Document:

exv10w4

 

Exhibit 10.4

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT (“Agreement”) is made this 15th day of
June, 2007, by and between CUISINE SOLUTIONS, INC., a Delaware corporation, (the “Borrower”) and BRANCH BANKING AND TRUST COMPANY (“Lender”).

RECITALS:

     WHEREAS, Borrower has requested Lender to make a revolving line of credit loan in the maximum
principal amount permitted to be outstanding at any one time of SIX MILLION AND NO/100 DOLLARS ($6,000,000.00) to Borrower; and

     WHEREAS, Lender is willing to make such loan subject to the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein, Borrower and Lender do hereby agree as follows:

1. CONSTRUCTION AND DEFINITION OF TERMS.

     All terms used herein which are defined by the Virginia Uniform Commercial Code shall have the
same meanings assigned to them by the Virginia Uniform Commercial Code unless and to the extent
varied by this Agreement. All accounting terms not specifically defined herein shall have the
meanings assigned to them as determined by generally accepted accounting principles. In addition to
the terms elsewhere in this Agreement, unless the context otherwise requires, the following terms
shall have the following meanings:

     1.01 “Collateral” shall mean all of Borrower’s personal property, both now owned and
hereafter acquired, including, but not limited to:

	 	(a)	 	Accounts;
	 
	 	(b)	 	Chattel paper;
	 
	 	(c)	 	Deposit accounts;
	 
	 	(d)	 	Documents;

Loan No.                                         

 

 

	 	(e)	 	Equipment;
	 
	 	(f)	 	Fixtures;
	 
	 	(g)	 	General intangibles;
	 
	 	(h)	 	Goods;
	 
	 	(i)	 	Instruments;
	 
	 	(j)	 	Inventory;
	 
	 	(k)	 	Investment property;
	 
	 	(l)	 	Letter-of-credit rights; and
	 
	 	(m)	 	Proceeds and products of all of the foregoing.

     1.02 “Event of Default” shall mean any of the events described in Section 6
hereof.

     1.03 “Lien” shall mean any statutory or common law consensual or non-consensual
mortgage, pledge, security interest, encumbrance, lien, right of setoff, claim or charge of any
kind, including, without limitation, any conditional sale or other title retention transaction, any
lease transaction in the nature thereof and any secured transaction under the Uniform Commercial
Code of any jurisdiction.

     1.04 “Note” shall mean the Deed of Trust Note (Secured Revolving Line of Credit) in
the maximum principal amount permitted to be outstanding at any one time of SIX MILLION AND NO/100
DOLLARS ($6,000,000.00), executed and delivered by Borrower payable to the order of Lender and
dated of even date herewith, and all modifications, renewals and extensions thereof and
substitutions and replacements therefor.

     1.05 “Obligations” shall include the full and punctual performance of all present and
future duties, covenants and responsibilities due to Lender by Borrower under this Agreement,
the Note and the Other Agreements, all present and future obligations of Borrower to Lender
for the payment of money under this Agreement, the Note, and the Other Agreements, extending
to all principal amounts, interest, late charges and all other charges and sums, as well as
all costs and expenses payable by Borrower under this Agreement, the Note, and the Other

-2-

 

Agreements, and all renewals, refinancings, consolidations, re-castings and extensions of any
of the foregoing.

     1.06 “Other Agreements” shall mean any and all other security agreements, assignments,
pledge or hypothecation agreements, mortgages, deeds of trust, instruments and documents now and
hereafter existing between Lender and Borrower and any other person executed and/or delivered
pursuant to this Agreement or further evidencing, securing or in any other manner relating to the
loan from Lender to Borrower evidenced by the Note.

     1.07 “Permitted Liens” shall mean (a) Liens of the Lender, (b) Liens for taxes and
special assessments not delinquent, and (c) Liens, if any, consented to by the Lender in writing.

     1.08 “Person” shall include natural persons, corporations, associations, partnerships,
joint ventures, trusts, governments and agencies and departments thereof, and every other entity of every kind.

2. SECURITY.

     2.01 Security Interest. As security for the payment and performance of all of the
Obligations and performance under the Other Agreements, Borrower hereby irrevocably and
unconditionally assigns, pledges and grants to Lender a continuing security interest in the
Collateral. Lender’s assignment, pledge and grant is coupled with an interest and shall continually
exist until all Obligations have been paid in full. If required by Lender at any time, Borrower
shall make notations, satisfactory to Lender, on its books and records disclosing the existence of
Lender’s security interest in the Collateral. Borrower agrees that, with respect to the Collateral,
Lender shall have all the rights and remedies of a secured party under the Virginia Uniform
Commercial Code, Lender shall have no liability or duty, either before or after the occurrence of
an Event of Default hereunder, on account of loss or damage to, or to collect or enforce any of its
rights against, the Collateral, or to preserve any rights against account debtors or other parties
with prior interests in the Collateral.

     2.02 Covenants and Representations Concerning Collateral. With respect to all of the
Collateral, Borrower covenants, warrants and represents that:

-3-

 

          (a) No financing statement covering any of the Collateral is on file in any public office or
land or financing records except for financing statements in favor of Lender and financing statements with respect to any Permitted Liens.

          (b) Borrower is the legal and beneficial owner of all of the Collateral, free and clear of all
Liens, except for Permitted Liens.

          (c) The security interest granted Lender hereunder shall constitute a first Lien upon the
Collateral, except for Permitted Liens, and Borrower will not, except in the ordinary course of
business, transfer, discount, sell or assign any interest in the Collateral nor permit any other
Lien to be created or remain thereon except for Permitted Liens.

          (d) Borrower will maintain the Collateral in good order and condition, ordinary wear and tear
excepted, and will use, operate and maintain the Collateral in compliance with all laws,
regulations and ordinances and in compliance with all applicable insurance requirements and
regulations. Borrower will pay promptly all taxes, judgments and charges of any kind levied or
assessed thereon, unless disputed in good faith and, if requested by the Lender, bonded off to the
Lender’s satisfaction. Borrower shall promptly notify Lender in writing of any such dispute, and
any pending or threatened litigation involving the Collateral. Borrower shall promptly pay when due
all transportation, storage, warehousing and other such charges and fees affecting or arising out
of or relating to the Collateral and shall defend the Collateral, at Borrower’s expense, against
all claims and demands of any persons claiming any interest in the Collateral adverse to Borrower or Lender.

          (e) At all reasonable times Lender and its agents and designees may enter Borrower’s premises
and inspect the Collateral and all books and records of Borrower (in whatever form) relating to the
Collateral or to the finances and operations of Borrower’s business.

          (f) Borrower shall maintain comprehensive casualty insurance on the Collateral, as may be
reasonably required by the Lender, against such risks, such amounts, with such loss deductible
amounts with such companies as may be required by or acceptable to Lender, and each such policy
shall contain a clause or endorsement, satisfactory to Lender, naming Lender as

-4-

 

loss payee and a clause or endorsement, satisfactory to Lender, that such policy may not be
canceled or altered and Lender may not be removed as loss payee without at least thirty (30) days
prior written notice to Lender. Borrower hereby assigns to Lender any and all proceeds of such
policies and authorizes and empowers Lender to adjust or compromise any loss under such policies
and to collect and receive all such proceeds. Borrower hereby authorizes and directs each insurance
company to pay all such proceeds directly and solely to Lender and not to Borrower and Lender
jointly. Borrower authorizes and empowers Lender to execute and endorse in Borrower’s name all
proofs of loss, drafts, checks and any other documents necessary to accomplish such collection and
any persons making payments to Lender under the terms of this paragraph are hereby relieved
absolutely from any obligation or responsibility to see to the application of any sums so paid.
After deduction from any such proceeds of all reasonable costs and expenses (including reasonable
attorney’s fees) incurred by Lender in the collection and handling of such proceeds, the net
proceeds may be applied in whole or in part, at Lender’s option, either toward replacing or
restoring the Collateral, or as a credit against such of the Obligations, whether matured or
unmatured, as Lender shall determine in Lender’s sole discretion.

          (g) All information, schedules, certificates, records and data furnished to the Lender are
true and correct in all material respects and complete insofar as completeness may be necessary to
give the Lender accurate knowledge of the subject matter.

          (h) All books and records of Borrower pertaining to the Collateral are located at 85 South
Bragg Street, Suite 600, Alexandria, Virginia 22312, and Borrower will not change the location of
such books and records without the prior written consent of Lender.

          (i) Borrower shall do, make, execute and deliver all such additional and further acts, things,
deeds, assurances, instruments and documents as Lender may reasonably request to vest in and assure
to Lender its rights hereunder or in any of the Collateral, including, without limitation, placing
legends on Collateral or on books and records pertaining to Collateral stating that Lender has a
security interest therein.

          (j) Borrower shall cooperate with Lender to obtain and keep in effect one or more control agreements in deposit

-5-

 

account, electronic chattel paper, investment property and letter of credit rights Collateral.

          (k) Borrower authorizes Lender to file financing statements covering the Collateral and all
personal property of Borrower and containing such legends as Lender shall deem necessary or
desirable to protect Lender’s interest in the Collateral. Borrower agrees to pay all taxes, fees
and costs (including attorneys’ fees) paid or incurred by Lender in connection with the
preparation, filing or recordation thereof.

          (l) Whenever required by Lender, Borrower shall promptly deliver to Lender, with all
endorsements and/or assignments required by Lender, all instruments, chattel paper, guaranties and
the like received by Borrower constituting, evidencing or relating to any of the Collateral or
proceeds of any of the Collateral.

          (m) Borrower shall not file any amendments, correction statements or termination statements
concerning the Collateral without the prior written consent of Lender.

          (n) If any Collateral arises out of a contract with the United States Government or any department,
agency or instrumentality thereof, Borrower shall immediately notify Bank thereof and shall execute
and deliver to Bank specific assignments of those contracts and the related United States
Government accounts of Borrower and shall do such other things as may be satisfactory to Bank in
order that all sums due and to become due to Borrower under such contract shall be duly assigned to
Bank in accordance with the Federal Assignment of Claims Act (31 United States Code ‘3727; 41
United States Code’ 15) as in effect on the date hereof and as hereafter amended and/or any other
applicable laws and regulations relating to the assignment of governmental obligations. Payments on
United States Government contracts or United States Government accounts which have been
specifically assigned to Bank by means of a direct assignment, as provided herein, shall be made
directly to Bank, for payment to the Obligations. The separate assignment of specific United States
Government contracts to Bank, as contemplated herein, shall not be deemed to limit Bank’s security
interest to the payments under those particular United States Government contracts and the related
United States Government accounts, but rather Bank’s security interest shall extend to any and all
United States Government contracts and the related United States Government accounts and proceeds thereof,

-6-

 

now or hereafter owned or acquired by Borrower. During the term of this Agreement, Borrower agrees
and covenants not to make any assignment of any of the United States Government contracts to any party other than Bank without Banks prior written consent.

3. REPRESENTATIONS AND WARRANTIES.

     To induce Lender to enter into this Agreement, Borrower represents and warrants to Lender that as of the date hereof:

     3.01 State of Organization, Legal Name and Good Standing. Borrower’s state of
organization and exact legal name are set forth in the first paragraph of this Agreement. Borrower
is an entity, duly organized, legally existing and in good standing under the laws of the
jurisdiction of its organization, has the power to own its property and to carry or its business
and is duly qualified to do business and is in good standing in each jurisdiction in which the
character of the properties owned by it therein or in which the transaction of its business makes such qualification necessary.

     3.02 Authority. Borrower has full power and authority to enter into this Agreement, to
execute and deliver all documents and instruments required hereunder and to incur and perform the
Obligations provided for herein and in the Note, all of which have been duly authorized by all
necessary and proper corporate and other action, and no consent or approval of any person,
including, without limitation, stockholders of Borrower and any public authority or regulatory
body, which has not been obtained, is required as a condition to the validity or enforceability hereof or thereof.

     3.03 Binding Agreements. This Agreement has been duly and properly executed by
Borrower, constitutes the valid and legally binding obligation of Borrower and is fully enforceable against Borrower in accordance with its terms.

     3.04 No Conflicting Agreements. The execution and performance by Borrower of this Agreement
and Borrower’s execution and delivery of and performance under the Note will not (a) violate (i)
any provision of law, any order, rule or regulation of any court or other agency of government,
(ii) any award of any arbitrator, (iii) the charter or Bylaws of Borrower, or (iv) any indenture,
contract, agreement, mortgage, deed of trust or other instrument to which Borrower is a party or by which it or any of its property is bound, or (b) be in

-7-

 

conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default
under, any such award, indenture, contract, agreement, mortgage, deed of trust or other instrument,
or result in the creation or imposition of any Lien upon any of the property or assets of Borrower.

     3.05 Litigation. There are no undisclosed judgments, claims, actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or
its properties, at law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, which may result in
any material adverse change in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of Borrower, and Borrower is not, to its knowledge, in default
with respect to any judgment, order, writ, injunction, decree, rule or regulation of any court or
federal, state, municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would have a material adverse effect on Borrower.

     3.06 Financial Condition. The financial statements of Borrower heretofore delivered
to Lender are complete and correct, and fairly present the financial condition of Borrower. There
are no liabilities of Borrower, direct or indirect, fixed or contingent, as of the date of such
statements which are not reflected therein.

     3.07 Taxes. Except as otherwise disclosed to the Lender, Borrower has paid or caused
to be paid all federal, state and local taxes to the extent that such taxes have become due.
Borrower has filed or caused to be filed all federal, state and local tax returns which are
required to be filed by Borrower.

     3.08 Title to Properties. Borrower has good and marketable title to all of its
properties and assets (including the Collateral) and all of the properties and assets of Borrower
are free and clear of Liens, except for Permitted Liens, and has made no assignments thereof except to Lender.

     3.09 Licenses and Permits. Borrower has duly obtained and now holds all licenses, permits,
certifications, approvals and the like required by federal, state and local laws of the
jurisdiction in which Borrower conducts its business and each remains valid and in full force and
effect and Borrower has paid

-8-

 

all fees, taxes, assessments and other charges necessary to maintain same.

     3.10 No Default. No Event of Default and no event which, with notice or passage of time or
both, would constitute an Event of Default has occurred hereunder.

4. AFFIRMATIVE COVENANTS.

     Borrower covenants and agrees with Lender that, until all of the Obligations have been paid in
full, Borrower will:

     4.01 Taxes. Pay and discharge all taxes, assessments and governmental charges upon
Borrower, its income and properties prior to the date on which penalties are attached thereto.

     4.02 Continuation of Business and Compliance With Laws. Continue its business operations
as now being conducted and comply with all applicable federal, state and local laws, rules, ordinances, regulations and orders.

     4.03 Litigation. Promptly notify Lender in writing of any action, suit or proceeding at
law or in equity by or before any court, governmental agency or instrumentality which could result
in any material change in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of Borrower.

     4.04 Extraordinary Loss. Promptly notify Lender in writing of any event causing
extraordinary loss or depreciation of the value of any of Borrower’s assets and the facts with respect thereto.

     4.05 Maintenance. Maintain all properties and improvements necessary to the conduct of
Borrower’s business in good working order and condition, ordinary wear and tear excepted, and
cause replacements and repairs to be made when necessary for the proper conduct of its business.

     4.06 Patents, Franchises, etc. Maintain, preserve and protect all licenses, patents,
franchises, trademarks and trade names of Borrower or licenses by Borrower which are necessary to
the conduct of the business of Borrower as now conducted, free of any conflict with the rights of any other person.

-9-

 

     4.07 Insurance. Maintain with insurers and in amounts satisfactory to Lender such
insurance against such risks and with such loss deductible amounts as may be reasonably required by
or reasonably acceptable to Lender. Hazard insurance for the Equipment and Inventory shall be in
the amount of full replacement costs or, if full replacement cost insurance is not available,
coverage shall be for the maximum insurable value, and shall contain a lender’s loss payable clause
in favor of Lender which provides that any act or neglect of the Borrower or other owner of the
property will not invalidate the interest of Lender. Borrower shall also maintain worker’s
compensation insurance in an amount meeting state law requirements. All policies of insurance
maintained by Debtor must provide for at least thirty (30) days prior written notice to Lender of
policy cancellation.

     4.08 Evidence of Insurance. Deliver to Lender from time to time as requested, and
periodically if Lender shall so require, evidence reasonably satisfactory to Lender that all
insurance and endorsements required by the Lender pursuant to Section 4.07 hereof, are in effect.

     4.09 Further Assurances. The Borrower shall promptly, upon request, execute,
acknowledge and deliver any financing statement, endorsement, renewal, affidavit, deed, assignment,
continuation statement, security agreement, certificate or other document as the Lender may
reasonably require in order to perfect, preserve, maintain, protect, continue or extend the lien or
security interest of the Lender under this Agreement and its priority. The Borrower shall pay to
the Lender on demand all taxes, costs and expenses (including, but not limited to, reasonable
attorney’s fees) incurred by the Lender in connection with the preparation, execution, recording
and filing of any such document or instrument mentioned aforesaid.

     4.10 Financial Information.

          (a) The Borrower will deliver financial statements and copies of its tax returns to the Lender
in accordance with the terms of the Note.

          (b) The Borrower will promptly deliver to the Lender such other financial information as the Lender
may from time to time require.

-10-

 

5. NEGATIVE COVENANTS.

     Borrower covenants and agrees with Lender that, until all Obligations have been paid in full,
Borrower will not, directly or indirectly, without Lender’s prior written consent:

     5.01 Liens. Create, incur, assume or permit to exist, directly or indirectly, any
liens upon any of Borrower’s property or assets, now owned or hereafter acquired by Borrower, other
than Permitted Liens.

     5.02 Merger, Sale of Assets, Etc. Enter into or be a party to any merger or
consolidation; sell, assign, transfer, convey or lease all or any part of its property or any
interest therein except in the ordinary course of Borrower’s business as now being conducted.

     5.03 Change of Name. Change the name of Borrower.

     5.04 Trade Names. Permit any Accounts to be in the any trade name other than
Borrower’s true corporate name.

     5.05 Change of Management. Change the persons controlling the management and/or day to
day activities of the Borrower without the prior written consent of Lender.

     5.06 Other Agreements. Borrower will not enter into any agreement or undertaking
containing any provision which would be violated or breached by performance of its obligations hereunder.

6. EVENTS OF DEFAULT.

     The occurrence of any one or more of the following events shall constitute an “Event of
Default”:

     (a) If a default shall occur with respect to the payment of any installment of the Note when
and as the same shall become due and payable, whether at maturity or by acceleration or otherwise,
and such default shall continue for a period of ten (10) business days after written notice thereof
from Lender to Borrower.

     (b) If an event of default occurs under any of the Other Agreements.

-11-

 

     (c) If any representation of warranty made herein or in any statement, report, certificate,
opinion, financial statement or other document furnished or to be furnished in connection with this
Agreement shall be false or misleading in any material respect.

     (d) If Borrower fails to pay any amount due Lender under this Agreement when and as the same
shall become due, and such default shall continue for a period of ten (10) business days after
written notice thereof from Lender to Borrower.

     (e) If Borrower fails to observe or perform any warranty, covenant, condition or agreement to
be observed or performed by Borrower under this Agreement, and such failure continues for a period
of thirty (30) days after written notice thereof from Lender to Borrower; provided, however, that
no such grace period shall be provided with respect to Section 2.02, 4.07 or 5.01; and provided
further that no such notice or grace period shall be provided for any default specifically
referenced in this Section 6.

     (f) If by the order of a court of competent jurisdiction, a trustee, receiver or liquidator of
the Collateral or any part thereof, or of the Borrower, shall be appointed and such order shall not
be discharged or dismissed within sixty (60) days after such appointment.

     (g) If the Borrower shall file a petition in bankruptcy or for an arrangement or for
reorganization pursuant to the Bankruptcy Reform Act of 1978, as amended, or any similar law,
federal or state, or if, by decree of a court of competent jurisdiction, the Borrower shall be
adjudicated a bankrupt, or be declared insolvent, or shall make, an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as they become due,
or shall consent to the appointment of a receiver or receivers of all or any part of its property.

     (h) If any of the creditors of the Borrower or other person shall file a
petition in bankruptcy against the Borrower or for reorganization of the Borrower
pursuant to the Federal Bankruptcy Reform Act of 1978, as amended, or any similar
law, federal or state, and if such petition shall not be discharged or dismissed
within sixty (60) days after the date on which such petition was filed.

-12-

 

     (i) If Borrower shall dissolve or liquidate, and such dissolution or
liquidation is not in connection with a reorganization, merger or consolidation approved in writing by the Lender.

     (j) Reserved.

     (k) If a default under any obligation or indebtedness owed to the Lender,
other than the secured by this Agreement, by the Borrower or any guarantor of the Obligations, which default is not cured within any applicable grace or cure period.

7. RIGHTS AND REMEDIES.

     7.01 Rights and Remedies of Lender. Upon the occurrence of an Event
of Default, Lender may, without notice or demand, exercise in any jurisdiction in
which enforcement hereof is sought, the following rights and remedies, in addition
to the rights and remedies of a secured party under the Uniform Commercial Code
and all other rights and remedies available to Lender under applicable law, all
such rights and remedies being cumulative and enforceable alternatively, successively or concurrently:

     (a) Declare the Note, all interest accrued and unpaid thereon, and all other
Obligations to be immediately due and payable and the same shall thereupon become
immediately due and payable without presentment, demand or protest, all of which
are hereby expressly waived.

     (b) Institute any proceeding or proceedings to enforce the Obligations and
any Lien of Lender.

     (c) Take possession of the Collateral, and for that purpose, so far as
Borrower may give authority therefor, enter upon the premises on which the
Collateral or any part thereof may be situated and remove the same therefrom
without any liability for suit, action or other proceeding by Borrower, BORROWER
HEREBY WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND TO JUDICIAL HEARING WITH
RESPECT TO REPOSSESSION OF COLLATERAL, and require Borrower, at Borrower’s
expense, to assemble and deliver the Collateral to such place or places as Lender may designate.

     (d) Operate, manage and control the Collateral, or permit the Collateral or any portion thereof to
remain idle, or store

-13-

 

the same, and collect all rents and revenues therefrom and sell or otherwise dispose of any or all
of the Collateral (including, without limitation, sell, transfer or reassign any license) upon such
terms and under such conditions as Bank, in its reasonable discretion, may determine, all without
any notice or demand, and purchase or acquire any of the Collateral at any such sale or other
disposition, all to the extent permitted by applicable law. Borrower shall have all risk of loss of
the Collateral. Bank shall have no liability or duty, either before or after the occurrence of an
Event of Default, on account of loss of or damage to, to collect or enforce any of its rights
against, the Collateral, to collect any income accruing on the Collateral, or to preserve rights
against account debtors or other parties with prior interests in the Collateral. If Bank actually
receives any notices requiring action with respect to Collateral in Bank’s possession, Bank shall
take reasonable steps to forward such notices to Borrower. Borrower is responsible for responding
to notices concerning the Collateral, voting the Collateral, and exercising rights and options,
calls and conversions of the Collateral. Bank’s sole responsibility is to take such action as is
reasonably requested by Borrower in writing, however, Bank is not responsible to take any action
that, in Bank’s sole judgment, would affect the value of the Collateral as security for the
Obligations adversely. While Bank is not required to take certain actions, if action is needed, in
Bank’s sole discretion, to preserve and maintain the Collateral, Borrower authorizes Bank to take
such actions, but Bank is not obligated to do so.

     7.02 Power of Attorney. Effective upon the occurrence of an Event of Default, Borrower
hereby designates and appoints Lender and its designees as attorney-in-fact of Borrower,
irrevocably and with power of substitution, with authority to execute proofs of claim
and loss; to adjust and compromise any claims under insurance policies; to execute releases; and to
perform all other acts necessary and advisable, in Lender’s sole discretion, to carry out and
enforce this Agreement and the Other Agreements. All acts of said attorney or designee are hereby
ratified and approved by Borrower and said attorney or designee shall not be liable for any acts of
commission or omission nor for any error of judgment or mistake of fact or law, except for gross
negligence, willful misconduct or bad faith. This Power of Attorney is coupled with an interest and
is irrevocable so long as any of the Obligations remain unpaid or unperformed or there exists any
commitment of Lender to Borrower which could give rise to any Obligations.

-14-

 

     7.03 Cumulative Nature of Remedies. Each right, power and remedy of Lender shall be
cumulative and concurrent, and recourse to one or more rights or remedies shall not constitute a
waiver of any other right, power or remedy. It is mutually agreed that commercial reasonableness
and good faith require Lender to give Borrower no more than five (5) days prior written notice of
the time and place of any public disposition of the Collateral or of the time after which any
private disposition or any other intended disposition is to be made.

     7.04 Liquidation Costs. The Borrower shall reimburse and pay to the Lender upon demand
all costs and expenses (the “Liquidation Costs”), including, without limitation, attorneys’ fees
and expenses, advanced, incurred by, or on behalf of the Lender in collecting and enforcing this
Agreement, the Note and the Other Agreements. All Liquidation Costs shall bear interest payable by
the Borrower to the Lender upon demand from the date advanced or incurred until paid in full at a
per annum rate of interest equal at all times to the then highest rate of interest charged on the
principal of the Note, plus two percent (2%) per annum.

     7.05 Expense Payments. If the Borrower shall fail to make any payment or otherwise
fail to perform, observe, or comply with any of the conditions, covenants, terms, stipulations, or
agreements contained herein, or in the Note or the Other Agreements, the Lender without notice to
or demand upon the Borrower and without waiving or releasing any obligation or Event of Default may
(but shall be under no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Borrower, and may enter upon any premises of the Borrower
for that purpose and take all such action thereon as the Lender may consider necessary or
appropriate for such purpose. All sums so paid or advanced by the Lender (the “Expense Payments”),
together with interest thereon from the date paid, advanced, or incurred until repaid in full at a
per annum rate of interest equal at all times to the then highest rate of interest charged on the
Note plus two percent (2%) per annum, shall be paid by the Borrower to the Lender upon demand by
the Lender.

8. MISCELLANEOUS.

     8.01 Performance for Borrower. Borrower agrees and hereby authorizes that Lender may, in
Lender’s sole discretion, but

-15-

 

Lender shall not be obligated to, advance funds on behalf of Borrower without prior notice to
Borrower, in order to insure Borrower’s compliance with any covenant, warranty, representation or
agreement of Borrower made in or pursuant to this Agreement or any of the Other Agreements, to
cover overdrafts in any checking or other accounts of Borrower at Lender or to preserve or protect
any right or interest of Lender in the Collateral or under or pursuant to this Agreement or any of
the Other Agreements, including without limitation, the payment of any insurance premiums or taxes
and the satisfaction or discharge of any judgment or any Lien upon the Collateral or other property
or assets of Borrower; provided, however, that the making of any such advance by Lender shall not
constitute a waiver by Lender of any Event of Default with respect to which such advance is made
nor relieve Borrower of any such Event of Default. Borrower shall pay to Lender upon demand all
such advances made by Lender with interest thereon at the rate and determined in the manner
provided in the Note. All such advances shall be deemed to be included in the Obligations and
secured by the security interest granted Lender hereunder.

     8.02 Expenses. All expenses of Lender in connection with the filing or recordation of
all financing statements and instruments as may be required by Lender at the time of, or subsequent
to, the execution of this Agreement, including, without limitation, all documentary stamps,
recordation and transfer taxes on any document or instrument in connection herewith. Borrower
agrees to save harmless and indemnify Lender from and against any liability resulting from the
failure to pay any required documentary stamps, recordation and transfer taxes, recording costs, or
any other expenses incurred by Lender in connection with this Agreement. The provisions of this
Subsection 8.02 shall survive the execution and delivery of this Agreement and the payment of all
other Obligations.

     8.03 Applications of Collateral. Except as may be otherwise specifically provided in
this Agreement, all Collateral and proceeds of Collateral coming into Lender’s possession may be
applied by Lender to any of the Obligations, whether matured or unmatured, as Lender shall
determine in its sole discretion.

     8.04 Indemnification by Borrower. The Borrower hereby agrees to indemnify and hold harmless
the Lender from and against all liabilities, claims, demands, and costs, including without
limitation, reasonable attorney’s fees, arising out of

-16-

 

or in connection with the Collateral, except arising from the Lender’s gross negligence, willful
misconduct or bad faith.

     8.05 Receipt Sufficient Discharge to Purchaser. Upon any sale or other disposition of
the Collateral or any part thereof, the receipt of the Lender or any other person making the sale
or disposition shall be a sufficient discharge to the purchaser for the purchase money, and such
purchaser shall not be obligated to see to the application thereof.

     8.06 Waivers by Borrower. Borrower hereby waives, to the extent the same may be
waived under applicable law:

     (a) All claims, causes of action and rights of Borrower against Lender on account of actions
taken or not taken by Lender in the exercise of Lender’s rights or remedies hereunder or under the
Other Agreements, except arising from the Lender’s gross negligence, willful misconduct, bad faith,
or in violation of any of the provisions hereof, or in the Other Agreements.

     (b) All claims of Borrower for failure of Lender to comply with any requirement of applicable
law relating to enforcement of Lender’s rights or remedies hereunder or under the Other Agreements;

     (c) All rights of redemption of Borrower with respect to the Collateral;

     (d) In the event Lender seeks to repossess any or all of the Collateral by judicial
proceedings, any bond(s) or demand(s) for possession which otherwise may be necessary or required;

     (e) Presentment, demand for payment, protest and all exemptions;

     (f) Trial by jury in any action or proceeding of any kind or nature in connection with any of
Obligations, this Agreement or any of the other Agreements;

     (g) Settlement, compromise or release of the Obligations of any person primarily or
secondarily liable upon any of the Obligations;

     (h) Substitution, impairment, exchange or release of any collateral security for any of the
Obligations.

-17-

 

     Borrower agrees that Lender may exercise any or all of its rights and/or remedies hereunder
and under the Other Agreements without resorting to and without regard to any collateral security
or sources of liability with respect to any of the Obligations.

     8.07 Waivers by Lender. Neither any failure nor any delay on the part of Lender in
exercising any right, power or remedy hereunder or under any of the Other Agreements shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other rights, power or remedy.

     8.08 Modifications. No modification or waiver of any provision of this Agreement, the
Note or any of the Other Agreements, and no consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which given. No notice to
or demand upon Borrower in any case shall entitle Borrower to any other or further notice or demand
in the same, similar or other circumstances.

     8.09 Lender’s Setoff. Lender shall have the right, in addition to all other rights and
remedies available to it, to set off against any or all of the Obligations any debt owing to
Borrower by Lender, including, without limitation, any funds in any checking or other account now
or hereafter maintained by Borrower at Lender. Borrower hereby confirms Lender’s right to banker’s
lien and setoff, and nothing in this Agreement or any of the Other Agreements shall be deemed a
waiver or prohibition of Lender’s rights of banker’s lien or setoff.

     8.10 Notices. Any notice or other communication in connection with this Agreement,
shall be in writing and shall be deemed to have been properly given or served for all purposes when
personally presented or sent by United States registered or certified mail, return receipt
requested, postage prepaid, provided that any such notice or communication shall be addressed to a
party hereto as provided below (or at such other address as such party shall specify in writing to
the other parties hereto):

          (a) If to Borrower, at 85 South Bragg Street, Suite 600, Alexandria, Virginia
22312.

-18-

 

          (b) If to Lender, at 1717 King Street, Alexandria, Virginia 22314.

     8.11 Applicable Law. The performance and construction of this Agreement, the Note and
the Other Agreements shall be governed by the internal laws of the Commonwealth of Virginia.

     8.12 Successors and Assigns. Whenever any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party. All covenants,
agreements, representations and warranties by or on behalf of Borrower which are contained in this
Agreement and the Other Agreements shall inure to the benefit of the successors and assigns of
Lender. This Agreement may not be assigned by Borrower without the prior written consent of Lender.

     8.13 Use of Terms. The use of any gender or the neuter herein shall also refer to the
other gender or the neuter and the use of the plural shall also refer to the singular, and vice versa.

     8.14 Severability. If any term, provision or condition, or any part thereof, of this
Agreement or any of the Other Agreements shall for any reason be bound or held invalid or
unenforceable by any court or governmental agency of competent jurisdiction, such invalidity or
unenforceability shall not affect the remainder of such term, provision or condition nor any other
term, provision or condition, and this Agreement, the Note, and the Other Agreements shall survive
and be construed as if such invalid or unenforceable term, provision or condition had not been
contained therein.

     8.15 Merger and Integration. This Agreement, the Note and the Other Agreements
contain the entire agreement of the parties hereto with respect to the matters covered and the
transactions contemplated hereby, and no other agreement, statement or promise made by any party
hereto, or by any employee, officer, agent or attorney of any party hereto, which is not contained
herein, shall be valid or binding.

     8.16 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which, when so executed and delivered,
shall be an original, but all such counterparts shall together constitute the same
instrument.

-19-

 

     8.17 Headings. The headings and subheadings contained in the titling of this
Agreement are intended to be used for convenience only and do not constitute part of this Agreement.

     8.18 Consent to Jurisdiction; Service of Process. The Borrower hereby agrees and
consents that any action or proceeding arising out of or brought to enforce the provisions of this
Agreement may be brought in any appropriate court in the Commonwealth of Virginia, or in any other
court having jurisdiction over the subject matter, all at the sole election of the Lender, and by
the execution of this Agreement the Borrower irrevocably consents to the jurisdiction of each such court.

     IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed this Agreement,
under seal as of the date first above written.

	 	 	 	 	 
	 	BORROWER:

CUISINE SOLUTIONS, INC., a Delaware corporation 
 	 
	By:  	/s/ Stanislas Vilgrain  	 [SEAL]  
	 	Name:  	Stanislas Vilgrain 	 
	 	Title:  	CEO 	 
	 
	 	LENDER:

BRANCH BANKING AND TRUST COMPANY 
 	 
	 	By:  	/s/ Henry Abott  	 [SEAL] 
	 	 	Name:  	Henry Abott 	 
	 	 	Title:  	AVP 	 
	 

-20-exv10w85

 

Exhibit 10.85

Employment Agreement

This Employment, Termination and Severance Agreement is entered into, and is effective as of
the 8th day of May, 2007 (the “Effective Date”), by and between Alion Science and Technology
Corporation (the “Company”) and Dr. Bahman Atefi (the “Executive”), under the following terms and
conditions:

Article 1. Employment and Duties

Upon the terms and subject to the conditions contained herein, the Company hereby employs the
Executive as Chairman of the Board and Chief Executive Officer. The Executive shall have all of the
powers, duties and responsibilities customary to his position as are reasonably necessary to the
operations of the Company and as may be assigned to him from time to time by the Board of Directors
(the “Board”), and shall be responsible for making the day-to-day operational and executive
decisions on behalf of the Company. The Executive shall further be responsible for supervising and
directing other officers and employees of the Company. The Executive’s employment is at-will and
for an indefinite period. The Executive or the Company may terminate the Executive’s employment at
any time, subject to the terms and provisions of this Agreement.

Article 2. Compensation and Benefits

The Company shall continue to pay the Executive a Base Salary not less than Five Hundred and
Forty Thousand Dollars ($540,000) per year, subject to adjustments in the discretion of the Board.
The Company shall further provide to the Executive all benefits to which other executives of the
Company are entitled, as commensurate with the Executive’s position, subject to the eligibility
requirements and other provisions of such benefits and other perquisites as determined by the
Board. Such benefits and perquisites may include bonus, long term incentives, group term life
insurance, comprehensive health and major medical insurance, dental and life insurance, disability,
automobile allowance and club memberships. All such compensation and benefits shall be subject to
all appropriate federal and state withholding taxes and payable in accordance with the normal
payroll practices of the Company.

Article 3. Employment Termination and Severance

3.1. (a) Without Cause. During the Employment Period, other than during a Potential Change in
Control Protection Period or within the period ending twenty-four (24) calendar months immediately
following a Change in Control as specified in Article 5 below, the Board may terminate the
Executive’s employment for reasons other than Cause, by notifying the Executive in writing of the
Company’s intent to terminate with the effective date of termination specified by the Company in
the written notice. Upon the effective date of termination under this Article 3.1, if the Executive
timely signs a General Release and does not revoke or violate such General Release, the Company
shall be obligated to pay to the Executive (subject to all appropriate federal and state
withholding taxes):

     (i) A lump-sum cash payment equal to two (2) times the Executive’s Base Salary at the rate in
effect immediately prior to the termination.

1

 

     (ii) A lump-sum cash payment equal to two (2) times the Executive’s actual bonus for the last
complete fiscal year prior to the effective date of termination, if any.

     (iii) Base Salary and all other benefits due the Executive through the effective date of
termination.

     (iv) The unpaid bonus, if any, with respect to the last complete fiscal year preceding the
effective date of termination (such bonus, if any, to be determined in the manner it would have
been determined and payable at the time it would have been payable hereunder had there been no
termination of the Employment Period).

     (v) To the extent that the Executive is eligible for and elects to receive medical and/or
dental benefits pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) for himself and/or any qualifying beneficiaries, the Company shall pay on the Executive’s
behalf, or reimburse the Executive for, the amount of the applicable COBRA that exceeds the amount
of premium payable by the Executive for the same level of coverage immediately prior to the
effective date of termination. Any such COBRA premium payment by the Company that constitutes
taxable income to the Executive shall be grossed up by the Company, assuming an applicable income
tax rate of forty percent (40%). Payments under this paragraph shall cease at the earlier of (i)
the end of the first month in which the Executive is no longer eligible for COBRA for any reason
(other than death or eligibility for Medicare, provided that COBRA coverage continues for any
qualified beneficiary), or (ii) eighteen (18) months after the Executive’s date of termination.
The Executive shall notify the Company as soon as practicable after he ceases to be eligible for
COBRA coverage due to coverage under the group health plan of another employer.

     (vi) All other rights and benefits that the Executive is vested in, pursuant to other plans
and programs of the Company.

     (b) Retirement. If the Executive’s employment terminates due to Retirement (as defined the
Executive’s termination of employment upon reaching age sixty-five (65) for any reason other than
death, Disability (as defined below) or Cause (as defined in Article 3.3), the Company shall be
obligated to pay the Executive the amounts and benefits described in Article 3.1(a)(iii), (iv), (v)
and (vi).

     (c) Death or Disability. If the Executive’s employment is terminated by reason of Disability
(as defined as in the Company’s long-term disability plan), the Company shall be obligated to pay
the Executive or, if applicable, the Executive’s estate: The amounts and benefits described in
Article 3.1(a) (iii), (iv), (v) and (vi), and an additional lump-sum cash payment equal to the
Executive’s Base Salary for a period of six (6) months; provided, however, that such lump sum
payment shall be offset by any payments under the Company’s short-term disability policy or under
any long-term disability plan or insurance program maintained by the Company.

     (d) Voluntary Termination. The Executive may terminate this Agreement at any time by giving
the Board of Directors of the Company written notice of intent to terminate. The

2

 

Executive will receive the amounts and benefits described in Article 3.1(a) (iii), (iv) and (vi),
but shall not be paid any bonus with respect to the fiscal year in which voluntary termination
occurs.

3.2. General Release. As a condition precedent to receiving any of the payments and benefits set
forth in Article 3.1 above, upon the effective date of termination under Article 3.1(a), (b) (c) or
(d) above, the Executive (or his estate as the case may be) agrees to execute and return to the
Company, and shall not revoke or attempt to revoke, a general release (a “General Release”) in a
form acceptable to the Company, within thirty (30) days following the effective date of
termination, that (i) releases the Company and its affiliates, directors, officers, employees and
agents from any and all claims that the Executive may have in connection with his employment or
termination thereof, to the extent permitted by applicable laws, and (ii) the Executive
affirmatively agrees not to violate the provisions of Article 4.

3.3. Termination for Cause. In the event that the Executive is terminated for Cause, the Executive
will not be entitled to any severance or other benefits upon termination other than those accrued
benefits provided to employees pursuant to existing Company policy. “Cause” means:

     (a) The Executive’s commission of a felony of or a crime involving moral turpitude; or

     (b) The Executive committing an act constituting fraud, deceit, or material misrepresentation
with respect to the Company; or

     (c) In the Company’s reasonable discretion, the Executive committing any negligent or willful
act or omission that causes material damage (by reason, without limitation, of financial exposure
or loss, damage to reputation or goodwill, or exposure to civil or criminal penalties or other
prosecutorial action by any governmental authority) to the Company or any parent or subsidiary
corporation thereof; or

     (d) Willful or material violation of any provision of the Company’s Code of Ethics, Conduct
and Responsibility; or

     (e) Willful and material misstatement knowingly made or caused to be made by the Executive in
any filing with the Securities and Exchange Commission; or

     (f) Willful or material violation of any of the covenants contained in Article 4, as
applicable.

For purposes of this Article 3.3, no act or omission by the Executive shall be considered “willful”
unless it is done or omitted in bad faith or without reasonable belief that the Executive’s action
or omission was in the best interests of the Company. Any act or failure to act based upon: (a)
authority given pursuant to a resolution duly adopted by the Board; or (b) advice of counsel for
the Company with written notice to the Board, shall be conclusively presumed to be done or omitted
to be done by the Executive in good faith and in the best interests of the Company.

3

 

The effective date of termination shall be the date specified by the Board. If this Agreement is
terminated by the Board for Cause, the Company shall be obligated to pay the Executive’s Base
Salary through the effective date of termination, and the Executive shall immediately thereafter
forfeit all rights and benefits (other than vested benefits) the Executive would otherwise have
been entitled to receive under this Agreement.

3.4. Severance Payment Schedule. Payments due to the Executive or, if applicable, the Executive’s
estate, pursuant to termination events described in this Article 3, shall be paid in four (4)
semi-annual installments as follows: (a) an amount equal to six months of annual salary set forth
in Article 3.1(a)(i) and twenty five percent (25%) of the total bonus amount set forth in Article
3.1(a)(ii) (the “Severance Installment Payment”), and the amounts set forth in Article 3.1(a)(iii)
and (iv), within thirty (30) days after the expiration of any applicable statutory period in which
revocation of the General Release is permitted (the “First Installment”); (b) an amount equal to
the Severance Installment Payment six (6) months from the date of payment of the First Installment
(the “Second Installment); (c) an amount equal to the Severance Installment Payment six (6) months
from the date of payment of the Second Installment (the “Third Installment); and (d) an amount
equal to the Severance Installment Payment six (6) months from the date of payment of the Third
Installment (the “The Final Installment”) . The Company’s obligation to pay severance amounts due
to the Executive pursuant to this Article 3, to the extent not already paid, shall cease
immediately and such payments will be forfeited if the Executive violates any condition described
in Article 3 or 4. The parties intend and agree that any payments contemplated by this Agreement
constituting “deferred compensation” for purposes of Code Section 409A shall comply with the
requirements of such section. No deferred compensation payable hereunder shall be subject to
acceleration or to any change in the specified time or method of payment, except as otherwise
provided under this Agreement and consistent with Code Section 409A. In no event shall the Company
have any liability or obligation with respect to taxes for which Executive may become liable as a
result of the application of Code Section 409A.

Article 4. Noncompetition, Confidentiality, Nonsolicitation, and Ownership

4.1. Noncompetition. The Executive acknowledges and agrees that by virtue of his employment
with the Company, he has or will have access to valuable proprietary information not known to the
public that the Company possesses, including but not limited to, methods of operation, business
strategies and plans, financial information, marketing materials, ideas, trade secrets, customer
contacts and other customer information (“Proprietary Information”). The Executive further
acknowledges and agrees that the Company has legitimate business interests in assuring that his
unique knowledge of the Company, including but not limited to that knowledge regarding and relating
to the foregoing information, is not disclosed or converted to the use of entities or individuals
in competition with the Company. The Executive therefore agrees that during the Employment Period
and for a period of two (2) years after the date of termination or cessation of the Executive’s
employment with the Company for any reason whatsoever, he will not, directly or indirectly, compete
with the Company or its subsidiaries or affiliates by providing services or by being an officer,
director, employee, consultant, agent, advisor, shareholder or owner to or of any other person,
partnership, association, corporation, or other entity that is a “Competing Business,” except that
he may have an ownership interest of up to two percent (2%)

4

 

of a Competing Business which is a public company. As used herein, a “Competing Business” is any
business whose activities relate to the products or services of the same or similar type as the
products or services which are sold (or, pursuant to an existing business plan, will be sold) to
paying customers of the Company or its subsidiaries or affiliates, and for which the Executive has
the responsibility to plan, develop, manage, market, or oversee, or had any such responsibility
within the Executive’s most recent twenty-four (24) months of employment with the Company.
Following termination of employment, the Executive may request in writing an exception to the
foregoing provision from the Company for prospective employment, which exception will be granted if
the Board, in its sole discretion, determines that such prospective employment will not unduly or
materially compete with or otherwise interfere with the business of the Company.

In addition to the foregoing, the Executive agrees that, for a period of two (2) years after the
date of termination or cessation of the Executive’s employment with the Board for any reason
whatsoever, he will not, directly or indirectly, intentionally entice, induce or solicit, or
attempt to entice, induce or solicit, any individual or entity having a current or prospective
business relationship with the Company, whether as a consultant, client, customer or otherwise, to
terminate or cease such relationship with the Company, or to fail to enter into or renew such
relationship with the Company.

The parties agree that the above restrictions on competition are completely severable and
independent agreements supported by good and valuable consideration and, as such, shall survive the
termination of this Agreement for whatever reason. The parties further agree that any invalidity or
unenforceability of any one or more of such restrictions on competition shall not render invalid or
unenforceable any remaining restrictions on competition. Additionally, should a court of competent
jurisdiction determine that the scope of any provision of this Article 4.1 is too broad to be
enforced as written, the parties intend that the court reform the provision to such narrower scope
as it determines to be reasonable and enforceable. The Executive acknowledges and agrees that the
non-competition and non-solicitation provisions herein are expressly assignable to any successor of
the Company as set forth in Article 6(b).

4.2. Nonsolicitation. During the Employment Period and for a period of two (2) years after the
termination or cessation of his employment with the Company for any reason whatsoever, the
Executive shall not, on his own behalf or on behalf of any other person, partnership, association,
corporation, or entity: (a) directly, indirectly, or through a third party hire or cause to be
hired; (b) directly, indirectly, or through a third party solicit; or (c) in any manner attempt to
influence or induce any employee of the Company or its subsidiaries or affiliates to leave the
employment of the Company or its subsidiaries or affiliates, nor shall he use or disclose to any
person, partnership, association, corporation, or other entity any information obtained concerning
the names and addresses the Company’s employees. The Executive further agrees and acknowledges that
the Company has confidentiality and non-competition agreements with certain of its employees, and
he agrees that he will not interfere with any such agreements. The parties agree that the above
restrictions on hiring and solicitation are completely severable and independent agreements
supported by good and valuable consideration and, as such, shall survive the termination of this
Agreement for whatever reason. The parties further agree that any invalidity or unenforceability of
any one or more of such restrictions on hiring and solicitation shall not

5

 

render invalid or unenforceable any remaining restrictions on hiring and solicitation.
Additionally, should a court of competent jurisdiction determine that the scope of any provision of
this Article 4.2 is too broad to be enforced as written, the parties intend that the court reform
the provision to such narrower scope as it determines to be reasonable and enforceable.

4.3. Nondisclosure of Trade Secrets. During the term of this Agreement and for a period of two (2)
years thereafter, the Executive agrees: (a) to treat all Proprietary Information in a secret and
confidential manner, take all reasonable steps to maintain such secrecy, and comply with all
applicable procedures established by the Company with respect to maintaining the secrecy and
confidentiality of Proprietary Information; (b) to use Proprietary Information only as necessary
and proper in the performance of the Executive’s duties as an employee of the Company; and (c)
except as required in this Article 4.3, to not directly or indirectly, without the written consent
of the Company, reproduce, copy, disseminate, publish, disclose, provide or otherwise make
available to any person, firm, corporation, agency or other entity, any Proprietary Information.
Under no circumstances shall the Executive use, directly or indirectly, any such Proprietary
Information for his personal gain or profit.

4.4. Nondisparagement. During the Employment Period and at all times thereafter, the Executive
agrees to not disparage the Company or otherwise make comments harmful to the Company’s reputation.

4.5. Ownership. The Executive agrees that all inventions, copyrightable material, business and/or
technical information, marketing plans, customer lists, and trade secrets which arise out of the
performance of this Agreement are the property of the Company.

Article 5. Change in Control

5.1. Change in Control. This Article 5 shall not become effective, and the Company shall have
no obligation hereunder, unless the employment of the Executive with the Company shall terminate
for the reasons provided in this Article 5 during a Potential Change in Control Protection Period
or within the period ending twenty-four (24) calendar months after a Change in Control.

5.2. Definition of Change in Control. Change in Control of the Company shall be as set forth in the
Company’s Phantom Stock Plan effective as of February 11, 2003, and amended and restated effective
as of November 9, 2005, and as such plan or its successor shall be amended from time to time
thereafter; provided, however, that any amendment to the definition of Change in Control shall not
apply to a transaction that occurs within the twenty-four (24) calendar month period after such
amendment is adopted if such transaction would have constituted a Change in Control or Potential
Change in Control without regard to such transaction.

5.3. Potential Change in Control Definitions.

     (a) For the purposes of this Agreement, the term “Potential Change in Control” means the date
when any of the following actions occur: (i) The Company enters into an agreement the consummation
of which, or the approval by shareholders of which, would

6

 

constitute a Change in Control; (ii) any other event occurs which is deemed to be a Potential
Change in Control by the Board and the Board adopts a resolution to the effect that a Potential
Change in Control has occurred.

     (b) The term “Potential Change in Control Protection Period” means the period beginning on the
date an event described in the preceding subparagraph occurs and ending (i) with respect to a
Potential Change in Control described in clause (a)(i) above, upon the abandonment or termination
of the applicable agreement; or (ii) with respect to a Potential Change in Control described in
clause (a)(ii) above, upon the one year anniversary of the occurrence of the Potential Change in
Control or such earlier date as may be determined by the Board.

     (c) If a Change in Control occurs within the Potential Change in Control Protection Period,
the Potential Change in Control Protection Period shall automatically terminate on the date of the
Change in Control and the Change in Control protections described herein shall simultaneously
commence.

     (d) In addition to the foregoing, any termination of the Executive at the request of a third
party in contemplation of a Change in Control or Potential Change in Control shall be deemed to
have occurred during a Potential Change in Control Protection Period.

5.4. Change in Control Severance Benefits. If, at any time during the Potential Change in Control
Protection Period or within the period ending twenty-four (24) calendar months after the occurrence
of a Change in Control, the Executive’s employment is terminated involuntarily by the Company
without Cause (as provided in Article 3.3) or by the Executive for Good Reason (as defined below),
then, if the Executive timely signs a General Release and does not revoke or violate such General
Release, the Company shall be obligated to pay to the Executive, in accordance with Article 3.4:

     (a) The amounts and benefits described in Article 3.1(a), (b), (c) and (d) above; and

     (b) Outplacement services in an amount not to exceed twenty-five thousand dollars ($25,000)
with a firm selected by the Company and at the reasonable expense of the Company; provided,
however, that under no circumstances shall such outplacement services be provided beyond the
December 31 of the second calendar year following the calendar year in which the Executive’s
Separation From Service occurred. Article 3.4 shall apply to the payment of benefits hereunder.

5.5. Definition of Good Reason. “Good Reason” shall mean, without the Executive’s express written
consent, the occurrence of any one or more of the following events during the Potential Change in
Control Protection Period or within the twenty-four (24) calendar month period immediately
following a Change in Control:

     (a) The assignment to the Executive by the Company of duties materially inconsistent with, or
the material reduction of the powers and functions associated with, the Executive’s position,
duties, responsibilities, and status with the Company;

7

 

     (b) A reduction by the Company in the Executive’s Base Salary or pay incentive opportunities;
unless: (i) the reduction is made with the agreement of the Executive, and/or (ii) the Base Salary
for executives of a similar class are also similarly reduced; or (iii) there is a reduction in base
salary or pay incentive for all senior executives holding substantially similar agreements to this
Agreement;

     (c) The Company requiring the Executive to be based anywhere other than a location no more
than twenty (20) miles from the Company’s current principal executive offices or the location where
the Executive is based;

     (d) Any material breach by the Company of any provision of this Agreement; or

     (e) Any failure by the Company to obtain the assumption of this Agreement by any successor or
assign of the Company effected in accordance with the provisions of Article 6(b).

Unless the Executive becomes Disabled, the Executive’s right to terminate employment for Good
Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The
Executive’s continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason herein. The Executive must provide the
Company with written notice of intent to terminate and request for cure within ninety (90) days
after the occurrence of the Good Reason event, which notice, in the case of an event described in
clause (a) or (d) above, shall provide the Company with a reasonable opportunity (not required to
exceed fourteen (14) days) to cure the event. If the Bank cures the Good Reason event within the
time provided, the Executive’s notice of intent to terminate shall automatically be withdrawn and
of no effect.

Article 6. Miscellaneous

          (a) Any notices required by this Agreement shall: (i) be delivered by messenger or made
in writing and mailed by certified mail, return receipt requested, with adequate postage prepaid;
(ii) be deemed given when so delivered or mailed; and (iii) in the case of the Company, be
delivered or mailed to its office at 1750 Tysons Boulevard, Suite 1300, McLean, Virginia
22102-4213, Attn: Chief Financial Officer, or in the case of the Executive, be mailed to the last
home address that the Executive has given to the Company.

          (b) The obligations and duties of the Executive under this Agreement are personal and not
assignable by the Executive. . This Agreement may and shall be assigned or transferred to, and
shall be binding upon and shall inure to the benefit of, any successor of the Company, and any such
successor shall be deemed substituted for all purposes of the “Company” under the terms of this
Agreement (other than for the purpose of determining whether a Change in Control has occurred or
may potentially occur). If any term or provision of this Agreement is held to be illegal or
invalid, such illegality or invalidity shall not affect the remaining terms or provisions hereof,
and each such remaining term and provision of this Agreement shall be enforced to the fullest
extent permitted by law.

          (c) If any dispute arises under this Agreement, such dispute shall be referred to a panel of
three (3) arbitrators for resolution. Any such arbitration proceeding shall take place

8

 

in Arlington or Fairfax County, Virginia. All disputes shall be resolved by a single
arbitrator. The arbitrator will have the authority to award the same remedies, damages, and costs
that a court could award. The American Arbitration Association’s Voluntary Labor Arbitration Rules
shall govern procedures for the arbitration, unless the parties unanimously agree to adopt a
different rule or rules.

          (d) This Agreement may be altered, amended or modified only by written agreement signed by
both the Executive and the Company. No oral modification of this Agreement, or of any part of this
Agreement including this paragraph, shall have any force or effect. No waiver by either of such
parties of their rights under this Agreement shall be deemed to constitute a waiver with respect to
any subsequent occurrences or transactions hereunder unless such waiver specifically states that it
is to be construed as a continuing waiver.

          (e) This Agreement contains the entire understanding between the parties and supersedes any
prior written or oral agreement(s) between the Company and the Executive relating to the
termination of the Executive’s employment and the amounts payable under this Agreement. This
Agreement shall not be modified or waived except by written instrument signed by the parties.

          (f) To the extent not preempted by federal law, the provisions of this Agreement shall be
construed and enforced in accordance with the laws of the state of Virginia without reference to
Virginia choice of law statutes or decisions.

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement, subject to approval
and ratification by the Board of Directors, as of the Effective Date.

	 	 	 	 	 
	EXECUTIVE:	 	 
	 
	 	 	 	 
	By:

	 	/s/ Dr. Bahman Atefi	 	 
	 

	 	 	 	 
	 

	 	Dr. Bahman Atefi	 	 
	 
	 	 	 	 
	ALION SCIENCE AND TECHNOLOGY CORPORATION:	 	 
	 
	 	 	 	 
	By

	 	/s/ Harold W. Gehman	 	 
	 

	 	 	 	 
	 

	 	Harold W. Gehman	 	 
	 

	 	On behalf of the Alion Board of Directors	 	 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]