Exhibit
10.9


 


October 7, 2007


 


Personal and Confidential


 


Stuart F. Gray


5221 Springlake Way


Baltimore, MD 
21212


 


	
  Re:

  	
   

  	
  Designation
  of Eligibility for Severance under the

  
	
   

  	
   

  	
  AAI
  Corporation Change in Control Retention and Severance Plan

  



 


Dear Stuart:


 


We are pleased
to inform you that AAI Corporation (the “Company”) has selected you to be
eligible to receive Severance Benefits, described below, under the AAI
Corporation Change in Control Retention and Severance Plan (the “Plan”). All
terms and conditions for payment of the Severance Benefits are described in
this letter agreement and the Plan (copy enclosed). The severance provided
under the Plan will be in lieu of any payments and/or benefits provided under any
severance or termination arrangement, plan, policy or practice of the Company
and its affiliates. Since this letter agreement and the Plan memorialize your
right to receive Severance Benefits (assuming all conditions are satisfied), we
encourage you to retain these materials with your other important papers.


 


Severance Benefits.


 


If, within 24 months after a Change in Control, you incur a Separation
from Service with the Company, either without Cause or by you for Good Reason, you
will be entitled to receive the Severance Benefits described below. If your
Separation from Service is due to “Disability” (as defined in the Company’s
long-term disability plan), you will still be eligible for Severance Benefits
but your severance will be offset (reduced) by amounts payable to you under the
Company’s short or long-term disability plans. You will not be entitled
to Severance Benefits under the Plan if your Separation from Service is: (i)
for Cause, (ii) by you without Good Reason, or (iii) on account of your death.


 


Your Severance Benefits will consist of the following:


 


•                  Severance
Payment:  You will receive a lump sum
Severance Payment equal to your Base Salary in effect immediately prior to your
separation for six months, less
applicable taxes;  and


 

















 


•                  Continued
Health Coverage at Active Employee Rates:  Subject to your timely election of
continuation coverage under the Consolidated Budget Omnibus Reconciliation Act
of 1985, as amended (“COBRA”), and your continued co-payment of required
premiums at the same coverage level and cost to you as if you were an active
employee of the Company (excluding, for purposes of calculating cost, your
ability to pay premiums with pre-tax dollars), continued participation in the
Company’s group medical and dental plans (to the extent permitted under
applicable law and the terms of such plan) at the Company’s expense for six
months, provided that you are eligible and remain eligible for COBRA
coverage, and if you obtain other employment that offers health benefits, such
continuation of coverage by the Company shall immediately cease.


 


Payment of your Severance Benefits is conditioned on your execution
(and non-revocation) of an Agreement and Release (as provided in Section 8.1 of
the Plan).


 


Severance Benefits payable under the Plan supersede all other severance
payable to you by the Company under any plan, policy or arrangement, including an
approved, executed agreement with the Company or any affiliate that has not
expired as of the date of your termination (“Individual Severance Agreement”). In
order to be eligible to receive Severance Benefits under the Plan, you must consent
(by signing this agreement in the space provided on the last page of this
letter agreement) to the foregoing waiver of any and all severance otherwise payable
to you under your Individual Severance Agreement upon your Separation from
Service on or after a Change in Control, as described in this letter agreement
and the Plan.


 


Timing for Severance Payment.


 


If you are a “Specified Employee,” i.e., one of
the top 50 “officers” (which is broadly defined) of the Company and its
affiliates having annual compensation in excess of $145,000 for 2007 or as
adjusted thereafter, your Severance Payment will not be paid until the date
that is six months after the date of your Separation from Service unless your
separation is due to Disability. Following this delay period, the Severance
Payment will be paid in a single sum cash payment as soon as administratively
feasible. If your severance is payable in installments, your first payment will
consist of the regular installment amount plus all of the payments that were
not permitted to be paid to you during the delay period.


 


If you are not a Specified Employee (or you are a Specified Employee
and your separation is due to Disability), the delay period will not apply to you,
and your Severance Payment will be paid in a single sum cash payment within 10
days after the date of your Separation from Service.


 


Other Important Terms.


 


The Company is extending participation in the Plan to only selected
employees. For this reason, we ask and you agree that you will keep the terms
of the Plan and this letter agreement completely confidential.


 


2

















 


This letter agreement is not an employment agreement or guarantee of
continued employment by the Company. In addition, the agreement is personal to
you: you may not assign this agreement or the benefits provided by it to
anyone.


 


This letter agreement may not be amended, except in a writing signed by
you and the Company. This letter agreement will be construed and enforced in
accordance with the laws of the State of Maryland  (without
regard to the principles of conflicts of law).


 


You are hereby advised by the Company to consult your own legal counsel
and/or your own personal financial or tax advisors before signing this letter
agreement. By signing below, you acknowledge that you have carefully read this
letter agreement in its entirety; that you have had an adequate opportunity to
consider it and to consult with any advisors of your choice about it; that you
understand the terms of this letter agreement and their significance; that you
knowingly and voluntarily assent to all the terms and conditions contained in
this agreement, including but not limited to the waiver of any and all
severance payable to you under your Individual Severance Agreement upon a
Separation from Service on or after a Change in Control, as described herein;
and that you are signing this letter agreement voluntarily and of your own free
will.


 


Please indicate your agreement to the terms of this letter by signing
it in the space provided below and returning a hard copy to me confidentially. Please
do not hesitate to contact me if you have any questions.


 


 


	
   

  	
  Very truly yours

  
	
   

  	
   

  
	
   

  	
  AAI CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anna-Maria G. Palmer

  	
   

  
	
   

  	
  Name: Anna-Maria G. Palmer

  
	
   

  	
  Title: Vice President, Human Resources

  



 


The undersigned accepts the above letter agreement and agrees that it
contains the entire agreement of the parties relating to the subject matter
hereof, and supersedes in its entirety any and all prior agreements,
understandings, offers or representations relating to the subject matter
hereof, whether oral or written, and that there are no other terms, express or
implied.


 


	
  Accepted and Agreed:

  
	
   

  
	
   

  
	
  /s/ Stuart F. Gray

  	
   

  
	
  Stuart F. Gray

  
	
   

  
	
  Dated: October 7, 2007

  



 


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