exv10w45






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,




 









 




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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