Document:

exv10w66

 

Exhibit 10.66

FOURTH AMENDMENT TO THE SELLER WARRANT AGREEMENT

     THIS FOURTH AMENDMENT TO THE SELLER WARRANT AGREEMENT (the “Amendment”) is made effective as
of March 27, 2006, between Alion Science and Technology Corporation, a Delaware corporation (the
“Company”), and Illinois Institute of Technology, an Illinois not-for-profit corporation (“IIT”).

     WHEREAS, the Company, IIT Research Institute, an Illinois not-for-profit corporation
affiliated with and controlled by IIT (“IITRI”), and Alion Science and Technology Corporation
Employee Ownership, Savings and Investment Trust (the “Trust”) entered into that certain Seller
Warrant Agreement dated as of the 20th day of December 2002 (the “Seller Warrant
Agreement”), pursuant to which the Company issued to IITRI warrants to purchase One Million Eighty
Thousand Four Hundred Thirty-Six and Eight-Tenths (1,080,436.8) shares of the Company’s $0.01 par
value per share common stock (“Common Stock”);

   WHEREAS, as of July 1, 2004, IITRI transferred to IIT all its rights and interests in the
Seller Warrant Agreement;

     WHEREAS, the Company and IIT entered into that certain First Amendment to the Seller Warrant
Agreement effective as of December 16, 2004 (the “First Amendment”), pursuant to which the parties
agreed to certain amendments to the Seller Warrant Agreement;

     WHEREAS, the Company and IIT entered into that certain Second Amendment to the Seller Warrant
Agreement effective as of January 24, 2005 (the “Second Amendment”), pursuant to which the parties
agreed to certain further amendments to the Seller Warrant Agreement;

     WHEREAS, the Company and IIT entered into that certain Third Amendment to the Seller Warrant
Agreement effective as of March 8, 2005 (the “Third Amendment”), pursuant to which the parties
agreed to certain further amendments to the Seller Warrant Agreement (as amended by the First
Amendment, the Second Amendment and the Third Amendment, the “Amended Seller Warrant Agreement”);

     WHEREAS, the Company and IIT desire to amend Sections 3(l)(i), 3(l)(iii) and 16(c) of the
Amended Seller Warrant Agreement as set forth herein; and

     WHEREAS, the Trust is a party to the Amended Seller Warrant Agreement only for the purposes of
Sections 6, 7, 15 and 17 through 25 of the Amended Seller Warrant Agreement, and pursuant
to Section 18 of the Amended Seller Warrant Agreement, Sections 3(l)(i), Section 3(l)(iii) and
16(c) may be amended by the mutual written agreement of the Company and IIT, without the need to
obtain the Trust’s consent.

     NOW, THEREFORE, in consideration of the premises set forth above and the respective covenants
and agreements contained in this Amendment, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby mutually acknowledged, and intending to be legally
bound, the parties hereto hereby agree as follows:

  Third Amendment to the Seller Warrant Agreement

 

 

     1. Amendments to the Amended Seller Warrant Agreement.

          (a) Section 3(l)(i) of the Amended Seller Warrant Agreement is hereby amended by deleting the
entire text of Section 3(l)(i) and substituting in lieu thereof:

“SARs issued to employees, consultants, officers or directors of the Company or any
of its Subsidiaries with an exercise price no less than Fair Value, except for such
amount of SARs that, at the time of issuance, would cause the aggregate number of
SARs then outstanding (excluding any SARs that have (x) been exercised, (y) expired,
terminated unexercised, or become unexercisable or (z) been forfeited or otherwise
terminated, surrendered or canceled) to be in excess of:

                    (1) two percent (2%) of the number of then outstanding shares of Common Stock
on a fully diluted basis (assuming the exercise of all outstanding options, warrants
and rights and the conversion into Common Stock of all convertible securities) at
the first anniversary of the Effective Date;

                    (2) four percent (4%) of the number of then outstanding shares of Common Stock
on a fully diluted basis (assuming the exercise of all outstanding options, warrants
and rights and the conversion into Common Stock of all convertible securities) at
the second anniversary of the Effective Date;

                    (3) the sum of (a) thirty-three thousand (33,000), plus (b) the amount equal to
six percent (6%) of the number of then outstanding shares of Common Stock on a fully
diluted basis (assuming the exercise of all outstanding options, warrants and rights
and the conversion into Common Stock of all convertible securities), at the third
anniversary of the Effective Date;

                    (4) the sum of (a) thirty-three thousand (33,000), plus (b) the amount equal to
nine percent (9%) of the number of then outstanding shares of Common Stock on a
fully diluted basis (assuming the exercise of all outstanding options, warrants and
rights and the conversion into Common Stock of all convertible securities), at the
fourth anniversary of the Effective Date; and

                    (5) the sum of (a) thirty-three thousand (33,000), plus (b) the amount equal to
twelve percent (12%) of the number of then outstanding shares of Common Stock on a
fully diluted basis (assuming the exercise of all outstanding options, warrants and
rights and the conversion into Common Stock of all convertible securities), at the
fifth anniversary of the Effective Date.”

          (b) Section 3(l)(iii) of the Amended Seller Warrant Agreement is hereby amended by deleting
the entire text of Section 3(l)(iii) and substituting in lieu thereof:

“shares of Common Stock issued to the ESOP in connection with employees’ purchase of
ESOP interests after the Effective Date via payroll deductions, at a purchase price
which is the lesser of (x) the Fair Value as of the date of issuance of such Common
Stock as determined by an independent appraiser in connection

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with the ESOP (“Full Price Employee Contributions”), or (y) the Fair Value resulting
from the immediately preceding appraisal of the Common Stock performed by an
independent appraiser in connection with the ESOP (“Price Protected Employee
Contributions”), except for such amount of shares that, at the time of issuance,
would cause the aggregate value of all Price Protected Employee Contributions (in
each case the total value of a Price Protected Employee Contribution shall be the
dollar value of the payroll deduction made in connection with such Price Protected
Employee Contribution) to exceed five percent (5%) of the Company’s aggregate
consolidated payroll expenses (i.e., the aggregate payroll expenses of the Company
and any of the Company’s Subsidiaries substantially all of whose employees are
eligible to participate in the ESOP) from the Effective Date to the date of such
contributions, measured at the end of each plan year for the ESOP.”

          (c) Section 16(c) of the Amended Seller Warrant Agreement is hereby amended by deleting the
entire text of Section 16(c) and substituting in lieu thereof:

“As long as none of the clauses (a), (b) or (c) of the definition of Current
Market Price in Section 3(c)(ii) is applicable to the Common Stock, all SARs
issued by the Company will be issued with an exercise price no less than the per
share value of the Common Stock as set forth in the then most recent appraisal
performed by an independent appraiser at the Company’s request in connection with
the ESOP. If one of the clauses (a), (b) or (c) of the definition of Current Market
Price in Section 3(c)(ii) is applicable to the Common Stock, all SARs issued
by the Company will be issued with an exercise price no less than the then current
Current Market Price. All SARs issued by the Company will vest in accordance with
the terms of the Company’s Stock Appreciation Rights Plan, as in effect at the time
of issuance. The Company will not issue SARs that cause the aggregate number of
outstanding SARs (excluding any SARs that have been exercised, that have expired,
terminated unexercised, or become unexercisable or that have been forfeited or
otherwise terminated, surrendered or cancelled), at the time of issuance, to be in
excess of:

                    (1) two percent (2%) of the number of then outstanding shares of Common Stock
on a fully diluted basis (assuming the exercise of all outstanding options, warrants
and rights and the conversion into Common Stock of all convertible securities) at
the first anniversary of the Effective Date;

                    (2) four percent (4%) of the number of then outstanding shares of Common Stock
on a fully diluted basis (assuming the exercise of all outstanding options, warrants
and rights and the conversion into Common Stock of all convertible securities) at
the second anniversary of the Effective Date;

                    (3) the sum of (a) thirty-three thousand (33,000), plus (b) the amount equal to
six percent (6%) of the number of then outstanding shares of Common Stock on a fully
diluted basis (assuming the exercise of all outstanding options, warrants and rights
and the conversion into Common Stock of all convertible securities), at the third
anniversary of the Effective Date;

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                    (4) the sum of (a) thirty-three thousand (33,000), plus (b) the amount equal to
nine percent (9%) of the number of then outstanding shares of Common Stock on a
fully diluted basis (assuming the exercise of all outstanding options, warrants and
rights and the conversion into Common Stock of all convertible securities), at the
fourth anniversary of the Effective Date; and

                    (5) the sum of (a) thirty-three thousand (33,000), plus (b) the amount equal to
twelve percent (12%) of the number of then outstanding shares of Common Stock on a
fully diluted basis (assuming the exercise of all outstanding options, warrants and
rights and the conversion into Common Stock of all convertible securities), at the
fifth anniversary of the Effective Date.”

     2. Waivers. The parties hereto hereby agree that neither the execution of this
Amendment nor any provision contained herein shall be deemed to in any way affect or act to
restrict or terminate the provisions of Section 2 of the First Amendment or Section 2 of the
Second Amendment, including without limitation, any waivers and releases granted to and/or given
for the benefit of the Company therein.

     3. Remainder of the Amended Seller Warrant Agreement Not Affected. Except as set
forth in Section 1 hereof, the terms and provisions of the Amended Seller Warrant Agreement remain
in full force and effect without change, amendment, waiver or modification.

     4. Ratification. As modified hereby, the Amended Seller Warrant Agreement and its
terms and provisions are hereby ratified for all purposes and in all respects.

     5. Counterparts. This Amendment may be executed in one or more counterparts, all of
which taken together shall constitute one instrument.

     6. References. From and after the date provided above, all references to the Amended
Seller Warrant Agreement shall be deemed to be references to the Amended Seller Warrant Agreement
as modified hereby.

     7. Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflict of laws principles thereof.

     8. Conflict. In the event of any conflict between the terms of this Amendment and the
Amended Seller Warrant Agreement, the terms of this Amendment shall govern.

[Signatures follow on next page]

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by its
officers thereunto duly authorized as of the date hereof.

	 	 	 	 	 	 	 	 	 
	Alion Science and Technology Corporation	 	Illinois Institute of Technology	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 /s/ Bahman Atefi
 

	 	By: 
	 	 /s/ Lewis Collens
 

	 	 
	Name: Bahman Atefi	 	Name: Lewis Collens	 	 
	Title: Chief Executive Officer	 	Title: Presidentexv10w67

 

Exhibit 10.67

MEZZANINE WARRANT REDEMPTION AGREEMENT

     THIS MEZZANINE WARRANT REDEMPTION AGREEMENT (the “Agreement”) is made effective as of March
27, 2006, between Alion Science and Technology Corporation, a Delaware corporation (the “Company”),
and Illinois Institute of Technology, an Illinois not-for-profit corporation (“IIT”).

     WHEREAS, the Company, IIT Research Institute, an Illinois not-for-profit corporation
affiliated with and controlled by IIT (“IITRI”), and Alion Science and Technology Corporation
Employee Ownership, Savings and Investment Trust (the “Trust”) entered into that certain Mezzanine
Warrant Agreement dated as of the 20th day of December 2002 (the “Mezzanine Warrant
Agreement”), pursuant to which the Company issued to IITRI warrants to purchase Five Hundred
Twenty-Four Thousand Two Hundred Twenty-Eight and Nine-Tenths (524,228.9) shares of the Company’s
$0.01 par value per share common stock (“Common Stock”), of which warrants to purchase Five Hundred
Four Thousand Nine Hundred One and Nine-Tenths (504,901.9) shares of Common Stock (the “Warrant
Shares”) remain outstanding as of the date of this Agreement (the “Outstanding Warrants”);

     WHEREAS, as of July 1, 2004, IITRI transferred to IIT all its rights and interests in the
Mezzanine Warrant Agreement;

     WHEREAS, the Company and IIT entered into (a) that certain First Amendment to the Mezzanine
Warrant Agreement effective as of December 16, 2004 (the “First Amendment”), (b) that certain
Second Amendment to the Mezzanine Warrant Agreement effective as of January 24, 2005 (the “Second
Amendment”), and (c) that certain Third Amendment to the Mezzanine Warrant Agreement effective as
of March 8, 2005 (the “Third Amendment”) (the Mezzanine Warrant Agreement, as amended by the First
Amendment, the Second Amendment and the Third Amendment, is hereinafter referred to as the “Amended
Mezzanine Warrant Agreement”); and

     WHEREAS, subject to the terms and conditions of this Agreement, IIT desires to sell to the
Company, and the Company desires to redeem from IIT, all of the Outstanding Warrants.

     NOW, THEREFORE, in consideration of the premises set forth above and the respective covenants
and agreements contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby mutually acknowledged, and intending to be legally
bound, the parties hereto hereby agree as follows:

     1. Redemption of the Mezzanine Warrant Agreement. IIT hereby agrees to sell to the
Company, and the Company hereby agrees to redeem from IIT, all of the Outstanding Warrants
(including any and all component and related rights).

     2. Redemption Price. The Company shall pay to IIT for the redemption of the
Outstanding Warrants an amount (the “Redemption Price”) equal to the product of (a) the number of
Warrant Shares (which is 504,901.9) multiplied by (b) the difference between (i) the fair market
value of one share of Common Stock as of September 30, 2005, which such fair market value is set
forth in the appraisal dated as of September 30, 2005 performed by the independent appraisal firm
of Houlihan Lokey Howard & Zukin at the Company’s request

  Mezzanine
Warrant Redemption Agreement

 

 

relating to the Alion Science and Technology Corporation Employee Ownership, Savings and Investment
Plan (which is $35.89), minus (ii) Ten Dollars ($10), which is the current per share exercise price
for the Outstanding Warrants.

     3. Closing, The closing of the redemption of the Outstanding Warrants by the Company
(the “Closing”) shall take place on or about March 28, 2006, or such other date as the parties
hereto may mutually agree. At the Closing, the Company shall pay the Redemption Price, and IIT
shall deliver to the Company any and all original executed Outstanding Warrants, which shall be
marked “cancelled”.

     4. Termination of Amended Mezzanine Warrant Agreement. IIT hereby acknowledges and
agrees that immediately upon the redemption of the Outstanding Warrants by the Company (the
“Redemption”), the Amended Mezzanine Warrant Agreement shall terminate and have no further force or
effect, such that IIT shall no longer have any rights whatsoever under the Amended Mezzanine
Warrant Agreement and the Company shall no longer have any obligations whatsoever under the Amended
Mezzanine Warrant Agreement.

     5. Termination of Portion of Rights Agreement. IIT hereby further acknowledges and
agrees that, immediately upon the Redemption, the portion of the rights agreement among the
Company, IIT, as successor to IITRI, and others dated as of December 20, 2002 (the “Rights
Agreement”) relating to rights held by IIT, in its capacity as a holder of Outstanding Warrants,
shall terminate and have no further force or effect, such that IIT shall no longer have any rights
under the Rights Agreement relating to holding the Outstanding Warrants and the Company shall no
longer have any obligations under the Rights Agreement to IIT in its capacity as a holder of the
Outstanding Warrants. Except as so terminated, the remaining rights and obligations under the
Rights Agreement shall survive such termination and shall remain in full force and effect.

     6. Representations and Warranties.

     (a) Each party hereby represents and warrants to the other that each has the requisite
corporate authority to enter into, deliver and perform this Agreement, that this Agreement does not
conflict with any other agreement of such party and that this Agreement constitutes the valid and
binding legal obligation of such party, enforceable against such party in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights in
general and subject to general principles of equity and the discretion of courts in granting
equitable remedies.

     (b) IIT represents and warrants to the Company that IIT owns all of the Outstanding
Warrants beneficially and of record, free and clear of any liens or encumbrances, and upon delivery
of payment of the Redemption Price by Company pursuant to this Agreement, IIT shall convey good,
valid and marketable title thereto, free and clear of any liens, encumbrances or restrictions other
than restrictions imposed by applicable securities laws.

     7. Full Release and Discharge by IIT. IIT, for itself and on behalf of its
successors and assigns, its insurers and any other Person claiming through IIT, hereby knowingly
and voluntarily, fully and forever, effective as of the date of this Agreement, releases,
discharges, indemnifies, holds harmless and acquits the Company, its officers, directors,
employees, agents,

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representatives, successors and assigns from and against any and all claims, demands, causes of
action, suits, obligations, liabilities, sums of money, debts, covenants, agreements, and/or
damages (each a “Claim”) whatsoever, whether known or unknown, which IIT, directly or indirectly,
may now or hereafter have or claim to have had against the Company,
based upon or which may
arise from or be connected to the Amended Mezzanine Warrant Agreement and/or the Outstanding
Warrants, other than any Claim arising from a breach by Company of any of its representations and
warranties set forth herein, including without limitation, those representations and warranties set
forth in Section 6 above.

     8. Full Release and Discharge by Company. Company, for itself and on behalf of
its successors and assigns, its insurers and any other Person claiming through Company, hereby
knowingly and voluntarily, fully and forever, effective as of the date of this Agreement, releases,
discharges, indemnifies, holds harmless and acquits IIT, its officers, trustees, employees, agents,
representatives, successors and assigns from and against any and all Claims whatsoever, whether
known or unknown, which Company, directly or indirectly, may now or hereafter have or claim to
have had against IIT, based upon or which may arise from or be connected to the Amended
Mezzanine Warrant Agreement, the Outstanding Warrants and/or the sale thereof pursuant to this
Agreement, other than any Claim arising from a breach by IIT of any of its representations and
warranties set forth herein, including without limitation, those representations and warranties set
forth in Section 6 above.

     9. Entire Agreement. This Agreement constitutes the entire agreement between IIT
and the Company concerning its subject matter and supersedes all prior oral and written
communications between IIT and the Company with respect to the subject matter contained herein.

     10. Counterparts. This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one instrument.

     11. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflict of laws principles thereof.

[Signatures follow on next page]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by its
officers thereunto duly authorized as of the date hereof.

	 	 	 	 	 	 	 	 	 
	Alion Science and Technology Corporation	 	 	 	Illinois Institute of Technology
	 
	 	 	 	 	 	 	 	 
	By:

	 	 /s/ Bahman Atefi	 	 	 	By:	 	 /s/ Lewis Collens
	 

	 	 
	 	 	 	 	 	 
	Name: Bahman Atefi	 	 	 	Name: Lewis Collens
	Title: Chief Executive Officer	 	 	 	Title: President

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