EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement') is entered into this 20th day
of December, 2002 (the "Effective Date") by and between Alion Science and
Technology Corporation, a Delaware corporation ("Alion"), and ▇▇▇▇▇▇ ▇▇▇▇▇ of
▇▇▇▇▇▇, Virginia ("▇▇▇▇▇").
WHEREAS, IIT Research Institute, an Illinois not for profit corporation
("IITRI"), and ▇▇▇▇▇ entered into an Employment Agreement dated December 5, 2001
(the "Prior Employment Agreement') to serve as President and Chief Executive
Officer of IITRI;
WHEREAS, Alion, as of the Effective Date, acquired certain business
operations from IITRI and in connection therewith ▇▇▇▇▇ and IITRI terminated the
Prior Employment Agreement immediately prior to the Effective Date; and
WHEREAS, Alion and ▇▇▇▇▇ 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, Alion and ▇▇▇▇▇ agree
as follows:
1. APPOINTMENT OF ▇▇▇▇▇ AS CHIEF EXECUTIVE OFFICER. Upon the terms and
subject to the conditions contained herein, Alion hereby appoints and employs
▇▇▇▇▇ to serve as the Chief Executive Officer of Alion, and ▇▇▇▇▇ hereby accepts
such appointment and employment. ▇▇▇▇▇ shall provide services hereunder in
accordance with the goals, policies, supervision and direction of Alion's Board
of Directors (the "Board") and Chairman of the Board ("Chairman").
2. COMMITMENT AND DUTIES. ▇▇▇▇▇ agrees to faithfully, industriously,
and with maximum application of his experience, ability and talent, devote his
full working time, attention
and energy to performing his duties as Alion's Chief Executive Officer and such
other duties as the Board or Chairman may from time to time assign.
▇▇▇▇▇ shall be responsible for making the day to day operational
decisions for Alion. ▇▇▇▇▇ shall supervise and direct the other officers (except
for the Chairman) and employees of Alion.
▇▇▇▇▇ shall not, without the prior written permission of the Chairman,
render services of any professional nature to or for any person or firm for
remuneration other than Alion and shall absolutely not engage in any activity
that may be competitive with and adverse to the best interest of Alion. The
making of passive and personal investments and the conduct of private business
affairs shall not be prohibited hereunder.
3. TERM OF APPOINTMENT. Unless terminated or extended in accordance
with the provisions hereof, the term of this Agreement and of Atefi's
appointment hereunder 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 (each
a "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 ▇▇▇▇▇ of its
intent to not renew the Agreement.
4. ANNUAL BASE SALARY. As of the Effective Date, during Atefi's
employment hereunder, and for all services rendered and all covenants made
hereunder, Alion shall pay ▇▇▇▇▇ an annual base salary of $375,000 ("Annual Base
Salary"), payable in equal biweekly installments. Atefi's Annual Base Salary
shall be reviewed annually by the Board and may be increased at the sole
discretion of the Board. Such annual salary review will be in conjunction with a
review by the Board or a committee of the Board of Atefi's performance.
5. INCENTIVE COMPENSATION.
a. ANNUAL INCENTIVE COMPENSATION. For each Alion fiscal year
during Atefi's employment hereunder, Alion shall pay ▇▇▇▇▇ incentive
compensation as set forth on Exhibit A attached hereto and incorporated
herein by reference ( "Incentive Compensation").
Within thirty (30) days of the end of each fiscal year
starting with the fiscal year ending [September 30, 2003], Alion shall
estimate the Incentive Compensation due to ▇▇▇▇▇ for such fiscal year
in accordance with Exhibit A based on Alion's annual internal financial
statements (the "Estimated Incentive Compensation") and deliver notice
of such amount to ▇▇▇▇▇. Within forty-five (45) days following the date
of such notice Alion shall pay the Estimated Incentive Compensation to
▇▇▇▇▇.
Upon receipt of Alion's audited financial statements for the
applicable fiscal year, the actual Incentive Compensation due to ▇▇▇▇▇
in accordance with Exhibit A shall be calculated based on such audited
financial statements (the "Actual Incentive Compensation"). Within
thirty (30) days of receipt of the audited financial statements, Alion
shall compare the Estimated Incentive Compensation to the Actual
Incentive Compensation and provide notice of any difference to ▇▇▇▇▇.
To the extent that the Actual Incentive Compensation exceeds the
Estimated Incentive Compensation, Alion shall pay any additional
amounts due and owing to ▇▇▇▇▇ within fifteen (15) days of delivery of
such notice. To the extent that the Estimated Incentive Compensation
exceeds the Actual Incentive Compensation, ▇▇▇▇▇ shall pay any such
difference to Alion within fifteen (15) days of delivery of such
notice.
b. SPECIAL INCENTIVE ARRANGEMENT. In connection with Alion's
acquisition of IITRI assets as of the Effective Date, ▇▇▇▇▇ has been
awarded a special credit in Alion's deferred compensation plan
(described below), representing a right to have his deferred
compensation account credited with the amounts that would be received
if the deferred compensation plan owned for his benefit $1 million 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,
Atefi'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 rules set
forth below. Additionally, as part of that same award, ▇▇▇▇▇ 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. Atefi'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
shall remain employed continuously from the Effective Date to the
seventh anniversary of the Effective Date at which time he 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 employment through
that date. Notwithstanding the foregoing, upon a termination of Atefi's
employment by Alion without Just Cause or by ▇▇▇▇▇ with Good Reason (as
defined in Section 15.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.
C. DEFERRED COMPENSATION PLAN. ▇▇▇▇▇ will participate in
Alion's deferred compensation plan (which will continue the deferral of
the net amount of deferral of Atefi's accounts under IITRI's deferred
compensation programs, determined at the time of Alion's acquisition of
IITRI's assets. ▇▇▇▇▇ has elected to have such net amount of deferral
(that is, the net deferral amount of Atefi's accounts in the Executive
Deferred Compensation Agreement, attached as Exhibit B to this
Agreement), and in the Retention Agreement, attached as Exhibit C to
this Agreement, credited to the Alion deferred compensation plan and
such net amount, up to a maximum of $1 million, shall be deemed
invested in mezzanine notes of the type issued to IITRI in connection
with the acquisition and to be credited with the associated warrants.
All interest payable (12% interest) on the mezzanine notes shall be
deemed credited to Atefi's account in the Alion deferred compensation
plan and be deemed invested in accordance with the provisions and
investment options of the plan. ▇▇▇▇▇ will be permitted, under rules
provided by Alion, to elect in advance to receive compensation
currently in lieu of an equal amount of such 12% interest credits.
Notwithstanding the foregoing, if Alion terminated Atefi's employment
with Just Cause or if ▇▇▇▇▇ terminates his employment with Alion
without Good Reason (as defined in Section 15.a. but, for purposes of
this sentence only, without
regard to whether the occurrence of one of the events is during the
Protection Period), then no current payments of interest as
compensation shall be made available and all such interest shall
instead be credited to the Alion deferred compensation plan and paid to
▇▇▇▇▇ in accordance with the terms of the Alion deferred compensation
plan.
Upon the later of the sixth anniversary of the Effective
Date or the date the mezzanine noteholders have the right to receive
the principal of their mezzanine notes, the Alion deferred compensation
plan shall allow ▇▇▇▇▇ to withdraw all (but not less than all) of the
fair value of such deemed investment in the mezzanine notes to be paid
in the same manner as the mezzanine holders. Notwithstanding the
foregoing, if before the date provided in the prior sentence, Atefi's
employment is terminated by Alion without Just Cause, by ▇▇▇▇▇ with
Good Reason (as defined in Section 15.a. but, for purposes of this
sentence only, without regard to whether the occurrence of one of the
events is during the Protection Period) or due to Atefi's death or
disability, he shall have the right to receive full payment of his
account with respect to the deemed investment in the mezzanine note,
such payment to be made at Atefi's election on the later of (i) sixty
(60) days following such termination or (ii) the scheduled maturity
date of the mezzanine notes (and with such election to be made at least
one year before any such termination).
d. LONG TERM INCENTIVE PLAN. It is presently expected that the
Board 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.
6. RETENTION PAYMENT. The parties acknowledge that ▇▇▇▇▇ has fully
vested in his right to receive the payments under the Retention Agreement
entered into by IITRI and ▇▇▇▇▇, attached as Exhibit B to this Agreement, and
has deferred receipt of the payments in accordance with the deferred
compensation plan described in Section 5(c) above.
7. AUTOMOBILE LEASE. ▇▇▇▇▇ shall lease an automobile for his use during
the term of his employment with Alion. Alion shall pay and/or reimburse ▇▇▇▇▇ up
to $1,500 per month maximum in automobile leasing costs for the leased
automobile. ▇▇▇▇▇ shall obtain and provide Alion with appropriate receipts and
supporting documentation for such fees and costs.
8. INSURANCE, RETIREMENT AND OTHER FRINGE BENEFITS. During Atefi's
employment hereunder, subject to Atefi's qualification therefore, ▇▇▇▇▇ shall be
entitled to participate in the same health and life insurance plans, retirement
plans and other benefit plans which are or may be from time to time provided by
Alion to its senior officers. ▇▇▇▇▇ shall also be entitled to such other fringe
benefits, such as vacation and personal leave benefits, which are or may be from
time to time provided by Alion to its senior officers.
9. CLUB MEMBERSHIP. Alion shall pay the initiation fee (if not
heretofore paid) and membership dues for ▇▇▇▇▇ for a club chosen by ▇▇▇▇▇ for
business entertainment purposes, with the approval of the Chairman.
10. CORPORATE HEADQUARTERS. Alion's corporate headquarters is and shall
remain in Virginia.
11. TERMINATION BY ALION.
a. FOR JUST CAUSE. Alion may terminate Atefi's employment
under this Agreement at any time for "Just Cause." If Alion terminates
Atefi's employment for Just Cause, ▇▇▇▇▇ shall not be entitled to any
further payments under this Agreement, other
than payment for any annual base salary which ▇▇▇▇▇ earned prior to
such termination but for which has not been paid, and shall
specifically be deemed to have forfeited any Incentive Compensation
which might otherwise be due to him. For purposes of this Agreement,
"Just Cause" means (i) Atefi's material breach of this Agreement which
is not cured within thirty (30) days after receipt of notice thereof;
(ii) Atefi's theft or embezzlement of any material property of Alion;
(iii) Atefi's gross negligence or willful misconduct in performing his
duties under this Agreement; (iv) Atefi's willful refusal to perform or
substantial neglect of any duties under this Agreement; (v) Atefi's
unauthorized use of Alion's trade secrets or Proprietary Information
(as defined below); (vi) Atefi's commission of a felony which adversely
affects Alion's business, reputation or business relations. If ▇▇▇▇▇ is
terminated for Just Cause, ▇▇▇▇▇ shall be entitled to no future
compensation under Sections 4, 5 or 6 above.
b. UPON ATEFI'S DEATH. Atefi's employment under this Agreement
shall terminate automatically if ▇▇▇▇▇ dies. If Atefi's employment is
terminated due to Atefi's death, Alion shall pay to Atefi's heirs or
personal representatives, as the case may be, six monthly payments,
each equal to 1/12 of Atefi's then current annual base salary,
beginning the first calendar month after Atefi's employment terminates.
c. UPON ATEFI'S DISABILITY. Atefi's employment under this
Agreement shall terminate automatically if ▇▇▇▇▇ becomes totally
disabled in accordance with the definition of total disability set
forth in Alion's long term disability insurance plan. Alion reserves
the right to require ▇▇▇▇▇ to submit to a medical examination, either
physical or mental, by a fully-licensed physician selected by Alion, at
Alion's sole expense, to determine whether ▇▇▇▇▇ is or has become so
disabled. If Atefi's employment
is terminated due to Atefi's total disability, Alion shall pay to ▇▇▇▇▇
six monthly payments, each equal to 1/12 of Atefi's then current annual
base salary less any long-term disability insurance payments for which
▇▇▇▇▇ is or becomes entitled to receive that month, beginning the first
calendar month after Atefi's employment terminates.
d. WITHOUT CAUSE. Alion may terminate Atefi's employment
hereunder without cause, for any reason or no reason, by delivering to
▇▇▇▇▇ written notice of the Board's intent to terminate. If Alion
terminates Atefi's employment without cause during the term of this
Agreement, Alion shall make a lump sum severance payment to ▇▇▇▇▇ equal
to the greater of (i) the amount of Atefi'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 years or (ii) an amount equal to
Atefi's Annual Base Salary plus $100,000.
12. TERMINATION BY ▇▇▇▇▇. This Agreement may be terminated by ▇▇▇▇▇ by
giving Alion thirty (30) days advance written notice. If ▇▇▇▇▇ exercises his
right under this Section to terminate his employment with Alion, he shall
forfeit any right to any further payments under this Agreement other than
payment for any annual base salary which ▇▇▇▇▇ earned prior to such termination
but for which has not been paid, and shall specifically be deemed to have
forfeited any Incentive Compensation which might otherwise be due to him and any
future payments under Sections 4, 5 or 6 above.
13. SPECIAL CHANGE OF CONTROL SEVERANCE BENEFITS.
a. If eligibility for severance benefits from Alion's
successor or assign (or any of its respective affiliates) is
established pursuant to Section 15 below (the "Severance Benefits"),
the Severance Benefits payable to ▇▇▇▇▇ shall, in lieu of the benefits
otherwise be payable under Section 11, consist of the following: (i) a
lump sum severance payment
equal to the greater of (a) Atefi's base pay as of the Termination Date
(as defined in Section 15 below) over the unexpired term of this
Agreement up to a maximum of three (3) years, or (b) an amount equal to
one (1) year base salary plus $100,000 minimum incentive compensation;
and (ii) continued eligibility to participate throughout the Severance
Period (as defined below) in Alion'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 ▇▇▇▇▇ as of the Termination Date, it being understood that
Alion'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 Alion's
successor or assigns welfare benefit plans and policies subject to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), Atefi's "qualifying event" for COBRA purposes shall be the
Termination Date.
▇. ▇▇▇▇▇ shall enjoy continued entitlement to such other
accrued or earned and vested benefits provided under Alion's successor
or assigns' plans, programs, policies and practices as of the
Termination Date.
14. SEVERANCE PERIOD. The Severance Period shall begin on the effective
date of termination of Atefi's employment under the conditions specified in
Section 15, and end on the last day of the thirty-six (36) month period
beginning on the Termination Date.
15. ELIGIBILITY FOR SEVERANCE BENEFITS. If ▇▇▇▇▇ terminates employment
(other than on account of circumstances described in Section 16 below) with any
successor or assign (or any of their respective affiliates) of Alion, other than
an entity which is owned in whole or in part by an employee stock ownership
plan, at any time during the twenty-four (24) month period beginning
on the effective date of a Change in Control, as defined in Section 18 of this
Agreement (the "Protection Period"), he shall be entitled to the Severance
Benefits described in Sections 13, 14 and this 15, as follows: If during the
Protection Period, ▇▇▇▇▇ terminates his employment for Good Reason (as defined
below) by delivering to the successor or assign of Alion (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); ▇▇▇▇▇ shall have the right, in his sole and reasonable discretion, to
commence Severance Benefits. Any termination of Atefi's employment that
qualifies for Severance Benefits under Sections 13, 14 and 15 of this Agreement
shall supersede and take precedence over the provisions of Section 12. For
purposes of this Agreement, the following terms shall have the respective
meanings:
a. "Good Reason" shall only result upon the occurrence,
without Atefi's prior written consent, of one or more of the following
events, as determined by ▇▇▇▇▇ in good faith, during the Protection
Period: (i) Atefi's authority or responsibility has materially
diminished as compared to Atefi's authority and responsibility in
effect immediately prior to a Change in Control; (ii) ▇▇▇▇▇ has been
assigned duties inconsistent with his position, responsibility and
status with Alion immediately prior to the Protection Period; (iii)
there has been an adverse change in Atefi's title or office as in
effect immediately prior to the Protection Period; (iv) Atefi's base
pay or incentive compensation has been reduced; or (v) Atefi'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 Alion'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
Alion (or its respective affiliate), as applicable, of a written notice
from ▇▇▇▇▇ identifying in reasonable detail the act or acts
constituting "Good Reason" (a "Preliminary Notice of Good Reason"), or
(y) acts for which ▇▇▇▇▇ 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 Atefi's employment under the provision so
indicated.
c. "Termination Date" shall mean the date specified in the
Notice of Termination for termination of Atefi's employment under this
Agreement.
16. INELIGIBILITY FOR SEVERANCE BENEFITS. Notwithstanding any other
provision under this Agreement, ▇▇▇▇▇ shall not be entitled to receive Severance
Benefits in the event that: (i) Alion's successor or assign (or any of its
respective affiliates) terminates Atefi's employment for Just Cause (as defined
in Section 11.a); (ii) ▇▇▇▇▇ dies (in which case the terms of Section 11.b shall
apply); (iii) ▇▇▇▇▇ is determined to be totally and permanently disabled (in
which case the terms of Section 11.c shall apply); (iv) Alion's successor or
assign (or any of its respective affiliates) terminates Atefi's employment
without cause (in which case the terms of Section 11.d shall apply); or (v)
▇▇▇▇▇ resigns other than for Good Reason (in which case Section 12 applies). In
any such event, ▇▇▇▇▇, 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 Alion's successor or assign (or
any of its respective affiliates).
17. SUBSEQUENT EMPLOYMENT. Following termination of employment, ▇▇▇▇▇
shall not be required to perform any duties for Alion's successor or assign (or
any of its respective affiliates). In the event that ▇▇▇▇▇ secures other
employment during the Severance Period following termination under the
circumstances outlined in Section 15, and such employment includes benefits
under insured welfare benefit plans and policies at the same levels as described
in Section 13.a ("Corresponding Benefits"), then any requirements otherwise
applicable under this Agreement to provide such benefits shall be reduced by an
amount equal to such Corresponding Benefits.
18. CHANGE IN CONTROL. For 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 Alion; (ii) the merger or consolidation of Alion
with any other corporation, foundation, association or other entity; (iii) the
amendment of Alion's corporate documents to grant a party other than IIT,
through its Executive Committee, the right to designate, elect or remove a
majority of Alion'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 Alion.
19. SURRENDER OF PROPERTY. Upon the termination of this Agreement or at
any time upon Alion's request, ▇▇▇▇▇ shall promptly surrender to Alion all
property provided to him for use in performing his duties under this Agreement,
including, but not limited to, all documents, drafts, notes, memoranda, research
files, solicitation information and files, client or customer lists and
files, financial information, computer files, hardware, software, records and
any other materials relating in any way to Alion.
20. REPRESENTATIONS AND WARRANTIES. ▇▇▇▇▇ represents and warrants to
Alion that he has had a recent physical examination and that either he is in
good health or he has disclosed any major health problems to Alion.
21. PROPRIETARY INFORMATION. Except as may be required by court order
or in connection with the good faith performance of his duties hereunder, ▇▇▇▇▇
agrees to keep secret and confidential indefinitely and not to disclose to any
other person, firm or entity, or to use in any way, any Proprietary Information
of Alion which is acquired by or disclosed to ▇▇▇▇▇ during the course of his
employment with Alion. For purposes of this Agreement, the term "Proprietary
Information" means any non-public information concerning Alion or its
affiliates, including, without limitation, non-public information concerning its
client or customer lists, solicitation and contact lists, business plans and
strategies, marketing and solicitation techniques, research information, project
data and information, or any other information which gives or may give Alion and
advantage against its competitors.
22. NON-COMPETITION; NON-SOLICITATION. ▇▇▇▇▇ 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 22.f.), ▇▇▇▇▇ will not knowingly (after due inquiry), whether
on Atefi'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
▇▇▇▇▇ is aware at the time of such termination.
b. During the Restricted Period, ▇▇▇▇▇ 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 ▇▇▇▇▇ 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 ▇▇▇▇▇ is aware at the time
▇▇▇▇▇ 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
▇▇▇▇▇ 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 ▇▇▇▇▇ is aware at the time he ceases to be
employed by Alion.
c. Notwithstanding anything to the contrary in this Agreement,
▇▇▇▇▇ 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
▇▇▇▇▇ (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, ▇▇▇▇▇ will not, whether on
Atefi'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 ▇▇▇▇▇ 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 Atefi'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 Atefi'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.
e. It is expressly understood and agreed that although ▇▇▇▇▇
and Alion consider the restrictions contained in this Section 22(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. "Restricted Period" shall mean, following the date of
Atefi'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 Atefi's employment with Alion
is terminated by Alion for Just Cause, then the "Restricted Period"
shall mean the two (2) years following such termination.
23. REASONABLE RESTRICTIONS. ▇▇▇▇▇ understands that the provisions of
this Section 23 may limit Atefi's ability to earn a livelihood in a business
competitive with the business of Alion and its subsidiaries but nevertheless
▇▇▇▇▇ 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 ▇▇▇▇▇ for the restrictions contained in such
provisions. In consideration thereof and in light of Atefi's education, skills
and abilities, ▇▇▇▇▇ agrees that ▇▇▇▇▇ will not assert in any forum that such
provisions prevents ▇▇▇▇▇ from earning a living.
24. SURVIVAL OF COVENANTS. The covenants set forth in Sections 21 and
22 hereof, shall survive the termination of this Agreement according to each of
their express terms.
25. REMEDIES. ▇▇▇▇▇ acknowledges that compliance with the provisions of
Sections 21 and 22 hereof is necessary to protect the business and good will of
Alion, that Alion would be irreparably injured by a breach of Sections 21 or 22
and that money damages may not be an adequate remedy therefore. Consequently,
▇▇▇▇▇ agrees that Alion, in addition to any other remedies available to it shall
be entitled to an injunction restraining ▇▇▇▇▇ from any actual or threatened
breach of Sections 21 or 22 or to any other appropriate equitable remedy,
without any bond or other security being required.
26. ARBITRATION. Any controversy or claim arising out of, or relating
to this Agreement, or its breach, shall be settled by arbitration in the City of
▇▇▇▇▇▇, Virginia in accordance with the then governing rules of the American
Arbitration Association. Judgment upon the award rendered may be entered and
endorsed in any court of competent jurisdiction.
27. SEVERABILITY; ENFORCEABILITY. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid, unenforceable or void,
such provision shall be enforced to the fullest extend permitted by law or, if
necessary, severed in its entirety, and the remainder of this Agreement shall
continue in full force and effect as if that provision, or the offending portion
thereof, had never been included.
28. NOTICES. Any notice, demand or other communication hereunder shall
be effective upon delivery either personally (including delivery by messenger or
courier service) or by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
a. If to Alion:
Alion Science and Technology Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
b. If to ▇▇▇▇▇:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Or at any other address of which written notice has been provided pursuant to
this Section 28.
29. AMENDMENTS; WAIVERS. This Agreement may not be modified or amended
except in a writing signed by both parties. Either party may waive the other
party's compliance with provision of this Agreement, but such waiver shall be
effective only if set forth in a writing signed by both parties. Any waiver of a
particular provision in any one or more instance shall not operate as a waiver
of, or estopped with respect to, any subsequent compliance or failure to comply
with that or any other provision hereof. Furthermore, any party's failure to
exercise or delay in exercising any right, remedy or power hereunder, in one or
more instances, shall not preclude, waive or estop any subsequent exercise of
such right, remedy or power.
30. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of Alion and its successors and assigns and upon
▇▇▇▇▇ and his heirs, legatees and personal representatives. ▇▇▇▇▇ shall not
assign any of his interest in or obligations under this Agreement without
Alion's prior written consent, which may be withheld for any reason in Alion's
sole discretion.
31. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with Virginia law. Alion and ▇▇▇▇▇ hereby consent to the Virginia'
courts jurisdiction over any disputes relating to or arising out of this
Agreement and Atefi's employment and/or termination with Alion, and expressly
waive any objection to such forum based on jurisdiction or venue, including
forum non conveniens.
32. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding, oral or written, between Alion and ▇▇▇▇▇ relating to its
subject matters contained herein.
33. EXPENSES. ▇▇▇▇▇ shall be reimbursed for reasonable expenses that he
incurs in connection with Alion's business. Such expenses shall be documented by
▇▇▇▇▇ in accordance with procedures established by Alion.
34. INDEMNIFICATION. Alion shall indemnify, defend, hold and save
▇▇▇▇▇, 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 ▇▇▇▇▇, 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 Atefi's execution of the terms and
conditions of this Agreement, except for Atefi's fraudulent or criminal acts or
omissions or gross negligence except as prohibited by applicable law.
IN WITNESS WHEREOF, the duly-authorized representative of Alion and
▇▇▇▇▇▇ ▇▇▇▇▇ hereby execute this Agreement by their own free act and deed, as
follows:
▇▇▇▇▇▇ ▇▇▇▇▇ ALION SCIENCE AND TECHNOLOGY
CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- --------------------------------------
Title: Senior Vice President
-------------------------------
Exhibit A
CEO ANNUAL INCENTIVE SCHEDULE
Fiscal Year
--------------------------------------------------
EBITDA ($M) 2002 2003 2004 2005
----------- -------- --------- -------- ---------
11.0 $100,000
11.5 $100,000
12.0 $150,000
12.5 $150,000
13.0 $225,000 $100,000
13.5 $225,000 $100,000
14.0 $275,000 $150,000
14.5 $275,000 $150,000
15.0 $325,000 $225,000 $100,000
15.5 $350,000 $225,000 $100,000
16.0 $375,000 $275,000 $150,000
16.5 $400,000 $275,000 $150,000
17.0 $425,000 $375,000 $200,000
17.5 $400,000 $200,000
18.0 $425,000 $250,000
18.5 $450,000 $250,000
19.0 $475,000 $300,000
19.5 $300,000
20.0 $450,000
20.5 $475,000
21.0 $500,000
1. The bonus arrangement and all interpretations and determinations thereunder
are administered by the Compensation Committee of the Board (the "Committee"),
in its sole discretion. The Committee will have authority to determine EBITDA,
which will generally be determined in accordance with generally accepted
accounting principles but before taking into account expenses incurred by Alion
with respect to Alion's Stock Appreciation Rights Plan. The Committee may
exclude (or include) extraordinary items or otherwise adjust the calculation of
EBITDA and/or the performance targets to take into account extraordinary events
(which might include for example, without limitation, dispositions or
acquisitions of business units, extraordinary gains or losses, etc.).
2. Annual incentive compensation payable shall be made on a pro-rata basis,
according to the incremental difference between EBITDA target numbers for each
of the following:
a. For Fiscal Year 2002, EBITDA of the company below $15.0 million;
b. For Fiscal Year 2003, EBITDA of the company below $17.0 million;
and
c. For Fiscal Year 2004, EBITDA of the company below $20.0 million.
Exhibit B
[See attached copy of Executive Deferred Compensation Agreement]
Exhibit C
[See attached copy of Retention Agreement]