Document:

exv10w17

 

Exhibit 10.17

EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made this                      day of                    , 2002, (the “Effective Date”) by
and between Alion Science and Technology Corporation, a Delaware corporation
(the “Company”) and Barry S. Watson (the “Employee”).

         WHEREAS, IIT Research Institute, an Illinois not-for-profit corporation
(“IITRI”) and Employee entered into an Employment Agreement dated December 31,
2001 (the “Prior Employment Agreement”) to serve as Sector Senior Vice
President and Sector Manager for the Systems Technology Sector of IITRI
effective October 1, 2000;

         WHEREAS, the Company, as of the Effective Date, acquired certain business
operations of IITRI and in connection therewith Employee and IITRI terminated
the Prior Employment Agreement immediately prior to the Effective Date; and

         WHEREAS, the Company and Employee desire to enter into this new Agreement
as of the date hereof.

         NOW THEREFORE, in consideration of the foregoing recitals and mutual
promises and conditions set forth herein, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Employee agree as follows:

         1.     Employment. Upon the terms and subject to the conditions contained
herein, the Company hereby employs the Employee as Sector Senior Vice President
and Sector Manager for the Spectrum Engineering Sector, and agrees to continue
the Employee in that position (or in any other position upon which the parties
mutually agree) during the term of this Agreement unless terminated earlier in
accordance with Sections 14 or 17 of this Agreement (“Term and Termination”).

         2.     Definitions.

                       A.     “Company” means Alion Science and Technology Corporation, its
subsidiaries, affiliates, successors and assigns.

                       B.     “Company Proprietary Information” means any information, data, computer
software, invention, design, idea, concept, specification, formula, device,
equipment, plan, process, document or material, whether tangible or intangible
(including without limitation information relating to marketing strategies or
plans, pricing policies or plans, proposals, lists of customers or clients and
any other information that, in any way whatsoever, pertains to marketing or
sales), which is a trade secret or proprietary in nature and which: (i) belongs
to or is in the possession of the Company or any client or customer of the
Company; or (ii) is learned or developed, in whole or in part, by Employee or
otherwise comes into Employee’s possession, control or knowledge in connection
with, or arising out of Employee’s employment by the Company.

 

                       C.     “Client(s)” and/or “Customer(s)” means all entities with whom the
Company has a contract or is offering or proposing to enter into a contract,
including without limitation, federal government agencies, whether defense or
civil.

         3.     Compensation.

                       A.     The Employee’s initial base salary during the term of this Agreement
shall be Two Hundred Twenty Thousand Dollars and No/100 Cents ($230,000.00) per
annum (“Annual Base Salary”). During the term of this Agreement, the Company
shall not reduce Employee’s initial base salary without the consent of both
parties. Commencing with the Company’s first performance review cycle after
the effective date of employment, the Employee shall participate in the
Company’s annual performance review process, at which time the Company shall
review Employee’s performance and increase total annual compensation as deemed
appropriate by the Company. In addition, the Employee will be eligible to
participate in the Company’s Incentive Compensation Plan for each Company
fiscal year of employment to an extent consistent with similarly placed
management of the Company, and provided that Employee is an employee in good
standing of the Company at the time of each annual performance review.

                       B.     The Employee shall also be eligible to participate in the Company’s
Stock Appreciation Rights Plan and the Deferred Compensation Plan to an extent
consistent with similarly placed management of the Company; provided, however,
that both adoption of the Stock Appreciation Rights Plan and the Deferred
Compensation Plan, and Employee’s participation therein, are subject to
approval by the Company’s Board of Directors.

                       C.     The Company shall lease and insure, for the use and benefit of
Employee, an automobile for his or her use during the term of employment with
the Company. Any automobile lease provided and/or executed by Company shall
have a maximum monthly reimbursement allowance of one thousand dollars
($1,000).

         4.     Special Incentive Arrangement. In connection with Alion’s acquisition of
IITRI’s assets as of the Effective Date, Employee shall be awarded a special
credit in Alion’s deferred compensation plan (described below), representing a
right to have his or her deferred compensation account credited with the
amounts that would be received if the deferred compensation plan owned for his
or her benefit Three Hundred Thousand Dollars and No/100 Cents ($300,000.00)
face amount of subordinated notes of the series issued to IITRI in connection
with the acquisition, including without limitation all payment-in-kind thereon.
If and to the extent that the series of subordinated notes are paid off
prior to the scheduled redemption date, Employee’s deemed investment in such
subordinated notes shall be proportionately deemed paid off and those amounts
shall thereafter be adjusted for deemed investment experience of other deemed
investment options made available under the terms of the deferred compensation
plan, pending vesting and payment, in accordance with the provisions of this
Section 4. Additionally, as part of that same award, Employee shall directly be granted
warrants to acquire Alion stock, the terms of which are consistent with the
warrants attached to the issued series of the referenced subordinated notes.
Employee’s right to receive payment in respect of the deferred compensation
plan credit and to exercise the warrants shall be forfeitable upon termination
of employment, unless he or she shall remain employed continuously from the
Effective Date to the seventh anniversary of the Effective Date at which time
he or she shall be 50% vested in the deferred compensation and the warrants
shall be 50% exercisable; the remaining portion of the deferred compensation
and warrants shall become 100% vested and exercisable on the eighth anniversary
of the Effective Date, subject to his or her employment through that date.
Notwithstanding the foregoing, upon a

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 termination of Employee’s employment by the Company without Cause or by
Employee with Good Reason (as defined in Section 17.A but, for this purpose
only, without regard to whether the occurrence of one of the events is during
the Protection Period), the deferred compensation plan credits and the rights
to exercise or put the warrants (in accordance with the applicable Warrant
Agreement) shall vest immediately on a pro rata basis by month from the
Effective Date through the end of the month in which such termination is
effective.

         5.     Long-Term Incentive Plan. It is presently expected that the Board of
Directors of the Company will establish a long term incentive plan subject to a
maximum limitation, which may, but is not required to, include special
provisions for accelerated vesting and early payment in the event of
termination of employment by Alion without Just Cause or by Executive for Good
Reason. The Employee shall also be eligible to participate in such long-term
incentive plan to an extent consistent with similarly placed management of the
Company; provided, however, that adoption of such long-term incentive plan, and
Employee’s participation therein, is subject to approval by the Company’s Board
of Directors.

         6.     Retention Payment. Company and Employee acknowledge that Employee has
fully vested in his or her right to receive payments under the Retention
Incentive Agreement dated September 1, 2001 entered into by Company and
Employee, attached as Exhibit A to this Agreement, and that such Retention
Incentive Agreement remains in effect in its original form and is incorporated
herein by reference.

         7.     Duties.

                       A.     During the term of this Agreement, the Employee shall serve as the
Sector Senior Vice President and Sector Manager for the Systems Technology
Sector of the Company. The Employee shall report directly to the Chief
Executive Officer of the Company. He or she shall have such powers and shall
perform such duties as are incident and customary to his or her office. During
the term of this Agreement, the Employee shall serve in any additional offices
or positions of the Company which are pertinent and customary to his or her
office, and to which he or she may be elected or appointed by appropriate
action of the Company.

                       B.     The Employee shall devote his or her full time, attention, skill, and
energy to the performance of his or her duties under this Agreement, and shall
comply with all reasonable professional requests of the Company; provided,
however, that the Employee will be permitted to engage in and manage personal
investments (subject to the terms of Section 12 below) and to participate in
community and charitable affairs, so long as such activities do not interfere
with his or her duties under this Agreement. The Employee shall be
headquartered in the Company office currently located at 1750 Tysons Boulevard,
Suite 1300, McLean, Virginia 22102-4213.

                       C.     The Company agrees to maintain Employee’s status as a Senior Vice
President as long as the Employee’s obligations under this Agreement are
fulfilled and subject to the continued approval by the Company’s Board of
Directors.

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                       D.     The Company shall not, during the Term of this Agreement, demote the
Employee or reduce his or her responsibilities as set forth in this Section 7,
or otherwise reduce his or her stature in the Company except as authorized
under this Agreement.

                       E.     Employee shall conduct all assigned duties in compliance with the Alion
Science and Technology Corporation Code of Ethics, Conduct, and Responsibility
and all other Company policies and procedures then in effect, and shall
acknowledge and execute all documents necessary to comply and/or evidence
compliance with such codes, policies and procedures.

                       F.     The Company shall maintain in force, at all times during the term of
this Agreement, Directors and Officers Liability insurance that covers Employee
against all legal liabilities that may arise and are incurred in the good faith
performance of duties as a member of the Company’s management.

         8.     Vacation, Holidays, and Sick Leave. The Employee shall be entitled to
paid vacations, holidays, and sick leave in accordance with the Company’s
policies, as in effect from time to time.

         9.     Expenses. The Company shall reimburse the Employee for all reasonable
business-related expenses incurred in connection with his or her duties on
behalf of the Company in a manner consistent with current Company policies and
procedures.

         10.     Fringe Benefits. During the term of this Agreement, the Employee
shall be entitled to participate in any and all fringe benefit plans, programs
and practices sponsored by the Company for the benefit of its employees, under
the normal conditions for all such employees (including contributions, if any,
by Employee, to the cost of such plans if contributions by the employee is
normal) and shall be furnished with other services and perquisites appropriate
to his or her position, including without limitation life insurance, health
insurance, vision insurance, dental insurance, and disability insurance.

         11.     Nondisclosure of Proprietary Company Information. During the term of
this Agreement and for a period of two (2) years thereafter, Employee agrees:
(a) to treat all Company 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 Company Proprietary Information; (b) to use
Company Proprietary Information only as necessary and proper in the performance
of Employee’s duties as an employee of the Company; and (c) except as required
in this Section, 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 Company Proprietary Information. Under no circumstances shall
Employee use, directly or indirectly, any such Company Proprietary Information
for his or her personal gain or profit.

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         12.     Non-Competition; Non-Solicitation. Employee acknowledges and recognizes
the highly competitive nature of the business of Alion and Alion’s subsidiaries
and accordingly agree as follows:

                       A.     During the Term and the Restricted Period (as defined in Section
12.G), Employee will not knowingly (after due inquiry), whether on Employee’s
own behalf or on behalf of or in conjunction with any person, company,
business entity or other organization whatsoever, directly or indirectly
solicit or assist in soliciting in competition with Alion, the business of any
customer or prospective customer of Alion of which Employee is aware at the
time of such termination.

                       B.     During the Restricted Period, Employee will not directly or
indirectly: (i) engage in any services either individually or on behalf of any
person that compete with any material business of Alion or Alion’s
subsidiaries as conducted at the time Employee ceases to be employed by Alion
(including, without limitation, businesses which Alion or Alion’s subsidiaries
had at such time specific plans to conduct in the future and as to which plans
Employee is aware at the time Employee ceases to be employed by Alion) in the
United States (a “Competitive Business”); (ii) acquire a financial interest
in, or otherwise become actively involved with, any Competitive Business,
directly or indirectly, as an individual, partner, shareholder, officer,
director, principal, agent, trustee or consultant, except to the extent that
such financial interest is a component of compensation or benefits payable
pursuant to subsequent employment not otherwise prohibited by this Agreement;
or (iii) interfere with, or attempt to interfere with, business relationships
formed at or prior to the time Employee ceases to be employed by Alion between
Alion or any of Alion’s subsidiaries and customers, clients, suppliers of
Alion or Alion’s subsidiaries, as to which Employee is aware at the time he
ceases to be employed by Alion.

                       C.     Notwithstanding anything to the contrary in this Agreement, Employee
may, directly or indirectly own, solely as an investment, securities of any
person engaged in the business of Alion or Alion’s subsidiaries which are
publicly traded on a national or regional stock exchange or on the
over-the-counter market, or for which such person is required to file annual
and quarterly reports with the U.S. Securities and Exchange Commission in
accordance with the Securities Exchange Act of 1934, as amended, if Employee
(i) is not a controlling person of, or a member of a group which controls,
such person and (ii) does not, directly or indirectly, own 5% or more of any
class of securities of such person.

                       D.     During the Restricted Period, Employee will not, whether on Employee’s
own behalf or on behalf of or in conjunction with any person, company,
business entity or other organization whatsoever, directly or indirectly: (i)
solicit or encourage any employee of Alion or any of Alion’s affiliates to
leave the employment of Alion or such affiliate, provided that such employee
was employed (or had an offer of employment) with Alion at the time Employee
ceases to be employed by Alion; (ii) without Alion’s written permission, hire
any such employee who was employed by Alion or Alion’s affiliates as of the
effective date of Employee’s termination of employment with Alion or who left
employment with Alion or Alion’s affiliates coincident with, or within three
(3) months prior to or after, the termination of Employee’s employment with
Alion; or (iii) encourage to cease to work with Alion or Alion’s affiliates
any consultant then under contract with Alion or Alion’s affiliates.

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                       E.     It is expressly understood and agreed that although Employee and Alion
consider the restrictions contained in this Section 12.E to be reasonable, if
a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this letter
agreement is an unenforceable restriction against you, the provisions of this
Agreement will not be rendered void but will be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any
court of competent jurisdiction finds that any restriction contained in this
letter agreement is unenforceable, and such restriction cannot be amended so
as to make it enforceable, such finding will not affect the enforceability of
any of the other restrictions contained herein.

                       F.     Throughout the Restricted Period, the Company shall continue to
furnish to Employee the pre-selected health, dental, vision, disability and
life insurance coverage through the Company’s insured welfare benefit plans
and policies, and shall pay the employer’s contribution for such coverages.

                       G.     “Restricted Period” shall mean, following the date of Employee’s
termination of Employment with Alion, the greater of: (i) the unexpired term
of this Agreement, up to a maximum of three (3) years; or (ii) one year;
provided, however, that if Employee’s employment with Alion is terminated by
Alion for Just Cause, then the “Restricted Period” shall mean the two (2)
years following such termination.

         13.     Reasonable Restrictions. Employee understands that the provisions of
this Section 13 may limit Employee’s ability to earn a livelihood in a business
competitive with the business of Alion and its subsidiaries but nevertheless
Employee agrees and hereby acknowledges that (i) such provisions do not impose
a greater restraint than is necessary to protect the goodwill or other business
interests of Alion and its subsidiaries, (ii) such provisions contain
reasonable limitations as to time and scope of activity to be restrained, (iii)
such provisions are not harmful to the general public, (iv) such provisions are
not unduly burdensome to you, and (v) the consideration provided hereunder is
sufficient to compensate Employee for the restrictions contained in such
provisions. In consideration thereof and in light of Employee’s education,
skills and abilities, Employee agrees that Employee will not assert in any
forum that such provisions prevents Employee from earning a living.

         14.     Term and Termination.

                       A.     Term. Unless terminated or extended in accordance with the provisions
hereof, the term of this agreement shall commence on the Effective Date and end
on the fifth anniversary of the Effective Date (“the Original Term”). The Original Term of this
Agreement shall automatically renew for successive one-year intervals (“Renewal
Term”) unless, not later than six (6) months prior to the expiration of the
Original Term or any Renewal Term, Alion provides notice to Employee of its
intent to not renew the Agreement.

                       B.     Termination for Cause. Upon the issue of a written notice of
termination, the Company may terminate this Agreement for Cause and all
obligations of the Company to Employee shall cease on the date of termination.
For purposes of this Agreement, “Cause” is defined as the occurrence of one of
the following: (a) the Employee’s breach of any material provision of this
Agreement; (b) any act, failure to act, series of acts or failures to act, or
course of conduct of Employee constituting reckless,

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 willful, or criminal misconduct in the performance of duties specified in
this Agreement; (c) any failure to perform, or gross negligence or incompetence
in the performance of, the duties specified in this Agreement; or (d) the
Employee’s commission of a crime involving conversion, misappropriation,
larceny, theft, fraud, dishonesty, embezzlement, moral turpitude or any other
felony, regardless of whether such crime involves the Company. Following an
initial determination by the President that Cause exists, the President shall
provide Employee with written notice of the details of the alleged Cause and
opportunity to a hearing before the Chairman of the Board of Directors to
contest the validity of the initial determination. The President, with the
concurrence of the Chairman of the Board of Directors, shall thereafter make a
final determination as to whether Cause exists.

              C.     Termination Without Cause. The Company may terminate Employee’s
employment hereunder without cause, for any reason or no reason, by delivering
to Employee written notice of the Board’s intent to terminate. If the Company
terminates Employee’s employment without cause during the term of this
Agreement, the Company shall make a lump-sum severance payment to Employee
equal to the greater of (i) the amount of Employee’s Annual Base Salary as of
the effective date of such termination over the unexpired Term of this
Agreement up to a maximum of three (3) years or (ii) an amount equal to one (1)
year of Employee’s current Annual Base Salary. In addition, Employee shall
enjoy continued entitlement to such other accrued or earned and vested benefits
provided under the Company’s successor or assigns’ plans, programs, policies
and practices as of the effective date of termination without cause. Employee
shall have no further rights under this Agreement to future compensation or
benefits, including payments under the Company’s Incentive Compensation Plan,
Stock Appreciation Rights Plan and any long-term incentive plan (if established
by the Alion Board of Directors), except to extent provided for in such plans
or to the extent provided for in Section 12.F of this Agreement.

              D.     Voluntary Termination. Any resignation from employment submitted by
Employee to the Company, regardless of the reason for such resignation, shall
be deemed a Voluntary Termination. Employee shall give the Company not less
than thirty (30) days notice prior to the effective date of a Voluntary
Termination.

              E.     Payment Upon Termination for Cause or Voluntary Termination. In the
event of any Termination for Cause or Voluntary Termination, the Company shall
have no further obligations to Employee under this Agreement, including without
limitation payment of future compensation or benefits; provided, however, that
termination for Cause shall not affect the Company’s obligations to pay
Employee any salary and expense reimbursement, and provide any benefits,
accrued and unpaid by the Company as of the effective date of termination.

              F.     Death or Total Disability. In the event of Employee’s death or total
disability (as defined in the Company’s long term disability insurance plan),
Employee’s employment under this Agreement shall terminate immediately. If
terminated due to Employee’s death, the Company shall pay to Employee’s heir or
personal representatives, as the case may be, six (6) monthly payments, each
equal to one-twelfth (1/12) of Employee’s then-current salary, commencing with
the first calendar month after termination. If terminated due to Employee’s
total disability, the Company shall pay to Employee six (6)

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 monthly payments, each equal to one-twelfth (1/12) of Employee’s
then-current salary less any payments under the Company’s long term disability
insurance plan that Employee receives or is entitled to receive in each such
month, commencing with the first calendar month after termination.

         15.     Severance Benefits.

                       A.     If eligibility for severance benefits from the Company’s successor or
assign (or any of its respective affiliates) is established (pursuant to
Section 17 below) (the “Severance Benefits”), the Severance Benefits payable to
Employee shall, in lieu of the benefits otherwise payable under Section 14,
consist of the following: (i) a lump sum severance payment equal to the greater
of (a) the amount of Employee’s Annual Base Salary as of the Termination Date
over the unexpired Term of this Agreement up to a maximum of three (3) years or
(b) an amount equal to one (1) year of Employee’s current Annual Base Salary;
and (ii) continued eligibility to participate throughout the Severance Period
in the Company’s successor’s or assigns’ insured welfare benefit plans and
policies (including, without limitation, health, dental, vision, disability and
term life insurance benefits) at the same level of employee cost and at the
same level of coverage provided to Employee as of the Termination Date, it
being understood that the Company’s successor or assign has and reserves the
right to amend, modify or replace such plans or policies to provide
substantially similar insured coverage during the Severance Period. For
purposes of the Company’s successor or assigns welfare benefit plans and
policies subject to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”), Employee’s “qualifying event” for COBRA purposes shall be
the Termination Date.

                       B.     Employee shall enjoy continued entitlement to such other accrued or
earned and vested benefits provided under the Company’s successor or assigns’
plans, programs, policies and practices as of the Termination Date.

                       C.     It is expressly understood by both parties that under no circumstances
is the Company responsible for the payment of Severance Benefits.

         16.     Severance Period. The Severance Period shall begin on the effective
date of termination of Employee’s employment under the conditions specified in
Section 17, and end on the last day of the thirty-six (36) month period
beginning on the Termination Date.

         17.     Eligibility for Severance Benefits. If Employee terminates employment
(other than on account of circumstances described in Section 18 below) with any
successor or assign (or any of their respective affiliates) of the Company at
any time during the twenty-four (24) month period beginning on the effective
date of a Change in Control (the “Protection Period”), he shall be entitled to
the Severance Benefits described in Sections 15, 16 and 17 as follows. If
during the Protection Period, Employee terminates his employment for Good
Reason (as defined below) by delivering to the successor or assign of the
Company (or its respective affiliate), as applicable, each no later than thirty
(30) days after learning of the occurrence of an event constituting Good
Reason: (i) a Preliminary Notice of Good Reason (as defined below); and (ii) a
Notice of Termination (as defined below); Employee shall have the right, in
his sole and reasonable discretion, to commence Severance Benefits. Any
termination of Employee’s

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 employment that qualifies for Severance Benefits under Sections 15, 16 and
17 of this Agreement shall supersede and take precedence over the provisions of
Section 14. For purposes of this Agreement, the following terms shall have the
respective meanings:

         A.     “Good Reason” shall only result upon the occurrence, without Employee’s
prior written consent, of one or more of the following events, as determined by
Employee in good faith, during the Protection Period: (i) Employee’s authority
or responsibility has materially diminished as compared to Employee’s authority
and responsibility in effect immediately prior to a Change in Control; (ii)
Employee has been assigned duties inconsistent with his position,
responsibility and status with the Company immediately prior to the Protection
Period; (iii) there has been an adverse change in Employee’s title or office as
in effect immediately prior to the Protection Period; (iv) Employee’s base pay
or incentive compensation has been reduced; or (v) Employee’s principal work
location is more than ten (10) miles away from the principal work location as
immediately prior to the Protection Period; provided, however, that “Good
Reason” shall not include (x) acts not taken in bad faith that are cured by the
Company’s successor or assign in all respects, including without limitation
restoration of all back pay and incentive compensation through the Termination
Date, not later than thirty (30) days from the date of receipt by the successor
or assign of the Company (or its respective affiliate), as applicable, of a
written notice from Employee identifying in reasonable detail the act or acts
constituting “Good Reason” (a “Preliminary Notice of Good Reason”), or (y) acts
for which Employee does not provide a Preliminary Notice of Good Reason within
thirty (30) days of learning of the occurrence of the event constituting Good
Reason.

         B.     “Notice of Termination” shall mean a notice that indicates the specific
termination provision relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Employee’s employment under the provision so indicated.

         C.     “Termination Date” shall mean the date specified in the Notice of
Termination for termination of Employee’s employment under this Agreement.

         18.     Ineligibility for Severance Benefits. Notwithstanding any other
provision under this Agreement, Employee shall not be entitled to receive
Severance Benefits in the event that: (i) the Company’s successor or assign (or
any of its respective affiliates) terminates Employee’s employment for Cause
(as defined in Section 14.B); (ii) Employee dies (in which case the terms of
Section 14.F shall apply); (iii) Employee is determined to be totally and
permanently disabled (in which case the terms of Section 14.F shall apply);
(iv) the Company’s successor or assign (or any of its respective affiliates)
terminates Employee’s employment without cause (in which case the terms of
Section 14.C shall apply); or (v) Employee resigns other than for Good Reason
(in which case Sections 14.D and 14.E apply). In any such event, Employee, in
addition to any benefits payable in accordance with this Agreement, shall be
entitled only to his salary and benefits accrued or earned and vested under
other plans, programs, policies, practices and coverages of the Company’s
successor or assign (or any of its respective affiliates).

         19.     Return of Company Information. Immediately upon termination of
employment under this Agreement, the Employee shall promptly deliver to the
Company all documents, software, and other

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 tangible information in the possession or control of Employee and that
relate to, are connected with, or arise out of Employee’s employment by the
Company, including without limitation all Company Proprietary Information.

         20.     Notice of Subsequent Employment. For a period of one (1) year after
termination of employment under this Agreement, the Employee agrees to notify
the Company of the name and address of each employer with whom Employee accepts
employment. The Employee further authorizes the Company to contact any such
employer during the one-year period for the limited purpose of making the
employer aware of this Agreement and protecting the Company’s rights under this
Agreement.

         21.     Change in Control. For the purposes of this Agreement, a “Change of
Control” shall mean and shall be effective upon the closing date of: (i) the
dissolution or liquidation of the Company; (ii) the merger or consolidation of
the Company with any other corporation, foundation, association or other
entity; (iii) the amendment of the Company’s corporate documents to grant a
party other than IIT, through its Executive Committee, the right to designate,
elect or remove a majority of the Company’s voting directors; or (iv) the
transfer to another corporation, foundation, association or other entity in a
sale, lease, exchange or other similar transfer (in a single transaction or in
a series of related transactions) of all or substantially all of the assets of
the Company.

         22.     Termination of All Other Agreements. Notwithstanding anything
contained herein to the contrary, Employee acknowledges and agrees that the
Company has no obligations or responsibility to Employee under any previous
agreements or understandings, whether oral or written, that Employee may have
had or entered into with Employee’s previous employers, including without
limitation any arrangements for compensation, bonus, or stock appreciation
rights. Employee agrees to look to the previous employers for satisfaction of
any rights or payments accruing to Employee under any contracts, agreements, or
understandings with those employers.

         23.     Remedies.

              A.     The parties agree and acknowledge that the Company will be irreparably
injured by the breach of any material provision of this Agreement, including
without limitation Sections 11, 12, and 19, and that money damages alone may
not be an appropriate measure of the harm to the Company from such continuing
breach. Thus, the parties further agree that equitable relief, including
specific performance of these provisions by injunction, is an appropriate
remedy for breach of these provisions in addition to money damages, if
applicable.

              B.     The existence of any claim or cause of action that Employee or any such
other person or entity may have against the Company shall not constitute a
defense or bar to the enforcement of any action under the covenants set forth
in this Agreement. If the Company must resort to legal proceedings to enforce
any covenant which has a fixed term, then such term shall be extended for a
period of time equal to the period during which a breach of such covenant was
occurring, beginning on the date of a final order of a court or other tribunal
(without right of appeal) holding that such a breach occurred or, if later, the
last day of the original fixed term of such covenant.

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         24.     Indemnification. Company shall indemnify, defend, hold and save
Employee, his heirs, administrators or executors harmless from any and all
actions and causes of actions, claims, demands, liabilities, losses, costs,
damages or expenses of whatsoever kind of nature, including judgments, interest
and attorney’s fees, that Employee, his heirs, administrators or executors may
sustain or incur subsequent to the date of this Agreement or become subject to
by reason of any claim or claims, resulting from Employee’s execution of the
terms and conditions of this Agreement, except for Employee’s fraudulent or
criminal acts or omissions or gross negligence except as prohibited by
applicable law.

         25.     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: General Counsel, or in the case of the Employee, be mailed to
the last address that the Employee has given to the Company.

              B.     The obligations and duties of the Employee under this Agreement are
personal and not assignable. This Agreement shall be binding upon and inure to
the benefit of, the parties, their successors, assigns, personal
representatives, distributes, heirs, and legatees.

              C.     If any dispute arises under this Agreement, such dispute shall be
referred to a panel of three (3) arbitrators for resolution. The
three-arbitrator panel shall be selected as follows: the Company will
designate one arbitrator, the Employee will designate one arbitrator, and the
two designees will mutually select the third. The American Arbitration
Association’s Voluntary Labor Arbitration Rules shall govern procedures for the
arbitration, unless the three arbitrators unanimously agree to adopt a
different rule or rules. The arbitration shall occur in the the City of
McLean, Virginia. Notwithstanding the foregoing, and specifically in the event
of a dispute over the Employee’s termination by the Company, Employee may, at
his or her option, elect to have a court rather than an arbitrator resolve the
dispute.

              D.     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. If any covenant is
determined to be unenforceable in equity because of its scope, duration,
geographic area, or similar factor, the court or arbitrator making such
determination shall have the power to reduce or limit such scope, duration,
area, or other factor and such covenant shall then be enforceable in equity in
its reduced or limited form.

              E.     This Agreement may be altered, amended or modified only by written
agreement signed by both the Employee 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.

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              F.     In any action or claim brought by either party against the other under
or pursuant to this Agreement, the substantially prevailing party shall be
entitled to an award of all actual attorney’s fees, costs and expenses incurred
by the substantially prevailing party.

              G.     This Agreement contains the entire understanding between the parties
and supersedes any prior written or oral agreement(s) between the Company and
Employee relating to the subject matter contained herein. This Agreement shall
not be modified or waived except by written instrument signed by the parties.

              H.     This Agreement shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Virginia.

	 	 	 
	ALION SCIENCE AND TECHNOLOGY

CORPORATION	 	
EMPLOYEE
	
	 	

	Signature	 	
Signature
	
	 	

	Name and Title	 	
Name

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Exhibit A

Retention Incentive Agreement

13exv10w18

 

Exhibit 10.18

EMPLOYMENT AGREEMENT

         THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made this
   day of
           
    , 2002, (the “Effective Date”) by
and between Alion Science and Technology Corporation, a Delaware corporation
(the “Company”) and Stephen J. Trichka (the “Employee”).

         WHEREAS, IIT Research Institute, an Illinois not-for-profit corporation
(“IITRI”) and Employee entered into an Employment Agreement dated December 31,
2001 (the “Prior Employment Agreement’) to serve as Senior Vice President and
General Counsel of IITRI effective October 1, 2000;

         WHEREAS, the Company, as of the Effective Date, acquired certain business
operations of IITRI and in connection therewith Employee and IITRI terminated
the Prior Employment Agreement immediately prior to the Effective Date; and

         WHEREAS, the Company and Employee desire to enter into this new Agreement
as of the date hereof.

         NOW THEREFORE, in consideration of the foregoing recitals and mutual
promises and conditions set forth herein, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Employee agree as follows:

         1.     Employment. Upon the terms and subject to the conditions contained
herein, the Company hereby employs the Employee as Senior Vice President and
General Counsel, and agrees to continue the Employee in that position (or in
any other position upon which the parties mutually agree) during the term of
this Agreement unless terminated earlier in accordance with Sections 14 or 17
of this Agreement (“Term and Termination”).

         2.     Definitions.

                  A. “Company” means Alion Science and Technology Corporation, its
subsidiaries, affiliates, successors and assigns.

                  B. “Company Proprietary Information” means any information, data, computer
software, invention, design, idea, concept, specification, formula, device,
equipment, plan, process, document or material, whether tangible or intangible
(including without limitation information relating to marketing strategies or
plans, pricing policies or plans, proposals, lists of customers or clients and
any other information that, in any way whatsoever, pertains to marketing or
sales), which is a trade secret or proprietary in nature and which: (i) belongs
to or is in the possession of the Company or any client or customer of the
Company; or (ii) is learned or developed, in whole or in part, by Employee or
otherwise comes into Employee’s possession, control or knowledge in connection
with, or arising out of Employee’s employment by the Company.

 

 

                  C. “Client(s)” and/or “Customer(s)” means all entities with whom the
Company has a contract or is offering or proposing to enter into a contract,
including without limitation, federal government agencies, whether defense or
civil.

         3.     Compensation.

                  A. The Employee’s initial base salary during the term of this Agreement
shall be One Hundred Seventy Thousand Dollars and No/100 Cents ($170,000.00)
per annum (“Annual Base Salary”). During the term of this Agreement, the
Company shall not reduce Employee’s initial base salary without the consent of
both parties. Commencing with the Company’s first performance review cycle
after the effective date of employment, the Employee shall participate in the
Company’s annual performance review process, at which time the Company shall
review Employee’s performance and increase total annual compensation as deemed
appropriate by the Company. In addition, the Employee will be eligible to
participate in the Company’s Incentive Compensation Plan for each Company
fiscal year of employment to an extent consistent with similarly placed
management of the Company, and provided that Employee is an employee in good
standing of the Company at the time of each annual performance review.

                  B. The Employee shall also be eligible to participate in the Company’s
Stock Appreciation Rights Plan and the Deferred Compensation Plan to an extent
consistent with similarly placed management of the Company; provided, however,
that both adoption of the Stock Appreciation Rights Plan and the Deferred
Compensation Plan, and Employee’s participation therein, are subject to
approval by the Company’s Board of Directors.

                  C. The Company shall lease and insure, for the use and benefit of
Employee, an automobile for his or her use during the term of employment with
the Company. Any automobile lease provided and/or executed by Company shall
have a maximum monthly reimbursement allowance of one thousand dollars
($1,000).

         4.     Special Incentive Arrangement. In connection with Alion’s acquisition of
IITRI’s assets as of the Effective Date, Employee shall be awarded a special
credit in Alion’s deferred compensation plan (described below), representing a
right to have his or her deferred compensation account credited with the
amounts that would be received if the deferred compensation plan owned for his
or her benefit One Hundred Thousand Dollars and No/100 Cents ($100,000.00) face
amount of subordinated notes of the series issued to IITRI in connection with
the acquisition, including without limitation all payment-in-kind thereon.
If and to the extent that the series of subordinated notes are paid off
prior to the scheduled redemption date, Employee’s deemed investment in such
subordinated notes shall be proportionately deemed paid off and those amounts
shall thereafter be adjusted for deemed investment experience of other deemed
investment options made available under the terms of the deferred compensation
plan, pending vesting and payment, in accordance with the provisions of this
Section 4. Additionally, as part of that same award, Employee shall directly be granted
warrants to acquire Alion stock, the terms of which are consistent with the
warrants attached to the issued series of the referenced subordinated notes.
Employee’s right to receive payment in respect of the deferred compensation
plan credit and to exercise the warrants shall be forfeitable upon termination
of employment, unless he or she shall remain employed continuously from the
Effective Date to the seventh anniversary of the Effective Date at which time
he or she shall be 50% vested in the deferred compensation and the warrants
shall be 50% exercisable; the remaining portion of the deferred compensation
and warrants shall become 100% vested and exercisable on the eighth anniversary
of the Effective Date, subject to his or her employment through that date.
Notwithstanding the foregoing, upon a

-2-

 

 termination of Employee’s employment by the Company without Cause or by
Employee with Good Reason (as defined in Section 17.A but, for this purpose
only, without regard to whether the occurrence of one of the events is during
the Protection Period), the deferred compensation plan credits and the rights
to exercise or put the warrants (in accordance with the applicable Warrant
Agreement) shall vest immediately on a pro rata basis by month from the
Effective Date through the end of the month in which such termination is
effective.

         5.     Long-Term Incentive Plan. It is presently expected that the Board of
Directors of the Company will establish a long term incentive plan subject to a
maximum limitation, which may, but is not required to, include special
provisions for accelerated vesting and early payment in the event of
termination of employment by Alion without Just Cause or by Executive for Good
Reason. The Employee shall also be eligible to participate in such long-term
incentive plan to an extent consistent with similarly placed management of the
Company; provided, however, that adoption of such long-term incentive plan, and
Employee’s participation therein, is subject to approval by the Company’s Board
of Directors.

         6.     Retention Payment. Company and Employee acknowledge that Employee has
fully vested in his or her right to receive payments under the Retention
Incentive Agreement dated September 1, 2001 entered into by Company and
Employee, attached as Exhibit A to this Agreement, and that such Retention
Incentive Agreement remains in effect in its original form and is incorporated
herein by reference.

         7.     Duties.

                  A. During the term of this Agreement, the Employee shall serve as the
Senior Vice President and General Counsel of the Company. The Employee shall
report directly to the Chief Executive Officer of the Company. He or she shall
have such powers and shall perform such duties as are incident and customary to
his or her office. During the term of this Agreement, the Employee shall serve
in any additional offices or positions of the Company which are pertinent and
customary to his or her office, and to which he or she may be elected or
appointed by appropriate action of the Company.

                  B. The Employee shall devote his or her full time, attention, skill, and
energy to the performance of his or her duties under this Agreement, and shall
comply with all reasonable professional requests of the Company; provided,
however, that the Employee will be permitted to engage in and manage personal
investments (subject to the terms of Section 12 below) and to participate in
community and charitable affairs, so long as such activities do not interfere
with his or her duties under this Agreement. The Employee shall be
headquartered in the Company office currently located at 1750 Tysons Boulevard,
Suite 1300, McLean, Virginia 22102-4213.

                  C. The Company agrees to maintain Employee’s status as a Senior Vice
President as long as the Employee’s obligations under this Agreement are
fulfilled and subject to the continued approval by the Company’s Board of
Directors.

-3-

 

                  D. The Company shall not, during the Term of this Agreement, demote the
Employee or reduce his or her responsibilities as set forth in this Section 7,
or otherwise reduce his or her stature in the Company except as authorized
under this Agreement.

                  E. Employee shall conduct all assigned duties in compliance with the Alion
Science and Technology Corporation Code of Ethics, Conduct, and Responsibility
and all other Company policies and procedures then in effect, and shall
acknowledge and execute all documents necessary to comply and/or evidence
compliance with such codes, policies and procedures.

                  F. The Company shall maintain in force, at all times during the term of
this Agreement, Directors and Officers Liability insurance that covers Employee
against all legal liabilities that may arise and are incurred in the good faith
performance of duties as a member of the Company’s management.

         8.     Vacation, Holidays, and Sick Leave. The Employee shall be entitled to
paid vacations, holidays, and sick leave in accordance with the Company’s
policies, as in effect from time to time.

         9.     Expenses. The Company shall reimburse the Employee for all reasonable
business-related expenses incurred in connection with his or her duties on
behalf of the Company in a manner consistent with current Company policies and
procedures.

         10.     Fringe Benefits. During the term of this Agreement, the Employee
shall be entitled to participate in any and all fringe benefit plans, programs
and practices sponsored by the Company for the benefit of its employees, under
the normal conditions for all such employees (including contributions, if any,
by Employee, to the cost of such plans if contributions by the employee is
normal) and shall be furnished with other services and perquisites appropriate
to his or her position, including without limitation life insurance, health
insurance, vision insurance, dental insurance, and disability insurance.

         11.     Nondisclosure of Proprietary Company Information. During the term of
this Agreement and for a period of two (2) years thereafter, Employee agrees:
(a) to treat all Company 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 Company Proprietary Information; (b) to use
Company Proprietary Information only as necessary and proper in the performance
of Employee’s duties as an employee of the Company; and (c) except as required
in this Section, 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 Company Proprietary Information. Under no circumstances shall
Employee use, directly or indirectly, any such Company Proprietary Information
for his or her personal gain or profit.

-4-

 

         12.
Non-Competition; Non-Solicitation. Employee acknowledges and recognizes
the highly competitive nature of the business of Alion and Alion’s subsidiaries
and accordingly agree as follows:

                  A. During the Term and the Restricted Period (as defined in Section
12.G), Employee will not knowingly (after due inquiry), whether on Employee’s
own behalf or on behalf of or in conjunction with any person, company,
business entity or other organization whatsoever, directly or indirectly
solicit or assist in soliciting in competition with Alion, the business of any
customer or prospective customer of Alion of which Employee is aware at the
time of such termination.

                  B. During the Restricted Period, Employee will not directly or
indirectly: (i) engage in any services either individually or on behalf of any
person that compete with any material business of Alion or Alion’s
subsidiaries as conducted at the time Employee ceases to be employed by Alion
(including, without limitation, businesses which Alion or Alion’s subsidiaries
had at such time specific plans to conduct in the future and as to which plans
Employee is aware at the time Employee ceases to be employed by Alion) in the
United States (a “Competitive Business”); (ii) acquire a financial interest
in, or otherwise become actively involved with, any Competitive Business,
directly or indirectly, as an individual, partner, shareholder, officer,
director, principal, agent, trustee or consultant, except to the extent that
such financial interest is a component of compensation or benefits payable
pursuant to subsequent employment not otherwise prohibited by this Agreement;
or (iii) interfere with, or attempt to interfere with, business relationships
formed at or prior to the time Employee ceases to be employed by Alion between
Alion or any of Alion’s subsidiaries and customers, clients, suppliers of
Alion or Alion’s subsidiaries, as to which Employee is aware at the time he
ceases to be employed by Alion.

                  C. Notwithstanding anything to the contrary in this Agreement, Employee
may, directly or indirectly own, solely as an investment, securities of any
person engaged in the business of Alion or Alion’s subsidiaries which are
publicly traded on a national or regional stock exchange or on the
over-the-counter market, or for which such person is required to file annual
and quarterly reports with the U.S. Securities and Exchange Commission in
accordance with the Securities Exchange Act of 1934, as amended, if Employee
(i) is not a controlling person of, or a member of a group which controls,
such person and (ii) does not, directly or indirectly, own 5% or more of any
class of securities of such person.

                  D. During the Restricted Period, Employee will not, whether on Employee’s
own behalf or on behalf of or in conjunction with any person, company,
business entity or other organization whatsoever, directly or indirectly: (i)
solicit or encourage any employee of Alion or any of Alion’s affiliates to
leave the employment of Alion or such affiliate, provided that such employee
was employed (or had an offer of employment) with Alion at the time Employee
ceases to be employed by Alion; (ii) without Alion’s written permission, hire
any such employee who was employed by Alion or Alion’s affiliates as of the
effective date of Employee’s termination of employment with Alion or who left
employment with Alion or Alion’s affiliates coincident with, or within three
(3) months prior to or after, the termination of Employee’s employment with
Alion; or (iii) encourage to cease to work with Alion or Alion’s affiliates
any consultant then under contract with Alion or Alion’s affiliates.

-5-

 

                  E. It is expressly understood and agreed that although Employee and Alion
consider the restrictions contained in this Section 12.E to be reasonable, if
a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this letter
agreement is an unenforceable restriction against you, the provisions of this
Agreement will not be rendered void but will be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any
court of competent jurisdiction finds that any restriction contained in this
letter agreement is unenforceable, and such restriction cannot be amended so
as to make it enforceable, such finding will not affect the enforceability of
any of the other restrictions contained herein.

                  F. Throughout the Restricted Period, the Company shall continue to
furnish to Employee the pre-selected health, dental, vision, disability and
life insurance coverage through the Company’s insured welfare benefit plans
and policies, and shall pay the employer’s contribution for such coverages.

                  G. “Restricted Period” shall mean, following the date of Employee’s
termination of Employment with Alion, the greater of: (i) the unexpired term
of this Agreement, up to a maximum of three (3) years; or (ii) one year;
provided, however, that if Employee’s employment with Alion is terminated by
Alion for Just Cause, then the “Restricted Period” shall mean the two (2)
years following such termination.

         13.     Reasonable Restrictions. Employee understands that the provisions of
this Section 13 may limit Employee’s ability to earn a livelihood in a business
competitive with the business of Alion and its subsidiaries but nevertheless
Employee agrees and hereby acknowledges that (i) such provisions do not impose
a greater restraint than is necessary to protect the goodwill or other business
interests of Alion and its subsidiaries, (ii) such provisions contain
reasonable limitations as to time and scope of activity to be restrained, (iii)
such provisions are not harmful to the general public, (iv) such provisions are
not unduly burdensome to you, and (v) the consideration provided hereunder is
sufficient to compensate Employee for the restrictions contained in such
provisions. In consideration thereof and in light of Employee’s education,
skills and abilities, Employee agrees that Employee will not assert in any
forum that such provisions prevents Employee from earning a living.

         14.     Term and Termination.

                  A. Term. Unless terminated or extended in accordance with the provisions
hereof, the term of this agreement shall commence on the Effective Date and end
on the fifth anniversary of the Effective Date (“the Original Term”). The Original Term of this
Agreement shall automatically renew for successive one-year intervals (“Renewal
Term”) unless, not later than six (6) months prior to the expiration of the
Original Term or any Renewal Term, Alion provides notice to Employee of its
intent to not renew the Agreement.

                  B. Termination for Cause. Upon the issue of a written notice of
termination, the Company may terminate this Agreement for Cause and all
obligations of the Company to Employee shall cease on the date of termination.
For purposes of this Agreement, “Cause” is defined as the occurrence of one of
the following: (a) the Employee’s breach of any material provision of this
Agreement; (b) any act, failure to act, series of acts or failures to act, or
course of conduct of Employee constituting reckless,

-6-

 

willful, or criminal misconduct in the performance of duties specified in
this Agreement; (c) any failure to perform, or gross negligence or incompetence
in the performance of, the duties specified in this Agreement; or (d) the
Employee’s commission of a crime involving conversion, misappropriation,
larceny, theft, fraud, dishonesty, embezzlement, moral turpitude or any other
felony, regardless of whether such crime involves the Company. Following an
initial determination by the President that Cause exists, the President shall
provide Employee with written notice of the details of the alleged Cause and
opportunity to a hearing before the Chairman of the Board of Directors to
contest the validity of the initial determination. The President, with the
concurrence of the Chairman of the Board of Directors, shall thereafter make a
final determination as to whether Cause exists.

                  C. Termination Without Cause. The Company may terminate Employee’s
employment hereunder without cause, for any reason or no reason, by delivering
to Employee written notice of the Board’s intent to terminate. If the Company
terminates Employee’s employment without cause during the term of this
Agreement, the Company shall make a lump-sum severance payment to Employee
equal to the greater of (i) the amount of Employee’s Annual Base Salary as of
the effective date of such termination over the unexpired Term of this
Agreement up to a maximum of three (3) years or (ii) an amount equal to one (1)
year of Employee’s current Annual Base Salary. In addition, Employee shall
enjoy continued entitlement to such other accrued or earned and vested benefits
provided under the Company’s successor or assigns’ plans, programs, policies
and practices as of the effective date of termination without cause. Employee
shall have no further rights under this Agreement to future compensation or
benefits, including payments under the Company’s Incentive Compensation Plan,
Stock Appreciation Rights Plan and any long-term incentive plan (if established
by the Alion Board of Directors), except to extent provided for in such plans
or to the extent provided for in Section 12.F of this Agreement.

                  D. Voluntary Termination. Any resignation from employment submitted by
Employee to the Company, regardless of the reason for such resignation, shall
be deemed a Voluntary Termination. Employee shall give the Company not less
than thirty (30) days notice prior to the effective date of a Voluntary
Termination.

                  E. Payment Upon Termination for Cause or Voluntary Termination. In the
event of any Termination for Cause or Voluntary Termination, the Company shall
have no further obligations to Employee under this Agreement, including without
limitation payment of future compensation or benefits; provided, however, that
termination for Cause shall not affect the Company’s obligations to pay
Employee any salary and expense reimbursement, and provide any benefits,
accrued and unpaid by the Company as of the effective date of termination.

                  F. Death or Total Disability. In the event of Employee’s death or total
disability (as defined in the Company’s long term disability insurance plan),
Employee’s employment under this Agreement shall terminate immediately. If
terminated due to Employee’s death, the Company shall pay to Employee’s heir or
personal representatives, as the case may be, six (6) monthly payments, each
equal to one-twelfth (1/12) of Employee’s then-current salary, commencing with
the first calendar month after termination. If terminated due to Employee’s
total disability, the Company shall pay to Employee six (6)

-7-

 

monthly payments, each equal to one-twelfth (1/12) of Employee’s
then-current salary less any payments under the Company’s long term disability
insurance plan that Employee receives or is entitled to receive in each such
month, commencing with the first calendar month after termination.

         15.     Severance Benefits.

                  A. If eligibility for severance benefits from the Company’s successor or
assign (or any of its respective affiliates) is established (pursuant to
Section 17 below) (the “Severance Benefits”), the Severance Benefits payable to
Employee shall, in lieu of the benefits otherwise payable under Section 14,
consist of the following: (i) a lump sum severance payment equal to the greater
of (a) the amount of Employee’s Annual Base Salary as of the Termination Date
over the unexpired Term of this Agreement up to a maximum of three (3) years or
(b) an amount equal to one (1) year of Employee’s current Annual Base Salary;
and (ii) continued eligibility to participate throughout the Severance Period
in the Company’s successor’s or assigns’ insured welfare benefit plans and
policies (including, without limitation, health, dental, vision, disability and
term life insurance benefits) at the same level of employee cost and at the
same level of coverage provided to Employee as of the Termination Date, it
being understood that the Company’s successor or assign has and reserves the
right to amend, modify or replace such plans or policies to provide
substantially similar insured coverage during the Severance Period. For
purposes of the Company’s successor or assigns welfare benefit plans and
policies subject to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”), Employee’s “qualifying event” for COBRA purposes shall be
the Termination Date.

                  B. Employee shall enjoy continued entitlement to such other accrued or
earned and vested benefits provided under the Company’s successor or assigns’
plans, programs, policies and practices as of the Termination Date.

                  C. It is expressly understood by both parties that under no circumstances
is the Company responsible for the payment of Severance Benefits.

         16.     Severance Period. The Severance Period shall begin on the effective
date of termination of Employee’s employment under the conditions specified in
Section 17, and end on the last day of the thirty-six (36) month period
beginning on the Termination Date.

         17.     Eligibility for Severance Benefits. If Employee terminates employment
(other than on account of circumstances described in Section 18 below) with any
successor or assign (or any of their respective affiliates) of the Company at
any time during the twenty-four (24) month period beginning on the effective
date of a Change in Control (the “Protection Period”), he shall be entitled to
the Severance Benefits described in Sections 15, 16 and 17 as follows. If
during the Protection Period, Employee terminates his employment for Good
Reason (as defined below) by delivering to the successor or assign of the
Company (or its respective affiliate), as applicable, each no later than thirty
(30) days after learning of the occurrence of an event constituting Good
Reason: (i) a Preliminary Notice of Good Reason (as defined below); and (ii) a
Notice of Termination (as defined below); Employee shall have the right, in
his sole and reasonable discretion, to commence Severance Benefits. Any
termination of Employee’s

-8-

 

 employment that qualifies for Severance Benefits under Sections 15, 16 and
17 of this Agreement shall supersede and take precedence over the provisions of
Section 14. For purposes of this Agreement, the following terms shall have the
respective meanings:

                  A. “Good Reason” shall only result upon the occurrence, without Employee’s
prior written consent, of one or more of the following events, as determined by
Employee in good faith, during the Protection Period: (i) Employee’s authority
or responsibility has materially diminished as compared to Employee’s authority
and responsibility in effect immediately prior to a Change in Control; (ii)
Employee has been assigned duties inconsistent with his position,
responsibility and status with the Company immediately prior to the Protection
Period; (iii) there has been an adverse change in Employee’s title or office as
in effect immediately prior to the Protection Period; (iv) Employee’s base pay
or incentive compensation has been reduced; or (v) Employee’s principal work
location is more than ten (10) miles away from the principal work location as
immediately prior to the Protection Period; provided, however, that “Good
Reason” shall not include (x) acts not taken in bad faith that are cured by the
Company’s successor or assign in all respects, including without limitation
restoration of all back pay and incentive compensation through the Termination
Date, not later than thirty (30) days from the date of receipt by the successor
or assign of the Company (or its respective affiliate), as applicable, of a
written notice from Employee identifying in reasonable detail the act or acts
constituting “Good Reason” (a “Preliminary Notice of Good Reason”), or (y) acts
for which Employee does not provide a Preliminary Notice of Good Reason within
thirty (30) days of learning of the occurrence of the event constituting Good
Reason.

                  B. “Notice of Termination” shall mean a notice that indicates the specific
termination provision relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Employee’s employment under the provision so indicated.

                  C. “Termination Date” shall mean the date specified in the Notice of
Termination for termination of Employee’s employment under this Agreement.

         18.     Ineligibility for Severance Benefits. Notwithstanding any other
provision under this Agreement, Employee shall not be entitled to receive
Severance Benefits in the event that: (i) the Company’s successor or assign (or
any of its respective affiliates) terminates Employee’s employment for Cause
(as defined in Section 14.B); (ii) Employee dies (in which case the terms of
Section 14.F shall apply); (iii) Employee is determined to be totally and
permanently disabled (in which case the terms of Section 14.F shall apply);
(iv) the Company’s successor or assign (or any of its respective affiliates)
terminates Employee’s employment without cause (in which case the terms of
Section 14.C shall apply); or (v) Employee resigns other than for Good Reason
(in which case Sections 14.D and 14.E apply). In any such event, Employee, in
addition to any benefits payable in accordance with this Agreement, shall be
entitled only to his salary and benefits accrued or earned and vested under
other plans, programs, policies, practices and coverages of the Company’s
successor or assign (or any of its respective affiliates).

         19.     Return of Company Information. Immediately upon termination of
employment under this Agreement, the Employee shall promptly deliver to the
Company all documents, software, and other

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 tangible information in the possession or control of Employee and that
relate to, are connected with, or arise out of Employee’s employment by the
Company, including without limitation all Company Proprietary Information.

         20.     Notice of Subsequent Employment. For a period of one (1) year after
termination of employment under this Agreement, the Employee agrees to notify
the Company of the name and address of each employer with whom Employee accepts
employment. The Employee further authorizes the Company to contact any such
employer during the one-year period for the limited purpose of making the
employer aware of this Agreement and protecting the Company’s rights under this
Agreement.

         21.     Change in Control. For the purposes of this Agreement, a “Change of
Control” shall mean and shall be effective upon the closing date of: (i) the
dissolution or liquidation of the Company; (ii) the merger or consolidation of
the Company with any other corporation, foundation, association or other
entity; (iii) the amendment of the Company’s corporate documents to grant a
party other than IIT, through its Executive Committee, the right to designate,
elect or remove a majority of the Company’s voting directors; or (iv) the
transfer to another corporation, foundation, association or other entity in a
sale, lease, exchange or other similar transfer (in a single transaction or in
a series of related transactions) of all or substantially all of the assets of
the Company.

         22.     Termination of All Other Agreements. Notwithstanding anything
contained herein to the contrary, Employee acknowledges and agrees that the
Company has no obligations or responsibility to Employee under any previous
agreements or understandings, whether oral or written, that Employee may have
had or entered into with Employee’s previous employers, including without
limitation any arrangements for compensation, bonus, or stock appreciation
rights. Employee agrees to look to the previous employers for satisfaction of
any rights or payments accruing to Employee under any contracts, agreements, or
understandings with those employers.

         23.     Remedies.

                  A. The parties agree and acknowledge that the Company will be irreparably
injured by the breach of any material provision of this Agreement, including
without limitation Sections 11, 12, and 19, and that money damages alone may
not be an appropriate measure of the harm to the Company from such continuing
breach. Thus, the parties further agree that equitable relief, including
specific performance of these provisions by injunction, is an appropriate
remedy for breach of these provisions in addition to money damages, if
applicable.

                  B. The existence of any claim or cause of action that Employee or any such
other person or entity may have against the Company shall not constitute a
defense or bar to the enforcement of any action under the covenants set forth
in this Agreement. If the Company must resort to legal proceedings to enforce
any covenant which has a fixed term, then such term shall be extended for a
period of time equal to the period during which a breach of such covenant was
occurring, beginning on the date of a final order of a court or other tribunal
(without right of appeal) holding that such a breach occurred or, if later, the
last day of the original fixed term of such covenant.

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         24.     Indemnification. Company shall indemnify, defend, hold and save
Employee, his heirs, administrators or executors harmless from any and all
actions and causes of actions, claims, demands, liabilities, losses, costs,
damages or expenses of whatsoever kind of nature, including judgments, interest
and attorney’s fees, that Employee, his heirs, administrators or executors may
sustain or incur subsequent to the date of this Agreement or become subject to
by reason of any claim or claims, resulting from Employee’s execution of the
terms and conditions of this Agreement, except for Employee’s fraudulent or
criminal acts or omissions or gross negligence except as prohibited by
applicable law.

         25.     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: General Counsel, or in the case of the Employee, be mailed to
the last address that the Employee has given to the Company.

                  B. The obligations and duties of the Employee under this Agreement are
personal and not assignable. This Agreement shall be binding upon and inure to
the benefit of, the parties, their successors, assigns, personal
representatives, distributes, heirs, and legatees.

                  C. If any dispute arises under this Agreement, such dispute shall be
referred to a panel of three (3) arbitrators for resolution. The
three-arbitrator panel shall be selected as follows: the Company will
designate one arbitrator, the Employee will designate one arbitrator, and the
two designees will mutually select the third. The American Arbitration
Association’s Voluntary Labor Arbitration Rules shall govern procedures for the
arbitration, unless the three arbitrators unanimously agree to adopt a
different rule or rules. The arbitration shall occur in the the City of
McLean, Virginia. Notwithstanding the foregoing, and specifically in the event
of a dispute over the Employee’s termination by the Company, Employee may, at
his or her option, elect to have a court rather than an arbitrator resolve the
dispute.

                  D. 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. If any covenant is
determined to be unenforceable in equity because of its scope, duration,
geographic area, or similar factor, the court or arbitrator making such
determination shall have the power to reduce or limit such scope, duration,
area, or other factor and such covenant shall then be enforceable in equity in
its reduced or limited form.

                  E. This Agreement may be altered, amended or modified only by written
agreement signed by both the Employee 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.

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                  F. In any action or claim brought by either party against the other under
or pursuant to this Agreement, the substantially prevailing party shall be
entitled to an award of all actual attorney’s fees, costs and expenses incurred
by the substantially prevailing party.

                  G. This Agreement contains the entire understanding between the parties
and supersedes any prior written or oral agreement(s) between the Company and
Employee relating to the subject matter contained herein. This Agreement shall
not be modified or waived except by written instrument signed by the parties.

                  H. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Virginia.

	 	 	 
	ALION SCIENCE AND TECHNOLOGY

CORPORATION	 	
EMPLOYEE
	
	
	
	

	 	 	 
	
	 	

	Signature	 	
Signature
	
	
	
	

	 	 	 
	
	 	

	Name and Title	 	
Name

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Exhibit A

Retention Incentive Agreement

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