**Exhibit 10.39****Employment Agreement**This Employment Agreement is entered into, and is effective as of the 28th day of June, 2007 (the“Effective Date”), by and between Alion Science and Technology Corporation (the “Company”) andJames C. Fontana (the “Executive”), under the following terms and conditions:**Article 1. Employment and Duties**Upon the terms and subject to the conditions contained herein, the Company hereby employs theExecutive as Senior Vice President, General Counsel and Secretary. The Executive shall have all ofthe powers**,**duties and responsibilities customary to his position as are reasonably necessary toacting as the Company’s chief legal officer and as may be assigned to him from time to time by theChief Executive Officer (the “CEO”). The Executive shall further be responsible for supervisingand directing other officers and employees of the Company. The Executive’s employment is at-willand for an indefinite period. The Executive or the Company may terminate the Executive’semployment at any time, subject to the terms and provisions of this Agreement.**Article 2. Compensation and Benefits**The Company shall continue to pay the Executive a Base Salary not less than Two Hundred SixtyThousand and Thirty Nine Dollars **(**$260,039**)**per year, subject to adjustments in the discretion ofthe Board of Directors (the “Board”). The Company shall further provide to the Executive allbenefits to which other executives of the Company are entitled, as commensurate with theExecutive’s position, subject to the eligibility requirements and other provisions of such benefitsand other perquisites as determined by the Board. Such benefits and perquisites may include bonus,long term incentives, group term life insurance, comprehensive health and major medical insurance,dental and life insurance, disability, automobile allowance and club memberships. All suchcompensation and benefits shall be subject to all appropriate federal and state withholding taxesand payable in accordance with the normal payroll practices of the Company.**Article 3. Employment Termination and Severance****3.1.**(a) **Without Cause.**During the Employment Period, other than during a Potential Change inControl Protection Period or within the period ending twenty-four (24) calendar months immediatelyfollowing a Change in Control as specified in Article 5 below, the Company may terminate theExecutive’s employment for reasons other than Cause, by notifying the Executive in writing of theCompany’s intent to terminate with the effective date of termination specified by the Company inthe written notice. Upon the effective date of termination under this Article 3.1, if the Executivetimely signs a General Release and does not revoke or violate such General Release, the Companyshall be obligated to pay to the Executive (subject to all appropriate federal and statewithholding taxes):     (i) A lump-sum cash payment equal to one (1) times the Executive’s Base Salary at the rate ineffect immediately prior to the termination.
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     (ii) A lump-sum cash payment equal to one (1) times the Executive’s actual bonus for the lastcomplete fiscal year prior to the effective date of termination, if any.     (iii) Base Salary and all other benefits due the Executive through the effective date oftermination.     (iv) The unpaid bonus, if any, with respect to the last complete fiscal year preceding theeffective date of termination (such bonus, if any, to be determined in the manner it would havebeen determined and payable at the time it would have been payable hereunder had there been notermination of the Employment Period).     (v) To the extent that the Executive is eligible for and elects to receive medical and/ordental 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 the Executive’sbehalf, or reimburse the Executive for, the amount of the applicable COBRA that exceeds the amountof premium payable by the Executive for the same level of coverage immediately prior to theeffective date of termination. Any such COBRA premium payment by the Company that constitutestaxable income to the Executive shall be grossed up by the Company, assuming an applicable incometax rate of forty percent (40%). Payments under this paragraph shall cease at the earlier of (i)the end of the first month in which the Executive is no longer eligible for COBRA for any reason(other than death or eligibility for Medicare, provided that COBRA coverage continues for anyqualified beneficiary), or (ii) eighteen (18) months after the Executive’s date of termination.The Executive shall notify the Company as soon as practicable after he ceases to be eligible forCOBRA coverage due to coverage under the group health plan of another employer.     (vi) All other rights and benefits that the Executive is vested in, pursuant to other plansand programs of the Company.     (b) **Retirement.**If the Executive’s employment terminates due to Retirement (as defined theExecutive’s termination of employment upon reaching age sixty-five (65) for any reason other thandeath, Disability (as defined below) or Cause (as defined in Article 3.3), the Company shall beobligated to pay the Executive the amounts and benefits described in Article 3.1(a)(iii), (iv), (v)and (vi).     (c) **Death or Disability**. If the Executive’s employment is terminated by reason of Disability(as defined as in the Company’s long-term disability plan), the Company shall be obligated to paythe Executive or, if applicable, the Executive’s estate: The amounts and benefits described inArticle 3.1(a) (iii), (iv), (v) and (vi), and an additional lump-sum cash payment equal to theExecutive’s Base Salary for a period of six (6) months; provided, however, that such lump sumpayment shall be offset by any payments under the Company’s short-term disability policy or underany long-term disability plan or insurance program maintained by the Company.     (d) **Voluntary Termination**. The Executive may terminate this Agreement at any time by givingthe Company written notice of intent to terminate. The Executive will receive the
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amounts and benefits described in Article 3.1(a) (iii), (iv) and (vi), but shall not be paid anybonus with respect to the fiscal year in which voluntary termination occurs.**3.2. General Release**. As a condition precedent to receiving any of the payments and benefits setforth in Article 3.1 above, upon the effective date of termination under Article 3.1(a), (b) (c) or(d) above**,**the Executive (or his estate as the case may be) agrees to execute and return to theCompany, and shall not revoke or attempt to revoke, a general release (a “General Release”) in aform acceptable to the Company, within thirty (30) days following the effective date oftermination, that (i) releases the Company and its affiliates, directors, officers, employees andagents from any and all claims that the Executive may have in connection with his employment ortermination thereof, to the extent permitted by applicable laws, and (ii) the Executiveaffirmatively agrees not to violate the provisions of Article 4.**3.3. Termination for Cause**. In the event that the Executive is terminated for Cause, the Executivewill not be entitled to any severance or other benefits upon termination other than those accruedbenefits provided to employees pursuant to existing Company policy. “Cause” means:     (a) TheExecutive’s commission of a felony of or a crime involving moral turpitude; or     (b) The Executive committing an act constituting fraud, deceit, or material misrepresentationwith respect to the Company; or     (c) In the Company’s reasonable discretion, the Executive committing any negligent or willfulact or omission that causes material damage (by reason, without limitation, of financial exposureor loss, damage to reputation or goodwill, or exposure to civil or criminal penalties or otherprosecutorial action by any governmental authority) to the Company or any parent or subsidiarycorporation thereof; or     (d) Willful or material violation of any provision of the Company’s Code of Ethics, Conductand Responsibility; or     (e) Willful and material misstatement knowingly made or caused to be made by the Executive inany filing with the Securities and Exchange Commission; or     (f) Willful or material violation of any of the covenants contained in Article 4, asapplicable.For purposes of this Article 3.3, no act or omission by the Executive shall be considered “willful”unless it is done or omitted in bad faith or without reasonable belief that the Executive’s actionor omission was in the best interests of the Company. Any act or failure to act based upon: (a)authority given pursuant to a resolution duly adopted by the Board; or (b) advice of counsel forthe Company, shall be conclusively presumed to be done or omitted to be done by the Executive ingood faith and in the best interests of the Company.
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The effective date of termination shall be the date specified by the Company. If this Agreement isterminated for Cause, the Company shall be obligated to pay the Executive’s Base Salary through theeffective date of termination, and the Executive shall immediately thereafter forfeit all rightsand benefits (other than vested benefits) the Executive would otherwise have been entitled toreceive under this Agreement.**3.4. Severance Payment Schedule**. Payments due to the Executive or, if applicable, the Executive’sestate, pursuant to termination events described in this Article 3, shall be paid in two (2)installments as follows: (a) an amount equal to six months of annual salary set forth in Article3.1(a)(i) and one-half of the total bonus amount set forth in Article 3.1(a)(ii) (the “SeveranceInstallment Payment”), and the amounts set forth in Article 3.1(a)(iii) and (iv), within thirty(30) days after the expiration of any applicable statutory period in which revocation of theGeneral Release is permitted (the “First Installment”); and (b) an amount equal to the SeveranceInstallment Payment six (6) months from the date of payment of the First Installment (the “SecondInstallment) (the “Final Installment). The Company’s obligation to pay severance amounts due tothe Executive pursuant to this Article 3, to the extent not already paid, shall cease immediatelyand such payments will be forfeited if the Executive violates any condition described in Article 3or 4. The parties intend and agree that any payments contemplated by this Agreement constituting“deferred compensation” for purposes of Code Section 409A shall comply with the requirements ofsuch section. No deferred compensation payable hereunder shall be subject to acceleration or toany change in the specified time or method of payment, except as otherwise provided under thisAgreement and consistent with Code Section 409A. In no event shall the Company have any liabilityor obligation with respect to taxes for which Executive may become liable as a result of theapplication of Code Section 409A.**Article 4. Noncompetition, Confidentiality, Nonsolicitation, and Ownership****4.1. Noncompetition**. The Executive acknowledges and agrees that by virtue of his employment withthe Company, he has or will have access to valuable proprietary information not known to the publicthat the Company possesses, including but not limited to, methods of operation, business strategiesand plans, financial information, marketing materials, ideas, trade secrets, customer contacts andother customer information (“Proprietary Information”). The Executive further acknowledges andagrees that the Company has legitimate business interests in assuring that his unique knowledge ofthe Company, including but not limited to that knowledge regarding and relating to the foregoinginformation, is not disclosed or converted to the use of entities or individuals in competitionwith the Company. The Executive therefore agrees that during the Employment Period and for aperiod of one year after the date of termination or cessation of the Executive’s employment withthe Company for any reason whatsoever, he will not, directly or indirectly, compete with theCompany 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 havean 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 orservices of the same or similar type as the products or services which are sold (or, pursuant to anexisting business plan, will be sold) to paying customers of the Company or its subsidiaries oraffiliates, and for which the Executive
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has the responsibility to plan, develop, manage, market, or oversee, or had any such responsibilitywithin the Executive’s most recent twenty-four (24) months of employment with the Company.Following termination of employment, the Executive may request in writing an exception to theforegoing provision from the Company for prospective employment, which exception will be granted ifthe Company, in its sole discretion, determines that such prospective employment will not unduly ormaterially compete with or otherwise interfere with the business of the Company.In addition to the foregoing, the Executive agrees that, for a period of one year after the date oftermination or cessation of the Executive’s employment with the Company for any reason whatsoever,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 relationshipwith the Company, whether as a consultant, client, customer or otherwise, to terminate or ceasesuch relationship with the Company, or to fail to enter into or renew such relationship with theCompany.The parties agree that the above restrictions on competition are completely severable andindependent agreements supported by good and valuable consideration and, as such, shall survive thetermination of this Agreement for whatever reason. The parties further agree that any invalidity orunenforceability of any one or more of such restrictions on competition shall not render invalid orunenforceable any remaining restrictions on competition. Additionally, should a court of competentjurisdiction determine that the scope of any provision of this Article 4.1 is too broad to beenforced as written, the parties intend that the court reform the provision to such narrower scopeas it determines to be reasonable and enforceable. The Executive acknowledges and agrees that thenon-competition and non-solicitation provisions herein are expressly assignable to any successor ofthe Company as set forth in Article 6(b).**4.2. Nonsolicitation**. During the Employment Period and for a one year after the termination orcessation of his employment with the Company for any reason whatsoever, the Executive shall not, onhis own behalf or on behalf of any other person, partnership, association, corporation, or entity:(a) directly, indirectly, or through a third party hire or cause to be hired; (b) directly,indirectly, or through a third party solicit; or (c) in any manner attempt to influence or induceany employee of the Company or its subsidiaries or affiliates to leave the employment of theCompany 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 andaddresses the Company’s employees. The Executive further agrees and acknowledges that the Companyhas confidentiality and non-competition agreements with certain of its employees, and he agreesthat he will not interfere with any such agreements. The parties agree that the above restrictionson hiring and solicitation are completely severable and independent agreements supported by goodand valuable consideration and, as such, shall survive the termination of this Agreement forwhatever reason. The parties further agree that any invalidity or unenforceability of any one ormore of such restrictions on hiring and solicitation shall not render invalid or unenforceable anyremaining restrictions on hiring and solicitation. Additionally, should a court of competentjurisdiction determine that the scope of any provision of this Article 4.2 is too broad to beenforced as written, the parties intend that the court reform the provision to such narrower scopeas it determines to be reasonable and enforceable.
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**4.3. Nondisclosure of Trade Secrets**. During the term of this Agreement and for a period of two (2)years thereafter, the Executive agrees: (a) to treat all Proprietary Information in a secret andconfidential manner, take all reasonable steps to maintain such secrecy, and comply with allapplicable procedures established by the Company with respect to maintaining the secrecy andconfidentiality of Proprietary Information; (b) to use Proprietary Information only as necessaryand proper in the performance of the Executive’s duties as an employee of the Company; and (c)except as required in this Article 4.3, to not directly or indirectly, without the written consentof the Company, reproduce, copy, disseminate, publish, disclose, provide or otherwise makeavailable to any person, firm, corporation, agency or other entity, any Proprietary Information.Under no circumstances shall the Executive use, directly or indirectly, any such ProprietaryInformation for his personal gain or profit.**4.4. Nondisparagement**. During the Employment Period and at all times thereafter, the Executiveagrees to not disparage the Company or otherwise make comments harmful to the Company’s reputation.**4.5. Ownership**. The Executive agrees that all inventions, copyrightable material, business and/ortechnical information, marketing plans, customer lists, and trade secrets which arise out of theperformance of this Agreement are the property of the Company.**Article 5. Change in Control****5.1. Change in Control**. This Article 5 shall not become effective, and the Company shall have noobligation hereunder, unless the employment of the Executive with the Company shall terminate forthe reasons provided in this Article 5 during a Potential Change in Control Protection Period orwithin the period ending twenty-four (24) calendar months after a Change in Control**.****5.2. Definition of Change in Control**. Change in Control of the Company shall be as set forth in theCompany’s Phantom Stock Plan effective as of February 11, 2003, and amended and restated effectiveas of November 9, 2005, and as such plan or its successor shall be amended from time to timethereafter; provided, however, that any amendment to the definition of Change in Control shall notapply to a transaction that occurs within the twenty-four (24) calendar month period after suchamendment is adopted if such transaction would have constituted a Change in Control or PotentialChange in Control without regard to such transaction.**5.3. Potential Change in Control Definitions.**     (a) For the purposes of this Agreement, the term “Potential Change in Control” means the datewhen any of the following actions occur: (i) The Company enters into an agreement the consummationof which, or the approval by shareholders of which, would constitute a Change in Control; (ii) anyother event occurs which is deemed to be a Potential Change in Control by the Board and the Boardadopts a resolution to the effect that a Potential Change in Control has occurred.
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     (b) The term “Potential Change in Control Protection Period” means the period beginning on thedate an event described in the preceding subparagraph occurs and ending (i) with respect to aPotential Change in Control described in clause (a)(i) above, upon the abandonment or terminationof the applicable agreement; or (ii) with respect to a Potential Change in Control described inclause (a)(ii) above, upon the one year anniversary of the occurrence of the Potential Change inControl or such earlier date as may be determined by the Board.     (c) If a Change in Control occurs within the Potential Change in Control Protection Period,the Potential Change in Control Protection Period shall automatically terminate on the date of theChange in Control and the Change in Control protections described herein shall simultaneouslycommence.     (d) In addition to the foregoing, any termination of the Executive at the request of a thirdparty in contemplation of a Change in Control or Potential Change in Control shall be deemed tohave occurred during a Potential Change in Control Protection Period.**5.4. Change in Control Severance Benefits**. If, at any time during the Potential Change in ControlProtection Period or within the period ending twenty-four (24) calendar months after the occurrenceof a Change in Control, the Executive’s employment is terminated involuntarily by the Companywithout Cause (as provided in Article 3.3) or by the Executive for Good Reason (as defined below),then, if the Executive timely signs a General Release and does not revoke or violate such GeneralRelease, the Company shall be obligated to pay to the Executive, in accordance with Article 3.4:     (a) The amounts and benefits described in Article 3.1(a), (b), (c) and (d) above; and     (b) Outplacement services in an amount not to exceed twenty-five thousand dollars ($25,000)with a firm selected by the Company and at the reasonable expense of the Company; provided,however, that under no circumstances shall such outplacement services be provided beyond theDecember 31 of the second calendar year following the calendar year in which the Executive’sSeparation From Service occurred. Article 3.4 shall apply to the payment of benefits hereunder.**5.5. Definition of Good Reason**. “Good Reason” shall mean, without the Executive’s express writtenconsent, the occurrence of any one or more of the following events during the Potential Change inControl Protection Period or within the twenty-four (24) calendar month period immediatelyfollowing a Change in Control:     (a) The assignment to the Executive by the Company of duties materially inconsistent with, orthe material reduction of the powers and functions associated with, the Executive’s position,duties, responsibilities, and status with the Company;     (b) A reduction by the Company in the Executive’s Base Salary or pay incentive opportunities;unless: (i) the reduction is made with the agreement of the Executive, and/or (ii) the Base Salaryfor executives of a similar class are also similarly reduced; or (iii) there is a
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reduction in base salary or pay incentive for all senior executives holding substantiallysimilar agreements to this Agreement;     (c) The Company requiring the Executive to be based anywhere other than a location no morethan twenty (20) miles from the Company’s current principal executive offices or the location wherethe Executive is based;     (d) Any material breach by the Company of any provision of this Agreement; or     (e) Any failure by the Company to obtain the assumption of this Agreement by any successor orassign of the Company effected in accordance with the provisions of Article 6(b).Unless the Executive becomes Disabled, the Executive’s right to terminate employment for GoodReason shall not be affected by the Executive’s incapacity due to physical or mental illness. TheExecutive’s continued employment shall not constitute consent to, or a waiver of rights withrespect to, any circumstance constituting Good Reason herein. The Executive must provide theCompany with written notice of intent to terminate and request for cure within ninety (90) daysafter the occurrence of the Good Reason event, which notice, in the case of an event described inclause (a) or (d) above, shall provide the Company with a reasonable opportunity (not required toexceed fourteen (14) days) to cure the event. If the Bank cures the Good Reason event within thetime provided, the Executive’s notice of intent to terminate shall automatically be withdrawn andof no effect.**Article 6. Miscellaneous**          (a) Any notices required by this Agreement shall: (i) be delivered by messenger or made inwriting and mailed by certified mail, return receipt requested, with adequate postage prepaid;(ii) be deemed given when so delivered or mailed; and (iii) in the case of the Company, bedelivered or mailed to its office at 1750 Tysons Boulevard, Suite 1300, McLean, Virginia22102-4213, Attn: Corporate Director of Human Resources, or in the case of the Executive, be mailedto the last home address that the Executive has given to the Company.          (b) The obligations and duties of the Executive under this Agreement are personal and notassignable by the Executive. This Agreement may and shall be assigned or transferred to, and shallbe binding upon and shall inure to the benefit of, any successor of the Company, and any suchsuccessor shall be deemed substituted for all purposes of the “Company” under the terms of thisAgreement (other than for the purpose of determining whether a Change in Control has occurred ormay potentially occur). If any term or provision of this Agreement is held to be illegal orinvalid, such illegality or invalidity shall not affect the remaining terms or provisions hereof,and each such remaining 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 be referred to a panel ofthree (3) arbitrators for resolution. Any such arbitration proceeding shall take place inArlington or Fairfax County, Virginia. All disputes shall be resolved by a single arbitrator. Thearbitrator will have the authority to award the same remedies, damages, and costs that a courtcould award. The American Arbitration Association’s Voluntary Labor Arbitration Rules
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shall govern procedures for the arbitration, unless the parties unanimously agree to adopt adifferent rule or rules.          (d) This Agreement may be altered, amended or modified only by written agreement signed byboth the Executive and the Company. No oral modification of this Agreement, or of any part of thisAgreement including this paragraph, shall have any force or effect. No waiver by either of suchparties of their rights under this Agreement shall be deemed to constitute a waiver with respect toany subsequent occurrences or transactions hereunder unless such waiver specifically states that itis to be construed as a continuing waiver.          (e) This Agreement contains the entire understanding between the parties and supersedes anyprior written or oral agreement(s) between the Company and the Executive relating to thetermination of the Executive’s employment and the amounts payable under this Agreement. ThisAgreement shall not be modified or waived except by written instrument signed by the parties.          (f) To the extent not preempted by federal law, the provisions of this Agreement shall beconstrued and enforced in accordance with the laws of the state of Virginia without reference toVirginia choice of law statutes or decisions.**IN WITNESS WHEREOF**, the Executive and the Company have executed this Agreement as of the effectivedate first described above.     **EXECUTIVE:**       By: /s/ James C. Fontana       James C. Fontana       **ALION SCIENCE AND TECHNOLOGY CORPORATION:**       By: /s/ Dr. Bahman Atefi       Dr. Bahman Atefi  
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