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                                                                   EXHIBIT 10.16

                              HCI ACQUISITION CORP.

                         EXECUTIVE SECURITIES AGREEMENT

      THIS EXECUTIVE SECURITIES AGREEMENT (this "Agreement") is made as of March
31, 2004, by and between HCI Acquisition Corp., a Delaware corporation ("HCI"),
and James P. Waters (the "Executive Securityholder," and, together with the
other executives who execute an agreement with HCI or the Company (as defined
below) having terms substantially similar to those contained herein, the
"Executive Securityholders"). Certain capitalized terms used herein are defined
in Section 6 hereof.

      HCI, The Hillman Companies, Inc., a Delaware corporation ("Hillman"), and
the stockholders and optionholders of Hillman, including the Executive
Securityholder, have entered into the Agreement and Plan of Merger, dated as of
February 14, 2004 (the "Merger Agreement"), pursuant to which HCI will be merged
with and into Hillman on the date hereof (the "Merger") with Hillman being the
surviving corporation in the Merger (the surviving corporation in the Merger
being hereinafter referred to as the "Company").

      Effective upon the consummation of the Merger and without any action by
HCI, Hillman, the Company or the Executive Securityholder, the Company, as the
surviving corporation in the Merger, will assume all of HCI's obligations, and
become entitled to all of HCI's rights, under this Agreement.

      The Executive Securityholder owns (i) 2,410 shares (the "Rollover Stock")
of Hillman's common stock, par value $0.01 per share (the "Hillman Common
Stock"), and (ii) options to purchase 15,625 shares of Hillman Common Stock (the
"Rollover Options" and together with the Rollover Stock, the "Rollover
Securities").

      Section 1.7(c)(ii) of the Merger Agreement provides that, without any
action on the part of HCI, Hillman, the Company or the Executive Securityholder,
the Executive Securityholder's Rollover Stock shall not be cancelled and
converted into the right to receive the Per Share Closing Merger Consideration
(as defined in the Merger Agreement), but instead such shares of Rollover Stock
shall be cancelled and converted into a right to receive such number of shares
of common stock and/or preferred stock of the Company as HCI and the Executive
Securityholder may so agree.

      Section 1.7(d)(ii) of the Merger Agreement provides that, without any
action on the part of HCI, Hillman, the Company or the Executive Securityholder,
the Executive Securityholder's Rollover Options shall not be cancelled and
converted into the right to receive the Option Consideration (as defined in the
Merger Agreement), but instead such Rollover Options shall be cancelled and
converted into a right to receive such number of options to purchase shares of
preferred stock of the Company and/or of Hillman Investment Company, a Delaware
corporation

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(the "Investment Company"), as HCI and the Executive Securityholder may so
agree. None of the options granted hereunder are intended to be an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code (as
defined below).

      The parties hereto desire to enter into this Agreement for the purposes,
among others, of (i) enabling the Executive Securityholder to cancel and
exchange the Rollover Securities for the applicable Executive Securities (as
defined below) in the manner provided herein and in the Merger Agreement, (ii)
assuring continuity in the management and ownership of the Company and (iii)
limiting the manner and terms by which the Executive Securities may be
transferred.

      NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:

      1. Cancellation and Issuance of Rollover Securities for Executive
Securities.

      (a) Purchased Equity.

            (i) Upon consummation of the Merger and in accordance with the
      provisions of Sections 1.7(c)(ii) and 1.8(a) of the Merger Agreement, 831
      shares of the Rollover Stock owned by the Executive Securityholder shall
      be cancelled and converted into 23.858 shares of the Company's Class A
      Common Stock, par value $0.01 per share (the "Class A Common Stock").

            (ii) Upon consummation of the Merger and in accordance with the
      provisions of Sections 1.7(d)(ii) and 1.8(a) of the Merger Agreement,
      Rollover Options to purchase 15,625 shares of Hillman Common Stock shall
      be cancelled and exchanged for (A) an option (the "Company Preferred
      Purchased Option") to purchase 264.213 shares of the Preferred Stock and
      (B) an option (the "Investment Company Preferred Purchased Option") to
      purchase 184.335 shares of the Investment Company's Class A Preferred
      Stock, par value $0.01 per share (the "Investment Company Preferred"), in
      each case, at the applicable Exercise Price per share of underlying stock.
      The Company Preferred Purchased Option and the Investment Company
      Preferred Purchased Option issued to the Executive Securityholder pursuant
      to this Section 1(a)(ii) are hereafter collectively referred to as the
      "Purchased Options."

            (iii) The shares of Class A Common Stock and the Purchased Options
      issued to the Executive Securityholder pursuant to this Section 1(a) are
      collectively referred to hereafter as the "Purchased Equity".

      (b) Incentive Equity. Upon consummation of the Merger and in accordance
with the provisions of Sections 1.7(c)(ii) and 1.8(a) of the Merger Agreement,
(i) 1,579 shares of the Rollover Stock owned by the Executive Securityholder
shall be cancelled and converted into 45.325 shares of the Company's Class B
Common Stock, par value $0.01 per share (the "Class B Common Stock") and (ii)
the Company shall sell to the Executive Securityholder, and the

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Executive Securityholder shall purchase from the Company, 21.966 shares of the
Class B Common Stock for an aggregate purchase price of $21,966 in cash, which
will be paid at the Closing by wire transfer of immediately available funds to a
bank account designated by the Company. The shares of Class B Common Stock
issued to the Executive Securityholder pursuant to this Section 1(b) are
hereafter collectively referred to as the "Incentive Equity."

      (c) Preferred Options. Upon consummation of the Merger, (i) the Company
shall grant to the Executive Securityholder an option to purchase 648.164 shares
of the Preferred Stock and (ii) the Investment Company hereby shall grant to the
Executive Securityholder an option to purchase 452.208 shares of the Investment
Company Preferred, in each case, at the applicable Exercise Price per share of
underlying Preferred Stock or Investment Company Preferred, as the case may be.
The options granted to the Executive Securityholder pursuant to this Section
1(c) are hereinafter collectively referred to as the "Preferred Options".

      (d) Closing. The closing of the transactions contemplated by Sections
1(a), 1(b) and 1(c) (the "Closing") shall take place at the offices of Kirkland
& Ellis LLP, 200 East Randolph Drive, Chicago, Illinois at 10:00 a.m. on the
date hereof, or at such other place or on such other date as may be mutually
agreeable to the Company and the Executive Securityholder.

      (e) Surrender and Exchange of Certificates. The Company shall deliver to
the Executive Securityholder copies of the certificates representing the
Executive Securityholder's Executive Securities (to the extent such Executive
Securities are represented by certificates), and the Executive Securityholder
shall deliver to the Company stock certificates evidencing the Executive
Securityholder's Rollover Stock duly endorsed for transfer or accompanied by
appropriate transfer documents pursuant to the Merger Agreement. Until the
occurrence of a Sale of the Company, all certificates evidencing the Executive
Securities shall be held by the Company for the benefit of the Executive
Securityholder and the other holder(s) of Executive Securities. Upon the
occurrence of a Sale of the Company, the Company will return the certificates
for the Executive Securities to the record holders thereof. Upon the occurrence
of a Public Offering, the Company will return to the record holders thereof
certificates representing the Executive Securities (other than with respect to
any Executive Securities that remain unvested).

      (f) Representations and Warranties. The Executive Securityholder
represents and warrants that:

            (i) the Executive Securities to be acquired by the Executive
      Securityholder pursuant to this Agreement and the Merger Agreement shall
      be acquired for the Executive Securityholder's own account and not with a
      view to, or intention of, distribution thereof in violation of the
      Securities Act, or any applicable state securities laws, and the Executive
      Securities shall not be disposed of in contravention of the Securities Act
      or any applicable state securities laws;

            (ii) the Executive Securityholder will be, upon consummation of the
      Merger, an executive officer of the Company or a Subsidiary thereof, is
      sophisticated in financial

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      matters and is able to evaluate the risks and benefits of the investment
      in the Executive Securities;

            (iii) the Executive Securityholder is able to bear the economic risk
      of his or her investment in the Executive Securities for an indefinite
      period of time. The Executive Securityholder understands that the
      Executive Securities have not been registered under the Securities Act
      and, therefore, cannot be sold, and in certain circumstances, transferred,
      unless subsequently registered under the Securities Act or an exemption
      from such registration is available;

            (iv) the Executive Securityholder has had an opportunity to ask
      questions and receive answers concerning the terms and conditions of the
      offering of the Executive Securities and has had full access to such other
      information concerning the Company as he or she has requested; and

            (v) this Agreement constitutes the legal, valid and binding
      obligation of the Executive Securityholder, enforceable in accordance with
      its terms, and the execution, delivery and performance of this Agreement
      by the Executive Securityholder does not and shall not conflict with,
      violate or cause a breach of any agreement, contract or instrument to
      which the Executive Securityholder is a party or any judgment, order or
      decree to which the Executive Securityholder is subject.

      (g) No Employment Obligation. As an inducement to the Company to issue the
Executive Securities to the Executive Securityholder hereunder, and as a
condition thereto, the Executive Securityholder acknowledges and agrees that:

            (i) neither the issuance of the Executive Securities to the
      Executive Securityholder hereunder nor any provision contained herein
      shall entitle the Executive Securityholder to remain in the employment of
      the Company or any of its Subsidiaries or affect the right of the Company
      or any of its Subsidiaries to terminate the Executive Securityholder's
      employment at any time; and

            (ii) neither the Company nor its Subsidiaries shall have any duty or
      obligation to disclose to the Executive Securityholder, and the Executive
      Securityholder shall have no right to be advised of, any information
      regarding the Company or its Subsidiaries (except in connection with a
      determination of the Fair Market Value of the Executive Securities) at any
      time prior to, upon or in connection with the repurchase of the Executive
      Securities upon the termination of Executive Securityholder's employment
      with the Company or any of its Subsidiaries or as otherwise provided
      hereunder.

      (h) 83(b) Election. Within 30 days after the date of hereof, the Executive
Securityholder will make an effective election with respect to his Incentive
Equity with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code") and the
regulations promulgated thereunder in the form of Exhibit A attached hereto.

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      (i) Stock Powers. At the Closing, (i) the Executive Securityholder shall
execute in blank ten stock transfer powers in the form of Exhibit B attached
hereto (the "Stock Powers") with respect to his Purchased Equity represented by
certificates and Incentive Equity and shall deliver such Stock Powers to the
Company. The Stock Powers shall authorize the Company to assign, transfer and
deliver the shares of Purchased Equity represented by certificates and Incentive
Equity to the appropriate acquirer thereof pursuant to Section 4 below or
Section 6 of the Stockholders Agreement and under no other circumstances and
(ii) the Executive Securityholder's spouse shall execute the consent in the form
of Exhibit C attached hereto.

      (j) Investment Company. Upon consummation of the Merger, the Company shall
cause the Investment Company to execute a joinder to this Agreement in the form
of Exhibit D attached hereto, and the parties hereto agree that upon execution
of such joinder the Investment Company shall become a party hereto.

      (k) Executive Securities Purchase Plans. The shares of Class A Common
Stock and Class B Common Stock and the options to purchase shares of the
Preferred Stock are being granted to the Executive Securityholder pursuant to
the HCI Acquisition Corp. Executive Securities Purchase Plan (the "Company
Purchase Plan"). The options to purchase shares of the Investment Company
Preferred are being granted to the Executive Securityholder pursuant to the
Hillman Investment Company Executive Securities Purchase Plan (the "Investment
Company Purchase Plan" and together with the Company Purchase Plan, the
"Purchase Plans"). The Executive Securities being issued under the Purchase
Plans are intended to qualify for an exemption from the registration
requirements (i) under the Securities Act, pursuant to Rule 701 promulgated
thereunder, and (ii) under applicable state securities laws.

      2. Vesting of Executive Securities.

      (a) Vesting of Purchased Equity. All Purchased Equity shall be fully
vested, and with respect to the Purchased Options, fully exercisable, upon
issuance hereunder.

      (b) Vesting of Incentive Equity. The Executive Securityholder's Incentive
Equity shall be subject to vesting in the manner specified in this Section 2(b).

            (i) Except as otherwise provided in this Section 2(b), the shares of
      Incentive Equity will become vested in accordance with the following
      schedule, if as of each such date the Executive Securityholder is still
      employed by the Company or any of its Subsidiaries:

<TABLE>
<CAPTION>
                                                         Cumulative Percentage of
            Date                                      Incentive Equity to be Vested
            ----                                      -----------------------------
<S>                                                   <C>
1st Anniversary of date hereof                                      20%

2nd Anniversary of date hereof                                      40%

3rd Anniversary of date hereof                                      60%
</TABLE>

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<TABLE>
<CAPTION>
                                                         Cumulative Percentage of
            Date                                      Incentive Equity to be Vested
            ----                                      -----------------------------
<S>                                                   <C>
4th Anniversary of date hereof                                      80%

5th Anniversary of date hereof                                     100%
</TABLE>

            (ii) Upon the occurrence of a Sale of the Company, all of the
      Executive Securityholder's shares of Incentive Equity which have not yet
      become vested shall become vested at the time of such event, if as of the
      date of such event the Executive Securityholder is still employed by the
      Company or any of its Subsidiaries.

      (c) Vesting of Preferred Options. The Preferred Options may be exercised
only to the extent they have become vested. The Executive Securityholder's
Preferred Options shall be subject to vesting in the manner specified in this
Section 2(c).

            (i) Except as otherwise provided in this Section 2(c), the Preferred
      Options will become vested in accordance with the following schedule, if
      as of each such date the Executive Securityholder is still employed by the
      Company or any of its Subsidiaries:

<TABLE>
<CAPTION>
                                                         Cumulative Percentage of
            Date                                      Preferred Options to be Vested
            ----                                      ------------------------------
<S>                                                   <C>
1st Anniversary of date hereof                                      20%

2nd Anniversary of date hereof                                      40%

3rd Anniversary of date hereof                                      60%

4th Anniversary of date hereof                                      80%

5th Anniversary of date hereof                                     100%
</TABLE>

            (ii) Upon the occurrence of a Sale of the Company, all of the
      Executive Securityholder's Preferred Options which have not yet become
      vested shall become vested and fully exercisable at the time of such
      event, if as of the date of such event the Executive Securityholder is
      still employed by the Company or any of its Subsidiaries.

      (d) Expiration of Preferred Options and Purchased Options. The Preferred
Options shall expire at the close of business on March 31, 2014 and the
Purchased Options shall expire at the close of business on March 31, 2028 (in
either case, such date being hereinafter referred to as the "Expiration Date"),
subject to earlier expiration as provided herein. In no event shall any part of
the Executive Securityholder's Preferred Options and Purchased Options be
exercisable after the applicable Expiration Date. Except as otherwise provided
herein, any portion of the Executive Securityholder's Preferred Options that was
not vested and exercisable as of the date his employment with the Company or any
of its Subsidiaries terminated shall expire and be cancelled on such date.

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      3. Restrictions on Transfer of Executive Securities; Restriction on
Conversion of Common Stock.

      (a) Transfer of Executive Securities.

            (i) The holders of Executive Securities shall not sell, transfer,
      assign, pledge or otherwise dispose of (a "Transfer") any interest in any
      Executive Securities (other than Purchased Options and Preferred Options
      that have not been exercised), except pursuant to (i) the provisions of
      Sections 5 and 6 of the Stockholders Agreement, (ii) the provisions of
      Section 3 of the Investment Company Stockholders Agreement, (iii) a Sale
      of the Company, (iv) the provisions of Section 3(b) hereof or (v) the
      provisions of Section 4 hereof.

            (ii) The Purchased Options and the Preferred Options are personal to
      the Executive Securityholder, and any Purchased Options or Preferred
      Options that have not been exercised in accordance with the terms hereof
      are not transferable by the Executive Securityholder other than by (i)
      will or the laws of descent and distribution, (ii) the provisions of
      Section 4 hereof and (iii) the provisions of Section 7(b) hereof.

      (b) Certain Permitted Transfers. The restrictions set forth in Section
3(a)(i) shall not apply with respect to any Transfer of Executive Securities
made (i) pursuant to applicable laws of descent and distribution or to such
Person's legal guardian in case of any mental incapacity or among such Person's
Family Group, or (ii) at such time as the Investor Group sells Common Stock in a
Public Sale, but in the case of this clause (ii) only an amount (the "Transfer
Amount") equal to the number of Vested Shares owned by the Executive
Securityholder multiplied by a fraction (the "Transfer Fraction"), the numerator
of which is the number of shares of Common Stock sold by the Investor Group in
such Public Sale and the denominator of which is the total number of shares of
Common Stock held by the Investor Group prior to the Public Sale; provided that,
if at the time of a Public Sale by the Investor Group, the Executive
Securityholder chooses not to Transfer the Transfer Amount, the Executive
Securityholder shall retain the right to Transfer an amount of Vested Shares at
a future date equal to the number of Vested Shares owned by the Executive
Securityholder at such future date multiplied by the Transfer Fraction; provided
further that, the restrictions contained in this Section 3 will continue to be
applicable to the Executive Securities after any Transfer of the type referred
to in clause (i) and the transferees of such Executive Securities will agree in
writing to be bound by the provisions of this Agreement. Any transferee of
Executive Securities pursuant to a transfer in accordance with the provisions of
this Section 3(b) is herein referred to as a "Permitted Transferee." Upon the
transfer of Executive Securities pursuant to this Section 3(b), the transferring
Executive Securityholder will deliver a written notice (a "Transfer Notice") to
the Company. In the case of a Transfer pursuant to clause (i) hereof, the
Transfer Notice will disclose in reasonable detail the identity of the Permitted
Transferee(s).

      (c) Termination of Restrictions. The restrictions set forth in Sections
3(a)(i) and 3(b) above will continue with respect to each of the Executive
Securities until the earlier of (i) the date on which such Executive Securities
have been transferred in a Public Sale as permitted by

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this Section 3 or (ii) the consummation of a Sale of the Company. The
restrictions set forth in Section 3(a)(ii) will not terminate.

      (d) Legends. The certificates representing the Executive Securities will
bear a legend in substantially the following form:

      "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
      OF MARCH 31, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
      EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
      CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
      CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN
      EXECUTIVE SECURITIES AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE
      COMPANY DATED AS OF MARCH 31, 2004. A COPY OF SUCH AGREEMENT MAY BE
      OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS
      WITHOUT CHARGE."

      4. Repurchase of Executive Securities.

      (a) Repurchase of Purchased Equity.

            (i) If the Executive Securityholder's employment terminates due to
      termination by the Company or any of its Subsidiaries with Cause, then the
      Company, the Investment Company (in the case of Executive Securities of
      the Investment Company) and the Investor Group shall have the right to
      repurchase the Executive Securityholder's Purchased Equity (A) at a price
      per share of Purchased Equity (other than Purchased Options) equal to the
      lesser of the Fair Market Value and the Original Cost thereof and (B) with
      respect to the Purchased Options, at a price per share of Purchased Option
      Underlying Stock equal to (I) the lesser of the Fair Market Value and
      Original Cost less (II) the Exercise Price payable with respect each such
      share of Purchased Option Underlying Stock.

            (ii) Upon a resignation by the Executive Securityholder without Good
      Reason, the Executive Securityholder shall have the right to require the
      Company or the Investment Company (in the case of Executive Securities of
      the Investment Company) to repurchase his Purchased Equity (a "Purchased
      Equity Put"), or if the Executive Securityholder does not exercise the
      Purchased Equity Put in accordance with the terms hereof, the Company, the
      Investment Company (in the case of Executive Securities of the Investment
      Company) and the Investor Group shall have the right to repurchase the
      Executive Securityholder's Purchased Equity, in either case, (A) at a
      price per share of Purchased Equity (other than Purchased Options) equal
      to the Fair Market Value thereof

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      and (B) with respect to the Purchased Options, at a price per share of
      Purchased Option Underlying Stock equal to the Fair Market Value thereof
      less any Exercise Price payable with respect each such share of Purchased
      Option Underlying Stock; provided that after the closing of the Purchased
      Equity Put with the Executive Securityholder (including delivery of all
      the Executive Securities by the Executive Securityholder), the Company,
      the Investment Company (in the case of Executive Securities of the
      Investment Company) or the Investor Group shall be permitted to postpone
      payment of the amount owed in connection with the Purchased Equity Put
      exercised pursuant to this Section 4(a)(ii) for up to 2 years from the
      date of such resignation.

            (iii) If the Executive Securityholder's employment terminates due to
      (A) termination by the Company or any of its Subsidiaries without Cause,
      (B) death or Disability, (C) Retirement or (D) resignation by the
      Executive Securityholder for Good Reason, then the Executive
      Securityholder shall have a Purchased Equity Put, or if the Executive
      Securityholder does not exercise the Purchased Equity Put in accordance
      with the terms hereof, the Company, the Investment Company (in the case of
      Executive Securities of the Investment Company) and the Investor Group
      shall have a right to repurchase the Executive Securityholder's Purchased
      Equity, in either case, (I) at a price per share of Purchased Equity
      (other than Purchased Options) equal to the Fair Market Value and (II)
      with respect to the Purchased Options, at a price per share of Purchased
      Option Underlying Stock equal to the Fair Market Value less the Exercise
      Price payable with respect each such share of Purchased Option Underlying
      Stock.

      (b) Repurchase of Incentive Equity.

            (i) If the Executive Securityholder's employment terminates due to
      termination by the Company or any of its Subsidiaries with Cause, then the
      Company and the Investor Group shall have the right to repurchase the
      Executive Securityholder's Incentive Equity (whether Vested Incentive
      Equity or Unvested Incentive Equity) at a price per share equal to the
      lesser of the Fair Market Value and Original Cost.

            (ii) Upon a resignation by the Executive Securityholder without Good
      Reason after the third anniversary of the date hereof, the Executive
      Securityholder shall have the right to require the Company to repurchase
      his Incentive Equity (an "Incentive Equity Put"), or if the Executive
      Securityholder does not exercise the Incentive Equity Put in accordance
      with the terms hereof, the Company and the Investor Group shall have the
      right to repurchase shares of the Executive Securityholder's Incentive
      Equity, in either case, at a price per share of Vested Incentive Equity
      equal to the Fair Market Value and at a price per share of Unvested
      Incentive Equity equal to the lesser of the Fair Market Value and Original
      Cost; provided that after the closing of the Incentive Equity Put with the
      Executive Securityholder (including delivery of all the Executive
      Securities by the Executive Securityholder), the Company and the Investor
      Group shall be permitted to postpone payment of the amount owed in
      connection with the Incentive Equity Put exercised pursuant to this
      Section 4(b)(ii) for up to 2 years from the date of such resignation.

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            (iii) Upon a resignation by the Executive Securityholder without
      Good Reason on or prior to the third anniversary of the date hereof, the
      Executive Securityholder shall have the right to exercise an Incentive
      Equity Put, or if the Executive Securityholder does not exercise the
      Incentive Equity Put in accordance with the terms hereof, then the Company
      and the Investor Group shall have the right to repurchase the shares of
      the Executive Securityholder's Incentive Equity (whether Vested Incentive
      Equity or Unvested Incentive Equity), in either case, at a price per share
      equal to the lesser of the Fair Market Value and Original Cost.

            (iv) If the Executive Securityholder's employment terminates due to
      (A) termination by the Company or any of its Subsidiaries without Cause,
      (B) death or Disability, (C) Retirement or (D) resignation by the
      Executive Securityholder for Good Reason, then the Executive
      Securityholder shall have an Incentive Equity Put, or if the Executive
      Securityholder does not exercise the Incentive Equity Put in accordance
      with the terms hereof, the Company and the Investor Group shall have a
      right to repurchase shares of the Executive Securityholder's Incentive
      Equity, in either case, at a price per share of Vested Incentive Equity
      equal to the Fair Market Value and at a price per share of Unvested
      Incentive Equity equal to the lesser of the Fair Market Value and Original
      Cost.

      (c) Repurchase of Preferred Options.

            (i) If the Executive Securityholder's employment terminates due to
      termination by the Company or any of its Subsidiaries with Cause, then the
      Company, the Investment Company (in the case of Executive Securities of
      the Investment Company) and the Investor Group shall have the right to
      repurchase the Executive Securityholder's Vested Preferred Options at a
      price per share of Preferred Option Underlying Stock equal to the lesser
      of the Fair Market Value and Original Cost less any Exercise Price payable
      with respect to each such share of Preferred Option Underlying Stock.

            (ii) Upon a resignation by the Executive Securityholder without Good
      Reason after the third anniversary of the date hereof, the Executive
      Securityholder shall have a right to require the Company or the Investment
      Company (in the case of Executive Securities of the Investment Company) to
      repurchase (a "Preferred Option Put") his Vested Preferred Options, or if
      the Executive Securityholder does not exercise the Preferred Option Put in
      accordance with the terms hereof, then the Company, the Investment Company
      and the Investor Group shall have a right to repurchase the Executive
      Securityholder's Vested Preferred Options, in either case, at a price per
      share of Preferred Option Underlying Stock equal to the Fair Market Value
      less any Exercise Price payable with respect to each such share of
      Preferred Option Underlying Stock; provided that after the closing of the
      Preferred Option Put with the Executive Securityholder (including delivery
      of all the Executive Securities by the Executive Securityholder), the
      Company, the Investor Group or the Investment Company shall be permitted
      to postpone payment of the amount owed in connection with a Preferred

                                       10
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      Option Put exercised pursuant to this Section 4(c)(ii) for up to 2 years
      from the date of the Executive Securityholder's resignation.

            (iii) Upon a resignation by the Executive Securityholder without
      Good Reason on or prior to the third anniversary of the date hereof, the
      Executive Securityholder shall have a Preferred Option Put on his Vested
      Preferred Options, or if the Executive Securityholder does not exercise
      the Preferred Option Put in accordance with the terms hereof, then the
      Company, the Investment Company (in the case of Vested Preferred Options
      held in the Investment Company) and the Investor Group shall have a right
      to repurchase the Executive Securityholder's Vested Preferred Options, in
      either case, at a price per share of Preferred Option Underlying Stock
      equal to the lesser of the Fair Market Value and Original Cost less any
      Exercise Price payable with respect to each such share of Preferred Option
      Underlying Stock.

            (iv) If the Executive Securityholder's employment with the Company
      or any of its Subsidiaries terminates due to (A) termination by the
      Company without Cause, (B) death or Disability, (C) Retirement or (D)
      resignation by the Executive Securityholder for Good Reason, then the
      Executive Securityholder shall have a Preferred Option Put for his Vested
      Preferred Options, or if the Executive Securityholder does not exercise
      the Preferred Option Put in accordance with the terms hereof, then the
      Company, the Investment Company (in the case of Vested Preferred Options
      held in the Investment Company) and the Investor Group shall have the
      right to repurchase the Executive Securityholder's Vested Preferred
      Options, in either case, at a price per share of Preferred Option
      Underlying Stock equal to the Fair Market Value less any Exercise Price
      payable with respect to each such share of Preferred Option Underlying
      Stock.

      (d) Put Option Procedures.

            (i) In the event that the Executive Securityholder becomes entitled
      to exercise a Put Option pursuant to this Section 4 (a "Put Event"), the
      Executive Securityholder (or his personal representative, if the Executive
      Securityholder is deceased or incompetent) may, at his or her discretion,
      exercise all (but not less than all) of the Put Options then exercisable
      for all (but not less than all) of the Executive Securities subject to the
      Put Options by delivering written notice (the "Put Notice") to the Company
      specifying the number of Executive Securities to be repurchased by the
      Company within 40 days following the occurrence of the Put Event (the "Put
      Option Exercise Period").

            (ii) Upon the delivery of the Put Notice and subject to the
      provisions herein and in the Put Notice, the Company or the Investment
      Company (in the case of Executive Securities of the Investment Company),
      as the case may be, shall, in accordance with the terms hereof promptly
      determine the purchase price for the Executive Securities (the "Put
      Price"), and, within 20 days after the determination of the Put Price,
      shall purchase and the Executive Securityholder shall sell the number of
      the Executive Securities specified in the Put Notice at a mutually
      agreeable time and place.

                                       11
<PAGE>

            (iii) Notwithstanding any provision herein to the contrary and
      subject to Section 4(f) hereof, the maximum amount that the Company or the
      Investment Company collectively shall be required to pay during each
      calendar year in connection with the Put Options held by the Executive
      Securityholders is $5,000,000 (the "Put Option Cap"). In the event that
      the aggregate purchase price for the Put Options exercised by the
      Executive Securityholders in any calendar year exceeds the Put Option Cap,
      the amount of such excess shall be applied to the Put Option Cap for the
      next calendar year or succeeding years.

            (iv) The Company and the Investment Company will be entitled to
      receive customary representations and warranties from the sellers
      regarding such sale and to require that all sellers' signatures be
      guaranteed.

      (e) Repurchase Option Procedures.

            (i) Repurchase Option Procedure for the Company. With respect to any
      repurchase option other than a Put Option (which shall be governed by the
      procedures set forth in Section 4(d)) and subject to the Executive
      Securityholder's prior right to exercise a Put Option upon the occurrence
      of a Put Event, the Company or the Investment Company (in the case of
      Executive Securities of the Investment Company) may elect to repurchase
      all or any portion of the Executive Securities subject to repurchase as
      provided herein (the "Available Securities") of an Executive
      Securityholder whose employment with the Company or any of its
      Subsidiaries has terminated (the "Termination") as described in Sections
      4(a), 4(b) or 4(c) (the "Repurchase Option") by delivery of written notice
      (a "Repurchase Notice") to the holders of such Executive Securities within
      120 days after the date of the Termination (the "Repurchase Notice
      Period") if a Put Event has not occurred, or if a Put Event has occurred,
      within 120 days following the expiration of the Put Option Exercise
      Period. The Repurchase Notice shall set forth the aggregate consideration
      to be paid for such Available Securities and the time (not to be later
      than 20 days after such notice) and place for the closing of the
      transaction.

            (ii) Repurchase Option Procedure for Investor Group. If for any
      reason the Company or the Investment Company (in the case of Executive
      Securities of the Investment Company) does not elect to purchase all of
      the Available Securities, the Investor Group shall be entitled to exercise
      the Repurchase Option for all or any portion of the Available Securities.
      As soon as practicable after the Company or the Investment Company (in the
      case of Executive Securities of the Investment Company) has determined
      that it will not purchase all of the Available Securities, but in any
      event within 80 days after the Termination if a Put Event has not
      occurred, or if a Put Event has occurred, within 80 days following the
      expiration of the Put Option Exercise Period, the Company or the
      Investment Company (in the case of Executive Securities of the Investment
      Company) shall give written notice (the "Option Notice") to each member of
      the Investor Group setting forth the number of Available Securities and
      the purchase price for the Available Securities. The members of the
      Investor Group may elect to purchase all or any portion of the Available
      Securities by giving written notice to the

                                       12
<PAGE>

      Company or the Investment Company (in the case of Executive Securities of
      the Investment Company) within 30 days after the Option Notice has been
      delivered to such member of the Investor Group by the Company or the
      Investment Company (in the case of Executive Securities of the Investment
      Company). If the members of the Investor Group elect to purchase an
      aggregate amount of Available Securities in excess of the amount of
      Available Securities specified in the Option Notice, the Available
      Securities shall be allocated among the members of the Investor Group
      based on the amount of such type or types of Stockholder Shares (as
      defined in the Stockholders Agreement) owned by each member of the
      Investor Group on the date of the Option Notice and the type of Available
      Securities. Any member of the Investor Group may condition his, her or its
      election to purchase such Available Securities on the election of one or
      more other members of the Investor Group to purchase Available Securities.
      As soon as practicable, and in any event within ten days after the
      expiration of the 30-day period set forth above, the Company or the
      Investment Company (in the case of Executive Securities of the Investment
      Company) shall deliver a notice to the holders of such Available
      Securities setting forth the aggregate consideration to be paid by the
      respective members of the Investor Group for such Available Securities and
      the time (not to be later than 20 days after such notice) and place for
      the closing of the transaction. At the time the Company or the Investment
      Company (in the case of Executive Securities of the Investment Company)
      delivers such notice to the holders of such Available Securities, the
      Company or the Investment Company (in the case of Executive Securities of
      the Investment Company) shall also deliver written notice to each member
      of the Investor Group setting forth the amount of securities such member
      is entitled to purchase, the aggregate purchase price and the time and
      place of the closing of the transaction.

            (iii) Representations and Warranties; Signatures. The Company, the
      Investment Company (in the case of Executive Securities of the Investment
      Company) and the Investor Group, as the case may be, will be entitled to
      receive customary representations and warranties from the sellers
      regarding such sale and to require that all sellers' signatures be
      guaranteed.

            (iv) Revocation. Notwithstanding anything to the contrary contained
      in this Agreement, if in connection with a Repurchase Option the holder of
      Executive Securities delivers the notice of disagreement described in the
      definition of Fair Market Value, or if the Fair Market Value of the
      Executive Securities is determined to be an amount more than 10% greater
      than the repurchase price for Executive Securities originally determined
      by the Board, each of the Company, the Investment Company (in the case of
      Executive Securities of the Investment Company) and each member of the
      Investor Group who has exercised its, their or his Repurchase Option shall
      have the right to revoke its, their or his exercise of the Repurchase
      Option, as the case may be, for all or any portion of the Executive
      Securities elected to be repurchased by it, them or him by delivering
      notice of such revocation in writing to the holder of the Executive
      Securities during (A) the thirty-day period beginning on the date the
      Company, the Investment Company (in the case of Executive Securities of
      the Investment Company) and the relevant members of the

                                       13
<PAGE>

      Investor Group receive the Executive Securityholder's written notice of
      disagreement or (B) the thirty-day period beginning on the date the
      Company, the Executive Securityholder, the Investment Company (in the case
      of Executive Securities of the Investment Company) and the relevant
      members of the Investor Group are given written notice that the Fair
      Market Value of the Executive Securities was finally determined to be an
      amount more than 10% greater than the repurchase price for such Executive
      Securities originally determined by the Board. The closing of the
      transaction shall be postponed until the expiration of the thirty-day
      period described in the preceding sentence and shall in any event be
      postponed until the Fair Market Value of the Executive Securities is
      finally determined pursuant to the procedure described in the definition
      of Fair Market Value.

      (f) Manner of Payment. The Company, the Investment Company and/or a member
of the Investor Group, as applicable, shall pay for the Executive Securities to
be repurchased pursuant to the Repurchase Option or a Put Option by delivery of
a cashier's check or wire transfer of funds. Alternatively, the Company or the
Investment Company (in the case of Executive Securities of the Investment
Company) may pay the purchase price for the Executive Securities to be
repurchased pursuant to the Repurchase Option or a Put Option by offsetting
against any indebtedness or obligations for advanced or borrowed funds owed by
the applicable Executive Securityholder to the Company or the Investment
Company. Notwithstanding anything to the contrary contained in this Agreement,
all repurchases of Executive Securities by the Company or the Investment Company
shall be subject to applicable federal and state laws and to restrictions
contained in the Company's and its Subsidiaries' debt financing arrangements. If
any such laws or restrictions prohibit the repurchase of Executive Securities
hereunder which the Company or the Investment Company is otherwise entitled to
make, the time periods provided in this Section 4 shall be suspended, and the
Company or the Investment Company may make such repurchases as soon as it is
permitted to do so under such laws or restrictions. Alternatively, if and to the
extent any such laws or restrictions prohibit the repurchase of Executive
Securities hereunder for cash, the Company or the Investment Company (in the
case of Executive Securities of the Investment Company) may, at its sole option,
repurchase such Executive Securities, in which case the amount of the purchase
price which is not able to be paid in cash shall be paid for by the issuance of
a subordinated promissory note, which, subject to the approval of the senior and
senior subordinated lender(s) of the Company and its Subsidiaries, shall be
payable as soon as the Company or the Investment Company is permitted to pay
such note under such laws or restrictions and shall bear interest (payable
annually) at a floating rate per annum equal to the prime or base rate of
interest (as established and publicly announced in The Wall Street Journal).

      (g) Termination of Certain Repurchase Options. The Repurchase Options and
Put Options set forth in this Section 4 shall terminate with respect to the
Executive Securities (other than with respect to unvested Executive Securities)
upon (i) the date on which such Executive Securities have been transferred in a
Public Sale as permitted by Section 3 or (ii) consummation of a Sale of the
Company.

                                       14
<PAGE>

      (h) 2004 Stock Option Plan. To the extent that the Executive
Securityholder is granted an option to purchase shares of Common Stock under the
Company's 2004 Stock Option Plan, the written agreement pursuant to which such
option is granted shall include repurchase rights for the Company and/or such
other Persons as determined by the Company that are substantially similar to the
repurchase rights set forth in this Agreement with respect to the Executive
Securityholder's Incentive Equity.

      5. Transfer. Prior to transferring any Executive Securities (other than in
a Public Sale, a Sale of the Company, Section 4 hereof, Section 5 of the
Stockholders Agreement and Section 3 of the Investment Company Stockholders
Agreement) to any Person, the transferring Executive Securityholder will cause
the prospective transferee to be bound by this Agreement and to execute and
deliver to the Company a counterpart to this Agreement. Any Transfer or
attempted Transfer of any Executive Securities in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Executive Securities as the
owner of such units for any purpose.

      6. Definitions.

      "Affiliate" means with respect to any Person, any other Person
controlling, controlled by, or under common control with such first Person and
in the case of a Person which is a partnership, any partner of that Person.

      "Board" means the Board of Directors of the Company.

      "Cause" has the meaning set forth in the Employment Agreement.

      "CHS" means Code Hennessy & Simmons IV LP, a Delaware limited partnership
and any Affiliate thereof.

      "Class C Common Stock" means the Company's Class C Common Stock, par value
$0.01 per share.

      "Common Stock" means the Company's Class A Common Stock, Class B Common
Stock and Class C Common Stock.

      "Disability " has the meaning set forth in the Employment Agreement.

      "Employment Agreement" means that certain Employment Agreement dated as of
the date hereof by and between the Executive Securityholder and the Company or
any of its Subsidiaries.

      "Executive Securities" shall mean the Purchased Equity, Incentive Equity
and Preferred Options collectively. Executive Securities will continue to be
Executive Securities in the hands of any holder other than the Executive
Securityholder (except for the Company, the Investment Company and other
Stockholders, and except for transferees in a Sale of the Company), and except
as otherwise provided herein, each such other holder of Executive Securities
will succeed

                                       15
<PAGE>

to all rights and obligations attributable to the Executive Securityholder as a
holder of Executive Securities hereunder. Executive Securities will also include
the Company's and the Investment Company's securities issued with respect to
Executive Securities by way of a stock split or stock dividend and securities
into which such shares of stock or rights to acquire stock may be changed by
reason of a recapitalization, reorganization, merger, consolidation or any other
change in the structure or capitalization of the Company, including but not
limited to debt or shares of common stock and/or preferred stock and/or options
of any corporate successor to the business of the Company or the Investment
Company, whether issued in connection with a public offering of securities of
such entity or otherwise.

      "Exercise Price" with respect to (i) the Purchased Options, shall equal
$179.10 per share of Purchased Option Underlying Stock and (ii) the Preferred
Options, shall be $1,000 per share of Preferred Option Underlying Stock.

      "Fair Market Value" of any Executive Securities means the composite
closing price of the sales of such Executive Securities on the securities
exchanges on which such Executive Securities may at the time be listed (as
reported in The Wall Street Journal), or, if there have been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if such Executive Securities
are not so listed, the closing price (or last price, if applicable) of sales of
such Executive Securities on The Nasdaq Stock Market (as reported in The Wall
Street Journal), or if such Executive Securities are not quoted in The Nasdaq
Stock Market but are traded over-the-counter, the average of the highest bid and
lowest asked prices on such day in the over-the-counter market as reported by
the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day. If at any time such Executive
Securities are not listed on any securities exchange, quoted in The Nasdaq Stock
Market, or quoted in the over-the-counter market, the "Fair Market Value" of
such Executive Securities shall mean the fair market value of such Executive
Securities as determined by the Board reasonably and in good faith on an
enterprise basis, taking into account all relevant factors determinative of
value (including the lack of liquidity of such Executive Securities due to the
Company's status as a privately held corporation, but without regard to any
discounts for minority interests), using valuation techniques then prevailing in
the securities industry (e.g., discounted cash flows and/or comparable
companies) and assuming full disclosure of all relevant information and a
reasonable period of time for effectuating such sale; provided that upon the
Executive Securityholder's request the Board shall provide the Executive
Securityholder with reasonable supporting information regarding the Board's
determination of the Fair Market Value; and further provided that if the
Executive Securityholder disagrees with the Board's determination of the Fair
Market Value, then the Executive Securityholder shall provide notice of his
disagreement to the Company and the Investor Group within thirty days after the
Board provides notice to the Executive Securityholder of its determination, in
which case the "Fair Market Value" shall be determined by an investment banking
firm agreed upon by the Company and the Executive Securityholder, which firm
shall submit to the Company and the Executive Securityholder a report within 30
days of its engagement setting forth such determination. If the

                                       16
<PAGE>

parties are unable to agree on an investment banking firm within 20 days after
the Executive Securityholder provides notice to the Board of his disagreement,
the Company and the Executive Securityholder shall each select an investment
bank of recognized national standing and such two investment banking firms shall
select a third investment banking firm. Such third investment banking firm shall
render a determination within 30 days of its engagement. The determination of
such firm will be final and binding upon all parties. If an investment banking
firm is to make the Fair Market Value determination hereunder, the Executive
Securityholder, on the one hand, and the Company, on the other hand, shall
submit in writing their respective estimates of the Fair Market Value at the
time the investment banking firm is requested to make such determination, and
such investment banking firm's determination of the Fair Market Value shall not
be higher than the highest estimate nor lower than the lowest estimate as
submitted by the Company and the Executive Securityholder. The fees, costs and
expenses of the investment banking firm shall be allocated between the Company,
on the one hand, and the Executive Securityholder, on the other hand, in the
same proportion that the amount by which such party's estimate of the Fair
Market Value so submitted to the investment banking differs from the Fair Market
Value (as finally determined by the investment banking firm) bears to the amount
of the difference between such party's estimate of the Fair Market Value and the
other party's estimate of the Fair Market Value. If the Company, the Investment
Company (in the case of Executive Securities of the Investment Company) or the
Investor Group exercise their revocation rights under Section 4(e)(iv), then the
expenses of the investment banking firm shall be borne by the Company in all
cases. The Company may require that the investment banking firm keep
confidential any non-public information received as a result of this paragraph
pursuant to reasonable confidentiality arrangements. Regardless of when a
transaction based on a Fair Market Value valuation is executed, the Fair Market
Value shall be determined as of the date of the Termination of the Executive
Securityholder's employment with the Company or any of its Subsidiaries.
Notwithstanding the foregoing, the Executive Securityholder shall not have any
appraisal right hereunder if a similar appraisal right has been exercised by an
employee of any the Company or its Subsidiaries within the six months preceding
the day as of which Fair Market Value is being determined hereunder, and Fair
Market Value has been determined pursuant to such exercise of such appraisal
right.

      "Family Group" means (i) a Person's spouse and descendants (whether
natural or adopted), (ii) any trust solely for the benefit of the Person and/or
any of the Person's spouse and/or descendants and (iii) any entity wholly owned
by the Person.

      "Good Reason" has the meaning set forth in the Employment Agreement.

      "Investment Company Stockholders Agreement" means that certain
Stockholders Agreement dated as of the date hereof by and among the Investment
Company and certain stockholders of the Investment Company, as amended.

      "Investor Common Stock" means any Common Stock issued to or held by the
Investor Group.

      "Investor Group" means those persons set forth on Schedule A to this
Agreement.

                                       17
<PAGE>

      "Options" means the Preferred Options and the Purchased Options.

      "Original Cost" with respect to (i) shares of Class A Common Stock and
Class B Common Stock shall be equal to $1,000 per share and (ii) Purchased
Option Underlying Stock and Preferred Option Underlying Stock, shall be equal to
$1,000 per share of Preferred Stock and $1,000 per share of Investment Company
Preferred (in each case as adjusted for stock splits, stock dividends or other
recapitalizations occurring after the date hereof).

      "Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization or any other entity (including,
without limitation, any governmental entity or any department, agency or
political subdivision thereof).

      "Preferred Option Underlying Stock" means, with respect to the Preferred
Options, the shares of Preferred Stock underlying the option (whether exercised
or exercisable) granted to the Executive Securityholder pursuant to Section
1(c)(i) hereof and the shares of Investment Company Preferred underlying the
option (whether exercised or exercisable) granted to the Executive
Securityholder pursuant to Section 1(c)(ii) hereof.

      "Preferred Stock" means the Company's Class A Preferred Stock, par value
$0.01 per share.

      "Public Offering" means an underwritten initial public offering and sale,
registered under the Securities Act, of shares of the Company's Common Stock.

      "Public Sale" means any sale of Executive Securities (i) to the public
pursuant to an offering registered under the Securities Act or (ii) to the
public through a broker, dealer or market maker pursuant to the provisions of
Rule 144 (or any similar provision then in effect) adopted under the Securities
Act (other than Rule 144(k) prior to a Public Offering).

      "Purchased Option Underlying Stock" means, with respect to the Purchased
Options, the shares of Preferred Stock underlying the Company Preferred
Purchased Option (whether exercised or exercisable) and the shares of Investment
Company Preferred underlying the Investment Company Preferred Purchased Option
(whether exercised or exercisable).

      "Put Option" means the Purchased Equity Put, Incentive Equity Put and
Preferred Option Put.

      "Registration Agreement" means the Registration Agreement dated as of the
date hereof by and among the Company and certain Stockholders of the Company.

      "Retire" or "Retirement" means the Executive Securityholder's retirement
from employment with the Company or any of its Subsidiaries at any time after he
reaches age 61.

      "Sale of the Company" means any transaction or series of transactions
pursuant to which any Person(s) or a group of related Persons (other than the
Investor Group and their Affiliates) in

                                       18
<PAGE>

the aggregate acquire(s) (i) capital stock of the Company possessing the voting
power (other than voting rights accruing only in the event of a default, breach
or event of noncompliance) to elect a majority of the Board (whether by merger,
consolidation, reorganization, combination, sale or transfer of the Company's
capital stock, shareholder or voting agreement, proxy, power of attorney or
otherwise) or (ii) all or substantially all of the Company's assets determined
on a consolidated basis; provided, that a Sale of the Company shall not include
a Public Offering.

      "Securities Act" means the Securities Act of 1933, as amended from time to
time.

      "Stockholder" means any Person, other than the Company, who is a party to
the Stockholders Agreement as of the date hereof.

      "Stockholders Agreement" means that certain Stockholders Agreement dated
as of the date hereof by and among HCI and certain stockholders of HCI, as
amended from time to time in accordance with its terms.

      "Subsidiaries" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of such Person or entity or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.

      "Unvested Incentive Equity" means any shares of the Incentive Equity that
have not become vested pursuant to the terms of Section 2(b) of this Agreement.

      "Unvested Preferred Options" means any Preferred Options that have not
become vested pursuant to the terms of Section 2(c) of this Agreement.

      "Vested Incentive Equity" means any shares of the Incentive Equity that
have become vested pursuant to the terms of Section 2(b) of this Agreement.

      "Vested Preferred Options" means any Preferred Options that have become
vested pursuant to the terms of Section 2(c) of this Agreement.

                                       19
<PAGE>

      "Vested Shares" means the shares of Vested Incentive Equity as of the
applicable date of determination and shares of Common Stock issued to the
Executive Securityholder pursuant to Section 1(a)(i).

      7. Options.

      (a) Procedure for Exercise of Options. The Executive Securityholder may
exercise all (but not less than all) of his Options, to the extent they have
vested and are exercisable, at any time and from time to time prior to the
applicable Expiration Date, by delivering written notice to the Company or the
Investment Company, as applicable, (to the attention of the Company's or
Investment Company's Secretary, as applicable) and written acknowledgement by
the Executive Securityholder that he has reviewed and has been afforded an
opportunity to ask questions of management of the Company or the Investment
Company, as applicable, with respect to all financial and other information
provided to him regarding the Company or the Investment Company, as applicable,
together with payment of the Exercise Price for the Options being exercised.
Notwithstanding anything to the contrary contained in this Agreement, (i) the
Preferred Options must be exercised in tandem such that any exercise of a
Preferred Option to purchase shares of Preferred Stock or Investment Company
Preferred, as the case may be, must be accompanied by an exercise of Preferred
Options to purchase an equal number shares of Investment Company Preferred and
Preferred Stock, respectively and (ii) the Purchased Options must be exercised
in tandem such that any exercise of the Company Preferred Purchased Option or
the Investment Company Preferred Purchased Option, as the case may be, must be
accompanied by an exercise of the Investment Company Preferred Purchased Option,
in the case of an exercise of the Company Preferred Purchased Option, and the
Company Preferred Purchased Option, in the case of an exercise of the Investment
Company Preferred Purchased Option. Subject to vesting, the Executive
Securityholder's Options may be exercised in whole or in part upon payment of an
amount (the "Option Price") equal to the product of (i) the applicable Exercise
Price multiplied by (ii) the number of shares of Purchased Option Underlying
Stock or Preferred Option Underlying Stock, as applicable, underlying the
Options being exercised. Payment shall be made in cash (including check, bank
draft or money order). As a condition to any exercise of the Options, the
Executive Securityholder shall permit the Company or the Investment Company, as
applicable, to deliver to him all financial and other information regarding the
Company or the Investment Company, as applicable, it believes necessary to
enable him to make an informed investment decision, and the Executive
Securityholder shall make all customary investment representations which the
Company or the Investment Company, as applicable, requires.

      (b) Sale of the Company. In the event of a Sale of the Company, the Board
may (i) terminate any unvested Options without payment or notice of any kind,
(ii) terminate any vested Options for a cash payment equal to the excess of the
Fair Market Value per share of Purchased Option Underlying Stock or Preferred
Option Underlying Stock, as applicable, (measured as of the date of such Sale of
the Company) over such Option's Exercise Price multiplied by the number of
shares of Purchased Option Underlying Stock or Preferred Option Underlying
Stock, as applicable, with respect to the Options to be terminated, or (iii)
terminate any vested Options without payment or notice of any kind to the extent
that the Fair Market Value per share of

                                       20
<PAGE>

Purchased Option Underlying Stock or Preferred Option Underlying Stock, as
applicable (measured as of the date of such Sale of the Company), is less than
or equal to such Option's Exercise Price.

      (c) Dividends. If either the Company or the Investment Company pays a
dividend upon the Preferred Stock or Investment Company Preferred, respectively,
then upon exercise of any Option which was outstanding at the time of the
payment of such dividend (the "Applicable Option"), the Executive Securityholder
shall be entitled to receive an amount equal to the dividend (and in the same
form of consideration as was received by the other dividend recipients) which
would have been paid to the Executive Securityholder had the Applicable Option
been fully exercised immediately prior to the date on which a record was taken
for such dividend or, if no record was taken, the date as of which the record
holders of the Preferred Stock or Investment Company Preferred, respectively,
entitled to such dividends were determined.

      8. Miscellaneous.

      (a) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company, the holders of a
majority of the Investor Common Stock then outstanding, the Executive
Securityholder and, for so long as Ontario Teachers' Pension Plan Board, an
Ontario corporation ("Teachers"), owns Stockholder Shares and shares of
Investment Company Preferred with an aggregate Original Cost (as defined in the
Stockholders Agreement) to Teachers of at least $25,000,000, Teachers. The
failure of any party to enforce any of the provisions of this Agreement will in
no way be construed as a waiver of such provisions and will not affect the right
of such party thereafter to enforce each and every provision of this Agreement
in accordance with its terms.

      (b) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

      (c) Agreement. Except as otherwise expressly set forth herein, in the
Merger Agreement, Stockholders Agreement or Registration Agreement, this
Agreement, those documents expressly referred to herein (including the
Stockholders Agreement) and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.

      (d) Successors and Assigns. Except as otherwise provided herein, this
Agreement will bind and inure to the benefit of and be enforceable by the
Company and its successors and

                                       21
<PAGE>

assigns and the Investor Group and their respective successors and assigns, so
long as they hold shares of Investor Common Stock.

      (e) Third Party Beneficiaries. The members of the Investor Group are
intended to be third-party beneficiaries of this entire Agreement and the rights
and obligations of the parties hereto. It is understood and agreed by the
parties hereto that this Agreement shall be enforceable by the holders of a
majority of the Investor Common Stock then outstanding in accordance with this
Agreement's terms as though such holders of Investor Common Stock were a party
to every provision hereof. Except as expressly provided herein, no other third
party beneficiaries are intended by the parties hereto to be beneficiaries
hereof.

      (f) Counterparts; Facsimile Signature. This Agreement may be executed in
separate counterparts each of which will be an original and all of which taken
together shall constitute one and the same agreement. This Agreement may be
executed by facsimile signature.

      (g) Remedies. Each of Company, the Investor Group and the Executive
Securityholder shall be entitled to enforce its rights under this Agreement
specifically to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that each of the Company,
the Investor Group (acting by a majority vote of the Investor Common Stock) and
the Executive Securityholders may in its sole discretion apply to any court of
competent jurisdiction for specific performance and/or injunctive relief
(without posting a bond or other security) in order to enforce or prevent any
violation of the provisions of this Agreement.

      (h) Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, sent via facsimile, sent by first class
mail (postage prepaid and return receipt requested) or sent by reputable
overnight courier service (charges prepaid) to the Company and the Executive
Securityholder at the addresses set forth below and to any member of the
Investor Group at the address set forth on Schedule A attached hereto, or
subsequent holder of Executive Securities subject to this Agreement, at such
address as is indicated in the Company's records, or at such address or to the
attention of such other Person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when delivered personally, when confirmed if sent by facsimile, three
days after deposit in the U.S. mail and one day after deposit with a reputable
overnight courier service.

                           If to the Company:

                           HCI Acquisition Corp.
                           c/o Code Hennessy & Simmons LLC
                           10 South Wacker Drive, Suite 3175
                           Chicago, IL  60606
                           Facsimile: (312) 876-3854
                           Attn: Peter M. Gotsch

                                       22
<PAGE>

                           with copies to:

                           Code Hennessy & Simmons IV LP
                           c/o Code Hennessy & Simmons LLC
                           10 South Wacker Drive, Suite 3175
                           Chicago, IL  60606
                           Facsimile: (312) 876-3854
                           Attn: Peter M. Gotsch

                           and

                           Kirkland & Ellis LLP
                           200 East Randolph Drive
                           Chicago, IL  60601
                           Facsimile: (312) 861-2200
                           Attn: Stephen L. Ritchie, P.C.

                           If to the Executive Securityholder:

                           James P. Waters
                           c/o The Hillman Companies, Inc.
                           10590 Hamilton Avenue
                           Cincinnati, OH 45231

                           with a copy to:

                           Baker & Hostetler LLP
                           3200 National City Center
                           1900 East 9th Street
                           Cleveland, OH 44114-3485
                           Facsimile:  (216) 696-0740
                           Attn:  Elizabeth A. Dellinger

      (i) Governing Law. The corporate law of the State of Delaware shall govern
all issues and questions concerning the relative rights and obligations of the
Company and its Stockholders. All other issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits hereto shall be governed by, and construed in accordance with, the laws
of the State of Delaware, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.

      (j) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND

                                       23
<PAGE>

ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO THIS AGREEMENT HEREBY
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE
RELATIONSHIP ESTABLISHED AMONG THE PARTIES HEREUNDER.

      (k) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.

      (l) Indemnification and Reimbursement of Payments on Behalf of Executive
Securityholder. The Company and its Subsidiaries shall be entitled to deduct or
withhold from any amounts owing from the Company or any of its Subsidiaries to
Executive Securityholder any federal, state, local or foreign withholding taxes,
excise taxes, or employment taxes ("Taxes") imposed with respect to Executive
Securityholder's compensation or other payments from the Company or any of its
Subsidiaries or Executive Securityholder's ownership interest in the Company,
including, without limitation, wages, bonuses, dividends, the receipt or
exercise of equity options and/or the receipt or vesting of restricted equity.
In the event the Company or any of its Subsidiaries does not make such
deductions or withholdings, Executive Securityholder shall indemnify the Company
and its Subsidiaries for any amounts paid with respect to any such Taxes,
together with any interest, penalties and related expenses thereto.

      (m) Adjustments of Numbers. All numbers set forth herein that refer to per
share prices or amounts will be appropriately adjusted to reflect stock splits,
stock dividends, combinations of stock and other recapitalizations affecting the
subject class of equity.

      (n) Deemed Transfer of Executive Securities. If the Company (and/or the
Investor Group or any other Person acquiring securities) shall make available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Executive Securities to be repurchased in accordance with
the provisions of this Agreement, then from and after such time, the Person from
whom such Executive Securities are to be repurchased shall no longer have any
rights as a holder of such Executive Securities (other than the right to receive
payment of such consideration in accordance with this Agreement) and such
Executive Securities shall be deemed purchased in accordance with the applicable
provisions hereof and the Company (and/or the Investor Group and/or any other
Person acquiring securities) shall be deemed the owner and holder of such
Executive Securities, whether or not the certificates therefor have been
delivered as required by this Agreement.

                                       24
<PAGE>

      (o) No Pledge or Security Interest. The purpose of the Company's retention
of Executive Securityholder's certificates is solely to facilitate the
repurchase provisions set forth in Section 4 herein and Section 6 of the
Stockholders Agreement and does not constitute a pledge by Executive
Securityholder of, or the granting of a security interest in, the underlying
equity.

      (p) Rights Granted to Investors and their Affiliates. Any rights granted
to an Investor and its Affiliates hereunder may also be exercised (in whole or
in part) by their designees.

      (q) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.

      (r) Effect of Merger on this Agreement. Effective upon the consummation of
the Merger and without any action by HCI, Hillman, the Company or the Executive
Securityholder, the Company, as the surviving corporation in the Merger, shall
assume all of HCI's obligations, and become entitled to all of HCI's rights,
under this Agreement.

                                    * * * * *

                                       25
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Executive
Securities Agreement on the day and year first above written.

COMPANY:                               HCI ACQUISITION CORP.

                                       By: /s/ PETER M. GOTSCH
                                           -------------------------------------
                                       Its:
                                           -------------------------------------

                                       /s/  JAMES P. WATERS
EXECUTIVE SECURITYHOLDER:              -----------------------------------------
                                       James P. Waters

                                       26
<PAGE>

                                                                      SCHEDULE A

Code Hennessy & Simmons IV LP
10 South Wacker Drive
Suite 3175
Chicago, IL 60606
Attention:  Peter M. Gotsch

CHS Associates IV
10 South Wacker Drive
Suite 3175
Chicago, IL 60606

Ontario Teachers' Pension Plan Board
5650 Yonge Street
Toronto, Ontario M2M4H5
Attention:  J. Mark MacDonald

                                       27exv10w30

 

EXHIBIT 10.30

AMENDMENT NO. 2

to

CREDIT AGREEMENT

               THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (the “Amendment”) is made as of
March 31, 2004 by and among ALION SCIENCE AND TECHNOLOGY CORPORATION (the
“Borrower”), the institutions listed on the signature pages hereof (the
“Lenders”), and LASALLE BANK NATIONAL ASSOCIATION, in its individual capacity
as a Lender and in its capacity as contractual representative (the
“Administrative Agent”) under that certain Credit Agreement dated as of
December 20, 2002 by and among the Borrower, the institutions from time to time
parties thereto as lenders, and the Administrative Agent (as amended by an
Amendment No. 1 dated as of February 6, 2004, and as further amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”).
Defined terms used herein and not otherwise defined herein shall have the
meaning given to them in the Credit Agreement.

WITNESSETH

               WHEREAS, the Borrower, the Lenders, and the Administrative Agent are
parties to the Credit Agreement; and

               WHEREAS, the Borrower has requested that the Administrative Agent and each
Lender amend the Credit Agreement and waive the “Specified Default” (as defined
below), in each case, on the terms and conditions set forth herein; and

               WHEREAS, the Borrower, each Lender, and the Administrative Agent have
agreed to amend the Credit Agreement and waive the Specified Default, in each
case, on the terms and conditions set forth herein;

               NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto have agreed to the following amendments to the Credit
Agreement:

Amendments to the Credit Agreement. Effective as of March 31, 2004 and subject to the satisfaction of the

conditions precedent set forth in Section 4 below, the Credit Agreement is hereby amended as follows:

Section 1.01 of the Credit Agreement is hereby amended by adding the following term to such Section in

proper alphabetical order:

           “AB Technologies Acquisition” means the purchase by IITRI of
substantially all of the assets of AB Technologies, Inc. pursuant
to the terms and conditions set forth in the Asset Purchase
Agreement, dated as of February 7, 2000 by and between IITRI, AB
Technologies, Inc., Clyde Andrews and William Bewley, as in effect
on the Closing Date and without giving effect to any subsequent
amendment or modification thereto, and in respect of which the
Borrower assumed all of the obligations of IITRI concurrently with
the IITRI Acquisition.

Section 1.01 of the Credit Agreement is hereby amended by deleting the defined term “Borrowing Base (Senior

Debt)” thereof in its entirety and replacing it with the following:

           “Borrowing Base (Senior Debt)” means, (i) for the fiscal year
ending September 30, 2003 and for the fiscal period ending December
31, 2003, an amount, as set forth on the most current Borrowing
Base Certificate delivered to the Administrative Agent, equal to
the sum of (a) ninety percent (90%) of all billed Receivables from
any Account Debtor (other than the Borrower,

 

 

any Guarantor or an Affiliate of the Borrower or any Guarantor)
(“Total Billed Receivables”) which are outstanding less than one
hundred twenty-one (121) days from the date of original invoice as
of such date, plus (b) sixty percent (60%) of Total Billed
Receivables which are outstanding one hundred twenty-one (121) days
or more from the date of original invoice, plus (c) seventy-five
percent (75%) of all unbilled Receivables which may in accordance
with Agreement Accounting Principles be included as current assets
of the Borrower or any of its Subsidiaries notwithstanding that
such amounts have not yet been billed, plus (d) fifty percent (50%)
of net property, plants and equipment of the Borrower and its
consolidated Subsidiaries as of such date determined in accordance
with Agreement Accounting Principles, (ii) for the fiscal periods
ending March 31, 2004, June 30, 2004 and September 30, 2004, an
amount, as set forth on the most current Borrowing Base Certificate
delivered to the Administrative Agent, equal to the sum of (a)
fifty percent (50%) of Total Billed Receivables which are
outstanding one hundred twenty-one (121) days or more from the date
of original invoice, plus (b) fifty percent (50%) of net property,
plants and equipment of the Borrower and its consolidated
Subsidiaries as of such date determined in accordance with
Agreement Accounting Principles, plus (c) ninety percent (90%) of
the Net Amount of Eligible Receivables that are Eligible Billed
Government Accounts Receivable as of such date, plus (d)
eighty-five percent (85%) of the Net Amount of Eligible Receivables
that are Eligible Billed Commercial Accounts Receivable as of such
date, plus (e) sixty-five percent (65%) of the gross amount of
Eligible Unbilled Government Receivables as of such date, and (iii)
for any date of determination after September 30, 2004, the
Borrowing Base (Monthly).

Subclause (e) of Section 7.4(C) of the Credit Agreement is hereby amended by deleting the text thereof in its

and replacing it with the following:

(e) cash payments in respect of purchase price adjustments,
earn-outs or other similar forms of contingent purchase price
during such period (exclusive of (x) cash purchase price
adjustments related to the IITRI Acquisition paid on the Closing
Date and (y) earn-outs related to the AB Techologies Acquisition
paid during the fiscal year ending on September 30, 2004 to Clyde
Andrews or William Bewly or to their designees), of at least (1)
1.20 to 1.00 as of the end of each fiscal quarter for the period
commencing with the fiscal quarter ending on December 20, 2002
through the fiscal quarter ending September 30, 2003; (2) 1.25 to
1.00 as of the end of each fiscal quarter for the period commencing
with the fiscal quarter ending on December 31, 2003 through the
fiscal quarter ending March 31, 2006; and (3) 1.35 to 1.00 as of
the end of each fiscal quarter thereafter.

Section 7.3 of the Credit Agreement is amended by adding the following clause (CC) to such Section:

(CC) The Borrower shall not sale, assign, transfer, convey or
otherwise dispose of those certain Subordianted Notes and Seller
Warrants purchased by the Borrower from Jonathan M. Emery on
November 12, 2003.

The Exhibit J to the Credit Agreement (Form of Borrowing Base Certificate) is amended by deleting subline

5 of Section VI thereof in its entirety and replacing it with the following:

	 	 	 	 	 	 	 
	5.	 	Borrowing Base (Senior Debt) for Fiscal Year Ending
September 30, 2003 and for the Fiscal Quarter
Ending December 31, 2003 (Sum of Line 1
through Line 4
	 	$	_________	 

The Exhibit J to the Credit Agreement (Form of Borrowing Base Certificate) is
amended by deleting Section VII thereof in its entirety and replacing it with
the following:

VII. CALCULATION OF
BORROWING BASE (SENIOR DEBT) FOR FISCAL

PERIODS ENDING MARCH 31, 2004, JUNE 30, 2004 AND

SEPTEMBER 30, 2004

	 	 	 	 	 	 	 
	1.	 	50% of all such Receivables which are outstanding one
hundred twenty-one (121) days or more from
the date of original invoice
	 	$	_________	 

 

 

	 	 	 	 	 	 	 
	2.	 	Plus: 50% of the net property, plants and equipment of
the Borrower and its consolidated Subsidiaries
as of such date determined in accordance with
Agreement Accounting Principles
	 	$	_________	 
	 	 	 	 	 	 	 
	3.	 	Plus: 90% of the Net Amount of Eligible Billed
Government Accounts Receivables (Line I.18)
	 	$	__________	 
	 	 	 	 	 	 	 
	4.	 	Plus: 85% of the Net Amount of Eligible Billed
Commercial Accounts Receivables (Line II.17)
	 	$	___________	 
	 	 	 	 	 	 	 
	5.	 	Plus: 65% of the Gross Amount of Eligible Unbilled
Government Receivables (Line III.13)
	 	$	___________	 
	 	 	 	 	 	 	 
	6.	 	Borrowing Base (Senior Debt) for fiscal periods ending
March 31, 2004, July 31, 2004 and
September 30, 2004
(Sum of Line 1 through Line 5)
	 	$	___________	 

Waiver. Effective as of the date of this Amendment and subject to the satisfaction of the conditions

precedent set forth in Section 4 below, the parties hereby agree that certain Defaults arising by virtue of the

Borrower’s failure to consummate the sale of the “Subject Investment” required under, and as such term is

defined in, that certain Consent Memorandum, dated as of November 13, 2003, executed by the Required

Lenders, (such Default being herein, the “Specified Default”) is hereby waived.

Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that

the Administrative Agent shall have received the following:

	 	(a)	 	duly executed originals of this Amendment from each of the
Borrower, each Lender and the Administrative Agent;
	 
	 	(b)	 	duly executed originals of a Reaffirmation in the form of
Attachment A attached hereto from each of the Borrower’s
Subsidiaries identified thereon;
	 
	 	(c)	 	such other documents, instruments and agreements as the
Administrative Agent may reasonably request; and
	 
	 	(d)	 	an amendment fee for the account of each Lender in an
aggregate amount equal to $150,000, payable to the Administrative
Agent for the ratable benefit of the Lenders based on each Lender’s
Commitment.

Representations and Warranties of the Borrower.

	 	(e)	 	The Borrower hereby represents and warrants that this
Amendment, the attached Reaffirmation and the Credit Agreement, as
previously executed and as amended hereby, constitute legal, valid
and binding obligations of the Borrower and its Subsidiaries parties
thereto and are enforceable against the Borrower and its
Subsidiaries parties thereto in accordance with their terms (except
as enforceability may be limited by bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors’ rights
generally).
	 
	 	(f)	 	Upon the effectiveness of this Amendment and after giving
effect hereto, (i) the Borrower hereby reaffirms all covenants,
representations and warranties made in the Credit Agreement as
amended hereby, and agrees that all such covenants, representations
and warranties shall be true and correct as of the effective date of
this Amendment (unless such representation and warranty is made as
of a specific date, in which case such representation and warranty
shall be true and correct as of such date) and (ii) no Default or
Unmatured Default has occurred and is continuing.

References to the Credit Agreement.

	 	(g)	 	Upon the effectiveness of Section 1 hereof, on and after the
date hereof, each reference in the Credit Agreement (including any
reference therein to “this Credit Agreement,” “hereunder,”

 

 

	 	 	 	“hereof,” “herein” or words of like import referring thereto) or in
any other Loan Document shall mean and be a reference to the Credit
Agreement as amended hereby.
	 
	 	(h)	 	Except as specifically amended above, the Credit Agreement
and all other documents, instruments and agreements executed and/or
delivered in connection therewith, shall remain in full force and
effect, and are hereby ratified and confirmed.
	 
	 	(i)	 	The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of the Administrative Agent or the
Lenders, nor, except as expressly provided herein in respect of the
Specified Default, constitute a waiver of any provision of the
Credit Agreement or any other documents, instruments and agreements
executed and/or delivered in connection therewith.

GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN

ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ., BUT

OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS) OF THE STATE OF

ILLINOIS.

Headings. Section headings in this Amendment are included herein for convenience of reference only and

shall not constitute a part of this Amendment for any other purpose.

Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any

number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one

and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

 

               IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	ALION SCIENCE AND TECHNOLOGY
	 	 	CORPORATION, as Borrower
	 
	 	 	 	 	 	 	 	 
	 	 	By: /s/ John M. Hughes
	

	 	Name:
	 	 	 	John M. Hughes	 	 
	

	 	Title:
	 	 	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION, as
	 	 	Administrative Agent and as a Lender
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	/s/
	 	Scott O. Parsons	 	 
	

	 	Name:
	 	 	 	Scott O. Parsons	 	 
	

	 	Title:
	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	NCB CAPITAL CORPORATION, as a Lender
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	/s/
	 	Patrick N. Connelly	 	 
	

	 	Name:
	 	 	 	Patrick N. Connelly	 	 
	

	 	Title:
	 	 	 	Managing Director	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BRANCH BANKING & TRUST COMPANY, as a
	 	 	Lender
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	/s/
	 	Gregory E. Dougherty	 	 
	

	 	Name:
	 	 	 	Gregory E. Dougherty	 	 
	

	 	Title:
	 	 	 	Senior Vice President	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION, as a
	 	 	Lender
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	/s/
	 	Timothy Fossa	 	 
	

	 	Name:
	 	 	 	Timothy Fossa	 	 
	

	 	Title:
	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ORIX FINANCIAL SERVICES, INC., as a Lender
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	/s/
	 	Christopher W. Coulomb	 	 
	

	 	Name:
	 	 	 	Christopher W. Coulomb	 	 
	

	 	Title:
	 	 	 	Vice President	 	 

 

 

REAFFIRMATION

               The undersigned hereby acknowledges receipt of a copy of the foregoing
Amendment No. 2 to the Credit Agreement dated as of December 20, 2002 by and
among ALION SCIENCE AND TECHNOLOGY CORPORATION (the “Borrower”), the
institutions from time to time parties thereto (the “Lenders”), and LASALLE
BANK NATIONAL ASSOCIATION, a national banking association, in its individual
capacity as a Lender and in its capacity as contractual representative (the
“Administrative Agent”)(as amended by an Amendment No. 1 dated as of February
6, 2004, and as further amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), which Amendment No. 2 is dated as
of March 31, 2004 (the “Amendment”). Capitalized terms used in this
Reaffirmation and not defined herein shall have the meanings given to them in
the Credit Agreement. Without in any way establishing a course of dealing by
the Administrative Agent or any Lender, the undersigned reaffirms the terms and
conditions of the Guaranty, the Security Agreement and any other Loan Document
executed by it and acknowledges and agrees that such agreement and each and
every such Loan Document executed by the undersigned in connection with the
Credit Agreement remains in full force and effect and is hereby reaffirmed,
ratified and confirmed. All references to the Credit Agreement contained in
the above-referenced documents shall be a reference to the Credit Agreement as
so modified by the Amendment and as the same may from time to time hereafter be
amended, modified or restated.

Dated: March 31, 2004

HUMAN FACTORS APPLICATIONS, INC.

	 	 	 	 	 	 	 
	By:

	 	/s/
	 	John M. Hughes	 	 
	Name:

	 	 	 	John M. Hughes	 	 
	Title:

	 	 	 	Chief Financial Officer

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