Document:

exv10w74

 

Exhibit 10.74

SECOND ADDENDUM TO EMPLOYMENT AGREEMENT

     THIS SECOND ADDENDUM TO EMPLOYMENT AGREEMENT (the “Second Addendum”) is made this
21st day of April, 2006, by and between Alion Science and Technology Corporation, a
Delaware corporation (the “Company”) and James C. Fontana (the “Employee”).

     WHEREAS, the Company and Employee entered into an Employment Agreement dated February 2, 2004
(the “Employment Agreement”); and

     WHEREAS, the Company and Employee entered into an Addendum to Employment Agreement dated May
28, 2004 (the “First Addendum”); and

     WHEREAS, the Company and Employee desire to amend the Employment Agreement by extending its
term and clarifying eligibility for Change of Control benefits.

     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. Term of Employment Agreement. The term of the Employment Agreement and First
Addendum shall be extended for a period commencing as of February 2, 2006 through December 31,
2007.

     2. Eligibility for Change of Control Benefits. The first paragraph of Section 6 of
the Employment Agreement shall be deleted and replace with the following:

     “Eligibility for Change of Control Benefits. If Employee terminates employment (for
reasons other than set forth in Section 6D 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 Change of Control Benefits described in Section 5. 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 receive Change of Control Benefits. For purposes of this Agreement, the following
terms shall have the respective meanings:”

     In addition, a new Section 6D shall be inserted as follows:

“D. Notwithstanding any other provision under this Agreement, Employee shall not be entitled to
receive Change of Control Benefits in the event that: (i) the Company’s successor or assign (or any
of its respective affiliates) terminates Employee’s employment for Cause; (ii) Employee dies (in
which case 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); (iii) Employee is determined to be
totally and permanently disabled (in which case the Company shall pay to Employee six (6) 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); (iv) the
Company’s successor or assign (or any of its respective affiliates) terminates Employee’s
employment without cause (in which case the Company shall make a lump-sum severance payment to
Employee equal to one year of Annual Base Salary as of the Date of Termination); or (v) Employee
resigns other than for Good Reason (in which case the Company shall have no further obligations to
Employee under this Agreement, including without limitation payment
of future compensation or benefits). In any such event, Employee, in
addition to any benefits payable in accordance with this Agreement.

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and except as
otherwise provided in this Agreement, shall be entitled only to his salary and benefits accrued or
earned and vested under other plans, programs, policies, practices and coverage of the Company’s
successor or assign (or any of its respective affiliates).”

     3. Other
Terms. All other terms and conditions of the Employment Agreement and First Addendum
shall remain the same.

	 	 	 
	ALION SCIENCE AND TECHNOLOGY

	 	EMPLOYEE
	CORPORATION
	 	 
	 
	 	 
	/s/ Stacy Mendler

	 	/s/ James C. Fontana
	 

	 	 
	Signature

	 	James C. Fontana
	 
	 	 
	Stacy Mendler, EVP
	 	 
	 
	 	 
	Name and Title
	 	 

3exv10w75

 

Exhibit 10.75

EXECUTION
COPY

	 	 	 
	CREDIT SUISSE SECURITIES (USA) LLC
	 	CREDIT SUISSE
	Eleven Madison Avenue
	 	Eleven Madison Avenue
	New York, NY 10010
	 	New York, NY 10010

CONFIDENTIAL

May 25, 2006

Alion Science and Technology Corporation

1750 Tysons Boulevard

McLean, VA 22102

			
	Attention:	 	John M. Hughes

Chief Financial Officer

Alion Science and Technology Corporation

$50,000,000 Senior Secured Incremental Term Loan Facility

$175,000,000 Senior Unsecured Increasing Rate Bridge Facility

$310,000,000 Senior Secured Replacement Bank Facilities

Commitment Letter

Ladies and Gentlemen:

     Reference is made to the Credit Agreement dated as of August 2, 2004, as amended (the “Credit
Agreement”), among Alion Science and Technology Corporation, a Delaware corporation (the “Borrower”
or “you”), the lenders party thereto (the “Lenders”) and Credit Suisse (formerly known as Credit
Suisse First Boston, “CS”), as Administrative Agent and Collateral Agent. Terms used but not
defined in this commitment letter (including the Exhibits and other attachments hereto, this
“Commitment Letter”) shall have the meanings assigned thereto in the Credit Agreement, in the
Summary of Principal Terms and Conditions attached hereto as Exhibit A (the “Senior Facilities Term
Sheet”) or in the Summary of Principal Terms and Conditions attached hereto as Exhibit B (the
“Bridge Facility Term Sheet” and, together with the Senior Facilities Term Sheet, the “Term
Sheets”).

     You have informed CS, in its capacity as the Administrative Agent, and Credit Suisse
Securities (USA) LLC (“CS Securities” and, together with CS and their respective affiliates,
“Credit Suisse”, “we” or “us”) that you intend (a) to acquire (the “Acquisition”) from Anteon
Corporation (the “Seller”) all of the Seller’s rights, and to assume the Seller’s obligations,
under the Anteon Contracts, (b) pursuant to Section 2.24 of the Credit Agreement, to obtain
Incremental Term Loan Commitments for additional Term Loans (or, to the extent contemplated by the
sixth paragraph of the fee letter dated the date hereof, among the Borrower, CS and CS Securities
(the “Fee Letter”), Other Term Loans) in an aggregate principal amount of $50,000,000 (the
“Incremental Term Facility”), (c) to borrow up to $175,000,000 of senior unsecured increasing

 

 

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rate loans (the “Bridge Loans”) under the senior unsecured credit facility (the “Bridge Facility”)
described in the Bride Facility Term Sheet, and (d) to amend certain provisions of the Credit
Agreement in order (i) to give effect to the making of loans under the Incremental Term Facility
and the treatment of such loans as Term Loans for all purposes of the Credit Agreement and the
other Loan Documents, (ii) to permit the Acquisition and the incurrence of the Bridge Loans and
(iii) to make certain other changes thereto (the “Proposed Amendment”). If the Proposed Amendment
is not obtained, then you would not obtain the Incremental Term Facility, but rather you would
terminate the Credit Agreement, prepay all amounts outstanding thereunder and obtain the senior
secured replacement credit facilities (the “Replacement Bank Facilities”) described in the Senior
Facilities Term Sheet. The Incremental Term Facility, the Replacement Bank Facilities and the
Bridge Facility are referred to collectively herein as the “Facilities”.

     In connection with the foregoing, (a) CS is pleased to advise you of its commitment to provide
the entire principal amount of the Incremental Term Facility and the Bridge Facility and (b) CS
Securities is pleased to advise you of its agreement to use commercially reasonable efforts to
arrange the Proposed Amendment, in each case upon the terms and subject to the conditions set forth
in this Commitment Letter. In addition, if the Proposed Amendment is not obtained, CS is pleased
to advise you of its commitment to provide the entire principal amount of the Replacement Bank
Facilities and the Bridge Facility, upon the terms and subject to the conditions set forth or
referred to in this Commitment Letter.

     You hereby appoint (a) CS Securities to act, and CS Securities hereby agrees to act, as sole
bookrunner and sole lead arranger in respect of the Facilities, and (b) CS to act, and CS hereby
agrees to act, as sole administrative agent and sole collateral agent in respect of the Facilities.
Each of CS Securities and CS, in such capacities, will perform the duties and exercise the
authority customarily performed and exercised by it in such roles. You agree that no other titles
will be awarded and no compensation (other than that expressly contemplated by this Commitment
Letter and the Fee Letter) will be paid in connection with the Facilities or the Proposed Amendment
unless you and we shall so agree.

     We reserve the right, prior to or after the execution of definitive documentation for the
Facilities, to syndicate all or a portion of CS’s commitments in respect of the Facilities to a
group of banks, financial institutions and other institutional lenders identified by us in
consultation with and reasonably acceptable to you (together with CS, the “New Lenders”). We
intend to commence syndication efforts promptly upon the execution of this Commitment Letter, and
you agree actively to assist us in completing a satisfactory syndication. Such assistance shall
include (a) your using commercially reasonable efforts to ensure that any syndication efforts
benefit from your existing lending and investment banking relationships, (b) direct contact (at
times mutually agreed) between senior management, representatives and advisors of the Borrower and
the proposed New Lenders, (c) assistance by you in the preparation of a Confidential Information
Memorandum for each of the Facilities and other marketing materials to be used in connection with
the syndications, (d) prior to the launch of the syndications, the obtaining of ratings for the
Incremental Term Facility or the Replacement Bank Facilities, as applicable, from each of Standard
& Poor’s Ratings Service and Moody’s Investors Service, Inc., and (e) the hosting, with CS
Securities, of one or more meetings (at times mutually agreed) of prospective New Lenders. You
agree, at the request of CS Securities, to assist in the preparation of a version of the
Confidential Information Memorandum and other marketing materials and presentations to be used in
connection with the syndication of the Facilities, consisting exclusively of information and
documentation that is either (i) publicly available or (ii) not material with respect to the

 

 

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Borrower and its subsidiaries or the Seller and its subsidiaries and any of their respective
securities for purposes of United States Federal and state securities laws.

     CS Securities will manage, in consultation with you, all aspects of any syndication, including
decisions as to the selection of institutions to be approached and when they will be approached,
when their commitments will be accepted, which institutions will participate and the allocation of
the commitments among the New Lenders (subject to the institutions which will participate and the
commitment allocations being reasonably acceptable to you).

     To assist CS Securities in its syndication efforts, you agree promptly to prepare and provide
to Credit Suisse all information with respect to the Borrower and its subsidiaries and the
Acquisition, including all financial information and projections (the “Projections”), as we may
reasonably request. You hereby represent and covenant that (a) all information other than the
Projections and information of a general economic nature (the “Information”), taken as a whole,
that has been or will be prepared by or on behalf of you or any of your representatives and that
has been or will be made available to Credit Suisse by you or any of your representatives in
connection with the transactions contemplated hereby is or will be, when furnished, complete and
correct in all material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the circumstances under which
such statements are made and (b) the Projections that have been or will be prepared by or on behalf
of you or any of your representatives and that have been or will be made available to Credit Suisse
by you or any of your representatives in connection with the transactions contemplated hereby have
been or will be prepared in good faith based upon assumptions that are reasonable at the time made
and at the time the related Projections are made available to Credit Suisse (it being understood
that the Projections are subject to significant uncertainties and contingencies, many of which are
beyond the control of the Borrower, and that no assurance can be given that such Projections will
be realized). You agree that if at any time prior to the closing of the Facilities and the
effectiveness of the Proposed Amendment any of the representations in the preceding sentence would
be incorrect if the Information and Projections were being furnished, and such representations were
being made by you, at such time, then you will promptly supplement the Information and the
Projections so that such representations will be correct under those circumstances. In arranging
and syndicating the Facilities and arranging the Proposed Amendment, we will be entitled to use and
rely primarily on the Information and the Projections without responsibility for independent
verification thereof.

     As consideration for CS’s commitment hereunder, and Credit Suisse’s agreements to perform the
services described herein, you agree to pay to CS Securities the fees set forth in the Fee Letter.

     CS’s commitment hereunder, and Credit Suisse’s agreements to perform the services described
herein, are subject to (a) our not having discovered or otherwise become aware of any information
not previously disclosed to us that we believe to be inconsistent in a material and adverse manner
with our understanding, based on the information, taken as a whole, provided to us prior to the
date hereof, of the business, assets, liabilities, operations, financial condition or Projections
of the Borrower and its subsidiaries, taken as a whole, after giving effect to the Acquisition, (b)
there not having occurred any event, change or condition since September 30, 2005 (the date of the
most recent audited financial statements of the Borrower delivered to Credit Suisse as of the date
hereof) that, individually or in the aggregate, has caused, or could reasonably

 

 

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be expected to cause, a material adverse condition in or materially adverse effect on the business, assets,
liabilities, operations or financial condition of the Borrower and its subsidiaries, taken as a
whole, (c) our satisfaction that, prior to and during the syndication of the Facilities, there
shall be no other issues of debt securities or commercial bank or other credit facilities of the
Borrower or its subsidiaries being offered, placed or arranged, (d) the negotiation, execution and
delivery of definitive documentation with respect to the Facilities reflecting the terms and conditions
set forth in this Commitment Letter and in the Credit Agreement and otherwise reasonably
satisfactory to Credit Suisse and its counsel, (e) CS Securities having been afforded a period of
at least 20 consecutive days following the launch of the general syndication of the Facilities
(“launch” being defined as the date of the general meeting with prospective New Lenders) and
immediately prior to the closing date to syndicate the Facilities, and (f) your compliance with the
terms of the Fee Letter.

     You agree (a) to indemnify and hold harmless Credit Suisse and its officers, directors,
employees, agents, controlling persons, members and successors and assigns (each, an “Indemnified
Person”) from and against any and all losses, claims, damages, liabilities and expenses, joint or
several, to which any such Indemnified Person may become subject arising out of or in connection
with this Commitment Letter, the Fee Letter, the Transactions, the Facilities or any related
transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any such Indemnified Person is a party thereto, and to reimburse each such
Indemnified Person upon demand for any reasonable legal or other reasonable expenses incurred in
connection with investigating or defending any of the foregoing, provided that the foregoing
indemnity will not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or
related expenses to the extent they are found in a final, non-appealable judgment of a court of
competent jurisdiction to have resulted primarily from the willful misconduct or gross negligence
of such Indemnified Person, and (b) to reimburse Credit Suisse, upon presentation of a summary
statement, for all reasonable out-of-pocket expenses (including but not limited to expenses of
Credit Suisse’s due diligence investigation, consultants’ fees (if such consultants are retained
with your prior consent, which consent shall not be unreasonably withheld), syndication expenses,
travel expenses and reasonable fees, disbursements and other charges of one counsel (as well as
local counsel in each applicable jurisdiction), in each case incurred in connection with the
Facilities and the preparation of this Commitment Letter, the Fee Letter, the definitive
documentation for the Facilities and any security arrangements in connection therewith.
Notwithstanding any other provision of this Commitment Letter, no Indemnified Person shall be
liable for any damages arising from the unauthorized use by others of information or other
materials obtained through electronic, telecommunications or other information transmission
systems or for any indirect, special, punitive or consequential damages in connection with its
activities related to the Facilities.

     You acknowledge that Credit Suisse may be providing debt financing, equity capital or other
services (including financial advisory services) to other companies in respect of which you may
have conflicting interests regarding the transactions described herein and otherwise. Neither we
nor any of our affiliates will use confidential information obtained from you by virtue of the
transactions contemplated by this Commitment Letter or our other relationships with you in
connection with the performance by us of services for other companies, and we will not furnish any
such information to other companies. You also acknowledge that neither we nor any of our
affiliates has any obligation to use in connection with the transactions contemplated by this
Commitment Letter, or to furnish to you, confidential information obtained by us from other
companies.

 

 

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     You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship
between you and Credit Suisse is intended to be or has been created in respect of any of the
transactions contemplated by this Commitment Letter, irrespective of whether Credit Suisse has
advised or is advising you on other matters, (b) Credit Suisse, on the one hand, and you, on the
other hand, have an arms-length business relationship that does not directly or indirectly give
rise to, nor do you rely on, any fiduciary duty on the part of Credit Suisse, (c) you are capable
of evaluating and understanding, and you understand and accept, the terms, risks and conditions
of the transactions contemplated by this Commitment Letter, (d) you have been advised that Credit
Suisse is engaged in a broad range of transactions that may involve interests that differ from your
interests and that Credit Suisse has no obligation to disclose such interests and transactions to
you by virtue of any fiduciary, advisory or agency relationship, and (e) you waive, to the fullest
extent permitted by law, any claims you may have against Credit Suisse for breach of fiduciary duty
or alleged breach of fiduciary duty and agree that Credit Suisse shall have no liability (whether
direct or indirect) to you in respect of such a fiduciary duty claim or to any person asserting a
fiduciary duty claim on behalf of or in right of you, including your stockholders, employees or
creditors.

     This Commitment Letter shall not be assignable by you without the prior written consent of CS
and CS Securities (and any attempted assignment without such consent shall be null and void), is
intended to be solely for the benefit of the parties hereto (and Indemnitees (as defined below)),
and is not intended to confer any benefits upon, or create any rights in favor of, any person other
than the parties hereto (and Indemnitees). CS may assign its commitment hereunder to any of its
affiliates or, with your consent (which shall not be unreasonably withheld or delayed), to any
prospective New Lender. Any such assignment to an affiliate will not relieve CS from any of its
obligations hereunder unless and until such affiliate shall have funded the portion of the
commitment so assigned (or the commitment of CS hereunder shall have otherwise terminated in
accordance with the terms of this Commitment Letter). Any such assignment to a prospective New
Lender shall release CS from the portion of its commitment hereunder so assigned. Any and all
obligations of, and services to be provided by, CS Securities or CS hereunder may be performed and
any and all rights of CS Securities or CS hereunder may be exercised by or through any of their
respective affiliates or branches. This Commitment Letter may not be amended or any provision
hereof waived or modified except by an instrument in writing signed by CS Securities, CS and you.
This Commitment Letter may be executed in any number of counterparts, each of which shall be an
original and all of which, when taken together, shall constitute one agreement. Delivery of an
executed counterpart of a signature page of this Commitment Letter by facsimile or electronic
transmission shall be effective as delivery of a manually executed counterpart hereof. THIS
COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.

     EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF
THIS COMMITMENT LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER.

     Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and
its property, to the non-exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Commitment Letter or the

 

 

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transactions
contemplated hereby, or for recognition or enforcement of any judgment, and agrees that all claims
in respect of any such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court, (b) waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Commitment Letter or the
transactions contemplated hereby in any New York State or in any such Federal court and (c) waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

     This Commitment Letter is delivered to you on the understanding that neither this Commitment
Letter nor the Fee Letter nor any of their terms or substance shall be disclosed, directly or
indirectly, to any other person except (a) to your affiliates, officers, directors, employees,
attorneys, accountants and advisors on a confidential and need-to-know basis or (b) as required by
applicable law or compulsory legal process (in which case you agree to inform us promptly thereof);
provided that you may disclose this Commitment Letter and the contents hereof (but not the Fee
Letter or the contents thereof) to the Seller and its officers, directors, employees, attorneys,
accountants and advisors on a confidential and need-to-know basis. Credit Suisse acknowledges and
agrees that (i) the Borrower may file this Commitment Letter with the Securities and Exchange
Commission as an exhibit to any of its periodic reports and (ii) the provisions of Section 9.16
(Confidentiality) of the Credit Agreement apply to all Information (as defined therein) provided by
the Borrower to Credit Suisse hereunder or in connection with the syndication of the Facilities.

     Notwithstanding anything herein to the contrary, any party to this Commitment Letter (and any
employee, representative or other agent of such party) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions contemplated by
this Commitment Letter and the Fee Letter and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and tax structure,
except that (i) tax treatment and tax structure shall not include the identity of any existing or
future party (or any affiliate of such party) to this Commitment Letter or the Fee Letter and (ii)
no party shall disclose any information relating to such tax treatment and tax structure to the
extent nondisclosure is reasonably necessary in order to comply with applicable securities laws.
For this purpose, the tax treatment of the transactions contemplated by this Commitment Letter and
the Fee Letter is the purported or claimed U.S. federal income tax treatment of such transactions
and the tax structure of such transactions is any fact that may be relevant to understanding the
purported or claimed U.S. federal income tax treatment of such transactions.

     The compensation, reimbursement, indemnification, confidentiality, jurisdiction and waiver of
jury trial provisions contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive financing documentation for the Facilities or the Proposed
Amendment shall be executed and delivered and notwithstanding the termination of this Commitment
Letter.

     Credit Suisse hereby notifies you that pursuant to the requirements of the USA PATRIOT Act,
Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”), Credit Suisse
and each New Lender is required to obtain, verify and record information that identifies the
Borrower, which information includes the name, address, tax identification number and other
information regarding the Borrower that will allow Credit Suisse or such New Lender to identify

 

 

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the Borrower in accordance with the PATRIOT Act. This notice is given in accordance with the
requirements of the PATRIOT Act and is effective as to Credit Suisse and each New Lender.

     If the foregoing correctly sets forth our agreement, please indicate your acceptance of the
terms of this Commitment Letter and of the Fee Letter by returning to us executed counterparts
hereof and the Fee Letter by not later than 5:00 p.m. (New York City time) on June 3, 2006. CS’s
commitment hereunder, and Credit Suisse’s agreements to perform the services described herein, will
expire at such time in the event that Credit Suisse has not received such executed counterparts in
accordance with the immediately preceding sentence. In the event the initial borrowing in respect
of the Facilities does not occur on or before July 15, 2006, then this Commitment Letter, CS’s
commitment and Credit Suisse’s agreements to perform the services
described herein shall automatically terminate unless Credit Suisse shall, in its discretion,
agree to an extension.

[Remainder of this page intentionally left blank]

 

 

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     Credit Suisse is pleased to have been given the opportunity to assist you in connection with
this important financing.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CREDIT SUISSE SECURITIES (USA) LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	by	 	 	 	 
	 

	 	 	 	 	 	/s/ Christopher G. Cunningham	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Christopher G. Cunningham	 	 
	 

	 	 	 	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	by	 	 	 	 
	 

	 	 	 	 	 	/s/ Robert Hetu	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Robert Hetu	 	 
	 

	 	 	 	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	/s/ Cassandra Droogan	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Cassandra Droogan	 	 
	 

	 	 	 	 	 	Title: Vice President	 	 

	 	 	 	 	 	 	 
	Accepted and agreed as of the date first above written:	 	 
	 
	 	 	 	 	 	 
	ALION SCIENCE AND TECHNOLOGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	by
	 	/s/ John M. Hughes	 	 
	 

	 	 	 	 

Name: John M. Hughes
	 	 
	 

	 	 	 	Title: Executive Vice President and CFO	 	 

 

 

			
	CONFIDENTIAL

May 25, 2006
	 	EXHIBIT A

Alion Science and Technology Corporation

$310,000,000 Senior Secured Replacement Bank Facilities

Summary of Principal Terms and Conditions

	 	 	 
	Borrower:

	 	Alion Science and Technology Corporation, a
Delaware corporation (the “Borrower”).
	 
	 	 
	Transactions:

	 	The Borrower intends to enter into a Purchase
Agreement (the “Purchase Agreement”) with Anteon
Corporation (the “Seller”), pursuant to which
the Borrower will acquire (the “Acquisition”)
all of the Seller’s rights, and assume the
Seller’s obligations, under certain government
contracts (the “Anteon Contracts”) in
consideration of the payment by the Borrower to
the Seller of approximately $225,000,000 in cash
(the “Acquisition Consideration”). In
connection with the foregoing, (a) the Borrower
will obtain Senior Unsecured Term Loans in an
aggregate amount of $175,000,000 (the “Senior
Unsecured Term Loans”), (b) either (i) the
Borrower’s existing Credit Agreement dated as of
August 2, 2004, as amended (the “Existing Credit
Agreement”) will be amended to, among other
things, permit the Acquisition and the financing
therefor and the Borrower will (x) obtain an
Incremental Term Facility under the Existing
Credit Agreement, as so amended, in the
aggregate amount of $50,000,000, and (y) borrow
$21,000,000 of delayed draw term loans (the
“Delayed Draw Term Loans”) thereunder, or (ii)
the Borrower will prepay in full, and terminate,
the Existing Credit Agreement, using the
proceeds of the Replacement Bank Facilities
described below under the caption “Replacement
Bank Facilities”, and (c) fees and expenses
incurred in connection with the foregoing will
be paid. The transactions described in this
paragraph are collectively referred to herein as
the “Transactions”.
	 
	 	 
	Sources and Uses:

	 	The approximate sources and uses of the funds
necessary to consummate the Transactions are set
forth on Exhibit C to the Commitment Letter (the
“Commitment Letter”) to which this Term Sheet is
attached.
	 
	 	 
	Agent:

	 	Credit Suisse, acting through one or more of its
branches or affiliates (“CS”), will act as sole
and exclusive administrative agent and
collateral agent (collectively, the “Agent”) for
a syndicate of banks, financial institutions and
other institutional lenders

 

 

2

	 	 	 	 	 
	 

	 	 	 	(together with CS,
the “Lenders”), and will perform the duties
customarily associated with such roles.
	 
	 	 	 	 
	Sole Bookrunner and Sole Lead Arranger:

	 	Credit Suisse Securities (USA) LLC will act as
sole bookrunner and sole lead arranger for the
Senior Facilities described below (the
“Arranger”), and will perform the duties
customarily associated with such roles.
	 
	 	 	 	 
	Syndication Agent:

	 	 	 	At the option of the Arranger, a financial
institution identified by the Arranger and
acceptable to the Borrower (the “Syndication
Agent”).
	 
	 	 	 	 
	Documentation Agent:

	 	 	 	At the option of the Arranger, a financial
institution identified by the Arranger and
acceptable to the Borrower (the “Documentation
Agent”).
	 
	 	 	 	 
	Replacement Bank Facilities:

	 	(A)
	 	A senior secured term loan facility in an
aggregate principal amount of up to $260,000,000
(the “Term Facility”).
	 
	 	 	 	 
	 

	 	(B)
	 	A senior secured revolving credit facility in an
aggregate principal amount of up to $50,000,000
(the “Revolving Facility” and, together with the
Term Facility, the “Senior Facilities”), of
which up to $5,000,000 will be available in the
form of letters of credit.
	 
	 	 	 	 
	 

	 	 	 	In connection with the Revolving Facility, CSFB
(in such capacity, the “Swingline Lender”) will
make available to the Borrower a swingline
facility under which the Borrower may make
short-term borrowings of up to $5,000,000.
Except for purposes of calculating the
Commitment Fee described below, any such
swingline borrowings will reduce availability
under the Revolving Facility on a
dollar-for-dollar basis. Each Lender under the
Revolving Facility shall, promptly upon request
by the Swingline Lender, fund to the Swingline
Lender its pro rata share of any swingline
borrowings.
	 
	 	 	 	 
	Purpose:

	 	(A)
	 	The proceeds of the Term Facility will be used
by the Borrower on the date of the initial
borrowing under the Senior Facilities (the
“Closing Date”), solely (a) to refinance the
Existing Credit Agreement and (b) together with
the proceeds of the Senior Unsecured Term Loans,
(i) to finance the Acquisition and (ii) to pay
related fees and expenses.

 

 

3

	 	 	 	 	 
	 

	 	(B)
	 	The proceeds of loans under the Revolving
Facility will be used by the Borrower solely for
working capital and other general corporate
purposes, including for Permitted Acquisitions
(as defined below).
	 
	 	 	 	 
	 

	 	(C)
	 	Letters of credit will be used solely to support
payment obligations incurred in the ordinary
course of business by the Borrower and its
subsidiaries.
	 
	 	 	 	 
	Availability:

	 	(A)
	 	The full amount of the Term Facility will be
drawn in a single drawing on the Closing Date.
Amounts borrowed under the Term Facility that
are repaid or prepaid may not be reborrowed.
	 
	 	 	 	 
	 

	 	(B)
	 	No loans under the Revolving Facility may be
made on the Closing Date. Thereafter, loans
under the Revolving Facility will be available
at any time prior to the final maturity of the
Revolving Facility, in minimum principal amounts
to be agreed upon. Amounts repaid under the
Revolving Facility may be reborrowed.
	 
	 	 	 	 
	Incremental Term Facility:

	 	The definitive credit agreement for the Senior
Facilities will provide for an uncommitted
incremental term loan facility in an aggregate
principal amount not to exceed $200,000,000.
	 
	 	 	 	 
	Interest Rates and Fees:

	 	 	 	As set forth on Annex I hereto.
	 
	 	 	 	 
	Default Rate:

	 	 	 	The applicable interest rate plus 2.0% per annum.
	 
	 	 	 	 
	Letters of Credit:

	 	 	 	Letters of credit under the Revolving Facility
will be issued by CS or another Lender
acceptable to the Borrower and the Agent (the
“Issuing Bank”). Each letter of credit shall
expire not later than the earlier of (a) 12
months after its date of issuance and (b) the
fifth business day prior to the final maturity
of the Revolving Facility; provided, however,
that any letter of credit may provide for
renewal thereof for additional periods of up to
12 months (which in no event shall extend beyond
the date referred to in clause (b) above).
	 
	 	 	 	 
	 

	 	 	 	Drawings under any letter of credit shall be
reimbursed by the Borrower on the same business
day. To the extent that the Borrower does not
reimburse the Issuing Bank on the same business
day, the Lenders under the Revolving Facility
shall be irrevocably obligated to reimburse the
Issuing Bank

 

 

4

	 	 	 	 	 
	 

	 	 	 	pro rata based upon their
respective Revolving Facility commitments.
	 
	 	 	 	 
	 

	 	 	 	The issuance of all letters of credit shall be
subject to the customary procedures of the
Issuing Bank.
	 
	 	 	 	 
	Final Maturity
and Amortization:

	 	(A)
	 	Term Facility
	 
	 	 	 	 
	 

	 	 	 	The Term Facility will mature on the date that
is five years after the Closing Date, and will
amortize in equal quarterly installments in an
aggregate annual amount equal to 1% of the
original principal amount of the Term Facility
with the balance payable at the Maturity
thereof.
	 
	 	 	 	 
	 

	 	(B)
	 	Revolving Facility
	 
	 	 	 	 
	 

	 	 	 	The Revolving Facility will mature on the date
that is five years after the Closing Date.
	 
	 	 	 	 
	Guarantees:

	 	 	 	All obligations of the Borrower under the
Facilities and under any interest rate
protection or other hedging arrangements entered
into with a Lender or any affiliate thereof
(“Hedging Arrangements”) will be unconditionally
guaranteed (the “Guarantees”) by each existing
and subsequently acquired or organized domestic
and, to the extent no adverse tax consequences
to the Borrower would result therefrom, foreign
subsidiary of the Borrower (the “Subsidiary
Guarantors”).
	 
	 	 	 	 
	Security:

	 	 	 	The Facilities, the Guarantees and any Hedging
Arrangements will be secured by substantially
all the assets of the Borrower and each
Subsidiary Guarantor (collectively, the
“Collateral”), including but not limited to: (a)
a perfected first-priority pledge of all the
capital stock or other equity interests held by
the Borrower or any Subsidiary Guarantor (which
pledge, in the case of any foreign subsidiary,
shall be limited to 100% of the non-voting stock
or other equity interests (if any) and 65% of
the voting stock or other equity interests of
such foreign subsidiary to the extent the pledge
of any greater percentage would result in
adverse tax consequences to the Borrower) and
(b) perfected first-priority security interests
in, and mortgages on, substantially all tangible
and intangible assets of the Borrower and each
Subsidiary Guarantor (including but not limited
to accounts receivable, inventory, equipment,
general intangibles, investment property,
intellectual property, real

 

 

5

	 	 	 
	 

	 	property, cash,
commercial tort claims, letter of credit rights,
intercompany notes and proceeds of the
foregoing) except for those assets for which the
Agent shall determine, in its reasonable
judgment, that the costs of obtaining such
security interest are excessive in relation to
the value of the security afforded thereby.
	 
	 	 
	 

	 	All the above-described pledges, security
interests and mortgages shall be created on
terms, and pursuant to documentation, consistent
with those under the Existing Credit Agreement
or otherwise satisfactory to the Borrower and
the Lenders, and, subject to customary and
limited exceptions to be agreed upon,
none of the Collateral shall be subject to
any other pledges, security interests or
mortgages.
	 
	 	 
	Mandatory Prepayments:

	 	Loans under the Term Facility shall be prepaid
with (a) 50% of Excess Cash Flow (as defined in
the Existing Credit Agreement) for each fiscal
year, reducing to 25% if the Leverage Ratio (as
defined in the Existing Credit Agreement) at the
end of such fiscal year was less than 2.0 to
1.0, (b) 100% of the net cash proceeds of all
non-ordinary course asset sales or other
dispositions of property by the Borrower and its
subsidiaries (including insurance and
condemnation proceeds) (subject to exceptions
and reinvestment provisions as provided for in
the Existing Credit Agreement), (c) 100% of the
net cash proceeds of issuances of debt
obligations of the Borrower and its subsidiaries
(subject to exceptions as provided for in the
Existing Credit Agreement), (d) 50% of the net
cash proceeds of issuances of equity securities
of the Borrower and its subsidiaries (subject to
exceptions as provided for in the Existing
Credit Agreement, including an exception for
issuances of equity pursuant to the Borrower’s
Employee Stock Ownership Plan (the “ESOP”) and
reducing to 25% if the Leverage Ratio at the
time would be less than 2.0 to 1.0), and (e)
100% of the amount of any purchase price
adjustment received by the Borrower or any of
its subsidiaries in cash pursuant to the
Purchase Agreement.
	 
	 	 
	 

	 	The above-described mandatory prepayments shall
be applied first to any amortization payments
payable in the immediately succeeding 24 months
and thereafter, pro rata to the remaining
amortization payments thereunder.

 

 

6

	 	 	 
	Voluntary Prepayments and Reductions in
Commitments:

	 	Voluntary reductions of the unutilized portion
of the Facilities commitments and prepayments of
borrowings will be permitted at any time, in
minimum principal amounts of $1,000,000, without
premium or penalty, subject to reimbursement of
the Lenders’ breakage costs in the case of a
prepayment of Adjusted LIBOR borrowings other
than on the last day of the relevant interest
period. All voluntary prepayments of the Term
Facility will be applied to the remaining
amortization payments thereunder as directed by
the Borrower.
	 
	 	 
	Representations and Warranties:

	 	Substantially as provided for in the Existing
Credit Agreement, including accuracy of
financial statements and other information; no
material adverse change; absence of litigation;
no violation of material agreements or
instruments; compliance with laws (including
ERISA, margin regulations and environmental
laws); payment of taxes; ownership of
properties; inapplicability of the Investment
Company Act; solvency; effectiveness of
governmental approvals; labor matters;
environmental and other regulatory matters; and
validity, priority and perfection of security
interests in the Collateral.
	 
	 	 
	Conditions Precedent to Initial Borrowing:

	 	Usual for facilities and transactions of this
type, including delivery of satisfactory legal
opinions; first-priority perfected security
interests in the Collateral (free and clear of
all liens, other than permitted liens); delivery
of Assignment of Claims Act filings; execution
of the Guarantees, which shall be in full force
and effect; accuracy of representations and
warranties; absence of defaults, prepayment
events or creation of liens under debt
instruments or other agreements; evidence of
authority; absence of material adverse change;
payment of fees and expenses; and obtaining of
satisfactory insurance.
	 
	 	 
	 

	 	The initial borrowing under the Senior
Facilities will also be subject to the
applicable conditions precedent set forth in
Exhibit D to the Commitment Letter.
	 
	 	 
	Conditions Precedent to all Borrowings:

	 	Delivery of notice, accuracy of representations
and warranties and absence of defaults.
	 
	 	 
	Affirmative Covenants:

	 	Substantially as provided for in the Existing
Credit Agreement, including maintenance of
corporate existence and rights; performance of
material obligations; delivery of annual and
quarterly financial statements, other financial
information and

 

 

7

	 	 	 
	 

	 	information required under the
PATRIOT Act; delivery of notices of default,
litigation, ERISA events and material adverse
change; maintenance of properties in good
working order; maintenance of satisfactory
insurance; use of commercially reasonable
efforts to maintain a rating of the Facilities
by each of Standard & Poor’s Ratings Service
(“S&P”) and Moody’s Investors Service, Inc.
(“Moody’s”); compliance with laws; inspection of
books and properties; hedging arrangements;
further assurances; and payment of taxes.
	 
	 	 
	Negative Covenants:

	 	Substantially similar to the Existing Credit
Agreement (as modified to give effect to the
Transactions), including limitations on
dividends on, and redemptions and repurchases
of, capital stock (except as required pursuant
to ERISA, the ESOP and other existing
contractual and statutory obligations);
limitations on prepayments, redemptions and
repurchases of debt (other than loans under the
Senior Facilities); limitations on liens and
sale-leaseback transactions; limitations on
loans and investments; limitations on debt,
guarantees and hedging arrangements; limitations
on mergers, acquisitions and asset sales;
limitations on transactions with affiliates;
limitations on changes in business conducted by
the Borrower and its subsidiaries; limitations
on amendments of debt and other material
agreements; and limitations on capital
expenditures.
	 
	 	 
	 

	 	Notwithstanding the foregoing, the Borrower will
be permitted to make “Permitted Acquisitions”,
as defined in the Existing Credit Agreement,
which includes the following principal elements: (a) the acquired entity is a business unit, or
would become a wholly owned subsidiary of the
Borrower, and is in a similar line of business;
(b) no default or event of default shall have
occurred and be continuing and the Borrower
would be in pro forma compliance with its
covenants; (c) on a pro forma basis, the
Borrower’s ratio of Total Debt to EBITDA would
be at least 0.25 to 1.00 lower than the required
covenant level at the time; and (d) after giving
effect to the acquisition and the financing
therefor, there would be at least $5,000,000 of
available commitments under the Revolving
Facility.

 

 

8

	 	 	 
	Selected Financial Covenants:

	 	The definitive credit documentation for the
Facilities will contain the following financial
covenants (with financial definitions and levels
to be agreed upon): (a) maximum ratios of Total
Debt to EBITDA and (b) minimum interest coverage
ratios.
	 
	 	 
	Events of Default:

	 	Substantially as provided for in the Existing
Credit Agreement, including nonpayment of
principal, interest or other amounts; violation
of covenants; incorrectness of representations
and warranties in any material respect; cross
default and cross acceleration; bankruptcy;
material judgments; ERISA events; actual or
asserted invalidity of guarantees or security
documents; and Change of Control (as defined in
the Existing Credit Agreement).
	 
	 	 
	Voting:

	 	Amendments and waivers of the definitive credit
documentation will require the approval of
Lenders holding more than 50% of the aggregate
amount of the loans and commitments under the
Senior Facilities (with certain amendments and
waivers also requiring class votes), except that
the consent of each Lender directly adversely
affected thereby shall be required with respect
to, among other things, (a) increases in the
commitment of such Lender, (b) reductions of
principal, interest or fees, (c) extensions of
final maturity or scheduled amortization and (d)
releases of guarantors or all or substantially
all of the Collateral.
	 
	 	 
	Yield Protection and Illegality:

	 	Substantially as provided for in the Existing
Credit Agreement, including protection with
respect to breakage costs, changes in capital
requirements or their interpretation, changes in
circumstances, reserves, illegality and taxes.
	 
	 	 
	Assignments and Participations:

	 	The Lenders will be permitted to assign loans
and commitments under the Senior Facilities to
other Lenders or their affiliates without the
consent of the Borrower and to other persons
with the consent of the Borrower (and, if a
Revolving Facility commitment is being assigned,
the Swingline Lender and the Issuing Bank), in
each case not to be unreasonably withheld or
delayed; provided that the consent of the
Borrower shall not be required after the
occurrence and during the continuance of an
Event of Default. All assignments will require
the consent of the Agent, not to be unreasonably
withheld or delayed. Each assignment will be in
an amount of an integral multiple of $1,000,000.
Assignments will be by

 

 

9

	 	 	 
	 

	 	novation and will not be
required to be pro rata between the Senior
Facilities.
	 
	 	 
	 

	 	The Lenders will be permitted to sell
participations in loans and commitments without
restriction. Voting rights of participants
shall be limited to matters in respect of (a)
increases in commitments, (b) reductions of
principal, interest or fees, (c) extensions of
final maturity or scheduled amortization and (d)
releases of guarantors or all or substantially
all of the Collateral.
	 
	 	 
	Expenses and Indemnification:

	 	The Borrower will indemnify the Arranger, the
Agent, the Syndication Agent, the Documentation
Agent and the Lenders and hold them harmless
from and against all reasonable costs, expenses
(including reasonable fees, disbursements and
other reasonable charges of counsel) and
liabilities of the Arranger, the Agent, the
Syndication Agent, the Documentation Agent and
the Lenders arising out of or relating to any
claim or any litigation or other proceeding
(regardless of whether the Arranger, the Agent,
the Syndication Agent, the Documentation Agent
or any Lender is a party thereto) that relates
to the Transactions, including the financing
contemplated hereby or any transactions
connected therewith, provided that none of the
Arranger, the Agent, the Syndication Agent, the
Documentation Agent or any Lender will be
indemnified for any cost, expense or liability
to the extent determined in the final,
non-appealable judgment of a court of competent
jurisdiction to have resulted from its gross
negligence or willful misconduct. In addition,
all reasonable out-of-pocket expenses
(including, without limitation, reasonable fees,
disbursements and other charges of counsel) of
the Arranger, the Agent, the Syndication Agent,
the Documentation Agent and the Lenders for
enforcement costs and documentary taxes
associated with the Senior Facilities will be
paid by the Borrower.
	 
	 	 
	Governing Law and Forum:

	 	New York.
	 
	 	 
	Counsel to Agent and Arranger:

	 	Cravath, Swaine & Moore LLP.

 

 

ANNEX 1

	 	 	 
	Interest Rates:

	 	The interest rates under the Senior Facilities will be as follows:
	 
	 	 
	 

	 	Term Facility
	 
	 	 
	 

	 	At the option of the Borrower, Adjusted LIBOR
plus 2.50% or ABR plus 1.50%.
	 
	 	 
	 

	 	Revolving Facility
	 
	 	 
	 

	 	At the option of the Borrower, Adjusted LIBOR
plus 2.75% or ABR plus 1.75%
	 
	 	 
	 

	 	Both Facilities
	 
	 	 
	 

	 	The Borrower may elect interest periods of 1,
2, 3 or 6 months (or, if agreed to by all
relevant Lenders, 9 or 12 months) for Adjusted
LIBOR borrowings.
	 
	 	 
	 

	 	Calculation of interest shall be on the basis
of the actual days elapsed in a year of 360
days (or 365 or 366 days, as the case may be,
in the case of ABR loans based on the Prime
Rate) and interest shall be payable at the end
of each interest period and, in any event, at
least every 3 months.
	 
	 	 
	 

	 	ABR is the Alternate Base Rate, which is the
higher of CSFB’s Prime Rate and the Federal
Funds Effective Rate plus 1/2 of 1.0%.
	 
	 	 
	 

	 	Adjusted LIBOR will at all times include
statutory reserves.
	 
	 	 
	Letter of Credit Fee:

	 	A per annum fee equal to the spread over
Adjusted LIBOR under the Revolving Facility
will accrue on the aggregate face amount of
outstanding letters of credit under the
Revolving Facility, payable in arrears at the
end of each quarter and upon the termination of
the Revolving Facility, in each case for the
actual number of days elapsed over a 360-day
year. Such fees shall be distributed to the
Lenders participating in the Revolving Facility
pro rata in accordance with the amount of each
such Lender’s Revolving Facility commitment.
In addition, the Borrower shall pay to the
Issuing Bank, for its own account, (a) a
fronting fee equal to a percentage per annum to
be agreed upon of the aggregate face amount of
outstanding letters of credit, payable in
arrears at the end of each quarter and upon the
termination of the Revolving Facility,
calculated based upon the actual number of days
elapsed over a 360-day year, and (b) customary
issuance and administration fees.
	 
	 	 
	Commitment Fees:

	 	0.50% per annum on the undrawn portion of the
commitments in respect of the Senior
Facilities, payable

 

 

2

	 	 	 
	 

	 	quarterly in arrears after
the Closing Date and upon the termination of
the commitments, calculated based on the number
of days elapsed in a 360-day year.
	 
	 	 
	Changes in Interest Rates:

	 	The definitive documentation for the Senior
Facilities will contain provisions under which,
from and after the date of delivery of the
Borrower’s financial statements covering a
period of at least six full months after the
Closing Date, and so long as no default shall
have occurred and be continuing, interest rates
under the Revolving Facility will be subject to
reduction in increments to be agreed upon based
upon performance goals to be agreed upon.

 

 

			
	CONFIDENTIAL

May 25, 2006
	 	EXHIBIT B

Alion Science and Technology Corporation

$175,000,000 Senior Unsecured Increasing Rate Bridge Loans

Summary of Principal Terms and Conditions1

	 	 	 
	Borrower:

	 	Alion Science and Technology Corporation, a Delaware
corporation (the “Borrower”).
	 
	 	 
	Agent:

	 	Credit Suisse, acting through one or more of its
branches or affiliates (“CS”), will act as sole
administrative agent (in such capacity, the “Agent”)
for a syndicate of banks, financial institutions and
other institutional lenders (together with CS, the
“Lenders”), and will perform the duties customarily
associated with such roles.
	 
	 	 
	Sole Bookrunner and Sole Lead
Arranger:

	 	Credit Suisse Securities (USA) LLC will act as sole
bookrunner and sole lead arranger for the Senior
Unsecured Increasing Rate Bridge Facility described
below (collectively, in such capacities, the
“Arranger”), and will perform the duties customarily
associated with such roles.
	 
	 	 
	Syndication Agent:

	 	At the option of the Arranger, one or more financial
institutions identified by the Arranger and acceptable
to the Borrower (in such capacity, the “Syndication
Agent”).
	 
	 	 
	Documentation Agent:

	 	At the option of the Arranger, one or more financial
institutions identified by the Arranger and acceptable
to the Borrower (in such capacity, the “Documentation
Agent”).
	 
	 	 
	Senior Unsecured Bridge Facility:

	 	Senior unsecured increasing rate bridge loans in an
aggregate principal amount of up to $175,000,000 (the
“Senior Unsecured Term Loans”).
	 
	 	 
	Purpose:

	 	The proceeds of the Senior Unsecured Term Loans will be
used by the Borrower on the Closing Date, together with
the proceeds of the Incremental Term Facility, solely
(a) to pay the Acquisition Consideration, (b) to prepay
loans outstanding under the Existing Credit Agreement
and (c) to pay related fees and expenses.

 

			
	1	 	All capitalized terms used but not defined herein have the meanings given to them
in the Commitment Letter to which this term sheet is attached,
including Exhibit A thereto.

 

 

2

	 	 	 
	Availability:

	 	The full amount of the Senior Unsecured Term Loans must
be drawn in a single drawing on the date of the
borrowing of the Senior Unsecured Term Loans (the
“Closing Date”). Senior Unsecured Term Loans that are
repaid or prepaid may not be reborrowed.
	 
	 	 
	Guarantees:

	 	Each existing and subsequently acquired or organized
subsidiary of the Borrower that is or that is required
to be a “Subsidiary Guarantor” under and as defined in
the Existing Credit Agreement will guarantee (the
“Guarantees”) the Senior Unsecured Term Loans.
	 
	 	 
	Interest Rates:

	 	Interest for the six-month period commencing on the
Closing Date shall be paid at the London interbank
offered rate for U.S. dollars (for a three-month
interest period) (the “LIBO Rate”) plus 550 basis
points. Thereafter, interest shall be paid at (a) for
the six-month period commencing on the six-month
anniversary of the Closing Date, the LIBO Rate plus 625
basis points and (b) for the six-month period
commencing on the first anniversary of the Closing
Date, the LIBO Rate plus 700 basis points. Any
Extended Loans (as defined below) shall bear interest
at the LIBO Rate plus 900 basis points; provided that
the portion of any interest payment representing a per
annum interest rate in excess of the LIBO Rate plus 700
basis points shall be paid by capitalizing such excess
portion of interest as additional Extended Loans. All
references herein to Extended Loans shall include
additional Extended Loans owed and outstanding as a
result of the preceding sentence.
	 
	 	 
	Interest Payments:

	 	Interest on the Loans (as defined below) will be
payable in cash (except as provided above), quarterly
in arrears.
	 
	 	 
	Default Rate:

	 	The applicable interest rate plus 2.0%.
	 
	 	 
	 

	 	Notwithstanding anything to the contrary set forth
herein, in no event shall any limit upon the amount of
interest payable in cash with respect to the Extended
Loans affect the payment in cash of any default rate of
interest in respect of any Extended Loans.
	 
	 	 
	Initial Maturity Date:

	 	The eighteen-month anniversary of the Closing Date (the
“Initial Maturity Date”).
	 
	 	 
	Exchange:

	 	If the Senior Unsecured Term Loans have not been
previously repaid or prepaid in full in cash on or
prior to the Initial Maturity Date (with such
non-payment on such date not being an event of
default), the maturity of

 

 

3

	 	 	 
	 

	 	the Senior Unsecured Term
Loans shall automatically be extended to the date that
is five years and six months following the Closing Date
(the “Extended Loan Maturity Date”; such extended
Senior Unsecured Term Loans, the “Extended Loans” and,
together with the Senior Unsecured Term Loans, the
“Loans”). Extended Loans will bear interest as
described above and will have covenants, events of
default and mandatory redemption provisions identical
to the Senior Unsecured Term Loans except to the extent
set forth herein.
	 
	 	 
	Extended Loan Maturity Date:

	 	The Borrower shall repay the Extended Loans in full in
cash on the Extended Loan Maturity Date at a price
(expressed as a percentage of the outstanding principal
amount of such Extended Loans) of 103%.
	 
	 	 
	Mandatory Prepayments:

	 	The Loans shall be prepaid with, subject to certain
exceptions to be agreed upon, (i) the net proceeds from
the issuance, offering or placement of any debt
obligations or equity securities by the Borrower or any
of its subsidiaries, other than borrowings under the
Existing Credit Agreement (with such proceeds being
applied to repay the Loans prior to the repayment of
loans outstanding under the Existing Credit Agreement);
and (ii) the net proceeds from any asset sales by the
Borrower or any of its subsidiaries (including proceeds
from the sale of stock of any subsidiary of the
Borrower) in excess of the amount required to be paid
to the lenders under the Existing Credit Agreement.
Such mandatory prepayments made pursuant to clauses (i)
or (ii) of the preceding sentence during the periods
set forth below shall be payable at the prices set
forth below:
	 
	 	 

	 	 	 	 	 
	 	 	Months after Closing Date	 	Price2
	 
	 	0-6	 	100%
	 
	 	7-12	 	101%
	 
	 	13-18	 	102%
	 
	 	19-30	 	101%
	 
	 	31-42	 	102%
	 
	 	43-Extended Loan Maturity Date	 	103%

	 	 	 
	Change of Control:

	 	The Borrower will be required to offer to prepay the
Loans following the occurrence of a Change of Control
(to be defined) at 100% of the outstanding principal

 

			
	2	 	Price is expressed as a percentage of the
aggregate principal amount of Loans being prepaid.

 

 

4

	 	 	 
	 

	 	amount thereof (if such Change of Control occurs prior
to the Initial Maturity Date) or at 101% of the
outstanding principal amount thereof (if such Change of
Control occurs on or after the Initial Maturity Date).
	 
	 	 
	Voluntary Prepayments:

	 	The Senior Unsecured Term Loans may be prepaid, in
whole or in part, upon not less than 5 days’ prior
written notice, at the option of the Borrower at any
time during the periods set forth below at the prices
set forth below:

	 	 	 	 	 
	 	 	Months after Closing Date	 	Price3
	 
	 	0-6	 	100%
	 
	 	7-12	 	101%
	 
	 	13-Initial Maturity Date	 	102%

	 	 	 
	 

	 	The Extended Loans may be prepaid, in whole or in part,
upon not less than 5 days’ prior written notice, at the
option of the Borrower at any time during the periods
set forth below at the prices set forth below:

	 	 	 	 	 
	 	 	Months after Closing Date	 	Price4
	 
	 	19-30	 	101%
	 
	 	31-42	 	102%
	 
	 	43-Extended Loan Maturity Date	 	103%

	 	 	 
	Assignments and Participations:

	 	Each Lender shall have the absolute and unconditional
right to assign or participate the Loans held by it in
compliance with applicable law to any third party at
any time and shall give notice to the Borrower of any
such assignment.
	 
	 	 
	Representations and Warranties:

	 	The definitive documentation relating to the Loans (the
“Loan Documents”) will contain representations and
warranties relating to the Borrower and its
subsidiaries that are usual and customary for
transactions of this nature or required by the Agent
for this transaction in particular, including but not
limited to those set forth in the Existing Credit
Agreement, with such changes as are appropriate in
connection with the Loans.

 

			
	3	 	Price is expressed as a percentage of the
aggregate principal amount of Senior Unsecured Term Loans being prepaid.
	 
	4	 	Price is expressed as a percentage of the aggregate principal amount
of Senior Unsecured Term Loans being prepaid.

 

 

5

	 	 	 
	Conditions Precedent to
Borrowing:

	 	Usual for facilities and transactions of this type and
others to be reasonably specified by the Agent,
including, without limitation, delivery of satisfactory
legal opinions, corporate documents and officers’ and
public officials’ certifications; execution of the
Guarantees, which shall be in full force and effect;
evidence of authority; and payment of fees and
expenses.
	 
	 	 
	 

	 	The borrowing under the Senior Unsecured Term Facility
will also be subject to the applicable conditions
precedent set forth in Exhibit D to the Commitment
Letter.
	 
	 	 
	Covenants:

	 	The Loan Documents will contain covenants relating to
the Borrower and its subsidiaries that are usual and
customary for transactions of this nature or required
by the Agent for this transaction in particular,
including but not limited to those set forth in the
Existing Credit Agreement, with such changes as are
appropriate in connection with the Loans.
	 
	 	 
	Events of Default:

	 	Customary for the type of transactions proposed and
others to be reasonably specified by the Agent relating
to the Borrower and its subsidiaries (subject, where
appropriate, to thresholds and grace periods to be
agreed upon), including, but not limited to, nonpayment
of principal, interest or other amounts; violation of
covenants; incorrectness of representations and
warranties in any material respect; cross default and
cross acceleration; bankruptcy; material judgments;
ERISA events; or actual or asserted invalidity of
guarantees.
	 
	 	 
	Voting:

	 	Amendments and waivers of the Loan Documents will
require the approval of Lenders holding more than 50%
of the aggregate amount of the Loans, except that the
consent of each Lender shall be required with respect
to, among other things, (a) reductions of principal,
interest or fees payable to such Lender, (b) extensions
of the Initial Maturity Date or the Extended Loan
Maturity Date, as applicable, and (c) releases of all
or substantially all of the value of the Guarantees.
	 
	 	 
	Cost and Yield Protection:

	 	Usual for facilities and transactions of this type,
including customary tax gross-up provisions.
	 
	 	 
	Expenses and Indemnification:

	 	The Borrower will indemnify the Arranger, the Agent,
the Syndication Agent, the Documentation Agent, the

 

 

6

	 	 	 
	 

	 	Lenders, their respective affiliates, successors and
assigns and the officers, directors, employees, agents,
advisors, controlling persons and members of each of
the foregoing (each an “Indemnified Person”) and hold
them harmless from and against all costs, expenses
(including reasonable fees, disbursements and other
charges of counsel) and liabilities of such Indemnified
Person arising out of or relating to any claim or any
litigation or other proceeding (regardless of whether
such Indemnified Person is a party thereto) that
relates to the Transactions, including the financing
contemplated hereby, the Acquisition or any
transactions connected therewith, provided that no
Indemnified Person will be indemnified for any cost,
expense or liability to the extent determined in the
final, non-appealable judgment of a court of competent
jurisdiction to have resulted primarily from its gross
negligence or willful misconduct. In addition, all
out-of-pocket expenses (including, without limitation,
fees, disbursements and other charges of counsel) of
the Arranger, the Agent, the Syndication Agent, the
Documentation Agent and the Lenders for enforcement
costs and documentary taxes associated with the Loans
will be paid by the Borrower.
	 
	 	 
	Governing Law:

	 	New York.
	 
	 	 
	Counsel to the Agent and the
Arranger:

	 	Cravath, Swaine & Moore LLP.

 

 

EXHIBIT C

Sources and Uses of Funds

(in millions of dollars)

(all figures are approximate)

	 	 	 	 	 	 	 	 	 	 	 
	Sources of Funds	 	 	 	 	 	Uses of Funds	 	 	 	 
	Revolving Facility1
	 	$	0.0	 	 	Acquisition Consideration	 	$	225.0	 
	 
	 	 	 	 	 	 	 	 	 	 
	Delayed Draw Term Loans
	 	 	21.0	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Incremental Term Facility2
	 	 	50.0	 	 	Prepay Existing Revolving Facility	 	 	10.0	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Senior Unsecured
Bridge Facility
	 	 	175.0	 	 	Transaction Costs	 	 	11.0	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total Sources
	 	$	246.0	 	 	Total Uses	 	$	246.0	 
	 
	 	 	 	 	 	 	 	 

 

			
	1	 	Represents amount to be drawn under the $50,000,000 Revolving Facility on the Closing Date.
	 
	2	 	Assumes Proposed Amendment is obtained and Replacement Bank Facilities not provided.

 

 

EXHIBIT D

Alion Science and Technology Corporation

$50,000,000 Senior Secured Incremental Term Facility

$175,000,000 Senior Unsecured Increasing Rate Bridge Facility

$310,000,000 Senior Secured Replacement Bank Facilities

Summary of Additional Conditions Precedent1

     The initial borrowing under the Facilities shall be subject to the following additional
conditions precedent:

     1. The Acquisition and the other Transactions shall be consummated simultaneously with the
closing under the Facilities in accordance with applicable law and on the terms described in the
Term Sheets; the Purchase Agreement and all other related documentation shall be satisfactory to
the Agent and no provision thereof shall have been waived, amended, supplemented or otherwise
modified in any material respect adverse to the Lenders without the consent of the Agent.

     2. The Agent shall have received a pro forma consolidated balance sheet and related pro forma
consolidated statements of income of the Borrower as of and for the twelve-month period ending on
the last day of the most recently completed four-fiscal quarter period ended at least 30 days prior
to the Closing Date, prepared after giving effect to the Transactions as if the Transactions had
occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in
the case of such statements of income).

     3. The Agent shall be satisfied that (a) the Borrower’s consolidated pro forma EBITDA for the
four-fiscal quarter period most recently ended at least 30 days prior to the Closing Date (prepared
on a pro forma basis with stated assumptions and adjustments as shall be reasonably satisfactory to
the Agent to give pro forma effect to the Transactions as if they had occurred at the beginning of
such four-fiscal quarter period) (such consolidated pro forma EBITDA, “Pro Forma EBITDA”) shall not
be less than $71,000,000 and (b) the Borrower’s ratio of Total Debt (as defined in the Existing
Credit Agreement) on the Closing Date to Pro Forma EBITDA shall be no more than 6.0 to 1.0.

     4. The Agent shall have received a certificate from the chief financial officer of the
Borrower certifying that the Borrower and its subsidiaries, on a consolidated basis after giving
effect to the Transactions and the other transactions contemplated hereby, are solvent.

     5. All requisite governmental authorities and material third parties shall have approved or
consented to the Transactions and the other transactions contemplated hereby to the extent
required, all applicable appeal periods shall have expired and there shall be no litigation,
governmental, administrative or judicial action, actual or threatened, that could reasonably be
expected to prevent, materially restrain or impose materially burdensome conditions on the
Transactions or the other transactions contemplated hereby.

 

			
	1	 	All capitalized terms used but not defined
herein have the meanings given to them
in the Commitment Letter, including Exhibit A thereto, to which this
Exhibit D is
attached.

 

 

  2

     6. The Agent shall have received, at least five business days prior to the Closing Date, all
documentation and other information required by regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT
Act.

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