Exhibit 4.22





Exhibit 4.22




ALION SCIENCE AND TECHNOLOGY CORPORATION

2004 STOCK APPRECIATION RIGHTS PLAN

(as amended and restated effective January 1, 2007)




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 “Company”) and to motivate such persons to
contribute to the growth and future success of the Company.



1.3. Effective Date; Term. The Plan was initially effective as of November 9, 2004,
and was amended and restated effective as of November 9, 2005. The Plan is hereby further amended
and restated effective January 1, 2007 to comply with final regulations under Code Section 409A;
provided, however, that any provision herein required to be effective as of an earlier date in
order for the Plan to comply with Code Section 409A shall be effective as of such earlier date. No
Award shall be granted under the Plan after the close of business on the day immediately preceding
the eighth (8th) anniversary of the initial 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 twelve percent (12%) 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. “Administrative Committee” means the Compensation Committee of the Board, or such person
or persons as the Compensation Committee shall designate, unless the Board resolves to act itself
as the Administrative Committee.



2.2. “Affiliate” means an entity which is a member of a “controlled group” of corporations
with Alion under Code Section 414(b) or a trade or business under common control with Alion under
Code Section 414(c); provided, however, that in applying Code Sections 1563(a)(1), (2) or (3) and
for the purposes of Code Section 414(b), the language “at least 50 percent” will be used instead of
“at least 80 percent” each place it appears, and in applying Treasury Regulation Section 1.414(c)-2
for purposes of Code Section 414(c), the language “at least 50 percent” will be used instead of “at
least 80 percent” each place it appears. In addition, to the extent the Administrative Committee
determines that legitimate business criteria exist to use a reduced ownership percentage to
determine whether an entity is an Affiliate for purposes of determining whether a Termination of
Employment has occurred, the Administrative Committee may designate an entity that would meet the
definition of “Affiliate” by substituting “20 percent” in place of “50 percent” in the preceding
sentence as an Affiliate. Such designation shall be made by December 31, 2007 or, if later, at the
time a 20 percent or more ownership interest in such entity is acquired.



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 Company
which contains a definition of “cause” or “for cause” or words of similar import for
purposes of termination of employment thereunder by the Company, “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 Company; (ii) the Participant’s fraud, dishonesty or other
deliberate injury to the Company in the performance of his or her duties on behalf of, or
for, the Company; (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
Company; (iv) the willful commission by the Participant of a criminal or other act that
causes substantial economic damage to the Company or substantial injury to the business
reputation of the Company; (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 Company.



2.6. “CEO” means the Chief Executive Officer of Alion.


 


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2.7. “Change in Control” shall mean and shall be deemed to have occurred as of the date of the
first to occur of the following events:




(a) any Person or Group acquires stock of the Alion that, together with stock held by
such Person or Group, constitutes more than fifty percent (50%) of the total Fair Market
Value or total voting power of the stock of Alion. However, if any Person or Group is
considered to own more than fifty percent (50%) of the total Fair Market Value or total
voting power of the stock of Alion, the acquisition of additional stock by the same Person
or Group is not considered to cause a Change in Control of Alion. An increase in the
percentage of stock owned by any Person or Group as a result of a transaction in which Alion
acquires its stock in exchange for property will be treated as an acquisition of stock for
purposes of this subsection. This subsection applies only when there is a transfer of stock
of Alion (or issuance of stock of Alion) and stock in Alion remains outstanding after the
transaction;




(b) any Person or Group acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such Person or Group) ownership of stock of Alion
possessing thirty percent (30%) or more of the total voting power of the stock of Alion;




(c) a majority of members of Alion’s Board is replaced during any 12-month period by
Directors whose appointment or election is not endorsed by a majority of the members of
Alion’s Board prior to the date of the appointment or election; or




(d) any Person or Group acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such Person or Group) assets from Alion that have
a total gross fair market value equal to or more than forty percent (40%) of the total gross
fair market value of all of the assets of Alion immediately prior to such acquisition or
acquisitions. For this purpose, gross fair market value means the value of the assets of
Alion, or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets. However, no Change in Control shall be deemed to
occur under this subsection (d) as a result of a transfer to:




(i) A shareholder of Alion (immediately before the asset transfer) in exchange
for or with respect to its stock;




(ii) An entity, fifty percent (50%) or more of the total value or voting power
of which is owned, directly or indirectly, by Alion;




(iii) A Person or Group that owns, directly or indirectly, fifty percent (50%)
or more of the total value or voting power of all the outstanding stock of Alion; or




(iv) An entity, at least fifty percent (50%) of the total value or voting power
of which is owned, directly or indirectly, by a person described in clause (3)
above.


 


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For these purposes, the term “Person” shall mean an individual, corporation,
association, joint-stock company, business trust or other similar organization, partnership,
limited liability company, joint venture, trust, unincorporated organization or government or
agency, instrumentality or political subdivision thereof (other than an employee benefit trust
established or maintained for the benefit of employees of the Company). The term “Group”
shall have the meaning set forth in Rule 13d-5 of the Securities Exchange Commission (“SEC”),
modified to the extent necessary to comply with Treasury Regulation Section 1.409A-3(i)(5), or any
successor thereto in effect at the time a determination of whether a Change in Control has occurred
is being made. If any one Person, or Persons acting as a Group, is considered to effectively
control the Company as described in subsections (b) or (c) above, the acquisition of additional
control by the same Person or Persons is not considered to cause a Change in Control.



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” means that the Participant (a) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expect to last for a continuous period of not less than 12
months; (b) is, by reason of any medically determinable physical or mental impairment that 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 Company; or (c) has been determined to be
totally disabled by the Social Security Administration.



2.10. “Fair Market Value” on any given date means the value of one share of Stock as
determined by the Administrative Committee in its sole discretion, based upon the most recent
valuation of the Stock made by an independent appraisal that meets the requirements of Code Section
401(a)(28)(C) and the regulations thereunder as of a date that is no more than 12 months before the
relevant transaction to which the valuation is applied.



2.11. “Grant Agreement” means the agreement between the Company and the Participant pursuant
to which the Company authorizes an Award hereunder. Each Grant Agreement entered into between the
Company and a Participant with respect to an Award granted under the Plan shall incorporate the
terms of this Plan and shall contain such terms and conditions, consistent with the provisions of
the Plan, as may be established by the Administrative Committee. 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 Administrative Committee formally acts to grant
an Award to a Participant or such other date as the Administrative Committee shall so designate at
the time of taking such formal action.



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


 


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2.14. “Payment Date” means the first anniversary of the date a Participant’s Award becomes
100% Vested, or such other date as the Administrative Committee shall designate with respect to a
Vested amount in the Participant’s Grant Agreement, or, if earlier, the date set forth in Section
5.6 of the Plan.




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 the severing of employment with the Company and its
Affiliates for any reason. A Termination of Employment will be deemed to have occurred if the
facts and circumstances indicate that the Company and Participant reasonably anticipate that no
further services will be performed after a certain date or that the level of bona fide services the
Participant will perform for the Company or any Affiliate after such date (whether as an employee
or as an independent contractor) will permanently decrease to no more than the lesser of (a) 19
hours of bona fide services per week, or (b) fifty percent (50%) of the average level of bona fide
services performed (whether as an employee or an independent contractor) over the immediately
preceding 36-month period (or the full period of services to the employer if the Participant has
been providing services to the Company and its Affiliates). A Participant will not be deemed to
have incurred a Termination of Employment while he or she is on military leave, sick leave, or
other bona fide leave of absence (such as temporary employment by the government) if the period of
such leave does not exceed six months or such longer period as the Participant’s right to
reemployment with the Company or any Affiliate is provided either by statute or by contract. If
the period of leave exceeds six months and the Participant’s right to reemployment is not provided
either by statute or by contract, the Termination of Employment will be deemed to occur on the
first date immediately following such six-month period. Whether a Participant incurs a termination
of employment with the Company or an Affiliate will be determined in accordance with the
requirements of Code Section 409A.



2.18. “Vested” or “Vesting” refers to the extent to which an Award ceases to be subject to a
risk of forfeiture under Section 5.6(a) or (d). Subject to the provisions of Section 5.6 below,
unless the Administrative Committee determines otherwise in the Grant Agreement, 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 Administrative Committee. The
Administrative Committee 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.


 


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3.2. Procedure. The Administrative Committee 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 Administrative Committee hereunder shall constitute a quorum. Any acts by the Administrative
Committee 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 Administrative Committee hereunder shall
be valid acts of the Administrative Committee. 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 Administrative Committee during
which action is taken with respect to the granting of an Award to him or her.



3.3. Duties. The Administrative Committee 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
Administrative Committee deems necessary or advisable, all within the Administrative Committee’s
sole and absolute discretion. The Administrative Committee 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 Company 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 Administrative Committee 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
Company, except for Awards made to executive officers of the Company. 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 Administrative Committee 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 Company, the Administrative Committee hereby delegates to the CEO the authority to
nominate persons to receive Awards, which nomination shall be subject to the
approval of the Administrative Committee. The Administrative Committee 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 Administrative Committee.


 


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3.5. Limited Liability. To the maximum extent permitted by law, no member of the
Board or committee serving as Administrative Committee 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 Company’s
charter and by-laws, the members of the Board or committee serving as Administrative Committee
hereunder shall be indemnified by the Company in respect of all their activities under the Plan.



3.7. Effect of Administrative Committee’s Decision. All actions taken and decisions
and determinations made by the Administrative Committee on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Administrative Committee’s sole and
absolute discretion and shall be conclusive and binding on all parties concerned, including the
Company, its stockholders, any Participants in the Plan and any other employee of the Company, 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 Company who, in the opinion of the Administrative Committee, 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 Company
and the Participant.



ARTICLE V

STOCK APPRECIATION RIGHTS




5.1. Award of SARs. Subject to the other applicable provisions of the Plan, the
Administrative Committee may at any time and from time to time grant SARs to eligible Participants,
as it determines. Notwithstanding the foregoing, 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 Company maintains an employee stock ownership plan as described in and qualified under
section 4975(e)(7) and 401(a) of the Code, respectively. Any grant of SARs made in violation of
this provision 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 Company and the
Participant, stating the number of SARs and the terms and conditions of such SARs, including the
terms and conditions governing the Vesting of
Awards, in such form as the Administrative Committee 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.


 


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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 (1) the excess of (i) the Fair Market Value on the Payment
Date of one share of Stock over (ii) 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 (2) the
number of shares specified by the SAR which are then Vested. Notwithstanding the foregoing, in the
event of a Change in Control, except to the extent an applicable Grant Agreement provides
otherwise, Fair Market Value under (1)(i) of the preceding sentence shall be equal to the share
price of one share of Alion Common Stock based on the transaction price of the Change in Control
transaction, or the most recently determined per share Fair Market Value, whichever is greater.



5.3. Payment of SARs. Except as provided in Section 5.4, 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. All federal, state and local taxes, as well as other appropriate items, will be
withheld from payments. However, in lieu of payment of an Award under the preceding sentence, a
Participant granted an SAR under this Plan before November 9, 2005, was permitted to elect in
accordance with Internal Revenue Service Notice 2005-1, Q-20(a), to receive payment of any such
Award in calendar year 2005 or, if later, in the taxable year in which amounts under the Award
become earned and vested.



5.4. Election to Defer Benefits. A Participant who is (or is eligible to become) a
participant in the Alion Science and Technology Corporation Executive Deferred Compensation Plan
(the “Deferred Compensation Plan”) may elect to defer the amount of benefit that would
otherwise be payable with respect to an Award that is 100% Vested upon a Payment Date into the
Deferred Compensation Plan. Any such election shall be made in a writing acceptable to the
Administrative Committee and filed with the Administrative Committee at least one year prior to the
Payment Date; provided, however, that an election to defer the receipt of a payment under this
Section 5.4 that would, absent such a deferral election, be treated as a short-term deferral within
the meaning of Treasury Regulation Section 1.409A-1(b)(4) must be made as of a date permitted by
the Administrator that is at least one year prior to the date such payment ceases to be subject to
a substantial risk of forfeiture. Such election shall become effective upon the Payment Date (or
the date such payment ceases to be subject to a substantial risk of forfeiture, as applicable) and
shall specify a time for payment and method of distribution available under the Deferred
Compensation Plan, provided that such election may not provide for a time of distribution (other
than as a result of Termination of Employment, Change in Control, death or Disability) earlier than
five years after the Payment Date. If the Participant has elected a time of payment or method of
distribution under the Deferred Compensation Plan that will apply to amounts deferred hereunder and
is different from the time or method of distribution specified in Section 5.6(a), (b) or (c), as
applicable, the deferral election under this Section 5.4 shall be treated as a change election
under Treasury Regulation Section 1.409A-2(b) and Section 5.2(b) of the Deferred Compensation Plan.
This Section 5.4 shall not apply to amounts payable under the second sentence of Section 5.3.


 


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5.5. Disqualified Persons. If Participant is or becomes a Disqualified Person as
described in Section 5.1 above, then the full amount of any then outstanding Award that has not yet
Vested shall be forfeited and no amount of an Award shall become Vested, if, as a result of such
Vesting, the Participant would become a Disqualified Person and the Vesting of any such grant would
result in a “nonallocation year” (within the meaning of Code Section 409(p)(3)).




5.6. Termination and Forfeiture of Awards.




(a) Termination of Employment. Except as further provided below, a Participant
who has a Termination of Employment for any reason other than death or Disability shall
forfeit his or her rights to all unvested Awards. The Payment Date of any then outstanding
Vested Awards shall be the date of Termination of Employment.




(b) Death or Disability. If a Participant incurs a Termination of Employment
due to death or Disability, the Participant shall become fully Vested in any outstanding
Awards, and the Payment Date shall be the date of the Participant’s Termination of
Employment due to death or Disability.




(c) Change in Control. In the event of a Change in Control, if and to the
extent provided in the applicable Grant Agreement, a Participant shall become fully Vested
in any outstanding Awards under the Grant Agreement, and the Payment Date shall be the date
of the Change in Control.




(d) Termination for Cause. If a Participant has a Termination of Employment
for Cause, such Participant shall forfeit his or her rights to all unvested 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.



5.8. Acceleration of Payment Date. Notwithstanding the foregoing, the Payment Date of
a Vested Award may be accelerated, with the consent of the Administrative Committee, under the
following circumstances:




(a) Compliance with Domestic Relations Order: To permit payment to an
individual other than the Participant as necessary to comply with the provisions of a
domestic relations order (as defined in Code Section 414(p)(1)(B));




(b) Conflicts of Interest: To permit payment as necessary to comply with the
provisions of a Federal government ethics agreement or to avoid violation of applicable
Federal, state, local or foreign ethics law or conflicts of interest law;




(c) Payment of Employment Taxes: To permit payment of federal employment taxes
under Code Sections 3101, 3121(a) or 3121(v)(2), or to comply with any federal tax
withholding provisions or corresponding withholding provisions of applicable state, local,
or foreign tax laws as a result of the payment of federal
employment taxes, and to pay the additional income tax at source on wages attributable
to the pyramiding Code Section 3401 wages and taxes; or


 


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(d) Section 409(p): To prevent the occurrence of a nonallocation year (within
the meaning of Code Section 409(p)(3)) in the plan year of an employee stock ownership plan
next following the plan year in which such payment is made, provided that the amount
distributed may not exceed 125% of the minimum amount of distribution necessary to avoid the
occurrence of a nonallocation year; or




(e) Tax Event: Upon a good faith, reasonable determination by the Company,
upon advice of counsel, that the Plan or an Award fails to meet the requirements of Code
Section 409A and regulations thereunder. Such payment may not exceed the amount required to
be included in income as a result of the failure to comply with the requirements of Code
Section 409A.



5.9. Delay of Payments. If the Committee reasonably determines that the making of any
payment required under the Plan at the date specified in the Plan would jeopardize the ability of
the Company to continue as a going concern, the payment will be treated as made upon the date
specified under the Plan if the payment is made during the first taxable year of the Company in
which the making of the payment would not have such effect. In addition, a payment otherwise
required to be made under the terms of the Plan may be delayed solely to the extent necessary under
the following circumstances, provided that payment is made as soon as possible within the first
taxable year of the Participant after the reason for delay no longer applies:




(a) Payments Subject to the Deduction Limitation: The Company reasonably
anticipates that such payment would otherwise violate Code Section 162(m);




(b) Violation of Law: The Administrator reasonably determines that making the
payment will violate Federal securities or other applicable laws; or




(c) Other Permitted Event: Upon such other events and conditions as the
Commissioner of Internal Revenue shall prescribe in generally applicable guidance.



5.10. Compliance with Code Section 409A. No payment shall be made in violation of
Section 409A or any other applicable provisions of the Code and the rules and regulations
thereunder.



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 Administrative Committee shall make an appropriate or proportionate adjustment
in the Awards as it deems appropriate, in its sole discretion. The adjustment by the
Administrative Committee shall be final, binding and conclusive.


 


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6.2. Adjustments Due to Special Circumstances. The Administrative Committee 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 Company, or the financial statements
of the Company, or of changes in applicable laws, regulations, or accounting principles, whenever
the Administrative Committee 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. Compliance with Code Section 409A. Notwithstanding the foregoing, the
Administrative Committee shall not make an adjustment under this Article VI which results in a
violation of Code Section 409A.



ARTICLE VII

AMENDMENT AND TERMINATION




7.1. Amendment. The Board may amend the Plan at any time and from time to time,
provided that (a) 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 (b) amendments may be
subject to shareholder approval to the extent needed to comply with applicable law.
Notwithstanding the foregoing, the Board may amend the Plan or any outstanding Award subject to
Section 409A as necessary to cause the Plan or such Award to comply with Code Section 409A.



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. Termination
of the Plan shall not affect the Administrative Committee’s ability to exercise the powers granted
to it hereunder with respect to Awards granted under the Plan prior to the date of such
termination. Notwithstanding the foregoing, termination of the Plan shall not result in the
acceleration of payment of any Award except as permitted by the Administrative Committee and
consistent with the requirements of Code Section 409A.



ARTICLE VIII

MISCELLANEOUS




8.1. Restrictive Legends. The Company 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.


 


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8.3. Company 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
Company and a Participant or any other person. To the extent that any Participant or other person
acquires a right to receive payments from the Company pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company; 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 Company 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 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 Company 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 Company from adopting or continuing in effect other compensation arrangements (whether
such arrangements be generally applicable or applicable only in specific cases) as the
Administrative Committee, 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 Company 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.


 


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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 Administrative
Committee 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 Administrative Committee
shall also be entitled to pay such sum into court in accordance with the appropriate rules of law.
Any expenses incurred by the Company or the Administrative Committee incident to such proceeding or
litigation shall be charged against the account of the affected Participant.



8.10. Incompetence. If the Administrative Committee determines that any person to
whom a benefit is payable under the Plan is incompetent by reason of a physical or mental
disability, the Administrative Committee 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
Administrative Committee or the Company 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
Administrative Committee and the Company.



IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed as of November
13, 2007, and certifies that the foregoing Plan, as amended and restated herein, was duly adopted
by the Board of the Company on that date.



	 	 	 	 	 	 	 
	 	 	Alion Science and Technology Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Bahman Atefi
 

Chief Executive Officer
	 	 







 


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