation of SARs. A SAR shall entitle the Participant to
receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an
aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the Payment
Date of one share of Stock over (B) the base price per share specified in the Grant Agreement
(which shall be the Fair Market Value of one share of Stock on the Grant Date), times (ii) the
number of shares specified by the SAR.



          5.3 Maturation of SARs.



                    (a) A Participant will receive payment for all of a vested Award by the delivery of cash in a
lump sum sixty (60) days following the Payment Date.



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                    (b) In the event of the death or Disability of the Participant before an Award is fully
vested, all previously vested and unpaid Awards, shall be paid by the delivery of cash in a lump
sum sixty (60) days following the date of death or Disability. For purposes of determining the
amount of payment under this section 5.3(b), section 5.2 shall be applied by substituting the
Payment Date with the date of death or Disability.



                    (c) All federal, state and local taxes, as well as other appropriate items, will be withheld
from payments.



                    (d) No payment shall be made in violation of any provision of the Code or the rules and
regulations thereunder.



          5.4 Election to Defer Benefits. A Participant may elect to defer payment beyond
the Payment Date for a period of not less than five years from such Payment Date. Any election to
defer must be made not less than one year prior to the Payment Date and may not take effect until
at least twelve months after the date such election is made. Any such election shall defer the
affected payment into the Alion Science and Technology Executive Deferred Compensation Plan. If a
Participant elects to defer payment beyond the initial Payment Date, no payments shall be made
prior to the expiration of such deferral period unless such payment is related to the death or
Disability of the Participant.



          5.5 Disqualified Persons. Prior to each vesting date for so long as the Corporation
shall maintain an employee stock ownership plan, the Administrator shall determine whether a
Participant is or will become a Disqualified Person as of such date. If a Participant is a
Disqualified Person, then the full amount of the Award that has not yet vested shall be forfeited.
If a Participant will become a Participant as of such date, then all or part of the Award that has
not yet vested shall be forfeited to avoid causing such Participant to become a Disqualified
Person. In addition, if and to the extent that a Participant of a vested SAR would be a
Disqualified Person by virtue of a redemption of the Stock or any other reason, despite the
forfeiture of any unvested SARs held by such Participant as provided in this section, the otherwise
vested SARs will be forfeited ab initio, if and to the extent necessary to prevent the Participant
from becoming a Disqualified Person. In all cases, any required forfeiture is to occur in reverse
order of time at which the Corporation grants the Awards at issue.



          5.6 Termination and Forfeiture of Awards.



                    (a) Except as further provided in (b) below, a Participant who terminates employment with the
Company for any reason other than death or Disability shall forfeit his or her rights to all
unvested Awards. Such Participant will be paid all vested Awards sixty (60) days following the
effective date of termination, subject to the conditions of section 5.3 (c) hereof. For
purposes of determining the amount of payment under this section 5.6(a), section 5.2 shall be
applied by substituting the Payment Date with the date of termination.



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                    (b) If a Participant has a termination of employment for cause, such Participant shall
forfeit his or her rights to all unvested Awards and all unpaid vested Awards.



          5.7 Nontransferability. No Award shall be transferable by a Participant except by
will or by the laws of descent and distribution or pursuant to a gift of any vested Awards to such
Participant’s spouse, parents, children and grandchildren, whether directly or indirectly or by
means of a trust, partnership, or otherwise. Any transfer or purported transfer in violation of
this paragraph shall be void and of no effect. All Awards shall be paid in accordance with the
provisions of section 5.3(b).



ARTICLE VI

Transactions




          6.1 Adjustment of Number and Price of Shares. Any other provision of the Plan
notwithstanding, if through, or as a result of, any merger, consolidation, sale of all or
substantially all of the assets of Alion, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind of shares or other
securities of Alion, or additional shares or new or different shares or other securities of Alion
or other non-cash assets are distributed with respect to such shares of Stock or other securities,
the Administrator shall make an appropriate or proportionate adjustment in the Awards as it deems
appropriate, in its sole discretion. The adjustment by the Administrator shall be final, binding
and conclusive.



          6.2 Adjustments Due to Special Circumstances. The Administrator is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events affecting the Corporation, or the financial statements of the
Corporation, or of changes in applicable laws, regulations, or accounting principles, whenever the
Administrator determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan.



          6.3 Change in Control Participants shall fully and immediately vest in all grants
of SARs under this Plan, and shall be paid out, in accordance with the provisions of section
5.3(b), all such vested amount, determined by multiplying the granted number of SARs by the
share price of one share of Alion Common Stock equal to the transaction price upon the occurrence
of a Change in Control, or the per share value as of the last previous Semi-Annual Valuation,
whichever is greater.



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ARTICLE VII

Amendment and Termination




          7.1 Amendment. The Board may amend the Plan at any time and from time to time,
provided that (i) no amendment shall deprive any person of any rights granted under the Plan before
the effective date of such amendment, without such person’s consent; and (ii) amendments may be
subject to shareholder approval to the extent needed to comply with applicable law.



          7.2 Termination. The Board reserves the right to terminate the Plan in whole or in
part at any time, without the consent of any person granted any rights under the Plan.



ARTICLE VIII

Miscellaneous




          8.1 Restrictive Legends. The Corporation may at any time place legends referencing
any restrictions described in the Grant Agreement and any applicable federal or state securities
law restrictions on all Awards.



          8.2 Compliance with Governmental Regulations. Notwithstanding any provision of the
Plan or the terms of any Grant Agreement entered into pursuant to the Plan, Alion shall not be
required to issue any securities hereunder prior to registration of the offer or sale securities
subject to the Plan under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, if such registration shall be necessary, or before compliance by the Alion or any
Participant with any other provisions of either of those acts or of regulations or rulings of the
Securities and Exchange Commission thereunder, or before compliance with other federal and state
laws and regulations and rulings thereunder, including the rules any applicable securities exchange
or quotation system. Alion shall use its best efforts to effect such registrations and to comply
with such laws, regulations and rulings forthwith upon advice by its counsel that any such
registration or compliance is necessary.



          8.3 Corporation Charter and Bylaws. This Plan is subject to the charter and by-laws of
Alion, as they may be amended from time to time.



          8.4 No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between the
Corporation and a Participant or any other person. To the extent that any Participant or other
person acquires a right to receive payments from the Corporation pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the Corporation; however,
in the event of commencement of a voluntary or involuntary case of bankruptcy against or by Alion,
all vested and unvested Awards made hereunder shall be canceled and void.



          8.5 No Guarantee of Employment. Participation in this Plan shall not be construed to
confer upon any Participant the legal right to be retained in the employ of the Corporation or give
any person any right to any payment whatsoever, except to the extent of the benefits provided for
hereunder. Each Participant shall remain subject to discharge to the same



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extent as if this Plan had never been adopted. Nothing in this Plan shall prevent, interfere
with or limit in any way the right of the Corporation to terminate a Participant’s employment at
any time, whether or not such termination would result in: (i) the failure of any Award to vest;
(ii) the forfeiture of any unvested or vested portion of any Award under the Plan; and/or (iii) any
other adverse effect on the Participant’s interests under the Plan.



          8.6 No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall
prevent the Corporation from adopting or continuing in effect other compensation arrangements
(whether such arrangements be generally applicable or applicable only in specific cases) as the
Administrator, in its discretion determines desirable, including without limitation the granting of
stock options, stock awards, stock appreciation rights or phantom stock units otherwise than under
the Plan; provided that income recognized by a Participant in payment of a SAR shall be excluded
from the calculation of benefits under any pension, profit-sharing, ESOP or any other benefit plan
maintained by the Corporation unless such benefit plan provides otherwise, making specific
reference to SARs.



          8.7 Governing Law. The provisions of this Plan shall be governed by, construed and
administered in accordance with applicable federal law; provided, however, that to the extent not
in conflict with federal law, this Plan shall be governed by, construed and administered under the
laws of Delaware, other than its laws respecting choice of law.



          8.8 Severability. If any provision of the Plan shall be held invalid, the remainder
of this Plan shall not be affected thereby and the remainder of the Plan shall continue in force.



          8.9 Identity. If, at any time, any doubt exists as to the identity of any person
entitled to any payment hereunder or the amount of time of such payment, the Administrator shall be
entitled to hold such sum until such identity or amount or time is determined or until an order of
a court of competent jurisdiction is obtained. The Administrator shall also be entitled to pay
such sum into court in accordance with the appropriate rules of law. Any expenses incurred by the
Corporation or the Administrator incident to such proceeding or litigation shall be charged against
the account of the affected Participant.



          8.10 Incompetence. If the Administrator determines that any person to whom a benefit
is payable under the Plan is incompetent by reason of a physical or mental disability, the
Administrator shall have the power to cause the payments becoming due to such person to be made to
another person for his or her benefit without the responsibility of the Administrator or the
Corporation to see to the application of such payments. Any payment made pursuant to such power
shall, as to such payment, operate as a complete discharge of the Administrator and the
Corporation.



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     IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer of Alion, certifies
that the foregoing Alion Science and Technology Corporation 2004 Stock Appreciation Rights Plan was
duly adopted by the Board of Directors of Alion.



	 	 	 	 	 
	

	 	 	 	/s/ Bahman Atefi
	

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	Date Approved by the Board:
	 	November 9, 2004	 	 	 
	
	 	 	 	 







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