Document:

exv10w80

 

Exhibit 10.80

	 	 	 	     AMENDMENT NO. 1 dated as of December 11, 2006 (this
“Amendment”), related to the BRIDGE LOAN AGREEMENT dated as of June 30,
2006 (the “Bridge Loan Agreement”), among ALION SCIENCE AND TECHNOLOGY
CORPORATION (the “Borrower”), the Subsidiary Guarantors listed on the
signature pages hereto, the lenders from time to time party to the Bridge
Loan Agreement (the “Lenders”) and CREDIT SUISSE, as administrative agent
(in such capacity, the “Administrative Agent”).

     A. Pursuant to the Bridge Loan Agreement, the Lenders have made loans to the Borrower.

     B. The Borrower and the Lenders have agreed to amend the Bridge Loan Agreement as set forth
herein.

     Accordingly, in consideration of the mutual agreements herein contained and other good and
valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties
hereto agree as follows:

     SECTION 1. Defined Terms; Interpretation; Etc. Capitalized terms used and not defined herein
shall have the meanings assigned to such terms in the Bridge Loan Agreement. The rules of
construction set forth in Section 1.02 of the Bridge Loan Agreement shall apply equally to this
Amendment. This Amendment shall be a “Loan Document” for all purposes of the Bridge Loan Agreement
and the other Loan Documents.

     SECTION 2. Amendments to Bridge Loan Agreement. Effective as of the Amendment Effective Date
(as defined below), the definition of the term “Applicable Premium” set forth in Section 1.01 of
the Bridge Loan Agreement is hereby amended to read in its entirety as follows:

          “Applicable Premium” shall mean, with respect to any prepayment pursuant to Section 2.09 or
2.10 or any payment of Extended Loans on the Final Maturity Date, the applicable premium (expressed
as a percentage of the principal amount being prepaid) set forth below based on the date such
prepayment is made.

	 	 	 
	 	 	 
	Months after Closing Date	 	Percentage of Par
	0-8
	 	0%
	9-12
	 	1.00%
	13 to Initial Maturity Date
	 	2.00%
	After Initial Maturity Date to 30
	 	1.00%
	31-42
	 	2.00%
	Thereafter
	 	3.00%

 

 

     SECTION 3. Representations and Warranties. To induce the other parties hereto to enter into
this Amendment, the Borrower represents and warrants to the Administrative Agent and each of the
Lenders that, as of the Amendment Effective Date:

          (a) This Amendment has been duly authorized, executed and delivered by each Loan Party party
hereto, and constitutes a legal, valid and binding obligation of such Loan Party in accordance with
its terms. The Bridge Loan Agreement (as amended hereby) constitutes a legal, valid and binding
obligation of the Borrower in accordance with its terms.

          (b) The representations and warranties set forth in Article III of the Bridge Loan Agreement
are true and correct in all material respects on and as of the Amendment Effective Date with the
same effect as though made on and as of the Amendment Effective Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which case such
representations and warranties were true and correct in all material respects as of such earlier
date).

          (c) No Default or Event of Default has occurred and is continuing.

     SECTION 4. Effectiveness. This Amendment shall become effective as of the date (the
“Amendment Effective Date”) that the Administrative Agent shall have received (a) counterparts of
this Amendment that, when taken together, bear the signatures of (i) the Borrower, (ii) each
Subsidiary Guarantor, (iii) the Administrative Agent and (iv) the requisite Lenders and (b) for the
account of each Lender that executes and delivers a copy of this Amendment to the Administrative
Agent at or prior to 5:00 p.m., New York City time, on December 8, 2006, an amendment fee in an
amount equal to 0.50% of the principal amount of such Lender’s outstanding Loans, in each case as
of the Amendment Effective Date.

     SECTION 5. Effect of Amendment. Except as expressly set forth herein, this Amendment shall
not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the
rights and remedies of the Lenders, the Administrative Agent or the Borrower under the Bridge Loan
Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any
of the terms, conditions, obligations, covenants or agreements contained in the Bridge Loan
Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and
shall continue in full force and effect. Nothing herein shall be deemed to entitle any Loan Party
to a consent to, or a waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Bridge Loan Agreement or any
other Loan Document in similar or different circumstances. This Amendment shall apply and be
effective only with respect to the provisions of the Bridge Loan Agreement specifically referred to
herein. After the date hereof, any reference to the Bridge Loan Agreement shall mean the Bridge
Loan Agreement, as modified hereby.

     SECTION 6. Consent and Reaffirmation. Each Subsidiary Guarantor hereby consents to this
Amendment and the transactions contemplated hereby, and each Loan Party hereby (a) confirms its
guarantee of the Obligations (with respect to each Subsidiary Guarantor), as provided in the Loan
Documents as originally executed and (b) acknowledges that such guarantee continues in full force
and effect in respect of the Obligations under the Bridge Loan Agreement (as amended hereby) and
the other Loan Documents.

 

 

     SECTION 7. Expenses. The Borrower agrees to reimburse the Administrative Agent for all
reasonable out-of-pocket expenses incurred in connection with this
Amendment in accordance with the Bridge Loan Agreement, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent.

     SECTION 8. Counterparts. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute but one and the
same contract. Delivery of an executed counterpart of a signature page of this Amendment by
facsimile or electronic transmission shall be as effective as delivery of a manually executed
counterpart hereof.

     SECTION 9. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

     SECTION 10. Headings. The headings of this Amendment are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.

[Remainder of page intentionally left blank]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their
respective authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	ALION SCIENCE AND TECHNOLOGY
CORPORATION,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes	 
	 	 	Title:  	Executive VP and CFO 	 
	 
	 	HUMAN FACTORS APPLICATIONS, INC.,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes	 
	 	 	Title:  	Treasurer 	 
	 
	 	ALION-METI CORPORATION,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes 	 
	 	 	Title:  	Treasurer 	 
	 
	 	ALION-CATI CORPORATION,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes 	 
	 	 	Title:  	Treasurer 	 
	 
	 	ALION-JJMA CORPORATION,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes 	 
	 	 	Title:  	Treasurer 	 
	 
	 	ALION-BMH CORPORATION,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes 	 
	 	 	Title:  	Treasurer 	 
	 
	 	WASHINGTON CONSULTING, INC.,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes 	 
	 	 	Title:  	Treasurer 	 
	 
	 	ALION-MA&D CORPORATION,

	 
	 	by  	/s/ John M. Hughes	 
	 	 	Name:  	John M. Hughes 	 
	 	 	Title:  	Treasurer 	 
	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

 

 

	 	 	 	 	 
	 	CREDIT SUISSE INDIVIDUALLY AND AS
ADMINISTRATIVE AGENT,

	 
	 	by  	/s/ Alexis Maged	 
	 	 	Name:  	Alexis Maged 	 
	 	 	Title:  	Managing Director 	 
	 
	 	By  	/s/ Adam Forchheimer	 
	 	 	Name:  	Adam Forchheimer	 
	 	 	Title:  	Vice Presidentexv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into by and between Washington Gas
Light Company (the “Company” or the “Utility”) and Adrian P. Chapman (the “Executive”), as of the
1st day of November, 2000.

RECITALS

          The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined below) of the Company or its parent company, WGL Holdings, Inc. The Board
believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change of Control of the
Company or WGL Holdings, Inc., to encourage the Executive’s full attention and dedication to the
interests of the Company currently and in the event of any threatened or pending Change of Control
of the Company or WGL Holdings, Inc. and to provide the Executive with compensation and benefits
arrangements upon such a Change of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company
to enter into this Agreement.

AGREEMENT

          NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1. Certain Definitions. (a) The “Effective Date” shall mean the first date during the
Change of Control Period (as defined in Section l(b)) on which a Change of Control (as defined in
Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive’s employment with the Company is terminated within twelve
months prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all purposes of this
Agreement the “Effective Date” shall mean the date immediately prior to the date of such
termination of employment.

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          (b) The “Change of Control Period” shall mean the period commencing on the date hereof and
ending on the second anniversary of the Effective Date.

          2. Change of Control. For the purpose of this Agreement, a “Change of Control”
shall mean:

          (a) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of either (i) the then-outstanding shares of common
stock of WGL Holdings, Inc. or (ii) the combined voting power of the then-outstanding voting
securities of WGL Holdings, Inc. entitled to vote generally in the election of directors;
provided, however, that for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly from WGL Holdings,
Inc., (ii) any acquisition by WGL Holdings, Inc. or any corporation controlled by or
otherwise affiliated with WGL Holdings, Inc., (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by WGL Holdings, Inc. or any corporation
controlled by or otherwise affiliated with WGL Holdings, Inc.; or (iv) any transaction
described in clauses (i), (ii), and (iii) of subsection (d) of this Section 2; or

          (b) Individuals who, as of the close of business on November 1, 2000, constituted the
Board of Directors of WGL Holdings, Inc. (the “Incumbent WGL Holdings, Inc. Board”) cease
for any reason to constitute at least a majority of the Board of Directors of WGL Holdings,
Inc.; provided, however, that any individual becoming a director subsequent to November 1,
2000 whose election, or nomination for election by WGL Holdings, Inc.’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the Incumbent WGL
Holdings, Inc. Board shall be considered as though such individual were a member of the
Incumbent WGL Holdings, Inc. Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Incumbent WGL
Holdings, Inc. Board; or

          (c) The acquisition by any Person of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act)

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of 30% or more of either (i) the then-outstanding
shares of common stock of the Utility or (ii) the combined voting power of the
then-outstanding
voting securities of the Utility entitled to vote generally in the election of
directors, provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the
Utility, (ii) any acquisition by the Utility or any corporation controlled by or otherwise
affiliated with the Utility, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Utility or any corporation controlled by or otherwise
affiliated with the Utility; or (iv) any transaction described in clauses (i) and (ii) of
subsection (e) of this Section 2; or

          (d) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the WGL Holdings, Inc. (a “Business
Combination”), in each case unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial owners,
respectively, of the outstanding WGL Holdings, Inc. common stock and outstanding WGL
Holdings, Inc. voting securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the outstanding WGL
Holdings, Inc. common stock and outstanding WGL Holdings, Inc. voting securities, as the
case may be, (ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of WGL Holdings, Inc. or such
corporation resulting from such Business Combination) beneficially owns, directly or
indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent that such
ownership existed prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent WGL Holdings, Inc. Board at the time of the
execution of the initial agreement, or of such Incumbent WGL Holdings, Inc. Board, providing
for such Business Combination; or

          (e) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the

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assets of the Utility (a “Utility Business
Combination”), in each case unless, following such Utility Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial
owners, directly or indirectly, respectively, of the outstanding Utility common stock
and the outstanding Utility voting securities immediately prior to such Utility Business
Combination beneficially own, directly or indirectly, more than 50% of, respectively, the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Utility Business Combination in
substantially the same proportions as their ownership, immediately prior to such Utility
Business Combination, of the outstanding Utility common stock and outstanding Utility voting
securities, as the case may be, and (ii) no Person (excluding any corporation resulting from
such Utility Business Combination or any employee benefit plan (or related trust) of the
Utility or such corporation resulting from such Utility Business Combination) beneficially
owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of
common stock of the corporation resulting from such Utility Business Combination, or the
combined voting power of the then-outstanding voting securities of such corporation, except
to the extent that such ownership existed prior to the Utility Business Combination; or

          (f) Approval by the shareholders of WGL Holdings, Inc. of a complete liquidation or
dissolution of WGL Holdings, Inc.

          3. Employment Period. The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for the period commencing on the Effective Date and ending on the
second anniversary of such date (the “Employment Period”).

          4. Terms of Employment. (a) Positions and Duties. (i) During the Employment
Period, (A) the Executive’s position, duties and responsibilities shall be at least commensurate in
all material respects with the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Effective Date (it being understood that
changes in reporting relationships or offices shall not necessarily constitute a material change in
position, duties or responsibilities) and (B) the Executive’s services shall be performed at the
location where the Executive was employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location; and

4

 

          (ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s
reasonable best efforts to perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions, and (C) manage personal investments, so long as
such activities do not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of
the activities similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the
Company.

          (b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a
monthly rate, at least equal to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the 12-month period immediately preceding the month in which
the Effective Date occurs. As used herein, “Annual Base Salary” will include all wages or salary
paid to the Executive and will be calculated before any salary reduction or deferrals, including
but not limited to reductions made pursuant to Section 125 and 401(k) of the Internal Revenue Code
of 1986, as amended. During the Employment Period, the Annual Base Salary shall be reviewed no
more than 12 months after the last salary increase awarded to the Executive prior to the Effective
Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in this Agreement, the term “affiliated
companies” shall include any company controlled by, controlling or under common control with the
Company.

          (ii) Annual Incentive. In addition to Annual Base Salary, the Executive shall earn
annual incentive compensation (the “Annual Incentive”) for each fiscal year ending during the
Employment Period, at least equal to that available to other peer executives of the Company and its
affiliated companies.

5

 

Each such Annual Incentive shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual Incentive is awarded,
unless the Executive shall elect to defer the receipt of such Annual Incentive. In the event the
Executive is terminated during the Employment Period, the Executive’s Annual Incentive for the most
recent year
shall be prorated for the portion of that year that the Executive worked in the manner set forth in
Section 6(a)(i)(A)(2).

          (iii) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer executives of the Company and
its affiliated companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated companies for the Executive
under such plans, practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.

          (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s beneficiaries, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer executives of the
Company and its affiliated companies.

          (v) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day period immediately preceding

6

 

the Effective Date or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its affiliated companies.

          (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled
to fringe benefits, including, without limitation,
payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its affiliated companies.

          (vii) Office. During the Employment Period, the Executive shall be entitled to an
office at least equal to that of other peer executives of the Company and its affiliated companies.

          (viii) Vacation. During the Employment Period, the Executive shall be entitled to
paid vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.

          5. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the Executive (the
“Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. For purposes of this
Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with
the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive’s legal
representative.

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          (b) Cause. The Company may terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement, “Cause” shall mean:

     (i) the willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure
from incapacity due to physical or
mental illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive’s duties, or

     (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive 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 authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of
the Company or based upon the advice of counsel for the Company 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. The cessation of employment of the Executive shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.

          (c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

     (i) the assignment to the Executive of any duties inconsistent in any material respect
with the Executive’s position as contemplated by Section 4(a) of this Agreement, excluding
for this purpose an isolated,

8

 

insubstantial and inadvertent action which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

     (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure which is
remedied by the Company promptly after receipt of notice thereof given by the Executive;

     (iii) failure by the Company to reimburse the Executive for expenses related to a
required relocation;

     (iv) any required relocation of the Executive more than thirty five miles from
Washington, D.C., other than on a temporary basis (less than two months);

     (v) any purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement; or

     (vi) any failure by the Company to comply with and satisfy Section 11(c) of this
Agreement.

          (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date (which date shall
be not more than 30 days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

          (e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)
if the Executive’s employment is terminated by the Company other than for Cause or Disability,

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the Date of Termination shall be the date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or the Disability Effective
Date, as the case may be.

          6. Obligations of the Company upon Termination During Employment Period. (a)
Good Reason, Other Than for Cause, Death or Disability. If, during the Employment Period,
the Company shall terminate the
Executive’s employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:

     (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts:

     A. the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2) the product of (x) the Target
Annual Incentive (as defined in the Executive Compensation Plan of the Company) in
the fiscal year of the Executive’s Termination and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (3) any compensation previously
deferred by the Executive (together with any accrued interest or earnings thereon)
and any accrued vacation pay, in each case to the extent not therefore paid (the sum
of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred
to as the “Accrued Obligations”); and

     B. Subject to the provisions of Section 9, the amount equal to two times the
Executive’s Highest Pay. For purposes of this Agreement, Highest Pay shall mean the
sum of (1) the Executive’s Annual Base Salary, plus (2) the highest of the
Executive’s Annual Incentive actually earned for the last three full fiscal years.

     (ii) for two years after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or the Executive’s beneficiaries at
least equal to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement if the
Executive’s employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time

10

 

thereafter with respect to other peer executives of the Company
and its affiliated companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan during such
applicable period of eligibility. After this two-year term, the Executive shall immediately
be eligible for COBRA benefits. For purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for retiree benefits pursuant to such plans,
practices,
programs and policies, the Executive shall be considered to have remained employed until two
years after the Date of Termination and to have retired on the last day of such period;

     (iii) to the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”);

     (iv) the Company shall credit the Executive with up to an additional two years of
benefit service under the Company’s Supplemental Executive Retirement Plan (the “SERP”), but
in no event shall such additional years of benefit service result in total years of benefit
service exceeding the maximum under the SERP;

     (v) the Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services the scope and provider of which shall be selected by the
Executive in the Executive’s sole discretion; and

     (vi) immediately prior to termination of the Executive’s employment, all restricted
stock grants made to the Executive which are outstanding at the time of such event shall be
accelerated and vest.

          (b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days
of the Date of Termination. With respect

11

 

to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive’s
estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as in effect with respect to
other peers and their beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s
beneficiaries, as in effect on the date of the Executive’s death with respect to
other peer executives of the Company and its affiliated companies and their beneficiaries.

          (c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term “Other Benefits” as utilized in this Section 6(c) shall include, and the
Executive shall be entitled after the Disability Effective Date to receive, disability and other
benefits at least equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect generally with
respect to other peer executives and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive and/or the
Executive’s beneficiaries, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.

          (d) Cause: Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive (x) the Executive’s
Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously
deferred by the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid.
If the Executive voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination.

12

 

          7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.

          8. Full Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment.

          9. Certain Additional Payments by the Company. (a) Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall be determined that
any payment or distribution by the Company to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section 9) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties
are incurred by the Executive 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 Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.

          (b) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and

13

 

the assumptions to be utilized in arriving at such determination, shall be
made by such certified public accounting firm as may be designated by the Company (the “Accounting
Firm”) which shall provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting the Change of
Control, the Company shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by
the
Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the
Company to the Executive within five days of the receipt of the Accounting Firm’s determination.
Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

          (c) In the event the Internal Revenue Service (“IRS”) subsequently challenges the Excise Tax
computation herein described, then the Executive shall notify the Company in writing of any claim
by the IRS that, if successful, would require the payment by the Executive of additional Excise
Taxes. Such notification shall be given no later than ten days after the Executive receives
written notice of such claim. The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which the Executive gives notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such claim is due). If
the Company notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim and that it will bear the costs and provide the indemnification as
required by this sentence, the Executive shall cooperate with the Company in good faith in order
effectively to contest such claim and permit the Company to participate in any proceedings relating
to such claim. In the event a final determination is made with respect to the IRS claim, or in the
event the Company chooses not to further challenge such claim, then the Company shall reimburse the
Executive for the additional Excise Tax owed to the IRS in excess of the Excise Tax calculated by
the Accounting Firm. The Company shall also reimburse the Executive for all interest and penalties

14

 

related to the underpayment of such Excise Tax. The Company will also reimburse the Executive for
all federal and state income tax and employment taxes thereon.

          10. Confidential Information. The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive’s employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement). After termination
of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.

          11. Successors & Assigns. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive’s legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

          (c) The Company will require any successor or any party that acquires control of the Company
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company or any party that acquires control
of the Company to assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

          12. Miscellaneous. (a) Governing Law; Headings; Amendment. This Agreement
shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia,
without reference to principles of conflict of laws. The captions of this Agreement are not part
of the provisions

15

 

hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

          (b) Notices. All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:

at the address for Executive that is on file with the Company

If to the Company:

Washington Gas Light Company

1100 H Street, N.W.

Washington, D.C. 20080

ATTN: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

          (c) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

          (d) Withholding. The Company may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant
to any applicable law or regulation.

          (e) Waiver. The Executive’s or the Company’s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(vi) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right under this Agreement.

          (f) At Will Employment. The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is “at will” and, subject to Section 1(a) hereof, prior
to the Effective Date, the Executive’s employment and/or this Agreement may be terminated by either
the Executive or the Company at any time prior to

16

 

the Effective Date, in which case the Executive
shall have no further rights under this Agreement. From and after the Effective Date this
Agreement shall supersede any other agreement between the parties with respect to the subject
matter hereof.

          (g) Arbitration. In the event of any dispute between the parties regarding this
Agreement, the parties shall submit to binding arbitration, conducted in Washington, DC or in
Virginia within 25 miles of Washington, DC. The arbitration shall be conducted pursuant to the
rules of the American Arbitration Association. Each of the parties shall select one arbitrator,
who shall not be related to, affiliated with or employed by that party. The two arbitrators shall,
in turn, select a third arbitrator. The decision of any two of the arbitrators shall be binding
upon the parties, and may, if necessary, be reduced to judgment in any court of competent
jurisdiction. Notwithstanding
the foregoing, the parties expressly agree that nothing herein in any way precludes Company from
seeking injunctive relief or declaratory judgment through a court of competent jurisdiction with
respect to a breach (or an alleged breach) of any covenant not to compete or of any confidentiality
covenant contained in this Agreement. In the event the Executive pursues arbitration pursuant to
this Section herein, the Executive shall be compensated up to $150,000 in legal costs.

          (h) Pooling of Interests Accounting. In the event any provision of this Agreement
would prevent the use of pooling of interests accounting in a corporate transaction involving the
Company and such transaction is contingent upon pooling of interests accounting, then that
provision shall be deemed amended or revoked to the extent required to preserve such pooling of
interests. The Executive will, upon advice from the Company, take (or refrain from taking, as
appropriate) all actions necessary or desirable to ensure that pooling of interests accounting is
available.

          (i) Effect of Prior Agreements. This Agreement contains the entire understanding
between the parties hereto and supersedes the Employment Agreement dated July 19, 1999 between the
Company and the Executive.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 
	 	 	 
	 	 	Name: Adrian P. Chapman
	 
	 	 	WASHINGTON GAS LIGHT COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 	 	James H. DeGraffenreidt, Jr.
	 	 	Title: Chairman, President and Chief
	 

	 	 	 	Executive Officer

17

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