exv10w63



 






Exhibit 10.63




ALION DIRECTOR DEFERRED COMPENSATION PLAN




AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2005




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ALION DIRECTOR DEFERRED COMPENSATION PLAN

AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2005




ARTICLE I

PURPOSE




     The purpose of this Plan is to permit non-employee Members of the Board of Alion Science and
Technology Corporation, a Delaware corporation, to defer receipt of Director’s Fees (as defined
herein). This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.



ARTICLE II

DEFINITIONS




     For purposes of this Plan, unless otherwise clearly apparent from the context, the following
phrases or terms shall have the following indicated meanings:



     2.1. “Account Balance” shall mean, with respect to a Participant, a credit on the
records of the Employer equal to the Deferral Account balance. The Account Balance shall be a
bookkeeping entry only and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to a Participant, or his or her designated Beneficiary,
pursuant to this Plan.



     2.2. “Affiliate” shall mean (a) a corporation that is a member of a controlled group
of corporations (as determined pursuant to Section 414(b) of the Code) which includes the Company
and (b) a trade or business (whether or not incorporated) which is under common control (as
determined pursuant to Section 414(c) of the Code) of the Company, (c) any organization (whether or
not incorporated) that is a member of an affiliated service group (as determined pursuant to
Section 414(m) of the Code) that includes an Employer, a corporation described in clause (a) of
this section or a trade or business described in clause (b) of this section, or (d) any other
entity that is required to be aggregated with the Employer pursuant to regulations promulgated
under Section 414(o) of the Code.



     2.3. “Annual Deferral Amount” shall mean that portion of a Participant’s Annual
Director’s Fees and SAR or Phantom Stock Payment that a Participant elects to have, and is
deferred, in accordance with Article IV, for any one Plan Year.



     2.4. “Annual Director’s Fees” means any compensation, whether for Board meetings or
as retainer fees or otherwise, earned by a Member for services rendered as a Member during a
particular Plan Year in which he or she has elected to be a Participant.



     2.5. “Beneficiary” shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article VIII, that are entitled to receive benefits under
this Plan upon the death of a Participant.



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     2.6. “Beneficiary Designation Form” shall mean the form established from time to
time by the Committee that a Participant completes, signs and returns to the Committee to designate
one or more Beneficiaries.



     2.7. “Board” shall mean the Board of Directors of the Company.



     2.8. “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 Company that, together with
stock held by such Person or Group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company. However, if any Person or Group is
considered to own more
than 50% of the total fair market value or total voting power of the
stock of the Company, the
acquisition of additional stock by the same Person or Group is not considered to cause
a Change in Control of the Company. An increase in the percentage of stock owned by any
Person or Group as a result of a transaction in which the Company 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 the Company
(or issuance of stock of the Company) and stock in the Company 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 the Company possessing 35% or more of the total voting power of the stock of the
Company;




     (c) a majority of members of the Company’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 the Company’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 the
Company that have a total gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the value of
the assets of the Company, 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 the Company (immediately before the asset
transfer) in exchange for or with respect to its stock;




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



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




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



     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. The term “Group” shall have the
meaning set forth in Rule13d-5 of the Securities Exchange Commission (“SEC”), modified to the
extent necessary to comply with Proposed Treasury Regulation Section 1.409A-3(g)(5)(v)(B), 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.



     2.9. “Claimant” shall have the meaning set forth in Section 12.1.



     2.10. “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.



     2.11. “Committee” shall mean the committee described in Article X.



     2.12. “Company” shall mean Alion Science and Technology Corporation, a Delaware
corporation and any successor to such corporation that adopts the Plan.



     2.13. “Deduction Limitation” shall mean the following described limitation on a
benefit that may otherwise be distributable pursuant to the provisions of this Plan. Except as
otherwise provided, this limitation shall be applied to all distributions that are “subject to the
Deduction Limitation” under this Plan. If the Company determines in good faith prior to a Change
in Control that there is a reasonable likelihood that any compensation paid to a Participant for a
taxable year of the Company would not be deductible by the Company solely by reason of the
limitation under Code Section 162(m), then to the extent deemed necessary by the Company to ensure
that the entire amount of any distribution to the Participant pursuant to this Plan prior to the
Change in Control is deductible, the Company may defer all or any portion of a distribution under
this Plan. Any amounts deferred pursuant to this limitation shall continue to be credited/debited
with additional amounts in accordance with Section 4.4 below. The amounts so deferred and amounts
credited/debited thereon shall be distributed to the Participant or his or her Beneficiary (in the
event of the Participant’s death) at the earliest possible date, as determined by the Company in
good faith, on which the deductibility of compensation paid or payable to the Participant for the
taxable year of the Company during which the distribution is made will not be limited by Section
162(m), or if earlier, the effective date of a Change in Control. Notwithstanding anything to the
contrary in this Plan, the Deduction Limitation shall not apply to any distributions made after a
Change in Control.



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     2.14. “Deferral Account” shall mean (a) the sum of all of a Participant’s
Subaccounts, plus (b) amounts credited in accordance with all the applicable crediting provisions
of this Plan that relate to the Participant’s Deferral Account, less (c) all distributions made to
the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral
Account. The Deferral Account, and each other specified account balance, shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement and determination of the
amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.



     2.15. “Elected Distribution Date” shall mean the beginning date for distribution
with respect to amounts credited to the Participant’s Subaccount pursuant to Section 5.1.



     2.16. “Election Form” shall mean the form established by the Committee that a
Participant completes, signs and returns to the Committee to make his or her deferral election
under the Plan.



     2.17. “Employer” shall mean the Company and any Affiliate that, with the consent of
the Company, elects to participate in the Plan and any successor entity that adopts the Plan. If
any such entity withdraws, is excluded from participation in the Plan or terminates its
participation in the Plan, such entity shall thereupon cease to be an Employer.



     2.18. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.



     2.19. “Hardship” shall mean an unanticipated emergency that is caused by an event
beyond the control of the Participant that would result in severe financial hardship to the
Participant resulting from (a) a sudden and unexpected illness or accident of the Participant or
the spouse or a dependent of the Participant (as defined in Code Section 152(a)), (b) a loss of the
Participant’s property due to casualty (including the need to rebuild a home following damage to a
home not otherwise covered by insurance, for example, not as a result of a natural disaster), or
(c) such other extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant, all as determined in the sole discretion of the Committee. In
addition, the need to pay for medical expenses, including non-refundable deductibles, as well as
for the costs of prescription drug medication, or the need to pay for the funeral expenses of a
spouse or a dependent may also constitute a Hardship event. The Committee shall determine whether
the circumstances presented by the Participant constitute an unanticipated emergency. Such
circumstances and the Committee’s determination will depend on the facts of each case, but, in any
case, payment may not be made to the extent that such hardship is or may be relieved: (i) through
reimbursement or compensation by insurance or otherwise,
(ii) by liquidation of the Participant’s
assets, to the extent liquidation of such assets would not itself cause severe financial hardship,
or (iii) by cessation of his elective deferrals under this Plan or a similar deferred compensation
plan for the remainder of the Plan Year.



     2.20. “Member” means, for any Plan Year, any individual who is determined by the
Committee to be a member of the Employer’s Board.



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     2.21. “Participant” shall mean (a) any Member who is selected by the Committee to
participate in the Plan, (b) who elects to participate in the Plan, (c) who signs an Election Form,
(d) whose signed Election Form is accepted by the Committee, (e) who commences participation in the
Plan, and (f) whose participation has not terminated.



     2.22. “Phantom Stock Payment” means an amount paid to a Member upon the surrender of
a Phantom Stock Award under the Alion Science and Technology Board of Directors Phantom Stock Plan.



     2.23. “Plan” shall mean the Alion Science and Technology Corporation Director
Deferred Compensation Plan, which shall be evidenced by this instrument, as may be amended from
time to time.



     2.24. “Plan Year” shall mean the twelve-month period commencing each October 1 and
ending on September 30; provided, however, that for periods after December 31, 2005, the Plan Year
shall mean the calendar year.



     2.25. “SAR” shall mean an award granted to a Member pursuant to the terms of the
Alion Science and Technology Corporation 2004 Stock Appreciation Rights Plan.



     2.26. “SAR Payment” shall mean an amount paid to a Member upon his exercise or
payment of an SAR.



     2.27. “Subaccount” shall mean the separate subaccounts under the Deferral Account
that are established and maintained for each Participant. Such subaccounts shall reflect (a) the
amount deferred pursuant to the Participant’s Election Form for each deferral election; (b) amounts
credited in accordance with all the applicable crediting provisions of this Plan that relate to the
Subaccount, less (c) all distributions made to the Participant or his or her Beneficiary pursuant
to this Plan that relate to the Subaccount. In the event that two or more Subaccounts reflect
amounts deferred that are to be paid at the same time, all such Subaccounts shall be aggregated
into a single Subaccount.



     2.28. “Termination of Directorship” shall mean the severing of directorship with all
Employers, voluntarily or involuntarily, for any reason. If at the time of a Participant’s
Termination of Directorship, the Participant is an employee of an Employer, to the extent required
by Code Section 409A and regulations thereunder, the Participant shall be deemed not to have
incurred a Termination of Directorship prior to the date that he or she terminates employment with
all Employers.



     2.29. “Termination Benefit” shall mean an amount equal to the Participant’s Account
Balance if a Participant experiences a Termination of Directorship.



     2.30. “Trust” shall mean one or more trusts established, effective as of January
1, 2003 between the Company and the trustee named therein, as amended from time to time.



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ARTICLE III

SELECTION, ENROLLMENT AND ELIGIBILITY




     3.1. Enrollment Requirements. As a condition to participation, each
selected Member shall complete, execute and return to the Committee an Election Form. The
Committee shall establish from time to time such enrollment requirements as it determines in its
sole discretion are necessary.



     3.2. Eligibility; Commencement of Participation. Provided a Member selected
to participate in the Plan has met all enrollment requirements set forth in this Plan and required
by the Committee, including returning all required documents to the Committee within the specified
time period, that Member shall commence participation in the Plan on the first day of the month
following the month in which the Member completes all enrollment requirements.



     3.3. Termination of Participation and/or Deferrals. If the Committee
determines in good faith that a Participant no longer qualifies as a Member, the Committee shall
have the right, in its sole discretion, to (a) terminate any deferral election the Participant has
made for the remainder of the Plan Year in which the Participant’s membership status changes, to
the extent permitted under Code Section 409A, and (b) prevent the Participant from making future
deferral elections.



ARTICLE IV

DEFERRAL ELECTIONS/CREDITING/TAXES




     4.1. Deferrals.




     (a) Annual Director’s Fees and SAR Payments. For each Plan Year, a
Participant may elect to defer, as his or her Annual Director’s Fees and/or SAR or Phantom
Stock Payments in the following percentages.



	 	 	 
	Deferral	 	Minimum Amount
	Annual Director’s Fees

	 	0% to 100%, in 1% increments
	SAR or Phantom Stock Payments

	 	0% or 100%







     (b) If no election is made, the amount deferred shall be zero.



     4.2. Election to Defer; Effect of Election Form.




     (a) Annual Election Forms. A Participant’s Election Form shall be
effective only for the Plan Year that will be listed on the Election Form. The Committee
shall maintain an open enrollment period preceding each Plan Year in order to allow
Participants to submit Election Forms.



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     (b) Timing of Election to Defer Annual Director’s Fees. To be
effective for any Plan Year, an Election Form to defer a percentage of Annual Director’s
Fees must be received by the Committee prior to the first day of the Plan Year to which
these payments relate; provided, however, that no deferral shall be permitted for the Plan
Year commencing October 1, 2005 and ending December 31, 2005. However, if an individual
first becomes eligible to participate in the Plan as a result of his or her election to the
Board of Directors on a date after the first day of a Plan Year, the individual may submit
an Election Form to defer a percentage of Annual Director’s Fees for the remainder of the
Plan Year in which he or she first becomes a Participant if the Election Form is submitted
within thirty (30) days after becoming eligible to participate in the Plan; provided,
however, that the Election Form shall apply only to compensation not yet earned.




     (c) SAR and Phantom Stock Awards. A Participant may elect to defer
receipt of all of any SAR or Phantom Stock Award, as provided in the Alion Science and
Technology Corporation 2004 Stock Appreciation Rights Plan or the Alion Science and
Technology Corporation Board of Directors Phantom Stock Plan, as applicable. A
Participant’s election must be made at least twelve months prior to the date that the
applicable SAR or Phantom Stock Award would otherwise be paid under the terms of the
respective plan. Such deferrals shall be considered “Redeferrals” under Section 409A of the
Code, and, as such, shall be made for a minimum of five years.



     4.3. Withholding of Annual Deferral Amounts. For each Plan Year, the Annual
Director’s Fees and SAR or Phantom Stock Payment portions of the Annual Deferral Amount shall be
withheld at the time the Annual Director’s Fees and/or SAR or Phantom Stock Payments are or
otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself.



     4.4. Crediting/Debiting of Account Balances. In accordance with, and
subject to, the rules and procedures that are established from time to time by the Committee, in
its sole discretion, amounts shall be credited or debited to a Participant’s Account Balance in
accordance with the following rules:




     (a) Election of Measurement Funds for Deferral Account. A
Participant, in connection with his or her initial deferral election in accordance with
Section 4.2 above, shall elect, on the Election Form, one or more Measurement Fund(s) (as
described in Section 4.4(c) below) to be used to determine the additional amounts to be
credited to his or her Deferral Account when the Participant commences participation in the
Plan and continuing thereafter for each subsequent business day in which the Participant
participates in the Plan, unless changed in accordance with the next sentence. Commencing
with the business day that follows the Participant’s commencement of participation in the
Plan and continuing thereafter for each subsequent business day in which the Participant
participates in the Plan, the Participant may (but is not required to) elect, by submitting
an Election Form to the Committee that is accepted by the Committee, to reallocate among the



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available Measurement Fund(s) to be used to determine the additional amounts to be credited
to his or her Deferral Account, or to change the portion of his or her Deferral Account
allocated to each previously or newly elected Measurement Fund. If an election is made in
accordance with the previous sentence, it shall apply as soon as administratively possible
and shall continue thereafter for each subsequent business day in which the Participant
participates in the Plan, unless changed in accordance with the previous sentence.




     (b) Proportionate Allocation. In making any deferral election under
the Plan, the Participant shall specify on the Election Form, in increments of one
percentage point (1%), the percentage of his or her Deferral Account to be allocated to a
Measurement Fund (as if the Participant was making an investment in that Measurement Fund
with that portion of his or her Deferral Account).




     (c) Measurement Funds. The Participant may elect one or more
measurement funds (the “Measurement Funds”) for the purpose of crediting additional amounts
to his or her Deferral
Account. The Committee shall, in its sole discretion, select,
discontinue, substitute or add a Measurement Fund at any time.




     (d) Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be determined by the Committee, in its
reasonable discretion, based on the performance of the Measurement Funds themselves. Each
Participant’s Account balance shall be credited or debited on a daily basis based on the
performance of each Measurement Fund selected by the Participant for the Deferral Account,
as determined by the Committee in its sole discretion, as though (i) a Participant’s Account
Balance were invested in the selected or required Measurement Fund(s) in the percentages
applicable to such business day, as of the close of business on the business day, at the
closing price on such date; (ii) the portion of the Annual Deferral Amount that was actually
deferred as of the business day were invested in the
Measurement Fund(s) selected by the Participant, in the percentages applicable to such
business day, as soon as administratively possible after the day on which such amounts are
actually deferred from the Participant’s Director’s Fees; and (iii) any distribution made to
a Participant that decreases such Participant’s Account Balance ceased being invested in the
Measurement Fund(s), in the percentages applicable to such business day, as soon as
administratively possible.




     (e) No Actual Investment. Notwithstanding any other provision of
this Plan to the contrary, the Measurement Funds are to be used for measurement purposes
only, and a Participant’s election of any such Measurement Fund, the allocation to his or
her Account Balance thereto, the calculation of additional amounts and the crediting or
debiting of such amounts to a Participant’s Account Balance shall not be
considered or construed in any manner as an actual investment of his or her Account Balance
in any such Measurement Fund. In the event that the Employer or the Trustee (as that term
is defined in the Trust), in its own discretion, decides to invest funds in any or all of
the Measurement Funds, no Participant shall have any rights in or to such investments
themselves. Without limiting the foregoing, a Participant’s Account Balance shall at all
times be a bookkeeping entry only and shall not represent any investment made on his or her
behalf by the Employer or the Trust; the Participant shall at all times remain an unsecured
creditor of the Employer.



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ARTICLE V

DISTRIBUTIONS




     5.1. Elected Distribution Date. Each Participant shall make an irrevocable
election as to the Elected Distribution Date with respect to each amount deferred. This election
shall be made on the Election Form(s) for each Plan Year and shall apply solely to the applicable
Subaccount for the deferral election specified on the Election Form(s). The Election Form shall
allow each Participant to elect from among the following Elected Distribution Dates: (a) the date
immediately following the date that falls upon the fifth, sixth, seventh, eighth, ninth or tenth
anniversary of the final day of the Plan Year; or (b) the date of the Participant’s Termination of
Directorship.



     5.2. Method of Distribution. Each Participant shall make an irrevocable
election as to the method of distribution with respect to each amount deferred. This election
shall be made on the Election Form(s) for each Plan Year and shall apply solely to the applicable
Subaccount for the deferral election specified on the Election Form(s). Each Election Form shall
allow each Participant to elect from among the following methods of distribution: (a) a lump sum
payment of the Participant’s entire Subaccount balance, to be paid, subject to the Deduction
Limitation, within thirty (30) days of the Elected Distribution Date or Participant’s Termination
of Directorship; or (b) a series of ten (10) substantially equal annual installment payments. Such
installment payments, which shall be subject to the Deduction Limitation, shall be paid in
accordance with Section 5.3.



     5.3. Installment Payments. The first annual installment shall be paid
within thirty (30) days of the Elected Distribution Date or the date of the Participant’s
Termination of Directorship, whichever occurs first. Subsequent annual installments shall be paid
within thirty (30) days of the end of each 12-month anniversary of the
Elected Distribution Date or
the date of the Participant’s Termination of Directorship, whichever is applicable. The amount of
the first payment shall be a fraction of the total applicable Subaccount, the numerator of which is
1 and the denominator of which is 10. The amount of each subsequent payment shall be a fraction
of the total balance of the applicable Subaccount, the numerator of which is 1 and the denominator
of which is the total number of installments remaining.



     5.4. Withholding. The Employer shall withhold payroll and other taxes
required by Federal, state and/or local tax authorities from all distributions.



     5.5. Acceleration of Payment Date. Notwithstanding the foregoing, the
distribution of benefits hereunder 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));



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     (b) Conflicts of Interest: To permit payment as necessary to comply
with the provisions of a certificate of divestiture (as defined in Code Section 1043(b)(2));




     (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




     (d) Tax Event: Upon a good faith, reasonable determination by the
Committee, upon advice of counsel, that the Plan 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.



     5.6. Delay of Payments. 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 after the reason for delay no longer applies:




     (a) Administrative or Financial Cause. The Committee reasonably
determines that it is administratively impracticable to make payment by the time set forth
above or that making such payment will jeopardize the solvency of the Employer;




     (b) Delay in Calculation.  Calculation of the amount of the
payment is not administratively practicable due to events beyond the control of the Company;
or




     (c) Payments Subject to the Deduction Limitation. The Company
reasonably anticipates that such payment would otherwise violate the Deduction Limitation.
In such event, payment shall be made within the same calendar year as the originally
scheduled payment date or, if later, the 15th day of the third calendar month following the
date specified.



ARTICLE VI

HARDSHIP




     6.1. Withdrawal Payout/Suspensions for Hardship. If the Participant
experiences a Hardship, and distributions have not yet commenced under Article V, the Participant
may petition the Committee to (a) cancel any deferrals of Director’s Fees required to be made by a
Participant and/or (b) receive a partial or full payout from the Plan. The payout shall not exceed
the lesser of the Participant’s Account Balance, calculated as if such Participant were receiving a
Termination Benefit, or the amount reasonably needed to satisfy the Hardship, which amount may
include amounts necessary to pay any Federal, state, or local income taxes or penalties reasonably
anticipated to result from the distribution. The determinations of the amount reasonably necessary
to satisfy the Hardship will take into account any additional compensation that becomes available
ot the Participant as a result of cancellation of a deferral election. If, subject to the sole
discretion



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of the Committee, the petition for a suspension and/or payout is approved, suspension
shall take effect upon the date of approval and any payout shall be made within 60 days of the date
of approval. The payment of any amount under this Section 6.1 shall not be subject to the
Deduction Limitation. Any suspension of deferrals pursuant to this Section 6.1 shall continue for
the remainder of the Plan Year in which the suspension is approved.




ARTICLE VII

TERMINATION OF DIRECTORSHIP PRIOR TO ELECTED DISTRIBUTION DATE




     7.1. Termination Benefit. Subject to the Deduction Limitation, if a
Participant’s Termination of Directorship occurs prior to the applicable Elected Distribution
Date(s) or the Participant’s death, the Participant shall receive a Termination Benefit, payable
pursuant to the terms of Article V.



     7.2. Death Prior to Completion of Termination Benefit. If a Participant
dies after Termination of Directorship but before the Termination Benefit is paid, the
Participant’s unpaid Termination Benefit shall be paid as soon as administratively practicable to
the Participant’s Beneficiary in the same amount as that benefit would have been paid to the
Participant had the Participant survived.



     7.3. Death Prior to Termination of Directorship. If a Participant dies
before Termination of Directorship, the Termination Benefit shall be paid as soon as
administratively practicable to the Participant’s Beneficiary in the same amount as that benefit
would have been paid to the Participant had the Participant survived.



ARTICLE VIII

BENEFICIARY DESIGNATION




     8.1. Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits
payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the beneficiary designation under any other
plan of an Employer in which the Participant participates.



     8.2. Beneficiary Designation and Change of Beneficiary. A Participant shall
designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and
returning it to the Committee or its designated agent. A Participant shall have the right to
change a Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time to
time. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be entitled to rely on the
last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to
his or her death.



     8.3. Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in writing by the Committee or its
designated agent.



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     8.4. No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided above or, if all designated Beneficiaries predecease the Participant or die
prior to complete distribution of the Participant’s benefits, then the Participant’s designated
Beneficiary shall be deemed to be his or her estate.



     8.5. Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right,
exercisable in its discretion, to cause the Employer to withhold such payments until this matter is
resolved to the Committee’s satisfaction.



     8.6. Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge the Employer and the Committee from all further
obligations under this Plan with respect to the Participant, and that Participant’s participation
in the Plan shall terminate upon such full payment of benefits.



ARTICLE IX

 TERMINATION, AMENDMENT OR MODIFICATION




     9.1. Termination. Although the Company anticipates that it will continue
the Plan for an indefinite period of time, there is no guarantee that the Company will continue the
Plan or will not terminate the Plan at any time in the future. Accordingly, the Company reserves
the right to discontinue its sponsorship of the Plan and/or to terminate the Plan at any time with
respect to any or all of its participating Members, by action of its Board of Directors. Upon the
termination of the Plan, the affected Participants shall terminate their participation in the Plan
and their Account Balances, determined as if they had experienced a Termination of Directorship on
the date of Plan termination, shall be paid to the Participants as follows: Prior to a Change in
Control, if the Plan is terminated with respect to all of its Participants, the Company shall pay
such benefits as soon as administratively practicable. After a Change in Control, the Account
Balances of all participants shall be fully vested and the Company shall be required to pay such
benefits in a lump sum within five (5) business days of such Change in Control. The termination of
the Plan shall not adversely affect any Participant or Beneficiary who has become entitled to the
payment of any benefits under the Plan as of the date of termination. Notwithstanding the
foregoing, termination of the Plan shall not result in the acceleration of any payment except as
permitted by the Committee consistent with the requirements of Code Section 409A.



     9.2. Amendment. The Company may, at any time, amend or modify the Plan in
whole or in part with respect to that Employer by the action of its Board of Directors; provided,
however, that: (a) no amendment or modification shall be effective to decrease or restrict the
value of a Participant’s vested Account Balance in existence at the time the amendment or
modification is made, calculated as if the Participant had experienced a Termination of
Directorship as of the effective date of the amendment or modification, and (b) no amendment or
modification of this Section 9.2 or Section 10.2 of the Plan shall be effective. The amendment or
modification of the Plan shall not affect any Participant or Beneficiary who has become entitled to
the payment of benefits under the Plan as of the date of the amendment or modification.
Notwithstanding the foregoing, the Board of Directors may unilaterally amend the Plan as necessary
to cause the Plan to comply with Code Section 409A.



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     9.3. Effect of Payment. The full payment of the applicable benefit under
Articles V, VI or VII of the Plan shall completely discharge all obligations to a Participant and
his or her designated Beneficiaries under this Plan and the Participant’s participation in the Plan
shall terminate.



ARTICLE X

ADMINISTRATION




     10.1. Committee Duties. Except as otherwise provided in this Article X,
this Plan shall be administered by a Committee that shall consist of members appointed by the Board
of Directors. Members of the Committee may be Participants in this Plan. The Committee shall also
have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of this Plan and (b) decide or resolve any and all questions
including interpretations of this Plan, as may arise in connection with the Plan. Any individual
serving on the Committee who is a Participant shall not vote or act on any matter relating solely
to himself or herself. When making a determination or calculation, the Committee shall be entitled
to rely on information furnished by a Participant or the Employer.



     10.2. Administration Upon Change In Control. For purposes of this Plan, the
Committee shall be the “Administrator” at all times prior to the occurrence of a Change in Control.
Upon and after the occurrence of a Change in Control, the “Administrator” shall be an independent
third party selected by the trustee of the Trust and approved by the individual who, immediately
prior to such event, was the Company’s Chief Executive Officer or, if not so identified, the
Company’s highest ranking officer (the “Ex-CEO”). The Administrator shall have the discretionary
power to determine all questions arising in connection with the administration of the Plan and the
interpretation of the Plan and Trust including, but not limited to benefit entitlement
determinations; provided, however, upon and after the occurrence of a Change in Control, the
Administrator shall have no power to direct the investment of Plan or Trust assets or select any
investment manager or
custodial firm for the Plan or Trust. Upon and after the occurrence of a Change in Control,
the Company must: (a) pay all reasonable administrative expenses and fees of the Administrator; (b)
indemnify the Administrator against any costs, expenses and liabilities including, without
limitation, attorney’s fees and expenses arising in connection with the performance of the
Administrator hereunder, except with respect to matters resulting from the gross negligence or
willful misconduct of the Administrator or its employees or agents; and (c) supply full and timely
information to the Administrator on all matters relating to the Plan, the Trust, the Participants
and their Beneficiaries, the Account Balances of the Participants, the date of circumstances of the
death or Termination of Directorship of the Participants, and such other pertinent information as
the Administrator may reasonably require. Upon and after a Change in Control, the Administrator
may be terminated (and a replacement appointed) by the trustee of the Trust only with the approval
of the Ex-CEO. Upon and after a Change in Control, the Administrator may not be terminated by the
Company.



     10.3. Agents. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative duties as it sees fit
(including acting through a duly appointed representative) and may from time to time consult with
counsel who may be counsel to any Employer.



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     10.4. Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having any interest in the Plan.



     10.5. Indemnity of Committee. The Company shall indemnify and hold harmless
the members of the Committee, and any Member to whom the duties of the Committee may be delegated,
and the Administrator against any and all claims, losses, damages, expenses or liabilities arising
from any action or failure to act with respect to this Plan, except in the case of willful
misconduct by the Committee, any of its members, any such Member or the Administrator.



     10.6. Employer Information. To enable the Committee and/or Administrator to
perform its functions, the Employer shall supply full and timely information to the Committee
and/or Administrator, as the case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the death or Termination of Directorship of its
Participants, and such other pertinent information as the Committee or Administrator may reasonably
require.



ARTICLE XI

OTHER BENEFITS AND AGREEMENTS




     11.1. Coordination with Other Benefits. The benefits provided for a
Participant and Participant’s Beneficiary under the Plan are in addition to any other benefits
available to such Participant under any other plan or program of the Employer. The Plan shall
supplement and shall not supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.



ARTICLE XII

CLAIMS PROCEDURES




     12.1. Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver
to the Committee a written claim for a determination with respect to the amounts distributable to
such Claimant from the Plan. If such a claim relates to the contents of a notice received by the
Claimant, the claim must be made within sixty (60) days after such notice was received by the
Claimant. All other claims must be made within one hundred eighty (180) days of the date on which
the event that caused the claim to arise occurred. The claim must state with particularity the
determination desired by the Claimant.



     12.2. Notification of Decision. The Committee shall consider a Claimant’s
claim within a reasonable time, and shall notify the Claimant in writing:




     (a) that the Claimant’s requested determination has been made, and that the
claim has been allowed in full; or



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     (b) that the Committee has reached a conclusion contrary, in whole or in
part, to the Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:




     (c) the specific reason(s) for the denial of the claim, or any part of it;




     (d) specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;




     (e) a description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or information is
necessary; and




     (f) an explanation of the claim review procedure set forth in Section 12.3
below.



     12.3. Review of a Denied Claim. Within sixty (60) days after receiving a
notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the
Claimant’s duly authorized representative) may file with the Committee a written request for a
review of the denial of the claim. Thereafter, but not later than thirty (30) days after the
review procedure began, the Claimant (or the Claimant’s duly authorized representative):




     (a) may review pertinent documents;




     (b) may submit written comments or other documents; and/or




     (c) may request a hearing, which the Committee, in its sole discretion, may
grant.



     12.4. Decision on Review. The Committee shall render its decision on review
promptly, and not later than sixty (60) days after the filing of a written request for review of
the denial, unless a hearing is held or other special circumstances require additional time, in
which case the Committee’s decision must be rendered within one hundred twenty (120) days after
such date. Such decision must be written in a manner calculated to be understood by the Claimant,
and it must contain:




     (a) specific reasons for the decision;




     (b) specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and




     (c) such other matters as the Committee deems relevant.



     12.5. Legal Action. A Claimant’s compliance with the foregoing provisions
of this Article XII is a mandatory prerequisite to a Claimant’s right to commence any legal action
with respect to any claim for benefits under this Plan.



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ARTICLE XIII

TRUST




     13.1. Establishment of the Trust. The Company shall establish the Trust,
and shall at least annually transfer over to the Trust such assets as the Company determines, in
its sole discretion, are necessary to provide, on a present value basis, for its respective future
liabilities created with respect to the Annual Deferral Amounts for Participants for all periods
prior to the transfer, as well as any debits and credits to the Participants’ Account Balances for
all periods prior to the transfer, taking into consideration the value of the assets in the trust
at the time of the transfer.



     13.2. Interrelationship of the Plan and the Trust. The provisions of the
Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan. The
provisions of the Trust shall govern the rights of the Company, Participants and the creditors of
the Company to the assets transferred to the Trust. The Company shall at all times remain liable
to carry out its obligations under the Plan.



     13.3. Investment of Trust Assets. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee or investment manager appointed
by the Committee, to invest and reinvest the assets of the Trust in accordance with the applicable
Trust Agreement.



     13.4. Distributions From the Trust. The Company’s obligations under the
Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust. Any such
distribution shall reduce the Company’s obligations under this Plan.



ARTICLE XIV

MISCELLANEOUS




     14.1. Status of Plan. The Plan is intended to be a plan that is not
qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3)
and 401(a)(1). The Plan shall be administered and interpreted to the extent possible in a manner
consistent with that intent.



     14.2. Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any
property or assets of the Employer. For purposes of the payment of benefits under this Plan, any
and all of the Employer’s assets shall be, and remain, the general, unpledged unrestricted assets
of the Employer. The Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.



     14.3.
Employer’s Liability. The Employer shall have no obligation to a
Participant under the Plan except as expressly provided in the Plan.



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     14.4. Nonassignability. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which are expressly
declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be
transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy
or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.



     14.5. Continued Board Service. Nothing in this Plan shall be construed as
conferring any right upon any Participant to continuance as a member of the Board.



     14.6. Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by the Committee and
take such other actions as may be requested in order to facilitate the administration of the Plan
and the payments of benefits hereunder, including but not limited to taking such physical
examinations as the Committee may deem necessary.



     14.7. Terms. Whenever any words are used herein in the masculine, they
shall be construed as though they were in the feminine in all cases where they would so apply; and
whenever any words are used herein in the singular or in the plural, they shall be construed as
though they were used in the plural or the singular, as the case may be, in all cases where they
would so apply.



     14.8. Captions. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the meaning or construction of
any of its provisions.



     14.9. Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the Commonwealth of Virginia.



     14.10. Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:



Alion Science and Technology Corporation

Attention: Stacy Mendler

1750 Tysons Boulevard, Suite 1300

McLean, VA 22102




     Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail,
as of the date shown on the postmark on the receipt for registration or certification.



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     Any notice or filing required or permitted to be given to a Participant under this Plan shall
be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the
Participant.



     14.11. Successors. The provisions of this Plan shall bind and inure to the
benefit of the Company and its successors and assigns and the Participant and the Participant’s
designated Beneficiaries.



     14.12. Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof,
but this Plan shall be construed and enforced as if such illegal or invalid provision had never
been inserted herein.



     14.13. Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person
incapable of handling the disposition of that person’s property, the Committee may direct payment
of such benefit to the guardian, legal representative or person having the care and custody of such
minor, incompetent or incapable person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of the Participant and the Participant’s
Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan
for such payment amount.



     14.14. Court Order. The Committee is authorized to make any payments
directed by court order in any action in which the Plan or the Committee has been named as a party.
In addition, if a court determines that a spouse or former spouse of a Participant has an interest
in the Participant’s benefits under the Plan in connection with a property settlement or otherwise,
the Committee, in its sole discretion,
shall have the right, notwithstanding any election made by a Participant, to immediately
distribute the spouse’s or former spouse’s interest in the Participant’s benefits under the Plan to
that spouse or former spouse.



     14.15. Distribution in the Event of Taxation. If, for any reason, all or
any portion of a Participant’s benefits under this Plan becomes taxable to the Participant prior to
receipt, a Participant may petition the Committee before a Change in Control, or the trustee of the
Trust after a Change in Control, for a distribution of that portion of his or her benefit that has
become taxable. Upon the grant of such a petition, which grant shall not be unreasonably withheld
to the extent consistent with Section 409A (and, after a Change in Control, shall be granted to the
extent consistent with Section 409A), the Company shall distribute to the Participant immediately
available funds in an amount equal to the taxable portion of his or her benefit (which amount shall
not exceed a Participant’s unpaid Account Balance under the Plan). If the petition is granted, the
tax liability distribution shall be made within 90 days of the date when the Participant’s petition
is granted. Such a distribution shall affect and reduce the benefits to be paid under this Plan.



     14.16. Trust. If the Trust terminates and benefits are distributed from the
Trust to a Participant, the Participant’s benefits under this Plan shall be reduced to the extent
of such distributions.



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     14.17. Legal Fees To Enforce Rights After Change in Control. The Company is
aware that upon the occurrence of a Change in Control, the Board (which might then be composed of
new members) or a shareholder of the Company, or of any successor corporation might then cause or
attempt to cause the Company or such successor to refuse to comply with its obligations under the
Plan and might cause or attempt to cause the Company to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan. In these circumstances, the
purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should
appear to any Participant that the Company or any successor corporation has failed to comply with
any of its obligations under the Plan or any agreement thereunder or, if the Company or any other
person takes any action to declare the Plan void or unenforceable or institutes any litigation or
other legal action designed to deny, diminish or to recover from any Participant the benefits
intended to be provided, then the Company irrevocably authorizes such Participant to retain counsel
of his or her choice at the expense of the Company to represent such Participant in connection with
the initiation or defense of any litigation or other legal action, whether by or against the
Company or any director, officer, shareholder or other person affiliated with the Company or any
successor thereto in any jurisdiction.



     IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed as of January 1,
2005, and certifies that the foregoing Plan was duly adopted by the Board of the Company on that
date.



	 	 	 	 	 
	 	Alion Science and Technology Corporation

 	 
	 	By:  	/s/ Bahman Atefi
 	 
	 	 	Chief Executive Officer 	 
	 	 	 	 
	 



	 	 	 	 	 
	Attest:

	 	/s/ Jim Fontana
	 	 
	 	 	 	 	 
	Secretary	 	 







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