**EXHIBIT 10.34**
**EMPLOYMENT AGREEMENT**
     **THIS EMPLOYMENT AGREEMENT**(the “Agreement”) is made this 2nd day ofFebruary, 2004, by and between Alion Science and Technology Corporation, aDelaware corporation (the “Company”) and James C. Fontana (the “Employee”).
     WHEREAS, the Company and Employee desire to enter into this Agreement asof the date hereof and no other agreement concerning employment,except asprovided in the Employee’s Offer of Employment, dated January 15, 2004 (the“Offer Letter”), attached hereto and incorporated herein by reference.
     NOW THEREFORE, in consideration of the foregoing recitals and mutualpromises and conditions set forth herein, and other valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Company and theEmployee agree as follows:
     **1. Employment.**Uponthe terms and subject to the conditions containedherein, the Company hereby employs the Employee as Senior Vice President, andGeneral Counsel and Secretary, at will and terminable by either party at anytime for any reason, with or without prior notice, subject to the terms andprovisions of this Agreement.
     **3. Compensation.**TheEmployee’s salary (“Annual Base Salary”) and benefitsshall be as set forth in the Offer Letter initial base salary during the term ofthis Agreement shall be Two Hundred and Twenty Five Thousand Dollars and No/100Cents ($225,000.00) per annum (“Annual Base Salary”). Commencing with theCompany’s first performance review cycle after the effective date ofemployment, the Employee shall participate in the Company’s annual performancereview process, at which time the Company may at its sole discretion increaseannual base salary as deemed appropriate by the Company, which shall become thenew Annual Base Salary when effective.
 

 

     **4. Term.**Unlessterminated or extended in accordance with the provisionshereof, the term of this agreement shall commence on the Effective Date and endthe second anniversary of the Effective Date (“Term”). **Nondisclosure ofProprietary Company Information.**During the term of this Agreement and for aperiod of two (2) years thereafter, Employee agrees: (a) to treat all CompanyProprietary Information in a secret and confidential manner, take allreasonable steps to maintain such secrecy, and comply with all applicableprocedures established by the Company with respect to maintaining the secrecyand confidentiality of Company Proprietary Information; (b) to use CompanyProprietary Information only as necessary and proper in the performance ofEmployee’s duties as an employee of the Company; and (c) except as required inthis Section, to not directly or indirectly, without the written consent of theCompany, reproduce, copy, disseminate, publish, disclose, provide or otherwisemake available to any person, firm, corporation, agency or other entity, anyCompany Proprietary Information. Under no circumstances shall Employee use,directly or indirectly, any such Company Proprietary Information for his or herpersonal gain or profit.
     **5. Change of ControlBenefits.**
          A. In the event of a Change of Control, as defined herein below, if theEmployee meets the Eligibility Requirements set forth in section 6 below, theCompany’s successor or assign shall pay Employee, in lieu of severancebenefits, a lump sum amount equal to the amount of Employee’s Annual BaseSalary as of the date of the Change of Control.
          B. In addition to the salary benefits provided in Section 5A, Employeeshall have continued eligibility to participate, for a period of one (1) yearfrom the Termination Date as defined herein (the “Post Termination Period”) ,inthe Company’s successor’s or assigns’ insured welfare benefit plans andpolicies (including, without limitation, health, dental, vision, disability andterm life insurance benefits) at the same level of employee cost and at thesame level of coverage provided to Employee as of the Termination Date, itbeing understood that the Company’s successor or assign has and reserves theright to amend, modify or replace such plans or policies to providesubstantially similar insured coverage during the Post Termination Period. Forpurposes of the Company’s successor or assigns welfare benefit plans andpolicies subject to the Consolidated Omnibus Budget Reconciliation Act of 1985,as amended (“COBRA”),
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Employee’s “qualifying event” for COBRA purposes shall be the TerminationDate.(The salary and other benefits specified in Sections 5A and B hereof arecollectively referred to as the “Severance Benefits”). Employee shall enjoycontinued entitlement to such other accrued or earned and vested benefitsprovided under the Company’s successor’s or assign’s plans, programs, policiesand practices as of the Termination Date.C. Notwithstanding any other provisionunder this Agreement, Employee shall not be entitled to receive the SeveranceBenefits in the event that: (i) the Company’s successor or assign (or any ofits respective affiliates) terminates Employee’s employment for Cause (asdefined in Section 5D below); (ii) Employee dies (in which case the terms ofSection 5E below shall apply); (iii) Employee is determined to be totally andpermanently disabled (in which case the terms of Section 5E shall apply); or(iv) Employee resigns other than for Good Reason. In any such event, Employee,in addition to any benefits payable in accordance with this Agreement, shall beentitled only to his salary and benefits accrued or earned and vested underother plans, programs, policies, practices and coverages of the Company’ssuccessor or assign (or any of its respective affiliates).
          D. For purposes of this Agreement, “Cause” is defined as the occurrence ofone of the following: (i) the Employee’s breach of any material provision ofthis Agreement; (ii) any act, failure to act, series of acts or failures toact, or course of conduct of Employee constituting reckless, willful, orcriminal misconduct in the performance of duties specified in this Agreement;(iii) any failure to perform, or gross negligence or incompetence in theperformance of, the duties specified in this Agreement; or (iv) the Employee’scommission of a crime involving conversion, misappropriation, larceny, theft,fraud, dishonesty, embezzlement, moral turpitude or any other felony,regardless of whether such crime involves the Company. Following an initialdetermination by the President that Cause exists, the President shall provideEmployee with written notice of the details of the alleged Cause andopportunity to a hearing before the Chairman of the Board of Directors tocontest the validity of the initial determination. The President, with theconcurrence of the Chairman of the Board of Directors, shall thereafter make afinal determination as to whether Cause exists.
          E. In the event of Employee’s death or total disability (as defined in theCompany’s long term disability insurance plan) at any time the Employee isentitled to benefits
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under this Section 5, the Company shall pay to Employee’s heir or personalrepresentatives, as the case may be, six (6) monthly payments, each equal toone-twelfth (1/12) of Employee’s then-current salary, commencing with the firstcalendar month after termination. In the event of the Employee’s totaldisability at any time the Employee is entitled to benefits under this Section5, the Company shall pay to Employee six (6) monthly payments, each equal toone-twelfth (1/12) of Employee’s then-current salary less any payments underthe Company’s long term disability insurance plan that Employee receives or isentitled to receive in each such month, commencing with the first calendarmonth after termination.
     **6. Eligibility forChange of Control Benefits.**If Employee terminatesemployment with any successor or assign (or any of their respective affiliates)of the Company at any time during the twenty four (24) month period beginningon the effective date of a Change in Control (the “Protection Period”), heshall be entitled to the Change of Control Benefits described in Section 5. Ifduring the Protection Period, Employee terminates his employment for GoodReason (as defined below) by delivering to the successor or assign of theCompany (or its respective affiliate), as applicable, each no later than thirty(30) days after learning of the occurrence of an event constituting GoodReason: (i) a Preliminary Notice of Good Reason (as defined below); and (ii) aNotice of Termination (as defined below); Employee shall have the right, inhis sole and reasonable discretion, to receive Change of Control Benefits. Forpurposes of this Agreement, the following terms shall have the respectivemeanings:
          A. “Good Reason” shall only result upon the occurrence, without Employee’sprior written consent, of one or more of the following events, as determined byEmployee in good faith, during the Protection Period: (i) Employee’s authorityor responsibility has materially diminished as compared to Employee’s authorityand responsibility in effect immediately prior to a Change in Control; (ii)Employee has been assigned permanent duties inconsistent with his position,responsibility and status with the Company immediately prior to the ProtectionPeriod; (iii) there has been an adverse change in Employee’s title or office asin effect immediately prior to the Protection Period; (iv) Employee’s base payor incentive compensation has been reduced; or (v) Employee’s principal worklocation is more than ten (10) miles away from the principal work location asimmediately prior to the Protection Period; provided, however, that “Good
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Reason” shall not include (x) acts not taken in bad faith that are curedby the Company’s successor or assign in all respects, including withoutlimitation restoration of all back pay and incentive compensation through theTermination Date, not later than thirty (30) days from the date of receipt bythe successor or assign of the Company (or its respective affiliate), asapplicable, of a written notice from Employee identifying in reasonable detailthe act or acts constituting “Good Reason” in a “Preliminary Notice of GoodReason”, or (y) acts for which Employee does not provide a Preliminary Noticeof Good Reason within thirty (30) days of learning of the occurrence of theevent constituting Good Reason.
          B. “Notice of Termination” shall mean a notice that indicates inreasonable detail the facts and circumstances claimed to provide a basis fortermination of Employee’s employment.
          C. “Termination Date” shall mean the date specified in the Notice ofTermination for termination of Employee’s employment under this Agreement.
     **7. Change inControl.**For the purposes of this Agreement, a “Change ofControl” shall mean and shall be effective upon the closing date of: (i) thedissolution or liquidation of the Company; (ii) the merger or consolidation ofthe Company with any other corporation, foundation, association or other entitywhich results in the Company’s shareholders owning less than 51% of theresulting merged or consolidated entity; (iii) the amendment of the Company’scorporate documents to grant a party other than the Company’s Employee StockOwnership Plan, the right to designate, elect or remove a majority of theCompany’s voting directors; or (iv) the transfer to another corporation,foundation, association or other entity in a sale, lease, exchange or othersimilar transfer (in a single transaction or in a series of relatedtransactions) of all or substantially all of the assets of the Company.
     **8. Indemnification.**The Company shall indemnify, defend, hold and saveEmployee, his heirs, administrators or executors harmless from any and allactions and causes of actions, claims, demands, liabilities, losses, costs,damages or expenses of whatsoever kind of nature, including judgments, interestand attorney’s fees, that Employee, his heirs, administrators or executors maysustain or incur subsequent to the date of this Agreement or become subject to
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by reason of any claim or claims, resulting from Employee’s execution ofthe terms and conditions of this Agreement, except for Employee’s fraudulent orcriminal acts or omissions or gross negligence except as prohibited byapplicable law.
     **9. Miscellaneous.**
          A. Any notices required by this Agreement shall: (i) be delivered bymessenger or made in writing and mailed by certified mail, return receiptrequested, with adequate postage prepaid; (ii) be deemed given when sodelivered or mailed; and (iii) in the case of the Company, be delivered ormailed to its office at 1750 Tysons Boulevard, Suite 1300, McLean, Virginia22102-4213, Attn: Chief Executive Officer, or in the case of the Employee, bemailed to the last home address that the Employee has given to the Company.
          B. The obligations and duties of the Employee under this Agreement arepersonal and not assignable. This Agreement shall be binding upon and inure tothe benefit of, the parties, their successors, assigns, personalrepresentatives, distributes, heirs, and legatees. If any term or provision ofthis Agreement is held to be illegal or invalid, such illegality or invalidityshall not affect the remaining terms or provisions hereof, and each suchremaining term and provision of this Agreement shall be enforced to the fullestextent permitted by law.
          C. If any dispute arises under this Agreement, such dispute shall bereferred to a panel of three (3) arbitrators for resolution. Thethree-arbitrator panel shall be selected as follows: the Company willdesignate one arbitrator, the Employee will designate one arbitrator, and thetwo designees will mutually select the third. The American ArbitrationAssociation’s Voluntary Labor Arbitration Rules shall govern procedures for thearbitration, unless the three arbitrators unanimously agree to adopt adifferent rule or rules. The arbitration shall occur in the the City ofMcLean, Virginia. Notwithstanding the foregoing, and specifically in the eventof a dispute over the Employee’s termination by the Company, Employee may, athis or her option, elect to have a court rather than an arbitrator resolve thedispute.
          D. This Agreement may be altered, amended or modified only by writtenagreement signed by both the Employee and the Company. No oral modification ofthis Agreement, or of any part of this Agreement including this paragraph,shall have any force or effect. No waiver by either of such parties of theirrights under this Agreement shall be deemed
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to constitute a waiver with respect to any subsequent occurrences ortransactions hereunder unless such waiver specifically states that it is to beconstrued as a continuing waiver.
          E. In any action or claim brought by either party against the other underor pursuant to this Agreement, the substantially prevailing party shall beentitled to an award of all actual attorney’s fees, costs and expenses incurredby the substantially prevailing party.
          F. This Agreement contains the entire understanding between the partiesand supersedes any prior written or oral agreement(s) between the Company andEmployee relating to the subject matter contained herein. This Agreement shallnot be modified or waived except by written instrument signed by the parties.
          G. This Agreement shall be governed by, construed and enforced inaccordance with the laws of the Commonwealth of Virginia.   **ALION SCIENCE AND TECHNOLOGY** ** ****CORPORATION** **EMPLOYEE**   /s/ Katherine C. Madaleno /s/ James C. Fontana   Signature Signature   Katherine C. Madaleno James C. Fontana   Name Name   Corporate Vice President   Director, Human Resources, Payroll and Risk Management   Title  
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