Document:

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

  

 

3Exhibit 10.10

PRIVILEGED AND CONFIDENTIAL

 

AAI CORPORATION

CHANGE IN CONTROL 

RETENTION AND SEVERANCE PLAN

Effective as of September 1, 2007

 

INTRODUCTION

 

The purpose of
this Plan is to enable the Company to offer Eligible Employees an incentive to
remain employed with the Company or its Affiliates and/or to provide certain
protections if their employment is terminated without Cause or for Good Reason,
in each case, in connection with a Change in Control. Accordingly, to
accomplish this purpose, the Compensation and Stock Option Committee of the
Board of Directors of the Company has adopted this Plan, effective as of September
1, 2007.

 

Unless
otherwise expressly provided in this Plan or in an Incentive Letter, or unless
otherwise agreed to between the Company and a Participant on or after the date
hereof, Participants covered by this Plan shall not be eligible to participate
in any other severance or termination arrangement, plan, policy or practice of
the Company or any Affiliate that would otherwise apply under the circumstances
described herein. This Plan is intended to be a “top-hat” pension benefit plan
within the meaning of U.S. Department of Labor Regulation Section 2520.104-23. This
Plan document shall constitute both the plan document and summary booklet and
shall be distributed to Participants in this form. Capitalized terms and
phrases used herein shall have the meanings ascribed thereto in Article I.

 

ARTICLE
I

DEFINITIONS

 

For
purposes of this Plan, capitalized terms and phrases used herein
shall have the meanings ascribed to them in this Article.

 

1.1                               “Affiliate” shall mean (i) Parent,
(ii) any subsidiary corporation of the Parent within the meaning of Section
424(f) of the Code, or (iii) any corporation, trade or business (including,
without limitation, a partnership or limited liability company) which is
directly or indirectly controlled 50% or more (whether by ownership of stock,
assets or an equivalent ownership interest or voting interest) by the Parent.

 

1.2                               “Base Salary” shall mean a Participant’s
annual base compensation rate for services paid by the Employer to the
Participant at the time immediately prior to the Participant’s termination of
employment, as reflected in the Employer’s payroll records or, if higher, the
Participant’s annual base compensation rate immediately prior to a Change in
Control. Base Salary shall not include commissions, bonuses, overtime pay,
incentive 

 

 

compensation, benefits paid under any
qualified plan, any group medical, dental or other welfare benefit plan,
non-cash compensation or any other additional compensation but shall include
amounts reduced pursuant to a Participant’s salary reduction agreement under
Section 125, 132(f)(4) or 401(k) of the Code, if any, or a nonqualified
elective deferred compensation arrangement, if any, to the extent that in each
such case the reduction is to base salary.

 

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

 

1.4                               “Cause” shall mean the occurrence
of any of the following:

 

(a)                                  a material breach by the Participant of the
obligations under any written agreement with the Employer;

 

(b)                                 the Participant’s conviction of, or plea of
guilty or nolo contendere to a felony (regardless of the nature of the felony)
or any other crime involving dishonesty, fraud or moral turpitude;

 

(c)                                  the Participant’s willful misconduct or gross
negligence, in either case, in connection with the Participant’s performance of
his or her duties of a material nature; or

 

(d)                                 a material act of dishonesty or breach of
trust on the Participant’s part resulting or intending to result, directly or
indirectly, in material personal or family gain or enrichment at the expense of
the Employer.

 

1.5                               “Change in Control” shall have the
meaning set forth in Appendix A hereto.

 

1.6                               “Code” shall mean the Internal
Revenue Code of 1986, as amended.

 

1.7                               “Committee” shall mean the
Compensation and Stock Option Committee of the Board or such other committee
appointed by the Board from time to time to administer the Plan. Notwithstanding
the foregoing, if, and to the extent that no Committee exists which has the
authority to administer the Plan, the functions of the Committee shall be
exercised by the Board and all references herein to the Committee shall be
deemed to be references to the Board.

 

1.8                               “Company” shall mean AAI
Corporation, a Maryland corporation, and any successor as provided in Article VII
hereof.

 

1.9                               “Disability” shall mean a
Participant’s disability that would qualify as such under the Employer’s
long-term disability plan without regard to any waiting periods set forth in
such plan.

 

1.10                        “Effective Date” shall mean September
1, 2007.

 

1.11                        “Eligible
Employee” shall mean any full-time employee of the Company or any of its Affiliates,
including any employee who has incurred a Disability.

 

2

 

1.12                        “Employer” shall mean the Company
and any Affiliate and their successors as provided in Article VII hereof.

 

1.13                        “ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended.

 

1.14                        “Good Reason” shall mean, except as otherwise provided in an
Incentive Letter, the occurrence of any of the following events without the
Participant’s express written consent:

 

(a)                                  a relocation of the
Participant’s principal business location to an area outside a 50 mile radius
of the Participant’s principal business location at the time of the Change in
Control; or

 

(b)                                 any reduction in the
Participant’s Base Salary or failure to
pay a Participant’s Base Salary that remains uncured for ten (10) days after
written notice of such breach is given by the Participant to the Employer;

 

(c)                                  any
diminution in the Participant’s title or any material diminution in the
Participant’s authority, duties, responsibilities or reporting requirements; or

 

(d)                                 failure
of a successor to assume the Plan and the obligations hereunder in writing.

 

1.15                        “Gross-Up
Payment” shall have the meaning set forth in Appendix B to the Plan.

 

1.16                        “Incentive
Letter” shall mean the letter from the Company informing an Eligible Employee
of the Company or any Affiliate of his or her selection to be a Participant in
the Plan and setting forth the terms and conditions of the Participant’s
participation in the Plan as determined by the Committee in its sole
discretion.

 

1.17                        “Individual
Severance Agreement” shall have the meaning set forth in Section 8.13
hereunder.

 

1.18                        “Non-Competition
Restriction” shall have the meaning set forth in Appendix C.

 

1.19                        “Parent”
shall mean United Industrial Corporation and any successor by merger,
consolidation or otherwise.

 

1.20                        “Participant” shall mean any Eligible
Employee who is designated by the Committee to participate in the Plan and
receive the benefits provided under Article II and/or Article III of the Plan.

 

1.21                        “Payments”
shall mean, collectively, the Retention Payment, the Severance Payment and any
and all additional payments and benefits provided under this Plan.

 

3

 

1.22                        “Payment
Date” shall mean December 31, 2008.

 

1.23                        “Plan” shall mean the AAI Corporation
Change in Control Retention and Severance Plan.

 

1.24                        “Retention
Payment” shall mean a payment to an Eligible Employee subject to Section 2.1
below.

 

1.25                        “Separation
from Service” shall mean a Participant’s termination of employment with the
Employer, provided that such termination constitutes a separation from service
within the meaning of Code Section 409A and the guidance issued thereunder.

 

1.26                        “Severance Payment” shall have the
meaning set forth in Section 3.2 below.

 

1.27                        “Specified
Employee” shall mean a Participant who, as of the date of his or her
Separation from Service, is a key employee (as defined under Code Section
416(i)(1)(A)(i), (ii) or (iii) but determined without reference to Code Section
416(i)(5)) of a service recipient any stock of which is publicly traded, as
determined by the Company in accordance with procedures established by the
Company and Section 409A of the Code.

 

ARTICLE II

 

RETENTION PAYMENT

 

2.1                               Eligibility
for Retention Payment. The Committee  may,
in its sole discretion, designate in an Incentive Letter that an Eligible Employee
shall be eligible to be a Participant in the Plan and receive a Retention
Payment in the amount set forth in such letter subject to the terms and
conditions provided therein. Notwithstanding the foregoing, on the Effective
Date, each Eligible Employee whose name is set forth on the Retention Payment
Schedule attached hereto shall automatically be a Participant in the Plan and
shall be eligible to receive the Retention Payment approved by the Committee
and set forth in the Incentive Letter issued to such Participant.

 

2.2                               Continuous
Employment Requirement. Except as otherwise set forth in Section 2.4
below or in a Participant’s Incentive Letter, Retention Payments shall be expressly
conditioned upon the Participant’s continuous employment with the Company or
any Affiliate from the Effective Date through and including the Payment Date. A
Participant shall not have any claim for a Retention Payment for which such
requirement is not satisfied notwithstanding the reason for termination, except
as provided in Section 2.4 below or in the Participant’s Incentive Letter.

 

2.3                               Payment
of Retention Payments. Retention Payments, if any, shall be payable by
the Employer to the Participant in the form of a lump sum cash payment paid within
fifteen (15)  days following the Payment Date.

 

2.4                               Separation
from Service by the Employer Prior to the Payment Date. (a)  Subject to Sections 8.1
and 8.12, upon a Participant’s Separation from Service by the 

 

4

 

Employer or its successor without Cause or by the Participant for Good
Reason, in each case, within the period beginning on the Effective Date and
ending on the Payment Date, the Company shall pay the Participant his Retention
Payment (including any discretionary award made under Section 2.5 of the Plan) in
the form of a lump sum cash payment within ten (10) days following the
Participant’s separation date.

 

(b)                                 Notwithstanding
the provisions of Section 2.1(a) above, in the event that a Participant incurs
a Separation from Service from the Employer due to Disability prior to the
Payment Date, the Participant shall still be entitled to receive the Retention
Payment (including any discretionary award made under Section 2.5 below) but the
amount of such payment shall be reduced (offset) by any amounts payable to the
Participant under the Employer’s short or long-term disability plan. Payment
shall be made to the Participant in the form of a lump sum cash payment within
ten (10) days following the Participant’s separation date.

 

(c)                                  Except
as provided in an Incentive Letter or in Section 2.4(b) above, a Participant
shall not be entitled to a Retention Payment (including any discretionary award
made under Section 2.5 of the Plan) under this Plan if the Participant’s
employment is terminated (i) by the Employer for Cause, (ii) by the Participant
without Good Reason or (iii) on account of the Participant’s death.

 

(d)                                 A
transfer among Affiliates of the Employer shall not be treated as an employment
termination or Separation from Service and shall not trigger or otherwise affect
any Participant’s rights and entitlements to a Retention Payment described in
this Article II.

 

2.5                               Discretionary
Retention. The Committee  may provide for
alternative or additional retention payments, which may be payable on a Change
in Control and/or on a date designated by the Committee  following
a Change in Control; provided, however, that the Committee may not issue a
retention award under this Section 2.5 to a Participant in order to replace,
offset (reduce) or in any other manner adversely affect another award made
under this Article II to such Participant; and provided, further, that the
President and Chief Executive Officer of the Company shall have the discretion
to determine the date (or dates) on which a retention payment awarded to an
Eligible Employee under this Section 2.5 of the Plan shall be payable and such
date(s) shall be set forth in the Incentive Letter Agreement. For all purposes
of this Plan other than Section 2.3 above, references to “Retention Payment”
shall include any discretionary retention payment awarded under this Section
2.5.

 

ARTICLE III

SEVERANCE PAYMENT

 

3.1                               Eligibility for Severance Payment. (a) The Committee  may, in its sole discretion, designate in an Incentive
Letter that an Eligible Employee shall be eligible to be a Participant in the
Plan and shall receive a Severance Payment upon the Participant’s Separation
from Service by the Employer without Cause or by the Participant for Good
Reason, in each case, during the period commencing on the date of the Change in
Control and ending twenty-four (24) months thereafter, as specified by the Committee  in the Participant’s Incentive Letter.

 

5

 

(b)                                 Notwithstanding
the provisions of Section 3.1(a) above, in the event that a Participant incurs
a Separation from Service from the Employer due to Disability during the period
commencing on the date of the Change in Control and ending twenty-four (24)
months thereafter, the Participant shall be entitled to receive a Severance
Payment but such payment shall be reduced (offset) by any amounts payable to
the Participant under the Employer’s short or long-term disability plan, as
provided in Section 3.3 below.

 

(b)                                 A
Participant shall not be entitled to any Severance Payment under this Plan if
the Participant’s employment is terminated (i) by the Employer for Cause, (ii)
by the Participant without Good Reason, or (iii) on account of the Participant’s
death.

 

(c)                                  A
transfer among Affiliates of the Employer (or its successor) shall not be
treated as an employment termination and shall not trigger or otherwise affect
any Participant’s rights and entitlements to a Severance Payment described in
this Article III.

 

3.2                               Amount of Severance Payment. (a) Subject to Sections 8.1, 8.12
and 8.13, in the event that a Participant becomes entitled to a payment
pursuant to Section 3.1(a), then the Employer shall pay the Participant, in a
single lump sum payment within ten (10) days after the date of the Participant’s
Separation from Service, an amount not to exceed twelve (12) months (the “Severance
Period”) of the Participant’s Base Salary as in effect immediately prior to the
Participant’s Separation from Service, as determined by the Committee, in its
sole discretion, and specified in the Participant’s Incentive Letter (the “Severance
Payment”). Notwithstanding the foregoing, if a Participant has an Individual
Severance Agreement that provides for severance to be paid in installment
payments at such time as if the Participant remained an employee, then, in lieu
of a lump sum payment, such Participant’s Severance Payments shall be paid in
equal installments in accordance with the Company’s regular payroll practices
(but off employee payroll) during the Participant’s Severance Period and the
Severance Payments made under the Plan shall supersede the severance payable
under the Individual Severance Agreement, as more fully set forth in Section
8.13 below. Severance Payments shall be in lieu of any payments under any other
severance or termination arrangement, plan, policy or practice of the Employer.
In addition, Severance Payments shall be reduced (offset) by any amounts
payable under the Employer’s short or long-term disability plan to a
Participant who has incurred a Disability, any statutory entitlement (including
notice of termination, termination pay and/or severance pay) of the Participant
upon a termination of employment, including, without limitation, any payments related
to an actual or potential liability under the Worker Adjustment and Retraining
Notification Act (WARN) or similar state or local law.

 

3.3                               Additional Severance Benefits. The Committee  may, in its sole discretion, designate in an Incentive
Letter that any Eligible Employee shall be eligible for any or all of the
additional Severance Benefits set forth on the Additional Severance Benefit
Schedule attached hereto.

 

3.4                               Non-Competition
Restriction. The Committee may, in its sole discretion, specify in an
Incentive Letter that a Participant will be required to comply with the
Non-Competition Restriction following Separation from Service in order to be
eligible to receive a Severance Payment and/or to be eligible to receive
additional severance from the Employer.

 

6

 

ARTICLE IV

UNFUNDED PLAN

 

4.1                               Unfunded Status. This Plan shall be “unfunded”
for the purposes of ERISA and the Code and Payments shall be paid out of the
general assets of the Employer as and when Severance Payments are payable under
this Plan. All Participants shall be solely unsecured general creditors of the
Employer. If the Employer decides in its sole discretion to establish any
advance accrued reserve on its books against the future expense of the Payments
payable hereunder, or if the Employer decides in its sole discretion to fund a
trust under this Plan, such reserve or trust shall not under any circumstances
be deemed to be an asset of this Plan.

 

ARTICLE V

ADMINISTRATION OF THE PLAN

 

5.1                               Plan Administrator. The general administration of
this Plan on behalf of the Employer (as plan administrator under Section
3(16)(A) of ERISA) shall be placed with the Committee.

 

5.2                               Reimbursement of Expenses of Plan Committee. The Employer may, in its sole
discretion, pay or reimburse the members of the Committee for all reasonable
expenses incurred in connection with their duties hereunder, including, without
limitation, expenses of outside legal counsel.

 

5.3                               Action by the Plan Committee. Decisions of the Committee shall
be made by a majority of its members attending a meeting at which a quorum is
present (which meeting may be held telephonically), or by written action in
accordance with applicable law. Subject to the terms of this Plan and provided
that the Committee acts in good faith, the Committee shall have complete
authority to determine a Participant’s participation and the Payments under
this Plan, to interpret and construe the provisions of this Plan, and to make
decisions in all disputes involving the rights of any person interested in this
Plan.

 

5.4                               Delegation of Authority. The Committee may delegate, to
other persons, any and all of its powers and responsibilities provided for hereunder
with respect to determining the eligibility and/or benefits of non-executive
officers of the Employer.

 

5.5                               Retention of Professional Assistance. The Committee may employ such
legal counsel, accountants and other persons as may be required in carrying out
its work in connection with this Plan.

 

5.6                               Accounts and Records. The Committee shall maintain
such accounts and records regarding the fiscal and other transactions of this
Plan and such other data as may be required to carry out its functions under
this Plan and to comply with all applicable laws.

 

5.7                               Indemnification. The Committee, its members and
any person designated pursuant to Section 5.4 above shall not be liable for any
action or determination made 

 

7

 

in good faith with respect to this Plan. The
Employer shall, to the fullest extent permitted by law, indemnify and hold
harmless each member of the Committee and each director, officer and employee
of the Employer for liabilities or expenses they and each of them incur in
carrying out their respective duties under this Plan, other than for any
liabilities or expenses arising out of such individual’s willful misconduct or
fraud.

 

ARTICLE
VI

AMENDMENT AND TERMINATION

 

6.1                               Amendment and Termination. The Company reserves the right
to amend or terminate, in whole or in part, any or all of the provisions of
this Plan by action of the Committee at any time, provided that in no event
shall any amendment reducing the Payments provided hereunder or any Plan
termination be effective prior to the thirty-six (36) month anniversary of the
Effective Date, and further provided that the Company shall not amend or
terminate the Plan at any time after (i) the occurrence of a Change in Control
or (ii) the date the Company enters into a definitive agreement which, if
consummated, would result in a Change in Control, unless the potential Change
in Control is abandoned (as publicly announced by the Company), in either case
until thirty-six (36) months after the occurrence of a Change in Control and
all Payments arising during such period have been made.

 

ARTICLE VII

SUCCESSORS

 

7.1                               Successors
and Assigns. For purposes of this Plan, the terms the “Company” and the
“Employer” each shall include any and all successors or assignees, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company or the Employer,
respectively, and such successors and assignees shall perform the Company’s or
the Employer’s (as applicable) obligations under this Plan, in the same manner
and to the same extent that the Company or the Employer, as applicable would be
required to perform if no such succession or assignment had taken place. In the
event the surviving corporation in any transaction to which the Company (or the
Employer) is a party is a subsidiary of another corporation, then the ultimate
parent corporation of such surviving corporation shall cause the surviving
corporation to perform this Plan in the same manner and to the same extent that
the Company or the Employer, as applicable would be required to perform if no
such succession or assignment had taken place. In such event, the terms “Company”
and the “Employer,” as used in this Plan, shall mean the Company or the
Employer (as applicable), as hereinbefore defined and any successor or assignee
(including the ultimate parent corporation) to the business or assets which by
reason hereof becomes bound by the terms and provisions of this Plan.

 

8

 

ARTICLE VIII

MISCELLANEOUS

 

8.1                               Release
Required. Any Retention Payment or Severance Payment, in each case,
payable pursuant to this Plan upon a Participant’s termination of employment, shall
only be payable if the Participant delivers to the Company a release (in the
form attached as Appendix D hereto) of all claims of any kind whatsoever that
the Participant has or may have against the Company and its Affiliates and its
and their officers, directors and employees and other related parties, known or
unknown, as of the date of termination of employment occurring up to the
release date (other than claims to payments specifically payable hereunder,
claims under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, claims to vested accrued benefits under the Employer’s 401(k) or other
tax qualified retirement plans in accordance with the terms of such plans and
applicable law, claims relating to any rights of indemnification under the
Company’s organizational documents or otherwise, claims relating to any
outstanding stock options or other equity-based award on the date of
termination, or claims relating to amounts payable under the Company’s
Management Incentive Plan or Long-Term Incentive Plan). Notwithstanding the
foregoing, in no event shall a release be required with respect to any
Retention Payment that is made or required to be made on the Payment Date.

 

8.2                               No Duty to Mitigate/Set-off. No Participant entitled to
receive Payments hereunder shall be required to seek other employment or to
attempt in any way to reduce any amounts payable to the Participant by the
Employer pursuant to this Plan and there shall be no offset against any amounts
due the Participant under this Plan on account of any remuneration attributable
to any subsequent employment that the Participant may obtain or otherwise,
except as expressly provided in subsection (a) of the Additional Severance
Benefits Schedule attached hereto. The amounts payable hereunder shall not be
subject to setoff, counterclaim, recoupment, defense or other right which the
Employer may have against the Participant. In the event of the Participant’s
breach of any provision hereunder, including without limitation, Sections 8.1 (other
than as it applies to a release of claims under the Age Discrimination in
Employment Act, as amended), 8.3 and 8.15, the Company shall be entitled to
recover any payments previously made to the Participant hereunder.

 

8.3                               Cooperation. By accepting Payments under this Plan, subject to the
Participant’s other commitments, the Participant agrees to be reasonably
available to cooperate (but only truthfully) with the Employer and provide
information as to matters which the Participant was personally involved, or has
information on, during the Participant’s employment with the Employer and which
are or become the subject of litigation or other dispute.

 

8.4                               Minors and Incompetents. If
the Committee shall find that any person to whom Payments are payable under
this Plan is unable to care for his or her affairs because of illness or
accident, or is a minor, any Payments due (unless a prior claim therefore shall
have been made by a duly appointed guardian, committee or other legal
representative) may be paid to the spouse, a child, parent, or brother or
sister, or to any person deemed by the Committee to have incurred expense for
such person otherwise entitled to Payments, in such manner and proportions as
the Committee may determine it its sole discretion. Any such Payments shall be
a 

 

9

 

complete discharge of the liabilities of the
Employer, the Committee and the Board under this Plan.

 

8.5                               Limitation of Rights. Nothing contained herein shall
be construed as conferring upon a Participant the right to continue in the
employ of the Employer as an employee in any other capacity or to interfere
with the Employer’s right to discharge him or her at any time for any reason
whatsoever.

 

8.6                               Payment Not Salary. Any Payments payable under this
Plan shall not be deemed salary or other compensation to the Participant for
the purposes of computing benefits to which he or she may be entitled under any
pension plan or other arrangement of the Employer maintained for the benefit of
its employees, unless such plan or arrangement provides otherwise.

 

8.7                               Severability. 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 and invalid provision never existed.

 

8.8                               Withholding. The Employer shall have the right to make such provisions as
it deems necessary or appropriate to satisfy any obligations it may have to
withhold federal, state or local income or other taxes incurred by reason of
payments pursuant to this Plan. In lieu thereof, the Company and/or the
Employer shall have the right to withhold the amounts of such taxes from any
other sums due or to become due from the Company and/or the Employer to the
Participant upon such terms and conditions as the Committee may prescribe.

 

8.9                               Non-Alienation of Benefits. The Payments payable under this
Plan shall not be subject to alienation, transfer, assignment, garnishment,
execution or levy of any kind, and any attempt to cause any Severance Payment
to be so subjected shall not be recognized.

 

8.10                        Governing Law. To the extent legally required,
the Code and ERISA shall govern this Plan and, if any provision hereof is in
violation of any applicable requirement thereof, the Company reserves the right
to retroactively amend this Plan to comply therewith. To the extent not
governed by the Code and ERISA, this Plan shall be governed by the laws of the
State of Maryland.

 

8.11                        Code
Section 409A. Although the Company makes no guarantee with respect to
the tax treatment of payments hereunder and shall not be responsible in any
event with regard to non-compliance with Code Section 409A, the Plan is
intended to comply with the applicable requirements of Code Section 409A and
shall be limited, construed and interpreted in accordance with such intent. Accordingly,
the Company reserves the right to amend the provisions of the Plan at any time
in order to avoid the imposition of an excise tax under Code Section 409A on
any Payments to be made hereunder. In no event whatsoever shall the Company or
any of its Affiliates be liable for any additional tax, interest or penalties
that may be imposed on a Participant by Section 409A of the Code or any damages
for failing to comply with Section 409A of the Code other than for withholding
obligations or other obligations applicable to employers, if any, under Section
409A of the Code.

 

8.12                        Six-Month
Delay. In the event that, at the time of a Participant’s Separation
from Service, the Participant is a Specified Employee, then any Retention
Payment(s) 

 

10

 

or Severance Payment(s) payable to such
Participant in a lump sum upon Separation from Service (other than Separation
from Service due to Disability) shall not be paid until the date that is six
(6) months after the Participant’s Separation from Service (the “Delay Period”)
and, to the extent such amounts would have otherwise been payable during the
Delay Period, paid to the Participant in a lump sum as soon as administratively
feasible following the expiration of the Delay Period. In the event that the severance
payable under Article III of this Plan to a Participant described in the
immediately preceding sentence is required to be paid in equal installments in
accordance with the Company’s regular payroll practices (but off employee
payroll), the first such installment shall not be paid to the Participant until
after the Delay Period has ended and such payment shall be in an amount equal
to the sum, less applicable taxes, of: 
(a) all of the installment payments that were not permitted to be paid
to the Participant during the Delay Period and (b) the installment payment due
with respect to the period beginning on the day after the Delay Period has
ended.

 

8.13                        Individual
Severance Agreement. If the Participant has an approved, executed,
agreement with an Employer that provides for specific severance in connection
with a termination of employment and such agreement has not expired or been
replaced prior to the termination of the Participant’s employment (an “Individual
Severance Agreement”), any Severance Payment payable to such Participant under
this Plan shall supersede any and all severance payments and benefits to which
the Participant would otherwise be entitled to receive under the Individual
Severance Agreement. A Participant shall be required to consent to the foregoing
waiver of severance payments and benefits under an Individual Severance
Agreement in order to be eligible to participate and receive Severance Benefits
under the Plan.

 

8.14                        Code
Section 280G. Subject to the terms and conditions set forth in Appendix
B to the Plan, a Participant will be eligible to receive a Gross-Up Payment from
the Employer in the event that any payments or benefits (within the meaning of
Section 280G(b)(2) of the Code) to the Participant or for the Participant’s
benefit that are paid or payable or distributed or distributable under this
Plan or otherwise in connection with a Change in Control would be subject to
the excise tax imposed by Section 4999 of the Code. The terms and conditions
upon which a Gross-Up Payment shall be paid to a Participant are set forth in
Appendix B to the Plan.

 

8.15                        Non-Competition; Confidentiality. By accepting a Retention Payment
or a Severance Payment under this Plan, a Participant is deemed to acknowledge
that the restrictive covenants (including, without limitation, confidentiality
and non-competition) in any other agreement with the Company previously signed
by the Participant shall not be affected by this Plan and that the restrictive
covenants therein shall continue to apply after a Change in Control or a
termination of employment after a Change in Control in accordance with the
terms of such restrictive covenants. As a condition to receiving a Retention
Payment or a Severance Payment, the Participant shall be required to
acknowledge and agree that the payment of the Retention Payment or the
Severance Payment is subject to the enforcement of such restrictive covenants.

 

8.16                        Non-Exclusivity. The adoption of this Plan by the
Company shall not be construed as creating any limitations on the power of the
Company to adopt such other 

 

11

 

supplemental retirement income arrangements
as it deems desirable, and such arrangements may be either generally applicable
or limited in application.

 

8.17                        Non-Employment. This Plan is not an agreement of
employment and it shall not grant the Participant any rights of employment.

 

8.18                        Headings and Captions. The
headings and captions herein are provided for reference and convenience only. They
shall not be considered part of this Plan and shall not be employed in the
construction of this Plan.

 

8.19                        Gender and Number. Whenever used in this Plan, the
masculine shall be deemed to include the feminine and the singular shall be
deemed to include the plural, unless the context clearly indicates otherwise.

 

8.20                        Communications. All announcements, notices and
other communications regarding this Plan will be made by the Employer in
writing.

 

ARTICLE IX

WHAT ELSE A PARTICIPANT NEEDS

TO KNOW ABOUT THE PLAN

 

9.1                               Claim
Procedure. A Participant may file a written claim with the Committee
with respect to his or her rights to receive a benefit from the Plan. The Participant
will be informed of the decision of the Committee with respect to the claim
within 90 days after it is filed. Under special circumstances, the Committee
may require an additional period of not more than 90 days to review a claim. If
that happens, the Participant will receive a written notice of that fact, which
will also indicate the special circumstances requiring the extension of time
and the date by which the Committee expects to make a determination with
respect to the claim. If the extension is required due to the Participant’s
failure to submit information necessary to decide the claim, the period for
making the determination will be tolled from the date on which the extension
notice is sent until the date on which the Participant responds to the Plan’s
request for information.

 

If a claim is
denied in whole or in part, or any adverse benefit determination is made with
respect to the claim, the Participant will be provided with a written or
electronic notice setting forth the specific reason(s) for the determination,
along with specific references to Plan provisions on which the determination is
based. This notice will also provide a description of what additional material
or information is needed for the Participant to perfect the claim (and an
explanation of why such material or information is necessary), together with a
description of the Plan’s claims review procedure and the time limits
applicable to such procedure, including a statement of the Participant’s right
to bring a civil action under Section 502(a) of ERISA following an adverse
benefit determination on review. If an Participant is not notified (of the
denial or an extension) within ninety (90) days from the date the Participant
notifies the Committee, the Participant may request a review of the application
as if the claim had been denied.

 

12

 

If the Participant’s
claim has been denied, or an adverse benefit determination has been made, the Participant
may request that the Committee review the denial. The request must be in
writing and must be made within sixty (60) days after notification of denial or
advise benefit determination. In connection with this request, the Participant
(or his or her duly authorized representative) may (i) be provided, upon
written request and free of charge, with reasonable access to (and copies of)
all documents, records, and other information relevant to the claim; and (ii)
submit to the Committee written comments, documents, records, and other
information related to the claim.

 

The review by
the Committee will take into account all comments, documents, records, and
other information the Participant submits relating to the claim without regard to
whether such information was submitted or considered in the initial benefit
determination. The Committee will make a final written decision on a claim
review, in most cases within sixty (60) days after receipt of a request for a
review. In some cases, the claim may take more time to review, and an
additional processing period of up to sixty (60) days may be required. If that
happens, the Participant will receive a written notice of that fact, which will
also indicate the special circumstances requiring the extension of time and the
date by which the Committee expects to make a determination with respect to the
claim. If the extension is required due to the Participant’s failure to submit
information necessary to decide the claim, the period for making the
determination will be tolled from the date on which the extension notice is
sent to the Participant until the date on which the Participant responds to the
Plan’s request for information.

 

The Committee
will provide the Participant with written or electronic notification of its
decision on the claim for review. If an adverse benefit determination is made
with respect to the claim, the notice will include (i) the specific reason(s)
for any adverse benefit determination, with references to the specific Plan
provisions on which the determination is based; (ii) a statement that the Participant
is entitled to receive, upon request and free of charge, reasonable access to
(and copies of) all documents, records and other information relevant to the
claim; and (iii) a statement of the Participant’s right to bring a civil action
under Section 502(a) of ERISA. The decision of Committee (or its designee) is
final and binding on all parties. These procedures must be exhausted before a
Participant may bring a legal action seeking payment of benefits.

 

9.2                               Plan
Document. This document shall constitute both the plan document and
summary booklet and shall be distributed to all Participants in this form.

 

13

 

APPENDIX A

 

DEFINITION OF CHANGE IN CONTROL

 

A “Change in Control” shall be deemed to
occur following any transaction if:

 

(a)           any “person” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(other than the Parent, the Company or any trustee or other fiduciary holding
securities under any employee benefit plan of the Parent or of the Company, or
any company owned, directly or indirectly, by the stockholders of the Parent in
substantially the same proportions as their ownership of common stock of the Parent),
becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 35% or more of the combined voting
power of the then outstanding securities of the Parent or the Company; or

 

(b)           the
consummation of the sale or disposition by the Parent or the Company of all or
substantially all of the Parent’s or the Company’s assets other than
(i) the sale or disposition of all or substantially all of the assets of the
Parent or the Company to a person or persons who beneficially own, directly or
indirectly, at least 50% or more of the combined voting power of the
outstanding voting securities of the Parent or the Company at the time of the
sale or (ii) pursuant to a spinoff type transaction, directly or
indirectly, of such assets to the stockholders of the Parent or the Company.

 

A-1

 

APPENDIX B

 

280G
PARACHUTE PAYMENTS AND EXCISE TAXES

 

(a)           If any payment or
benefit (within the meaning of Section 280G(b)(2) of the Code) to the
Participant or for the Participant’s benefit that is paid or payable or
distributed or distributable pursuant to the terms of this Plan or otherwise in
connection with, or arising out of, the Participant’s employment with the Employer
or a Change in Control (any such payment or benefit, a “Parachute Payment”)
would be subject to the excise tax imposed by Section 4999 of the Code or if
any interest or penalties are incurred by the Participant with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then the Participant
will be entitled to receive additional payments (a “Gross-Up Payment”) in an
amount equal to the Excise Taxes imposed upon the Parachute Payment and the
Gross-Up Payment.

 

(b)           If the Participant
shall become entitled to a Parachute Payment, which Parachute Payment will be
subject to the Excise Tax, subject to paragraph (e) below, then the Employer
shall pay to the Participant at the time specified below (i) a Gross-Up Payment
such that the net amount retained by the Participant, after deduction of any
Excise Tax on the Parachute Payment and any U.S. federal, state, and local
income or payroll tax upon the Gross-up Payment provided for by this paragraph,
but before deduction for any U.S. federal, state, and local income or payroll
tax on the Parachute Payment, shall be equal to the Parachute Payment, and (ii)
an amount equal to the product of any deductions disallowed for federal, state
or local income tax purposes because of the inclusion of the Gross-Up Payment
in the Participant’s adjusted gross income multiplied by the highest applicable
marginal rate of federal, state or local income taxation, respectively, for the
calendar year in which the Gross-Up Payment is to be made.

 

(c)           Notwithstanding the
foregoing, if it shall be determined that the Participant is entitled to a
Gross-Up Payment, but that if the Parachute Payment (other than that portion
valued under Treasury Regulation Section 1.280G, Q&A 24(c)) (the “Cash
Payment”) does not exceed 110% of the greatest amount (the “Reduced Payment”)
that could be paid to the Participant such that the receipt of the Cash Payment
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made
to the Participant and the Cash Payment shall be reduced to be equal to the
Reduced Payment. If the Reduced Payment is to be effective, payments shall be
reduced in the following order (i) cash amounts payable to the Participant,
(ii) any benefits valued as “parachute payments, (iii) acceleration of vesting
of any stock options for which the exercise price exceeds the then fair market
value, and (iv) acceleration of vesting of any equity not covered by subsection
(iii) above, unless the Participant elects another method of reduction by
written notice to the Employer prior to the Change in Control.

 

(d)           In the event that the
Internal Revenue Service or court ultimately makes a determination that the
excess parachute payments plus the base amount is an amount other than as
determined initially, an appropriate adjustment shall be made with regard to
the Gross-Up 

 

B-1

 

Payment or Reduced Payment, as applicable to reflect
the final determination and the resulting impact on whether the preceding
paragraph (c) applies.

 

(e)           For purposes of
determining whether any of the Parachute Payments and Gross-Up Payments
(collectively the “Total Payments”)
will be subject to the Excise Tax and the amount of such Excise Tax, (i) the
Total Payments shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “parachute payments” in excess of the “base
amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that, in the opinion
of the Employer’s independent certified public accountants appointed prior to
any change in ownership (as defined under Section 280G(b)(2) of the Code) or
tax counsel selected by such accountants or the Company (the “Accountants”), there is a reasonable
reporting position that such Total Payments (in whole or in part) either do not
constitute “parachute payments,” including giving effect to the recalculation
of stock options in accordance with Treasury Regulation Section 1.280G-1,
Q&A 33, represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the “base
amount” or are otherwise not subject to the Excise Tax, and (ii) the value of
any non-cash benefits or any deferred payment or benefit shall be determined by
the Accountants in accordance with the principles of Section 280G of the Code. To
the extent permitted under Revenue Procedure 2003-68, the value determination
shall be recalculated to the extent it would be beneficial to the Participant. All
determinations hereunder shall be made by the Accountants which shall provide
detailed supporting calculations both to the Employer and the Participant at
such time as they are requested by the Employer or the Participant. If the
Accountants determine that payments under this Agreement must be reduced
pursuant to this paragraph, they shall furnish the Participant with a written
opinion to such effect. The determination of the Accountants shall be final and
binding upon the Employer and the Participant.

 

(f)            For purposes of
determining the amount of the Gross-Up Payment, the Participant shall be deemed
to pay U.S. federal income taxes at the highest marginal rate of U.S. federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rate of taxation
in the state and locality of the Participant’s residence for the calendar year
in which the Parachute Payment is to be made, net of the maximum reduction in
U.S. federal income taxes which could be obtained from deduction of such state
and local taxes if paid in such year. In the event that the Excise Tax is
subsequently determined by the Accountants to be less than the amount taken
into account hereunder at the time the Gross-Up Payment is made, the Participant
shall repay to the Employer, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the prior Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and U.S. federal, state and local income tax
imposed on the portion of the Gross-up Payment being repaid by the Participant
if such repayment results in a reduction in Excise Tax or a U.S. federal, state
and local income tax deduction), plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code. 

 

B-2

 

Notwithstanding the foregoing, in the event any
portion of the Gross-Up Payment to be refunded to the Employer has been paid to
any U.S. federal, state and local tax authority, repayment thereof (and related
amounts) shall not be required until actual refund or credit of such portion
has been made to the Participant, and interest payable to the Employer shall
not exceed the interest received or credited to the Participant by such tax authority
for the period it held such portion. The Participant and the Employer shall
mutually agree upon the course of action to be pursued (and the method of
allocating the expense thereof) if the Participant’s claim for refund or credit
from such tax authority is denied.

 

(g)           In the event that the
Excise Tax is later determined by the Accountant or the Internal Revenue
Service to exceed the amount taken into account hereunder at the time the
Gross-Up Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the Employer
shall make an additional Gross-Up Payment in respect of such excess (plus any
interest or penalties payable with respect to such excess) at the time that the
amount of such excess is finally determined.

 

(h)           The Gross-Up Payment
shall be paid not later than the last day of the calendar year following the
calendar year in which the Participant remits the Excises Taxes.

 

(i)            In the event of any
controversy with the Internal Revenue Service (or other taxing authority) with
regard to the Excise Tax, the Participant shall permit the Employer to control
issues related to the Excise Tax (at its expense), but the Participant shall
control any other issues unrelated to the Excise Tax. In the event that the
issues are interrelated, the Participant and the Employer shall in good faith
cooperate. In the event of any conference with any taxing authority as to the
Excise Tax or associated income taxes, the Participant shall permit the
representative of the Employer to accompany the Participant, and the Participant
and his representative shall cooperate with the Employer and its
representative.

 

(j)            The Employer shall be
responsible for all charges of the Accountant.

 

(k)           The Employer and the Participant
shall promptly deliver to each other copies of any written communications, and
summaries of any verbal communications, with any taxing authority regarding the
Excise Tax covered by this provision.

 

(l)            Nothing in Section
8.14 of the Plan or this Appendix B is intended to violate the Sarbanes-Oxley
Act and to the extent that any advance or repayment obligation hereunder would
do so, such obligation shall be modified so as to make the advance a
nonrefundable payment to the Participant and the repayment obligation null and
void.

 

B-3

 

APPENDIX C

 

NON-COMPETITION RESTRICTION

 

The
Participant agrees that during the three (3) month period commencing on the
date of his Separation from Service, the Participant shall not, at any time,
without the prior written consent of the Company, directly or indirectly,
engage in Competitive Activity. The term “Competitive Activity” shall mean the
Participant’s engaging in an activity, whether as an employee, consultant,
principal, member, agent, officer, director, partner, sole proprietor, or
shareholder (except as a less than 1% shareholder of a publicly traded
company), that is competitive with any product marketed and sold by the Company
or any Affiliate or which would compete with any product proposed to be
marketed and sold by the Company or any Affiliate and as to which the Company
or any Affiliate has devoted significant efforts, provided that the Participant
shall not be deemed to be engaging in a Competitive Activity if he provides
services to a subsidiary, division or affiliate of an entity engaged in a
Competitive Activity (a) if such subsidiary, division or affiliate is not
itself engaged in a Competitive Activity, (b) the portions of the entity
engaged in Competitive Activity comprise no more than 10% of the revenues of
the business enterprise as a whole in the fiscal year of the entity ending
immediately prior to the activity by the Participant, and (c) the Participant
does not directly or indirectly provide service to, supervise or manage the
employees of, or have any responsibilities regarding, the Competitive Activity.

 

C-1

 

APPENDIX D

 

AGREEMENT AND RELEASE

 

AAI Corporation (“Company”) and [name]
(“Employee”), who resides at [address]
agree to the terms and conditions set forth below:

 

1.             (a)           In exchange for the general release in
paragraph 3 below and other promises contained herein, and in accordance with
the terms of the AAI Corporation Change in Control Retention and Severance Plan
(“Plan”), which Employee hereby acknowledges receiving, Employee will receive
severance in the total gross amount of $[amount]
(the “Severance Payment”).(1)  The
Severance Payment will be payable in a single lump sum payment(2) within ten
(10) days following Employee’s termination of employment.(3)  The Severance Payment will be subject to all
applicable payroll withholding deductions.

 

2.             Employee hereby
agrees and acknowledges that the Severance Payment exceeds any payment, benefit
or other thing of value to which Employee might otherwise be entitled under any
policy, plan or procedure of Company or its parent or affiliates or pursuant to
any prior agreement or contract with Company or its parent or affiliates.

 

3.             (a)           In exchange for the consideration provided
for by paragraph 1 and other valuable consideration, Employee, for [himself/herself] and for [his/her] heirs, executors, administrators
and assigns (referred to collectively as “Releasors”), forever releases and
discharges Company and any and all of Company’s parent companies, subsidiaries,
affiliates, divisions, successors and assigns and any and all of its and their
past and/or present officers, directors, independent contractors, agents,
employees, representatives, counsel, employee benefit plans and their
fiduciaries and administrators, successors, assigns and purchasers (referred to
collectively as the “Releasees”), from any and all claims, demands, causes of
action, fees and liabilities of any kind whatsoever, whether known or unknown,
which Releasors ever had, now have or may have against Releasees by reason of
any actual or alleged act, omission, transaction, practice, conduct, occurrence
or other matter up to and including the date Employee signs this Agreement and
Release.

 

(b)           Without
limiting the generality of the foregoing, this Agreement and Release is
intended to and shall release Releasees from any and all claims, whether known
or unknown, that Releasors ever had, now have or may have against Releasees
arising out of Employee’s employment with Company or any of the Releasees, the
terms and conditions of such employment and/or the termination of such
employment, including but not limited to: (i) [any claim for severance under any
arrangement, plan or policy of the Employer, including, as 

 

(1)           Adjust
to reflect type of payments and benefits provided.

(2)           Adjust
for Employees who will receive installments. 

(3)           Adjust
for six-month delay, if applicable.

D-1

 

applicable, an Individual Severance Agreement](4), (ii) any claim
under the Age Discrimination in Employment Act, as amended (“ADEA”); (iii) any
claim under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
(iv) any claim under Title VII of the Civil Rights Act of 1964, as
amended; (v) any claim under the Americans with Disabilities Act, as
amended; (vi) any claim under the Workers’ Adjustment and Retraining
Notification Act; (vii) (vii) any claim under the Annotated Code of Maryland
prohibiting discrimination; (viii) the Sarbanes-Oxley Act of 2002, (ix) any
other claim of discrimination, harassment or retaliation in employment (whether
based on federal, state or local law, statutory or decisional) relating to or
arising out of Employee’s employment, the terms and conditions of such
employment, the separation of such employment, and/or any of the events
relating directly or indirectly to or surrounding the separation of that
employment, including, but not limited to, breach of contract (express or
implied), wrongful discharge, detrimental reliance, defamation, emotional
distress or compensatory or punitive damages; (xi) any claim sounding in tort
or contract (express or implied); and (xii) any claim for attorneys’ fees,
costs, disbursements and/or the like. By virtue of the foregoing, Employee
agrees that [he/she] has waived
any damages and other relief available to [him/her]
(including, without limitation, money damages, equitable relief and
reinstatement) under the claims waived in this paragraph 3. Notwithstanding
anything herein to the contrary, the sole matters to which this Agreement of
Release does not apply are: (i) claims to the Severance Payment, (ii) claims
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
(iii) claims arising after the date Employee signs this Agreement and Release,
(iv) claims to vested accrued benefits under the Employer’s 401(k) or other tax
qualified retirement plans in accordance with the terms of such plans and applicable
law, (v) claims relating to any rights of indemnification under the Company’s
organizational documents or otherwise, (vi) or claims relating to any
outstanding stock options or other equity-based award on the date of
termination, or (vii) claims relating to amounts payable under the Company’s
Management Incentive Plan or Long-Term Incentive Plan. Employee acknowledges
that Employee has been informed that Employee might have specific rights and/or
claims under the ADEA. Employee specifically waives such rights and/or claims
under the ADEA to the extent such rights and/or claims arose on or prior to the
date this Agreement of Release is executed by Employee.

 

4.             The
Employee agrees not to make or file any lawsuits, complaints, or other
proceedings against the Company or to join in any such lawsuits, complaints, or
other proceedings against the Company concerning any matter that arose prior to
the date of this Agreement; provided, however, that, this Agreement and covenant not to sue shall not restrict the Employee’s
right to initiate an action against the Company under the Older Workers Benefit
Protection Act (“OWBPA”) challenging the release of his claims under the ADEA

 

(4)           This
release of claims is only required for a Participant receiving severance under
Article III of the Plan.

 

D-2

 

5.             Employee
acknowledges and agrees that [he/she] has
knowledge of and has had access to Company confidential and proprietary
information and that such knowledge and information was received in confidence
and Employee agrees that [he/she] shall
not publish or disclose, or authorize anyone else to publish or disclose, any
such information or knowledge. This prohibition shall not restrict Employee in
the exercise of technical skills developed while employed by the Company
provided that the exercise of such skill does not involve the disclosure to
others of trade secrets or confidential knowledge or information of the
Company.

 

6.             Employee acknowledges
and agrees that if [he/she]
breaches the provisions of Paragraph 3, 4, 5 or 7 of this Agreement [or any
aspect of the Confidentiality/Non Compete Agreement previously entered into
between the Employee and the Company], the Company will not be required to make
the Severance Payment or, if already paid, the Employee agrees to promptly
repay the Severance Payment and to pay all legal fees and costs that Company
incurs to enforce the provisions of this Agreement [and/or the Confidentiality/Non
Compete Agreement].

 

7.             Employee agrees that
at no time will [he/she] engage in any form of conduct or make
any statements or representations that disparage or otherwise impair the
reputation, goodwill or commercial interests of the Releasees. Nothing in this
Agreement and Release shall prohibit or restrict Employee from: (i) making any
disclosure of information, as required by law, in a proceeding or lawsuit in
which the Company is a party, or additionally in any other civil proceeding or
lawsuit upon ten (10) business days prior written notice to the Company; (ii)
providing information to, or testifying or otherwise assisting in an
investigation or proceeding brought by any federal regulatory or law
enforcement agency or legislative body or the Company’s designated legal,
compliance, or human resources officers; (iii) filing, testifying,
participating or otherwise assisting in a proceeding relating to an alleged
violation of any federal, state or municipal law relating to fraud or any rule
or regulation of the Securities and Exchange Commission; or (iv) challenging
the validity of this Agreement and Release as it applies to a release of claims
under ADEA.

 

8.             Employee agrees make [himself/herself] reasonably available at times and for
durations reasonably acceptable to both parties to assist the Company with
respect to any issues wherein the Company considers Employee’s knowledge or
expertise reasonably beneficial. The Company will reimburse Employee for all
reasonable out of pocket expenses that incurred while [he/she]
is engaged in such activity. Employee will also cooperate fully with the
Company in the defense or prosecution of any claims or actions now in existence
or which may be brought in the future against or on behalf of the Company which
relate to events or occurrences that transpired while the Employee was employed
by the Company. Employee’s full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on 

 

D-3

 

behalf of the
Company at mutually convenient times. Employee shall also cooperate fully with
the Company in connection with any such investigation or review of any federal,
state or local regulatory authority as any such investigation or review relates
to events or occurrences that transpired while Employee was employed by the
Company. The Company shall pay for any reasonable out-of-pocket expenses
incurred by Employee in connection with [his/her]
performance of the obligations pursuant to this paragraph 8. Employee’s
performance under this paragraph 8 following the date of [his/her]
termination from the Company shall be subject to [his/her]
then current employment obligations.

 

9.             Employee represents
that [he/she] has returned (or
will return) in good condition to Company all property belonging to Company,
including but not limited to computers, laptops, hard drives, cell phones,
computer files, email, keys, card access to buildings and office floors, and business
information and documents.

 

10.           If any provision of
this Agreement and Release is held to be illegal, void, or unenforceable, such
provision shall be of no force or effect. However, the illegality or
unenforceability of such provision shall have no effect upon, and shall not
impair the enforceability of, any other provision of this Agreement and Release.
Further, to the extent any provision of this Agreement and Release is deemed to
be overbroad or unenforceable as written, such provision shall be given the
maximum effect permissible under law.

 

11.           With the exception of
the Confidentiality/Non Compete Agreement between the parties, this Agreement
and Release represents the entire understanding between the parties hereto with
respect to the subject matter hereof, and may not be changed or modified except
by a written agreement signed by both of the parties hereto after the Effective
Date of this Agreement and Release. In the event of any conflict between any of
the provisions of this Agreement and Release and the provisions of the Plan,
the terms of the Plan shall govern.

 

12.           Except as preempted by
ERISA, this Agreement and Release shall be construed and enforced in accordance
with the laws of the State of Maryland without regard to conflict of law rules.
The parties hereto agree that the state courts of the State of Maryland and, if
the jurisdictional prerequisites exist, the United States District Court for
the District of Maryland, shall have sole and exclusive jurisdiction and venue
to hear and determine any dispute or controversy arising under or concerning
this Agreement. Employee hereby waives any right to trial by jury in any action
relating to this Agreement.

 

13.           The parties agree that
this Agreement and Release and its terms are confidential and shall be accorded
the utmost confidentiality.

 

D-4

 

14.           This Agreement and
Release is binding upon, and shall inure to the benefit of, the parties and
their respective heirs, executors, administrators, successors and assigns.

 

15.           Employee acknowledges
that [he/she]: (a) has carefully
read this Agreement and Release in its entirety; (b) has had an opportunity to
consider the terms of this Agreement and Release [insert only if employees are over 40: and the disclosure
information attached hereto as Exhibit I (which is provided pursuant to the OWBPA)] for at least forty-five (45) days; (c) is
hereby advised by Company in writing to consult with an attorney of [his/her] choice in connection with this
Agreement and Release; (d) fully understands the significance of all of the
terms and conditions of this Agreement and Release and has discussed them with
an attorney of [his/her] choice,
or has had a reasonable opportunity to do so; and (e) is signing this Agreement
and Release voluntarily and of [his/her]
own free will and agrees to abide by all the terms and conditions contained
herein.

 

16.           Employee may accept
this Agreement and Release by signing it before a notary public and delivering
it to [INSERT NAME AND ADDRESS OF CONTACT]
on or before the forty-fifth (45th) day after [he/she]
receives this Agreement and Release. Notwithstanding the foregoing, Employee
may not sign this Agreement and Release before [his/her] last day of employment and this Agreement and Release
will not be accepted or effective if signed before Employee’s termination date.
After signing this Agreement and Release, Employee shall have seven (7) days
(the “Revocation Period”) to revoke [his/her]
decision by indicating [his/her]
desire to do so in writing delivered to [INSERT
NAME] at the above address by no later than the last day of the
Revocation Period. If the last day of the Revocation Period falls on a
Saturday, Sunday or holiday, the last day of the Revocation Period will be
deemed to be the next business day. Provided Employee does not revoke this
Agreement and Release during the Revocation Period, the Effective Date of this
Agreement and Release shall be the later of the eighth (8th) day
after Employee signs this Agreement and Release or the day after the last day
of the Revocation Period (the “Effective Date”).

 

[Signature page to follow]

 

D-5

 

I have read the Agreement and Release [and the information attached as
Exhibit I] and hereby accept the benefits provided under the Agreement of
Release, subject to the terms and conditions set forth in the Agreement and
Release.

 

	
  Print Name:

  	
  Date:

  
	
   

  	
  Employee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
  Employee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AAI CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  [INSERT NAME]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [INSERT TITLE]

  	
   

  	
   

  
						

 

D-6

 

Exhibit I

 

DISCLOSURE INFORMATION PROVIDED

PURSUANT TO THE OLDER WORKERS BENEFIT
PROTECTION ACT

 

[TO BE COMPLETED]

 

Eligibility Factors and Time Limitations

 

[Explanation for disclosure and additional
required disclosure will be included at the time this document is provided.]

 

All selected employees will have at least forty-five (45) days from
receipt of the Agreement to consider and sign it. Selected employees who sign
and timely return the Agreement will have seven (7) days after signing it (the “Revocation
Period”) to revoke their decision by providing written notice of revocation as
provided in the Agreement. If the last day of the Revocation Period falls on a
Saturday, Sunday or holiday, however, the last day of the Revocation Period
will be deemed to be the next business day. Provided the employee does not
revoke the Agreement, the Agreement will become effective on the later of the
eighth (8th) day after the employee has signed the Agreement or the day after
the last day of the Revocation Period.

 

The job titles and ages of Company employees who are selected and not
selected are attached.

 

 

RETENTION PAYMENT SCHEDULE

 

Each of the following Eligible Employees shall be a Participant in the
Plan and entitled to the Retention Payment set forth in the Incentive Letter
provided by the Committee to such Participant.

 

a.

b.

c.

d.

 

 

ADDITIONAL SEVERANCE BENEFITS SCHEDULE

 

The Committee  may, in its
sole discretion, designate in an Incentive Letter that any Eligible Employee
shall be eligible for any or all of the additional Severance Benefits set forth
below:

 

(a)           Subject
to (i) the Participant’s timely election of continuation coverage under the
Consolidated Budget Omnibus Reconciliation Act of 1985, as amended (“COBRA”),
and (ii) the Participant’s continued co-payment of premiums at the same level
and cost to Participant as if the Participant were an active employee of the
Company (excluding, for purposes of calculating cost, an employee’s ability to
pay premiums with pre-tax dollars), continued participation in the Company’s
group health plan (to the extent permitted under applicable law and the terms
of such plan) at the Company’s expense during the Participant’s Severance Period;
provided, that the Participant is eligible and remains eligible for
COBRA coverage; and provided, further, that in the event that the
Participant obtains other employment that offers health benefits, such
continuation of coverage by the Company shall immediately cease;

 

(b)           outplacement
assistance (services to be provided commensurate with title/position);

 

(c)           a
pro-rata bonus for period up to the date of the Change in Control (assuming all
applicable targets met).

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