WARRANT AGREEMENT Dated as of March 22, 2010 between ALION SCIENCE AND TECHNOLOGY CORPORATION and WILMINGTON TRUST COMPANY, as Warrant Agent Warrants for Common Stock of Alion Science and Technology Corporation

Exhibit 10.94
EXECUTION VERSION
 
 
Dated as of
March 22, 2010
between
ALION SCIENCE AND TECHNOLOGY CORPORATION
and
WILMINGTON TRUST COMPANY,
as Warrant Agent
 
Warrants for
Common Stock of
Alion Science and Technology Corporation
 
 
 

 

 

TABLE OF CONTENTS
             
        Page
 
  ARTICLE I        
 
            
 
  Definitions        
 
            
SECTION 1.01.
  Definitions     1  
SECTION 1.02.
  Other Definitions     5  
SECTION 1.03.
  Rules of Construction     6  
 
            
 
  ARTICLE II        
 
            
 
  Warrant Certificates        
 
            
SECTION 2.01.
  Form and Dating     6  
SECTION 2.02.
  Execution and Countersignature     7  
SECTION 2.03.
  Certificate Register     8  
SECTION 2.04.
  Transfer and Exchange     9  
SECTION 2.05.
  Certificated Warrants     14  
SECTION 2.06.
  Replacement Certificates     15  
SECTION 2.07.
  Outstanding Warrants     15  
SECTION 2.08.
  Cancellation     16  
SECTION 2.09.
  CUSIP Numbers     16  
 
            
 
  ARTICLE III        
 
            
 
  Exercise Terms        
 
            
SECTION 3.01.
  Exercise     16  
SECTION 3.02.
  Exercise Periods     16  
SECTION 3.03.
  Expiration     17  
SECTION 3.04.
  Manner of Exercise     17  
SECTION 3.05.
  Issuance of Warrant Shares     17  
SECTION 3.06.
  Fractional Warrant Shares     18  
SECTION 3.07.
  Reservation of Warrant Shares     18  
SECTION 3.08.
  Compliance with Law     19  
SECTION 3.09.
  Drag-Along Right     19  
 
            
 
  ARTICLE IV        
 
            
 
  Antidilution Provisions        
 
            
SECTION 4.01.
  Changes in Common Stock     21  
SECTION 4.02.
  Cash Dividends and Other Distributions     22  

 

 

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SECTION 4.03.
  Common Stock Issue     23  
SECTION 4.04.
  Issuance of Rights or Options     23  
SECTION 4.05.
  Combination; Liquidation     24  
SECTION 4.06.
  Superseding Adjustment     25  
SECTION 4.07.
  Minimum Adjustment     25  
SECTION 4.08.
  Notice of Adjustment     25  
SECTION 4.09.
  Notice of Certain Transactions     26  
SECTION 4.10.
  Adjustment to Warrant Certificate     27  
 
            
 
  ARTICLE V        
 
            
 
  Intentionally Omitted        
 
            
 
  ARTICLE VI        
 
            
 
  Warrant Agent        
             
SECTION 6.01.
  Appointment of Warrant Agent     27  
SECTION 6.02.
  Rights and Duties of Warrant Agent     27  
SECTION 6.03.
  Individual Rights of Warrant Agent     28  
SECTION 6.04.
  Warrant Agent’s Disclaimer     28  
SECTION 6.05.
  Compensation and Indemnity     29  
SECTION 6.06.
  Successor Warrant Agent     29  
 
            
 
  ARTICLE VII        
 
            
 
  Miscellaneous        
 
            
SECTION 7.01.
  SEC Reports     31  
SECTION 7.02.
  Persons Benefitting     31  
SECTION 7.03.
  Rights of Holders     31  
SECTION 7.04.
  Amendment     31  
SECTION 7.05.
  Notices     32  
SECTION 7.06.
  Governing Law     33  
SECTION 7.07.
  Successors     33  
SECTION 7.08.
  Multiple Originals     33  
SECTION 7.09.
  Table of Contents     33  
SECTION 7.10.
  Severability     33  
 
            
Appendix A
            
 
            
EXHIBIT A
  Form of Warrant Certificate        

 

 

     WARRANT AGREEMENT dated as of March 22, 2010 (this “Agreement”), between ALION SCIENCE AND TECHNOLOGY CORPORATION, a Delaware corporation (the “Company”), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Warrant Agent (together with its successors and assigns, in such capacity, the “Warrant Agent”).
          The Company desires to issue the warrants described herein. The Warrants (as defined herein) will initially entitle the holders thereof to purchase, in the aggregate, 602,614 shares of Common Stock, par value $0.01 per share, of the Company (“Common Stock”) in connection with an offering (the “Offering”) by the Company of 310,000 units (the “Units”), each consisting of $1,000 principal amount of the Company’s 12% Senior Secured Notes due 2014 (the “Notes”) and one Warrant (a “Warrant”) to purchase 1.9439 shares of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”).
          The Warrants will not trade separately from the Notes until the earliest date (the “Separation Date”) to occur of: (i) the date that is three months after the Warrants Issue Date and (ii) the date of the consummation of a registered exchange offer for the Notes or the effective date of a shelf registration statement with respect to the Notes.
          The Company further desires the Warrant Agent to act on behalf of the Company in connection with the issuance of the Warrants as provided herein and the Warrant Agent is willing to so act.
          The Company has duly authorized the execution and delivery of this Agreement to provide for the issuance of Warrants to be exercisable at such times and for such prices, and to have such other provisions, as shall be hereinafter provided.
          Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of Warrants:
ARTICLE I
Definitions
          SECTION 1.01. Definitions.
          “Affiliate” of any Person means (i) any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such Person, or (ii) any other Person who is a director or executive officer (A) of such Person, (B) of any subsidiary of such Person or (C) of any Person described in clause (i) above. For purposes hereof, (a) “control” of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise and (b) beneficial ownership of 10% or more of the voting common equity (on a fully diluted basis) or warrants to purchase such amount of equity (whether or not

 

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currently exercisable) of a Person shall be deemed to be in control of such Person; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
          “Board” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board of Directors.
          “Business Day” means each day which is not a Legal Holiday.
          “Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.
          “Cashless Exercise Ratio” means a fraction, the numerator of which is the excess of the Current Market Value per share of Common Stock on the Exercise Date over the Exercise Price per share as of the Exercise Date and the denominator of which is the Current Market Value per share of the Common Stock on the Exercise Date.
          “Certificated Warrants” means certificated Warrants in fully registered definitive form.
          “Code” means the Internal Revenue Code of 1986, as amended.
          “Combination” means an event in which the Company consolidates with, merges with or into, or sells all or substantially all of its assets to, another Person.
          “Current Market Value” per share of Common Stock or any other security at any date means (i) if the security is not registered under the Exchange Act, (a) the value of the security, determined in good faith by the Board and certified in a board resolution, based on the most recently completed arm’s-length transaction between the Company and a Person other than an Affiliate of the Company, the closing of which shall have occurred on such date or within the six-month period preceding such date, or (b) if no such transaction shall have occurred on such date or within such six-month period, the value of the security as determined by an independent financial expert, or (c) with respect to any share of Common Stock, any interest in Common Stock, any security convertible into Common Stock or any security whose value is derived or calculated with respect to Common Stock and any right to subscribe for or purchase Common Stock: (A) issued pursuant to and consistent with the terms of the ESOP including Company contributions to the ESOP in the form of Company match and Company profit sharing contributions, (B) issued pursuant to any stock appreciation rights or phantom stock plan, (C) issued upon any Holder’s election to use the Cashless Exercise or (D) issued or utilized in connection with any Company purchase of a fractional Warrant Share, the value of the share as determined by our board of directors or the ESOP Trustee based upon the ESOP’s most recent valuation by an “independent appraiser” as defined in Section 401(a)(28)(c) of the Code; or (ii) if the security is registered under the Exchange Act, the average of the daily closing bid prices (or the equivalent in an over-the-counter market) for each Business Day during the period commencing 15 Business Days before such date and ending on the date one day prior to such date, or if the security has been registered

 

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under the Exchange Act for less than 15 consecutive Business Days before such date, then the average of the daily closing bid prices (or such equivalent) for all of the Business Days before such date for which daily closing bid prices are available; provided, however, if the closing bid price is not determinable for at least ten Business Days in such period, the “Current Market Value” of the security shall be determined as if the security were not registered under the Exchange Act.
          “Depository” means The Depository Trust Company, its nominees and their respective successors.
          “ESOP” means the Alion Science and Technology Corporation Employee Ownership, Savings and Investment Plan.
          “ESOP Trust” means the Alion Science and Technology Corporation Employee Ownership, Savings and Investment Trust.
          “ESOP Trustee” means the trustee for the ESOP Trust.
          “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
          “Exercise Date” means, for a given Warrant, the day on which such Warrant is exercised pursuant to Section 3.04.
          “Holder” means (i) in the case of Warrants, the Person in whose name a Warrant is registered in the Certificate Register and all subsequent transferees and successors and (ii) in the case of the Common Stock for which a Warrant is exercisable, the Person in whose name such Common Stock is registered in the Company’s stock register and all subsequent transferees and successors.
          “Indenture” means the Indenture dated as of March 22, 2010, among the Company, the Subsidiary Guarantors named therein and the Trustee, with respect to the Notes, as it may be amended or supplemented from time to time.
          “Initial Purchaser” means Credit Suisse Securities (USA) LLC.
          “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York.
          “Offering Circular” means the Confidential Offering Circular dated March 11, 2010, of the Company with respect to the Units.
          “Officer” means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Senior Vice President, the Treasurer or the Secretary or an Assistant Secretary of the Company.
          “Officers’ Certificate” means a certificate signed by two Officers.

 

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          “Opinion of Counsel” means a written opinion, in form and substance reasonably satisfactory to the Warrant Agent, from legal counsel who is reasonably acceptable to the Warrant Agent. Such counsel may be an employee of or counsel to the Company.
          “Person” means any individual, corporation, partnership, joint venture, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
          “Preferred Stock”, as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the payment of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
          “Purchase Agreement” means the Purchase Agreement dated March 11, 2010, among the Company, the Subsidiary Guarantors named therein and the Initial Purchaser.
          “QIB” means a “qualified institutional buyer” as defined in Rule 144A.
          “Qualified Public Offering” means the consummation of one or more underwritten public offerings of the Company’s common stock which results in aggregate gross proceeds to the sellers in such offerings of not less than U.S. $30,000,000 (excluding proceeds received in such offerings from “affiliates” of the Company (other than any Holder of Warrants that is an affiliate of the Company), within the meaning of Rule 12b-2 of the Exchange Act or the ESOP) and pursuant to which the Company obtains a listing for its shares on a United States national securities exchange, the Nasdaq National Market System, or an automated quotation system of nationally recognized standing.
          “Regulation S” means Regulation S under the Securities Act.
          “Regulation S Restricted Warrant” means each Warrant initially sold under Regulation S (i) unless such Warrant has been resold pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144A under the Securities Act or (ii) until the earliest date that is no less than two years after the Warrants Issue Date and on which all such Warrants (except for Warrants held by an affiliate of the Company) are no longer subject to any restrictions on transfer under the Securities Act including those pursuant to Rule 144.
          “Rule 144A” means Rule 144A under the Securities Act.
          “SEC” means the Securities and Exchange Commission.
          “Securities” means the Warrants and the Warrant Shares.

 

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          “Securities Act” means the U.S. Securities Act of 1933, as amended.
          “Transfer Restricted Securities” means the Warrants and the Common Stock which may be issued to Holders upon exercise of the Warrants, whether or not such exercise has been effected. Each such security shall cease to be a Transfer Restricted Security (i) when it has been disposed of pursuant to a registration statement of the Company filed with the SEC and declared effective by the SEC that covers the disposition of such Transfer Restricted Security, (ii) when it has been distributed pursuant to Rule 144 promulgated under the Securities Act (or any similar provisions under the Securities Act then in effect) or (iii) upon the earliest date that is no less than two years after the Warrants Issue Date and on which all such Securities (except for Securities held by an affiliate of the Company) are no longer subject to any restrictions on transfer under the Securities Act including those pursuant to Rule 144.
          “Trust” means Alion Science and Technology Corporation Employee Ownership Savings and Investment Trust.
          “Trustee” means Wilmington Trust Company, or any successor trustee under the Indenture.
          “Warrant Certificates” mean the registered certificates (including the Global Warrants) issued by the Company under this Agreement representing the Warrants.
          “Warrant Custodian” means the custodian with respect to a Global Warrant (as appointed by the Depository) or any successor person thereto and shall initially be the Warrant Agent.
          “Warrant Shares” mean the shares of Common Stock (and any other securities) for which the Warrants are exercisable or which have been issued upon exercise of Warrants.
          “Warrants Issue Date” means the date on which the Warrants are initially issued.
          SECTION 1.02. Other Definitions.
     
    Defined in
Term   Section
 
“Agreement”
   Recitals
“Agent Members”
   2.01(b)
“Cashless Exercise”
   3.04
“Certificate Register”
   2.03
“Common Stock”
   Recitals
“Company”
   Recitals
“Drag-Along Notice”
   3.09(a)

 

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    Defined in
Term   Section
 
“Drag Sale Shares”
   3.09(a)
“Drag Transaction”
   3.09(f)
“Exercise Price”
   3.01
“Expiration Date”
   3.02(b)
“Global Warrant”
   2.01(a)
“Note Transfer Agent”
   2.01
“Offering”
   Recitals
“Plan”
   2.04(g)
“Proposed Transferee”
   3.09(a)
“Required Exercise Shares”
   3.09(a)
“Registrar”
   3.07
“Regulation S Global Warrants”
   2.01(a)
“Rule 144A Global Warrants”
   2.01(a)
“Separability Legend”
   2.04(e)
“Separation Date”
   Recitals
“Stock Transfer Agent”
   3.05
“Successor Company”
   4.05(a)
“Units”
   Recitals
“Warrants”
   Recitals
“Warrant Agent”
   Recitals
          SECTION 1.03. Rules of Construction. Unless the text otherwise requires:
     (i) a defined term has the meaning assigned to it;
     (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect on the date hereof;
     (iii) “or” is not exclusive;
     (iv) “including” means including, without limitation; and
     (v) words in the singular include the plural and words in the plural include the singular.
ARTICLE II
Warrant Certificates
          SECTION 2.01. Form and Dating. The Warrants shall be offered and sold by the Company pursuant to the Purchase Agreement. Each Warrant shall initially be issued as part of a Unit consisting of (i) $1,000 principal amount of Notes and (ii) one Warrant. The terms of the Units are governed by the Indenture. Prior to the Separation Date, each Warrant may not be transferred or exchanged separately from, but may be transferred or exchanged only together with, the Notes forming a part of the applicable

 

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Unit, in any case, in accordance with the terms of the Indenture. On and after the Separation Date, the Warrants and the Notes comprising each Unit shall trade separately and shall no longer form a part of a Unit. Insofar as the Units are concerned, in the event any of the terms of this Agreement conflict with the Indenture, the Indenture shall govern.
          (a) Global Warrants. Warrants offered and sold to QIBs in reliance on Rule 144A (“Rule 144A Global Warrants”) and Warrants offered and sold to non-U.S. persons (as defined in Regulation S) in reliance on Regulation S (“Regulation S Global Warrants”), each as provided in the Purchase Agreement, shall be issued initially in the form of one or more permanent global Warrants (a “Global Warrant”), in definitive, fully registered form with the legends set forth in Exhibit A hereto, which shall be deposited on behalf of the Initial Purchaser with, subject to the first paragraph of this Section 2.01, the Warrant Agent, as custodian for the Depository (or with such other custodian as the Depository may direct), and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and countersigned by the Warrant Agent as hereinafter provided.
          (b) Book-Entry Provisions. (i) This Section 2.01(b) shall apply only to a Global Warrant deposited with or on behalf of the Depository.
          The Company shall execute and the Warrant Agent shall, in accordance with Section 2.02, countersign and deliver initially one or more Global Warrants that (a) shall be registered in the name of the Depository for such Global Warrant or Global Warrants or the nominee of the Depository and (b) shall be delivered by the Warrant Agent to the Depository or pursuant to the Depository’s instructions or held by the Warrant Agent as custodian for the Depository.
          (ii) Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Agreement with respect to any Global Warrant held on their behalf by the Depository or by the Warrant Agent as the custodian of the Depository or under such Global Warrant, and the Depository may be treated by the Company, the Warrant Agent and any agent of the Company or the Warrant Agent as the absolute owner of such Global Warrant for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of the Depository governing the exercise of the rights of a Holder of a beneficial interest in any Global Warrant.
          (c) Certificated Securities. Except as provided in Section 2.04 or 2.05, owners of beneficial interests in Global Warrants will not be entitled to receive physical delivery of certificated Warrants.
          SECTION 2.02. Execution and Countersignature. Two Officers shall sign the Warrant Certificates for the Company by manual or facsimile signature.

 

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          If an Officer whose signature is on a Warrant Certificate no longer holds that office at the time the Warrant Agent countersigns the Warrant Certificate, the Warrants evidenced by such Warrant Certificate shall be valid nevertheless.
          Pursuant to the Indenture, the Trustee shall, on the date hereof, authenticate 310,000 Units. Upon authentication of the Units by the Trustee, the terms of the Warrants forming a part of each Unit shall be governed by the terms set forth herein and in the form of Warrant Certificate attached hereto.
          The Warrant Agent may appoint an agent reasonably acceptable to the Company to countersign the Warrant Certificates. Unless limited by the terms of such appointment, such agent may countersign Warrant Certificates whenever the Warrant Agent may do so. Each reference in this Agreement to countersignature by the Warrant Agent includes countersignature by such agent. Such agent will have the same rights as the Warrant Agent for service of notices and demands.
          At any time and from time to time after the execution of this Agreement, the Warrant Agent or an agent reasonably acceptable to the Company shall upon receipt of a written order of the Company signed by two Officers of the Company manually countersign for original issue a Warrant Certificate evidencing the number of Warrants specified in such order; provided, however, that the Warrant Agent shall be entitled to receive an Officers’ Certificate that it may reasonably request in connection with such countersignature of Warrants. Such order shall specify the number of Warrants to be evidenced on the Warrant Certificate to be countersigned, the date on which such Warrant Certificate is to be countersigned and the number of Warrants then authorized.
          The Warrants evidenced by a Warrant Certificate shall not be valid until an authorized signatory of the Warrant Agent or its agent as provided above manually countersigns the Warrant Certificate. The signature shall be conclusive evidence that the Warrant Certificate has been countersigned under this Agreement.
          On the date hereof, upon a written order of the Company signed by two Officers, the Warrant Agent shall countersign one or more Global Warrants that shall trade separately from the Notes on and after the Separation Date (the “Separation Warrants”). Each Separation Warrant shall initially represent zero (0) Warrants. The Separation Warrants shall not contain the Separability Legend. On the Separation Date, the Warrants forming part of each Unit shall be allocated to the Separation Warrants for the credit of the Holders in accordance with the applicable Depository procedures.
          SECTION 2.03. Certificate Register. The Warrant Agent shall keep a register (“Certificate Register”) of the Warrant Certificates and of their transfer and exchange. The Certificate Register shall show the names and addresses of the respective Holders and the date and number of Warrants evidenced on the face of each of the Warrant Certificates. The Company and the Warrant Agent may deem and treat the Person in whose name a Warrant Certificate is registered as the absolute owner of such Warrant Certificate for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by notice to the contrary.

 

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          SECTION 2.04. Transfer and Exchange.
          (a) Transfer and Exchange of Global Warrants.
     (i) The transfer and exchange of the beneficial interests in Global Warrants shall be effected through the Depository, in accordance with this Agreement (including applicable restrictions on transfer set forth herein) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Warrant shall deliver to the Warrant Agent a written order given in accordance with the Depository’s procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Warrant. The Warrant Agent shall, in accordance with such instructions, instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Warrant and to debit the account of the Person making the transfer of the beneficial interest in the Global Warrant being transferred.
     (ii) If the proposed transfer is a transfer of a beneficial interest in a Rule 144A Global Warrant under Regulation S or a beneficial interest in a Regulation S Global Warrant pursuant to Rule 144A, the Warrant Agent shall reflect on the Certificate Register the date and an increase in the amount of the Regulation S Global Warrant or the Rule 000X Xxxxxx Xxxxxxx, as applicable, in an amount equal to the amount of the interest to be so transferred, and the Warrant Agent shall reflect on the Certificate Register the date and a corresponding decrease in the amount of the Rule 000X Xxxxxx Xxxxxxx or Regulation S Global Warrant, as applicable; provided, however that the transfer is in accordance with the certification requirements set forth on the reverse of the Warrants as determined in the reasonable judgment of the Warrant Agent and with such other procedures as may from time to time be adopted by the Company.
     (iii) Notwithstanding any other provisions of this Agreement (other than the provisions set forth in Section 2.05), a beneficial interest in a Global Warrant may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.
     (iv) In the event that a Global Warrant is exchanged and transferred for Warrants in definitive registered form pursuant to Section 2.05, such Warrants may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.04 (including the certification requirements set forth on the reverse of the Warrants intended to ensure that such transfers comply with Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company.
          (b) Legend. (i) Except as permitted by the following paragraph (ii), and to the extent permitted by applicable law, each Warrant Certificate evidencing the Global

 

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Warrants (and all Warrants and Warrant Shares issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form:
“THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT, AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY OR ITS SUBSIDIARIES, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (V) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN EACH OF CASES (III), (IV) AND (V) SUBJECT TO THE COMPANY’S AND THE WARRANT AGENT’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY

 

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FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”
          Each Warrant Certificate purchased by a non-U.S. person purchasing such Warrant in an offshore transaction (as such terms are defined in Regulation S) pursuant to Regulation S will, unless otherwise agreed by the Company and the Holder thereof, bear a legend substantially to the following effect:
“THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT, AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
UNTIL ONE YEAR AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.”
          Each Warrant Certificate issued prior to the Separation Date will also bear the following legend (the “Separability Legend”):
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 12% SENIOR SECURED NOTES DUE NOVEMBER 1, 2014 (A “NOTE”) OF ALION SCIENCE AND TECHNOLOGY CORPORATION (THE “COMPANY”) AND ONE WARRANT (A “WARRANT”) TO PURCHASE 1.9439 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE COMPANY. THE NOTES AND WARRANTS COMPRISING THE UNITS WILL NOT BE PERMITTED TO TRADE SEPARATELY UNTIL THE EARLIER OF (I) THE DATE

 

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THAT IS THREE MONTHS AFTER THE WARRANTS ISSUE DATE, (II) THE DATE OF THE CLOSING OF AN EXCHANGE OFFER FOR THE NOTES OR THE EFFECTIVE DATE OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE NOTES.”
          Each certificate representing Warrants or shares issued upon exercise of Warrants (or following transfers of such shares) shall bear on the face thereof the following legend (the “Drag Legend”):
“ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS (INCLUDING DRAG-ALONG RIGHTS) SPECIFIED IN THE WARRANT AGREEMENT (THE “WARRANT AGREEMENT”) DATED AS OF MARCH 22, 2010 BETWEEN ALION SCIENCE AND TECHNOLOGY CORPORATION (THE “COMPANY”) AND WILMINGTON TRUST COMPANY, SOLELY IN ITS CAPACITY AS WARRANT AGENT. BY ACCEPTING DELIVERY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, ANY TRANSFEREE SHALL BE DEEMED TO HAVE AGREED TO BE BOUND BY THE WARRANT AGREEMENT AS IF THE TRANSFEREE HAD EXECUTED AND DELIVERED THE WARRANT AGREEMENT.”
          Each Purchaser understands that the Securities will bear legends required by DTC substantially in the following form:
“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE

 

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WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF.”
     (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Warrant) pursuant to Rule 144 under the Securities Act, the Warrant Agent shall permit, subject to the terms of Section 2.05, the Holder thereof to exchange such Transfer Restricted Security for a certificated Warrant that does not bear the legends set forth above (other than the Separability Legend, if applicable, and the Drag Legend), if the Holder certifies in writing to the Warrant Agent that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Warrant).
     (iii) On or after the Separation Date, the Holder of a Warrant Certificate containing a Separability Legend may surrender such Warrant Certificate accompanied by a written application to the Warrant Agent, duly executed by the Holder thereof, for a new Warrant Certificate or certificates not containing the Separability Legend.
          (c) Cancellation or Adjustment of Global Warrant. At such time as all beneficial interests in a Global Warrant have been exchanged for certificated Warrants, redeemed, repurchased or canceled, such Global Warrant shall be returned to the Depository for cancellation or retained and canceled by the Warrant Agent. At any time prior to such cancellation, if any beneficial interest in a Global Warrant is exchanged for certificated Warrants, redeemed, repurchased or canceled, the number of Warrants represented by such Global Warrant shall be reduced and an adjustment shall be made on the books and records of the Warrant Agent (if it is then the Warrant Custodian for such Global Warrant) with respect to such Global Warrant, by the Warrant Agent, to reflect such reduction.
          (d) Obligations with Respect to Transfers and Exchanges of Warrants.
     (i) To permit registrations of transfers and exchanges, the Company shall execute and the Warrant Agent shall countersign, upon receipt of an Opinion of Counsel and an Officers’ Certificate if so requested by the Warrant Agent, certificated Warrants and Global Warrants as required pursuant to the provisions of Section 2.02 and this Section 2.04.
     (ii) No service charge shall be made to a Holder for any registration of transfer or exchange upon surrender of any Warrant Certificate at the office of the Warrant Agent maintained for that purpose, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates.
     (iii) Prior to the due presentation for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the Person in whose

 

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name a Warrant is registered as the absolute owner of such Warrant, and neither the Company nor the Warrant Agent shall be affected by notice to the contrary.
     (iv) All Warrants issued upon any transfer or exchange pursuant to the terms of this Agreement shall be the valid obligations of the Company, entitled to the same benefits under this Agreement as the Warrants surrendered upon such transfer or exchange.
          (e) No Obligation of the Warrant Agent.
     (i) The Warrant Agent shall have no responsibility or obligation to any beneficial owner of a Global Warrant, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Warrants or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice or the payment of any amount, under or with respect to such Warrants. All notices and communications to be given to the Holders and all payments to be made to Holders under the Warrants shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Warrant). The rights of beneficial owners in any Global Warrant shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Warrant Agent may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.
     (ii) The Warrant Agent shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Agreement or under applicable law with respect to any transfer of any interest in any Warrant (including any transfers between or among the Depository participants, members or beneficial owners in any Global Warrant) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Agreement, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
          (f) No Registration of Transfer. The Company shall not, and shall cause the Warrant Agent not to, register any transfer of Warrants or Warrant Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration.
          SECTION 2.05. Certificated Warrants. (a) A Global Warrant deposited with the Depository or with the Warrant Agent as custodian for the Depository pursuant to Section 2.01 shall be transferred to the beneficial owners thereof in the form of certificated Warrants in a number equal to the number of Warrants represented by such Global Warrant, in exchange for such Global Warrant, only if such transfer complies with Section 2.04 and (i) the Depository notifies the Company that it is unwilling or unable to

 

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continue as depositary for such Global Warrant or if at any time the Depository ceases to be a “clearing agency” registered under the Exchange Act and, in each such case, a successor depositary is not appointed by the Company within 90 days of such notice or (ii) the Company, in its sole discretion, notifies the Warrant Agent in writing that it elects to cause the issuance of Certificated Warrants under this Agreement.
          (b) Any Global Warrant that is transferable to the beneficial owners thereof pursuant to this Section shall be surrendered by the Depository to the Warrant Agent, to be so transferred, in whole or from time to time in part, without charge, and the Warrant Agent shall countersign and deliver, upon such transfer of each portion of such Global Warrant, an equal number of Certificated Warrants. Any Certificated Warrants delivered in exchange for an interest in the Global Warrant shall, except as otherwise provided by Section 2.04(b)(ii) and Section 2.04(b)(iii), bear the legends set forth in Section 2.04(b).
          (c) Subject to the provisions of Section 2.05(b), the registered Holder of a Global Warrant may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Warrants.
          (d) In the event of the occurrence of either of the events specified in Section 2.05(a), the Company will promptly make available to the Warrant Agent a reasonable supply of Certificated Warrants in definitive, fully registered form.
          SECTION 2.06. Replacement Certificates. If a mutilated Warrant Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant Certificate claims that the Warrant Certificate has been lost, destroyed or wrongfully taken, the Company shall issue and the Warrant Agent shall countersign a replacement Warrant Certificate if the reasonable requirements of the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in effect in the State of New York are met. If required by the Warrant Agent or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Warrant Agent to protect the Company and the Warrant Agent from any loss which either of them may suffer if a Warrant Certificate is replaced. The Company and the Warrant Agent may charge the Holder for their expenses in replacing a Warrant Certificate. Every replacement Warrant Certificate evidences an additional obligation of the Company.
          SECTION 2.07. Outstanding Warrants. Warrants outstanding at any time are all Warrants evidenced on all Warrant Certificates authenticated by the Warrant Agent except for those canceled by it and those delivered to it for cancellation. A Warrant does not cease to be outstanding because an Affiliate of the Company holds the Warrant. A Warrant ceases to be outstanding if the Company holds the Warrant.
          If a Warrant Certificate is replaced pursuant to Section 2.06, the Warrants evidenced thereby cease to be outstanding unless the Warrant Agent and the Company receive proof satisfactory to them that the replaced Warrant Certificate is held by a bona fide purchaser.

 

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          SECTION 2.08. Cancellation. (a) In the event the Company shall purchase or otherwise acquire Certificated Warrants, the same shall thereupon be delivered to the Warrant Agent for cancellation.
          (b) The Warrant Agent and no one else shall cancel and destroy all Warrant Certificates surrendered for transfer, exchange, replacement, exercise or cancellation and deliver a certificate of such destruction to the Company unless the Company directs the Warrant Agent to deliver canceled Warrant Certificates to the Company. The Company may not issue new Warrant Certificates to replace Warrant Certificates to the extent they evidence Warrants which have been exercised or Warrants which the Company has purchased or otherwise acquired.
          SECTION 2.09. CUSIP Numbers. The Company in issuing the Warrants may use “CUSIP” numbers (if then generally in use) and, if so, the Warrant Agent shall use “CUSIP” numbers in notices as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Warrant Certificates or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Warrant Certificates.
ARTICLE III
Exercise Terms
          SECTION 3.01. Exercise. Each Warrant, when exercised, shall initially entitle the Holder thereof, subject to adjustment pursuant to the terms of this Agreement, to purchase 1.9439 shares of Common Stock. The exercise price (the “Exercise Price”) of each Warrant is $0.01 per share.
          SECTION 3.02. Exercise Periods. (a) Subject to the terms and conditions set forth herein, the Warrants shall be exercisable at any time and from time to time on or after March 22, 2011. Notwithstanding the foregoing, Holders of Warrants will be able to exercise their Warrants only if (i) the exercise is pursuant to an effective registration statement under the Securities Act or (ii) the exercise of such Warrants is exempt from the registration requirements of the Securities Act, and, in each case, the Warrant Shares are qualified for sale or exempt from qualification under the applicable securities laws of the states or other jurisdictions in which such Holders reside. If the Warrant being exercised is a Regulation S Restricted Warrant, upon exercise of any such Warrant, the Warrant Agent must receive a written opinion of counsel to the effect that the Warrant Shares delivered upon such exercise have been registered under the Securities Act or such exercise is exempt therefrom. At the request of a Holder, such opinion will be provided by counsel for the Company at no cost to the Holder.
          (b) No Warrant shall be exercisable after March 15, 2017 (the “Expiration Date”).

 

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          SECTION 3.03. Expiration. A Warrant shall terminate and become void as of the earlier of (i) the close of business on the Expiration Date or (ii) the date such Warrant is exercised in full. The Company shall give notice not less than 30, and not more than 60, days prior to the Expiration Date to the Holders of all then outstanding Warrants to the effect that the Warrants will terminate and become void as of the close of business on the Expiration Date; provided, however, that if the Company fails to give notice as provided in this Section 3.03, the Warrants will nevertheless expire and become void on the Expiration Date.
          SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i) surrender to the Warrant Agent at the office of the Warrant Agent of the related Warrant Certificate, together with the form of election attached thereto to purchase Common Stock on the reverse thereof duly filled in and signed by the Holder thereof and (ii) payment to the Warrant Agent, for the account of the Company, of the Exercise Price for each Warrant Share or other security issuable upon the exercise of such Warrants then exercised. Such payment shall be made (i) in cash or by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose or (ii) without the payment of cash, by reducing the number of shares of Common Stock obtainable upon the exercise of a Warrant and payment of the Exercise Price in cash so as to yield a number of shares of Common Stock upon the exercise of such Warrant equal to the product of (a) the number of shares of Common Stock issuable as of the Exercise Date upon the exercise of such Warrant (if payment of the Exercise Price were being made in cash) and (b) the Cashless Exercise Ratio. An exercise of a Warrant in accordance with the immediately preceding sentence is herein called a “Cashless Exercise”. Upon surrender of a Warrant Certificate representing more than one Warrant in connection with the Holder’s option to elect a Cashless Exercise, the number of shares of Common Stock deliverable upon a Cashless Exercise shall be equal to the number of shares of Common Stock issuable upon the exercise of Warrants that the Holder specifies are to be exercised pursuant to a Cashless Exercise multiplied by the Cashless Exercise Ratio. All provisions of this Agreement shall be applicable with respect to a surrender of a Warrant Certificate pursuant to a Cashless Exercise for less than the full number of Warrants represented thereby. Subject to Section 3.02, the rights represented by the Warrants shall be exercisable at the election of the Holders thereof either in full at any time or from time to time in part and in the event that a Warrant Certificate is surrendered for exercise of less than all the Warrants represented by such Warrant Certificate at any time prior to the Expiration Date, a new Warrant Certificate representing the remaining Warrants shall be issued. In the case of certificated Warrants, the Warrant Agent shall countersign and deliver to the Holders the required new Warrant Certificates, and the Company, at the Warrant Agent’s request, shall supply the Warrant Agent with Warrant Certificates duly signed on behalf of the Company for such purpose.
          SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.06, upon the surrender of Warrant Certificates and payment of the per share Exercise Price, as set forth in Section 3.04, the Company shall issue and cause a transfer agent for the Common Stock (the “Stock Transfer Agent”) to countersign and deliver to or upon the written order of the Holder and in such name or names as the Holder may designate, a

 

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certificate or certificates for the number of full Warrant Shares so purchased upon the exercise of such Warrants or other securities or property to which it is entitled, registered or otherwise, to the Person or Persons entitled to receive the same (including any depositary institution so designated by a Holder), together with cash as provided in Section 3.06 in respect of any fractional Warrant Shares otherwise issuable upon such exercise. Such certificate or certificates shall be deemed to have been issued and any Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrant Certificates and payment of the per share Exercise Price, as aforesaid; provided, however, that if, at such date, the transfer books for the Warrant Shares shall be closed, the certificates for the Warrant Shares in respect of which such Warrants are then exercised shall be issuable as of the date on which such books shall next be opened and until such date the Company shall be under no duty to deliver any certificates for such Warrant Shares; provided further, however, that such transfer books, unless otherwise required by law, shall not be closed at any one time for a period longer than 20 calendar days.
          SECTION 3.06. Fractional Warrant Shares. The Company shall not be required to issue fractional Warrant Shares on the exercise of Warrants. If more than one Warrant shall be exercised in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Warrant Shares which may be purchasable pursuant thereto. If any fraction of a Warrant Share would, except for the provisions of this Section 3.06, be issuable upon the exercise of any Warrant (or specified portion thereof), the Company shall be entitled to pay an amount in cash equal to the Current Market Value per Warrant Share, as determined on the day immediately preceding the date the Warrant is presented for exercise, multiplied by such fraction, computed to the nearest whole cent.
          SECTION 3.07. Reservation of Warrant Shares. The Company shall at all times keep reserved out of its authorized shares of Common Stock a number of shares of Common Stock sufficient to provide for the exercise of all outstanding Warrants. The registrar for the Common Stock (the “Registrar”) shall at all times until the Expiration Date reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Agreement on file with the Stock Transfer Agent. The Company will supply such Stock Transfer Agent with duly executed stock certificates for such purpose and will itself provide or otherwise make available any cash which may be payable as provided in Section 3.06. The Company will furnish to such Stock Transfer Agent a copy of all notices of adjustments (and certificates related thereto) transmitted to each Holder.
          Before taking any action which would cause an adjustment pursuant to Article IV to reduce the Exercise Price below the then par value (if any) of the Common Stock, the Company shall take any and all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at the Exercise Price as so adjusted.

 

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          The Company covenants that all Warrant Shares which may be issued upon exercise of and payment for Warrants in accordance with the provisions of this Agreement shall, upon issue, be fully paid, nonassessable, free of preemptive rights, free from all stamp and documentary taxes and free from all liens, charges and security interests with respect to the issue thereof.
          SECTION 3.08. Compliance with Law. (a) Notwithstanding anything in this Agreement to the contrary, in no event shall a Holder be entitled to exercise a Warrant unless (i) a registration statement filed under the Securities Act in respect of the issuance of the Warrant Shares is then effective or (ii) in the opinion of counsel to the Company addressed to the Warrant Agent the exercise of such Warrants is exempt from the registration requirements of the Securities Act and such securities are qualified for sale or exempt from qualification under the applicable securities laws of the states or other jurisdictions in which such Holders reside.
          (b) If any shares of Common Stock required to be reserved for purposes of the exercise of Warrants require, under any other Federal or state law or applicable governing rule or regulation of any national securities exchange, registration with or approval of any governmental authority, or listing on any such national securities exchange before such shares may be issued upon exercise, the Company will use its reasonable best efforts to cause such shares to be duly registered or approved by such governmental authority or listed on the relevant national securities exchange, as the case may be.
          SECTION 3.09. Drag-Along Right. (a) Subject to the terms and conditions of this Section 3.09, and notwithstanding any other provision of this Agreement, if the Trust proposes to sell 75% or more of the shares of Common Stock it then holds (the “Drag Sale Shares”) to a bona fide unaffiliated third party or parties on an arm’s length basis in a single transaction or a series of related transactions for cash or unrestricted marketable securities that are traded on a U.S. stock exchange, over the counter or on a bulletin board, the Trust shall be entitled to provide to the Holders, at least 20 days prior to the closing of such sale, written notice, in accordance with Section 7.05 herein, of its good faith intention to sell the shares of Common Stock, the name of the proposed transferee(s) (the “Proposed Transferee”), the price and other material terms under which the sale is proposed to be made and that it is requiring the Holders to exercise all or a portion of the Warrants, if any portion remains outstanding and unexpired hereunder, and to sell the Warrant Shares obtained through such exercise, if any (the “Required Exercise Shares”), as well as a certain number of the Warrant Shares then held by the Holders, if any, to the Proposed Transferee on the terms and conditions contained therein (“Drag-Along Notice”), such that the total number of Warrant Shares to be sold to the Proposed Transferee by the Holder shall be equal to:
           
(A + B)
  x   C
    D
             
where:
  A   =   the number of Warrant Shares then held by the Holder,

 

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          including the Required Exercise Shares;
 
            
 
  B   =   the number of shares of Common Stock subject to the outstanding, unexpired portion of the Warrant (if any), after taking into account the exercise required with respect to the Required Exercise Shares;
 
            
 
  C   =   the number of Drag Sale Shares; and
 
            
 
  D   =   the total number of shares of Common Stock then held by the Trust,
subject to the limitation that if the sale price to the Proposed Transferee is less than the then current Exercise Price, (i) the Holder shall not be required to exercise any portion of the Warrant in order to sell to the Proposed Transferee the Warrant Shares that could be obtained by such exercise, in connection with the proposed sale and (ii) that portion of the Warrant which the Holder would have been required to exercise under this Section 3.09 in the absence of the preceding clause (i), shall immediately expire and shall be and become void and of no value.
          The Holder shall be required to, and shall, comply with the terms of the Drag-Along Notice as long as it is consistent with the terms of this Section 3.09. The Warrant Shares to be sold by the Holder to the Proposed Transferee shall be sold to the Proposed Transferee at a purchase price equal to the product of (x) the number of such Warrant Shares, and (y) the per share sale price of the shares of Common Stock proposed to be sold by the Trust to the Proposed Transferee. The Drag-Along Notice shall be deemed to be given and served in accordance with Section 7.05 below.
          (b) Notwithstanding any other provision of this Agreement, but subject to Section 3.09(f), the Holder shall, within 15 days of receipt of a Drag-Along Notice, exercise the Warrants with respect to the Required Exercise Shares in accordance with Section 3.04 above, provided that the Exercise Date is deemed to occur concurrently with the consummation of the transaction which is the subject of the Drag-Along Notice. If the Holder does not exercise the Warrants within the required 15-day period or exercises the Warrants without the appropriate payment in cash for the exercise of the Warrant, or portion thereof, as appropriate (in all cases in accordance with Section 3.04 above), upon consummation of the transaction which is the subject of the Drag-Along Notice the Holder will have been deemed to have made a Cashless Exercise in accordance with Section 3.04 above.
          (c) Promptly after receipt of the Drag-Along Notice, the Holder shall deliver to the Trust, to hold in escrow pending closing of the transaction that is the subject of the Drag-Along Notice, stock certificates in its possession (if any) representing its shares of Common Stock to be transferred, properly endorsed for transfer to the Proposed Transferee.

 

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          (d) The Trust shall, together with the Drag-Along Notice, provide to the Holder a fairness opinion from an independent appraiser or investment bank selected by the Trust regarding the transaction that is the subject of the Drag-Along Notice, provided that there shall be no such requirement if the Trust has obtained such a fairness opinion for itself with respect to the transaction that is the subject of the Drag-Along Notice.
          (e) The monetary value of any indemnity to be provided by the Holder to the Proposed Transferee under the terms of its sale of Warrant Shares in accordance with this Section 3.09 (which indemnity may only cover non-operational matters the subject of the Holder’s representations and warranties described in the following sentence) shall not exceed the monetary value of the consideration it receives pursuant to the terms of such sale. The Holder’s representations and warranties shall be limited to enforceability, the ownership of the Warrant Shares to be transferred by such Holder, authority to transfer such Warrant Shares, that such Warrant Shares are free of liens and encumbrances as of the transfer date and other standard and customary non-operational representations and warranties.
          (f) Notwithstanding Section 3.09(b) above and subject to the limitations of Section 3.02, 3.03 and 3.04, after receiving a Drag-Along Notice, the Holder shall be entitled to exercise the portion of the Warrant that is the subject of the Drag-Along Notice, provided that such exercise shall only be given effect if the transaction relating to the Drag-Along Notice is terminated or is not consummated within ninety (90) days of the date of delivery of the Drag-Along Notice by the Trust. If the transaction that is the subject of a Drag-Along Notice delivered by the Trust to the Holder in accordance with Section 3.09(a) herein (the “Drag Transaction”) is terminated or is not consummated within ninety (90) days of the date of delivery of the Drag-Along Notice by the Trust, then the Drag-Along Notice shall be deemed voided. Notwithstanding the foregoing, such 90-day period will be stayed during any regulatory review period necessitated in connection with the Drag Transaction.
          (g) The rights of the Trust under this Section 3.09 shall expire upon the consummation by the Company of a Qualified Public Offering.
          (h) The Trust is a third party beneficiary of the rights contained in this Section 3.09 and is entitled to bring enforcement actions with respect to such rights.
ARTICLE IV
Antidilution Provisions
          SECTION 4.01. Changes in Common Stock. In the event that at any time and from time to time the Company shall (i) pay a dividend or make a distribution on the Common Stock in shares of Common Stock or other shares of Capital Stock, (ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) increase or decrease the number of shares of Common Stock outstanding by reclassification of its Common Stock, then the number of

 

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shares of Common Stock issuable upon exercise of each Warrant immediately after the happening of such event shall be adjusted so that, after giving effect to such adjustment, the Holder of each Warrant shall be entitled to receive the number of shares of Common Stock upon exercise of such Warrant that such Holder would have owned or would have been entitled to receive had such Warrants been exercised immediately prior to the happening of the events described above (or, in the case of a dividend or distribution of Common Stock, immediately prior to the record date therefor). An adjustment made pursuant to this Section 4.01 shall become effective immediately after the distribution date, retroactive to the record date therefor in the case of a dividend or distribution in shares of Common Stock or other shares of Capital Stock, and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
          SECTION 4.02. Cash Dividends and Other Distributions. In the event that at any time and from time to time the Company shall distribute to all holders of Common Stock (i) any dividend or other distribution (including any dividend or distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of cash, evidences of its indebtedness, shares of its Capital Stock or any other properties or securities or (ii) any options, warrants or other rights to subscribe for or purchase any of the foregoing (other than, in the case of clauses (i) and (ii) above, (A) any dividend or distribution described in Section 4.01 and (B) any rights, options, warrants or securities described in Section 4.03 or Section 4.04), then the number of shares of Common Stock issuable upon the exercise of each Warrant immediately prior to such record date for any such dividend or distribution shall be increased to a number determined by multiplying the number of shares of Common Stock issuable upon the exercise of such Warrant immediately prior to such record date for any such dividend or distribution by a fraction, the numerator of which shall be the Current Market Value per share of Common Stock on the record date for such dividend or distribution, and the denominator of which shall be such Current Market Value per share of Common Stock less the sum of (x) the amount of cash, if any, distributed per share of Common Stock and (y) the then fair value (as determined in good faith by the Board, whose determination shall be evidenced by a board resolution filed with the Warrant Agent, a copy of which will be sent to Holders upon request) of the portion, if any, of the distribution applicable to one share of Common Stock consisting of evidences of indebtedness, shares of stock, securities, other property, warrants, options or subscription or purchase rights; and subject to Section 4.08, the Exercise Price shall be adjusted to a number determined by dividing the Exercise Price immediately prior to such record date by the above fraction. Such adjustments shall be made, and shall only become effective, whenever any dividend or distribution is made; provided, however, that the Company is not required to make an adjustment pursuant to this Section 4.02 if at the time of such distribution the Company makes the same distribution to Holders of Warrants as it makes to holders of Common Stock pro rata based on the number of shares of Common Stock for which such Warrants are exercisable (whether or not currently exercisable). No adjustment shall be made pursuant to this Section 4.02 which shall have the effect of decreasing the number of shares of Common Stock issuable upon exercise of each Warrant or increasing the Exercise Price.

 

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          SECTION 4.03. Common Stock Issue. In the event that at any time or from time to time the Company shall issue shares of Common Stock for a consideration per share that is less than the Current Market Value per share of Common Stock as of the issuance date of such shares, the number of shares of Common Stock issuable upon the exercise of each Warrant immediately after such issuance date shall be determined by multiplying the number of shares of Common Stock issuable upon exercise of each Warrant immediately prior to such issuance date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately preceding the issuance of such shares plus the number of additional shares of Common Stock to be issued in such transaction, and the denominator of which shall be the number of shares of Common Stock outstanding immediately preceding the date for the issuance of such shares plus the total number of shares of Common Stock which the aggregate consideration expected to be received by the Company upon the issuance of such shares (as determined in good faith by the Board, whose determination shall be evidenced by a board resolution filed with the Warrant Agent, a copy of which will be sent by the Warrant Agent to any Holder upon request by such Holder to the Warrant Agent) would purchase at the Current Market Value per share of Common Stock as of the date of such issuance; and, subject to Section 4.08, in the event of any such adjustment, the Exercise Price shall be adjusted to a number determined by dividing the Exercise Price immediately prior to such date of issuance by the aforementioned fraction; provided, however, that no adjustment to the number of Warrant Shares issuable upon the exercise of the Warrants or to the Exercise Price shall be made as a result of (i) the issuance of shares of Common Stock in bona fide public offerings that are underwritten or in which a placement agent is retained by the Company, (ii) the issuance of options or shares of Common Stock, interests in Common Stock and securities convertible into Common Stock or whose value is derived or calculated with respect to Common Stock to officers, directors or employees of the Company, (iii) the issuance of shares of Common Stock in connection with acquisitions of products and businesses other than to Affiliates of the Company and (iv) the issuance of shares of Common Stock upon the conversion, exchange or exercise of convertible, exchangeable or exercisable securities of the Company outstanding on the Warrants Issue Date. Such adjustment shall be made, and shall only become effective, whenever such shares are issued. No adjustment shall be made pursuant to this Section 4.03 which shall have the effect of decreasing the number of shares of Common Stock issuable upon exercise of each Warrant or increasing the Exercise Price.
          SECTION 4.04. Issuance of Rights or Options. In the event that at any time or from time to time the Company shall issue to all holders of Common Stock (i) rights, options or warrants to acquire (provided, however, that no adjustment shall be made under Section 4.03 or this Section 4.04 upon the exercise of such rights, options or warrants), or (ii) securities convertible, exchangeable or exercisable into (provided, however, that no adjustment shall be made under Section 4.03 or this Section 4.04 upon the conversion or exchange of such securities (other than issuances specified in clauses (i) or (ii) which are made as the result of anti-dilution adjustments in such securities)), Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock at a price per share that is less than the Current Market Value per share of Common Stock in effect immediately prior to such issuance other than in connection with

 

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the adoption of a shareholder rights plan by the Company, the number of shares of Common Stock issuable upon the exercise of each Warrant immediately after such issuance shall be determined by multiplying the number of shares of Common Stock issuable upon exercise of each Warrant immediately prior to such issuance by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such rights, options, warrants or securities plus the number of additional shares of Common Stock offered for subscription or purchase or into which such securities are convertible or exchangeable, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such rights, options, warrants or securities plus the total number of shares of Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such rights, options, warrants or securities (as determined in good faith by the Board, whose determination shall be evidenced by a board resolution filed with the Warrant Agent, a copy of which will be sent by the Warrant Agent to any Holder upon request by such Holder to the Warrant Agent) would purchase at the Current Market Value per share of Common Stock as of the record date; and, subject to Section 4.08, in the event of any such adjustment, the Exercise Price shall be adjusted to a number determined by dividing the Exercise Price immediately prior to such date of issuance by the aforementioned fraction. Such adjustment shall be made, and shall only become effective, whenever such rights, options, warrants or securities are issued. No adjustment shall be made pursuant to this Section 4.04 which shall have the effect of decreasing the number of shares of Common Stock issuable upon exercise of each Warrant or increasing the Exercise Price.
          SECTION 4.05. Combination; Liquidation. (a) Except as provided in Section 4.05(b), in the event of a Combination, each Holder shall have the right to receive upon exercise of the Warrants the kind and amount of shares of Capital Stock or other securities or property which such Holder would have been entitled to receive upon completion of or as a result of such Combination had such Warrant been exercised immediately prior to such event or to the relevant record date for any such entitlement. Unless paragraph (b) is applicable to a Combination, the Company shall provide that the surviving or acquiring Person (the “Successor Company”) in such Combination will enter into an agreement with the Warrant Agent confirming the Holders’ rights pursuant to this Section 4.05(a) and providing for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article IV. The provisions of this Section 4.05(a) shall similarly apply to successive Combinations involving any Successor Company.
          (b) In the event of (i) a Combination where consideration to the holders of Common Stock in exchange for their shares is payable solely in cash or (ii) the dissolution, liquidation or winding-up of the Company, the Holders of the Warrants shall be entitled to receive, upon surrender of their Warrant Certificates, such cash distributions on an equal basis with the holders of Common Stock or other securities issuable upon exercise of the Warrants, as if the Warrants had been exercised immediately prior to such event, less the Exercise Price.

 

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          In the event of any Combination described in this Section 4.05(b), the surviving or acquiring Person and, in the event of any dissolution, liquidation or winding-up of the Company, the Company, shall deposit promptly with the Warrant Agent the funds, if any, necessary to pay the Holders of the Warrants the amounts to which they are entitled as described above. After such funds and the surrendered Warrant Certificates are received, the Warrant Agent shall make payment to the Holders by delivering a check or wire transfer in such amount as is appropriate (or, in the case of consideration other than cash, such other consideration as is appropriate) to such Person or Persons as it may be directed in writing by the Holders surrendering such Warrants.
          SECTION 4.06. Superseding Adjustment. Upon the expiration of any rights, options, warrants or conversion or exchange privileges which resulted in adjustments pursuant to this Article IV, if any thereof shall not have been exercised, the number of Warrant Shares issuable upon the exercise of each Warrant shall be readjusted pursuant to the applicable section of Article IV as if (i) the only shares of Common Stock issuable upon exercise of such rights, options, warrants, conversion or exchange privileges were the shares of Common Stock, if any, actually issued upon the exercise of such rights, options, warrants or conversion or exchange privileges and (ii) shares of Common Stock actually issued, if any, were issuable for the consideration actually received by the Company upon such exercise plus the aggregate consideration, if any, actually received by the Company for the issuance, sale or grant of all such rights, options, warrants or conversion or exchange privileges whether or not exercised and the Exercise Price shall be readjusted inversely; provided, however, that no such readjustment (except by reason of an intervening adjustment under Section 4.01) shall have the effect of decreasing the number of Warrant Shares issuable upon the exercise of each Warrant or increasing the Exercise Price by an amount in excess of the amount of the adjustment initially made in respect of the issuance, sale or grant of such rights, options, warrants or conversion or exchange privileges.
          SECTION 4.07. Minimum Adjustment. The adjustments required by the preceding sections of this Article IV shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price or the number of shares of Common Stock issuable upon exercise of the Warrants that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases by at least 1% of the Exercise Price or the number of shares of Common Stock issuable upon exercise of the Warrants immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Article IV and not previously made, would result in a minimum adjustment. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. In computing adjustments under this Article IV, fractional interests in Common Stock shall be taken into account to the nearest one-hundredth of a share.
          SECTION 4.08. Notice of Adjustment. Whenever the Exercise Price or the number of shares of Common Stock and other property, if any, issuable upon exercise

 

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of the Warrants is adjusted, as herein provided, the Company shall deliver to the Warrant Agent a certificate of the Company’s chief executive officer or chief financial officer setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which (i) the Board determined the then fair value of any evidences of indebtedness, other securities or property or warrants, options or other subscription or purchase rights and (ii) the Current Market Value of the Common Stock was determined, if either of such determinations were required), and specifying the Exercise Price and the number of shares of Common Stock issuable upon exercise of the Warrants after giving effect to such adjustment. The Company shall promptly cause the Warrant Agent to mail a copy of such certificate to each Holder in accordance with Section 7.05. The Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time, to any Holder desiring an inspection thereof during reasonable business hours. The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist which may require any adjustment of the Exercise Price or the number of shares of Common Stock or other stock or property issuable on exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making such adjustment or the validity or value of any shares of Common Stock, evidences of indebtedness, warrants, options, or other securities or property.
          SECTION 4.09. Notice of Certain Transactions. In the event that the Company shall propose to (a) pay any dividend payable in securities of any class to the holders of its Common Stock or to make any other non-cash dividend or distribution to the holders of its Common Stock, (b) offer the holders of its Common Stock rights to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of stock of any class or any other securities, rights or options, (c) issue any (i) shares of Common Stock, (ii) rights, options or warrants entitling the holders thereof to subscribe for shares of Common Stock or (iii) securities convertible into or exchangeable or exercisable for Common Stock (in the case of (i), (ii) and (iii), if such issuance or adjustment would result in an adjustment hereunder), (d) effect any capital reorganization, reclassification, consolidation or merger, (e) effect the voluntary or involuntary dissolution, liquidation or winding-up of the Company or (f) make a tender offer or exchange offer with respect to the Common Stock, the Company shall within five Business Days after any such action or offer send to the Warrant Agent a notice and the Warrant Agent shall within five Business Days after receipt thereof send the Holders a notice (in such form as shall be furnished to the Warrant Agent by the Company) of such proposed action or offer. Such notice shall be mailed by the Warrant Agent to the Holders at their addresses as they appear in the Certificate Register, which shall specify the record date for the purposes of such dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect, if any, of such action on the Common Stock and on the number and kind of any other shares of stock and on other property, if any, and the number of shares of Common Stock and other property, if any, issuable upon exercise of each Warrant and the Exercise Price after giving effect to any adjustment pursuant to Article IV which will be required as a result

 

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of such action. Such notice shall be given as promptly as possible and (x) in the case of any action covered by clause (a) or (b) above, at least 10 days prior to the record date for determining holders of the Common Stock for purposes of such action or (y) in the case of any other such action, at least 20 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock, whichever shall be the earlier.
          SECTION 4.10. Adjustment to Warrant Certificate. The form of Warrant Certificate need not be changed because of any adjustment made pursuant to this Article IV, and Warrant Certificates issued after such adjustment may state the same Exercise Price and the same number of shares of Common Stock issuable upon exercise of the Warrants as are stated in the Warrant Certificates initially issued pursuant to this Agreement. The Company, however, may at any time in its sole discretion make any change in the form of Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not affect the substance of the Warrant Certificate, and any Warrant Certificate thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant Certificate or otherwise, may be in the form as so changed.
ARTICLE V
Intentionally Omitted
ARTICLE VI
Warrant Agent
          SECTION 6.01. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the provisions of this Agreement and the Warrant Agent hereby accepts such appointment.
          SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent for the Company. In acting under this Warrant Agreement and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any obligation or relationship or agency or trust for or with any of the Holders of Warrant Certificates or beneficial owners of Warrants.
          (b) Counsel. The Warrant Agent may consult with counsel satisfactory to it (who may be counsel to the Company), and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the advice of such counsel.
          (c) Documents. The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any Warrant Certificate, notice, opinion, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties.

 

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          (d) No Implied Obligations. The Warrant Agent shall be obligated to perform only such duties as are specifically set forth herein and in the Warrant Certificates, and no implied duties or obligations of the Warrant Agent shall be read into this Agreement or the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be under any obligation to take any action hereunder which may tend to involve it in any expense or liability for which it does not receive indemnity if such indemnity is reasonably requested. The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any of the Warrant Certificates countersigned by the Warrant Agent and delivered by it to the Holders or on behalf of the Holders pursuant to this Agreement or for the application by the Company of the proceeds of the Warrants. The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a Holder with respect to such default, including any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise.
          (e) Not Responsible for Adjustments or Validity of Stock. The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require an adjustment of the number of shares of Common Stock issuable upon exercise of each Warrant or the Exercise Price, or with respect to the nature or extent of any adjustment when made, or with respect to the method employed, or herein or in any supplemental agreement provided to be employed, in making the same. The Warrant Agent shall not be accountable with respect to the validity or value of any shares of Common Stock or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Article IV, and it makes no representation with respect thereto. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates upon the surrender of any Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Article IV, or to comply with any of the covenants of the Company contained in Article IV.
          SECTION 6.03. Individual Rights of Warrant Agent. The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or its affiliates or become pecuniarily interested in transactions in which the Company or its affiliates may be interested, or contract with or lend money to the Company or its affiliates or otherwise act as fully and freely as though it were not the Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.
          SECTION 6.04. Warrant Agent’s Disclaimer. The Warrant Agent shall not be responsible for and makes no representation as to the validity or adequacy of this Agreement or the Warrant Certificates and it shall not be responsible for any statement in this Agreement or the Warrant Certificates other than its countersignature thereon.

 

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          SECTION 6.05. Compensation and Indemnity. The Company agrees to pay the Warrant Agent from time to time reasonable compensation for its services as agreed and to reimburse the Warrant Agent upon request for all reasonable out-of-pocket expenses incurred by it, including the reasonable compensation and expenses of the Warrant Agent’s agents and counsel. The Company shall indemnify the Warrant Agent, its officers, directors, agents and counsel against any loss, liability, claim, damage or expense (including reasonable agents’ and attorneys’ fees and expenses) incurred by it without gross negligence, willful misconduct or bad faith on its part arising out of or in connection with (i) the execution, delivery or performance of this Agreement, the performance by the parties hereto of their respective obligations hereunder or the consummation of the transactions contemplated hereby or (ii) any claim, litigation, investigation or proceeding relating to any of the foregoing whether or not the Warrant Agent is a party thereto, including the costs and expenses of enforcing this Agreement. The Warrant Agent shall notify the Company promptly of any claim for which it may seek indemnity. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Warrant Agent through willful misconduct, gross negligence or bad faith. The Company’s payment obligations pursuant to this Section 6.05 shall survive the termination of this Agreement.
          To secure the Company’s payment obligations under this Agreement, the Warrant Agent shall have a lien prior to the Holders on all money or property held or collected by the Warrant Agent.
          SECTION 6.06. Successor Warrant Agent. (a) The Company To Provide and Maintain Warrant Agent. The Company agrees for the benefit of the Holders that there shall at all times be a Warrant Agent hereunder until all the Warrants have been exercised or cancelled or are no longer exercisable. Any Warrant Agent to qualify as the Warrant Agent hereunder must be able to qualify as the trustee under the indenture relating to the Notes.
          (b) Resignation and Removal. The Warrant Agent may at any time resign by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided, however, that such date shall not be less than 60 days after the date on which such notice is given unless the Company otherwise agrees. The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date when it shall become effective, which date shall not be less than 60 days after such notice is given unless the Warrant Agent otherwise agrees. Any removal under this Section 6.06 shall take effect upon the appointment by the Company as hereinafter provided of a successor Warrant Agent (which shall be a bank or trust company authorized under the laws of the jurisdiction of its organization to exercise corporate trust powers) and the acceptance of such appointment by such successor Warrant Agent.
          (c) The Company To Appoint Successor. In the event that at any time the Warrant Agent shall resign, or shall be removed, or shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or shall commence a voluntary case under the

 

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Federal bankruptcy laws, as now or hereafter constituted, or under any other applicable U.S. Federal or state bankruptcy, insolvency or similar law or shall consent to the appointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator (or other similar official) of the Warrant Agent or its property or affairs, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall take corporate action in furtherance of any such action, or a decree or order for relief by a court having jurisdiction in the premises shall have been entered in respect of the Warrant Agent in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or state bankruptcy, insolvency or similar law, or a decree or order by a court having jurisdiction in the premises shall have been entered for the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar official) of the Warrant Agent or of its property or affairs, or any public officer shall take charge or control of the Warrant Agent or of its property or affairs for the purpose of rehabilitation, conservation, winding up or liquidation, a successor Warrant Agent, qualified as aforesaid, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent shall cease to be Warrant Agent hereunder; provided, however, that in the event of the resignation of the Warrant Agent under this subsection (c), such resignation shall be effective on the earlier of (i) the date specified in the Warrant Agent’s notice of resignation and (ii) the appointment and acceptance of a successor Warrant Agent hereunder.
          (d) Successor To Expressly Assume Duties. Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the rights and obligations of such predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor, upon payment of its charges and disbursements then unpaid, shall thereupon become obligated to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder.
          (e) Successor by Merger. Any corporation into which the Warrant Agent hereunder may be merged or consolidated, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all of its assets and business shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto.

 

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ARTICLE VII
Miscellaneous
          SECTION 7.01. SEC Reports. The Company shall file with the Warrant Agent for the benefit of the Holders of Warrants, within 15 days after it files them with the SEC, copies of its annual and quarterly reports and other information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
          SECTION 7.02. Persons Benefitting. Nothing in this Agreement is intended or shall be construed to confer upon any Person other than the Company, the Warrant Agent and the Holders any right, remedy or claim under or by reason of this Agreement or any part hereof, except as set forth in Section 3.09.
          SECTION 7.03. Rights of Holders. Holders of unexercised Warrants are not entitled to (i) receive dividends or other distributions, (ii) receive notice of or vote at any meeting of the stockholders, (iii) consent to any action of the stockholders, (iv) receive notice of any other proceedings of the Company, (v) exercise any preemptive right or (vi) exercise any other rights whatsoever as stockholders of the Company.
          SECTION 7.04. Amendment. Any provision of this Agreement other than Section 3.09 may be amended by the parties hereto without the consent of any Holder for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable (including without limitation any addition or modification to provide for compliance with the transfer restrictions set forth herein); provided, however, that such action shall not adversely affect the rights of any of the Holders. Any amendment or supplement to this Agreement that has an adverse effect on the interests of the Holders shall require the written consent of the Holders of a majority of the then outstanding Warrants. The consent of each Holder affected shall be required for any amendment pursuant to which the Exercise Price would be increased or the number of Warrant Shares issuable upon exercise of Warrants would be decreased (other than pursuant to adjustments provided for herein). Any amendment or supplement to Section 3.09 of this Agreement shall require the written consent of the Holders of a majority of the shares underlying the then outstanding Warrants and the then outstanding shares that were issued upon exercise of Warrants. In determining whether the Holders of the required number of Warrants have concurred in any direction, waiver or consent, Warrants or shares owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Warrant Agent shall be protected in relying on any such direction, waiver or consent, only Warrants and shares which the Warrant Agent knows are so owned shall be so disregarded. Also, subject to the foregoing, only

 

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Warrants and shares outstanding at the time shall be considered in any such determination.
          SECTION 7.05. Notices. Any notice or communication shall be in writing and delivered in Person or mailed by first-class mail addressed as follows:
          if to the Company:
Alion Science and Technology Corporation
0000 Xxxxxx Xxxxxxxxx
Xxxxx 0000
XxXxxx, XX 00000
Telephone: (000) 000-0000
Attention: General Counsel
          with a copy to:
Xxxxx & XxXxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
          if to the Warrant Agent:
Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Corporate Capital Markets
Xxxxxxxxx & Xxxxxxx LLP
The New York Times Building
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
          The Company or the Warrant Agent by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

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          Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the Certificate Register and shall be sufficiently given if so mailed within the time prescribed.
          Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
          SECTION 7.06. Governing Law. The laws of the State of New York shall govern this Agreement and the Warrant Certificates.
          SECTION 7.07. Successors. All agreements of the Company in this Agreement and the Warrant Certificates shall bind its successors. All agreements of the Warrant Agent in this Agreement shall bind its successors.
          SECTION 7.08. Multiple Originals. The parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Agreement.
          SECTION 7.09. Table of Contents. The table of contents and headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
          SECTION 7.10. Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid, illegal or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect in that jurisdiction only such clause or provision, or part thereof, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of this Agreement in any jurisdiction.

 

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          IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to be duly executed as of the date first written above.
         
  ALION SCIENCE AND TECHNOLOGY
CORPORATION,
 		  
  by   /s/ Xxxxxxx X. Xxxxx   
    Name:   Xxxxxxx X. Xxxxx   
    Title:   Senior Vice President, Chief Financial Officer and Treasurer   
 
  WILMINGTON TRUST COMPANY, as
Warrant Agent,
 		  
  by   /s/ Xxxxxxxxxxx X. Xxxxxxxxx   
    Name:   Xxxxxxxxxxx X. Xxxxxxxxx   
    Title:   Assistant Vice President   

 

 

EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[Restricted Securities Legend]
     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT, AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
     THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY OR ITS SUBSIDIARIES, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (V) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN EACH OF CASES (III), (IV) AND (V) SUBJECT TO THE COMPANY’S AND THE WARRANT AGENT’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
     IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY

 

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REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
[Definitive Securities Legend]
     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
     TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF.
[Separability Legend]
     THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 12% SENIOR SECURED NOTES DUE NOVEMBER 1, 2014 (A “NOTE”) OF ALION SCIENCE AND TECHNOLOGY CORPORATION (THE “COMPANY”) AND ONE WARRANT (A “WARRANT”) TO PURCHASE 1.9439 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE COMPANY. THE NOTES AND WARRANTS COMPRISING THE UNITS WILL NOT BE PERMITTED TO TRADE SEPARATELY UNTIL THE EARLIER OF (I) THE DATE THAT IS THREE MONTHS AFTER THE WARRANTS ISSUE DATE AND (II) THE DATE OF THE CLOSING OF AN EXCHANGE OFFER FOR THE NOTES OR THE EFFECTIVE DATE OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE NOTES.
[Regulation S Legend]
     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT, AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL

 

3

APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
     UNTIL ONE YEAR AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.
[Drag Legend]
     ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS (INCLUDING DRAG-ALONG RIGHTS) SPECIFIED IN THE WARRANT AGREEMENT (THE “WARRANT AGREEMENT”) DATED AS OF MARCH 22, 2010 BETWEEN ALION SCIENCE AND TECHNOLOGY CORPORATION (THE “COMPANY”) AND WILMINGTON TRUST COMPANY, SOLELY IN ITS CAPACITY AS WARRANT AGENT. BY ACCEPTING DELIVERY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, ANY TRANSFEREE SHALL BE DEEMED TO HAVE AGREED TO BE BOUND BY THE WARRANT AGREEMENT AS IF THE TRANSFEREE HAD EXECUTED AND DELIVERED THE WARRANT AGREEMENT.

 

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No. [     ]   Certificate for [     ] Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
ALION SCIENCE AND TECHNOLOGY CORPORATION
          THIS CERTIFIES THAT [                              ], or its registered assigns, is the registered holder of the number of Warrants set forth above (the “Warrants”). Each Warrant entitles the holder thereof (the “Holder”), at its option and subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from ALION SCIENCE AND TECHNOLOGY CORPORATION, a Delaware corporation (“the Company”), 1.9439 shares of Common Stock, par value of $0.01 per share, of the Company (the “Common Stock”) at the per share exercise price of $0.01 (the “Exercise Price”), or by Cashless Exercise referred to below. This Warrant Certificate shall terminate and become void as of the close of business on March 15, 2017 (the “Expiration Date”) or upon the exercise hereof as to all the shares of Common Stock subject hereto. The number of shares issuable upon exercise of the Warrants and the Exercise Price per share shall be subject to adjustment from time to time as set forth in the Warrant Agreement.
          This Warrant Certificate is issued under and in accordance with a Warrant Agreement dated as of March 22, 2010 (the “Warrant Agreement”), between the Company and Wilmington Trust Company (in such capacity, the “Warrant Agent”, which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties and obligations of the Company, the Warrant Agent and the Holders of the Warrants. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may be obtained for inspection by the Holder hereof upon written request to the Warrant Agent at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000, Attention: Corporate Capital Markets.
          Subject to the terms of the Warrant Agreement, the Warrants may be exercised in whole or in part (i) by presentation of this Warrant Certificate with the Election to Purchase attached hereto duly executed and with the simultaneous payment of the Exercise Price in cash (subject to adjustment) to the Warrant Agent for the account of the Company at the office of the Warrant Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall be made by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose. Payment by Cashless Exercise shall be made without the payment of cash by reducing the amount of Common Stock that would be obtainable upon the exercise of a Warrant and payment of the Exercise Price in cash so as to yield a number of shares of Common Stock upon the exercise of such Warrant equal to the product of (1) the number of shares of Common Stock for which such Warrant is exercisable as of the Exercise Date (if the Exercise Price were being paid in cash) and (2)

 

5

a fraction, the numerator of which is the excess of the Current Market Value per share of Common Stock on the Exercise Date over the Exercise Price per share as of the Exercise Date and the denominator of which is the Current Market Value per share of the Common Stock on the Exercise Date.
          As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Warrants shall be exercisable at any time and from time to time on any Business Day after the first anniversary of the Warrants Issue Date; provided, however, that Holders of Warrants will be able to exercise their Warrants only if (i) the exercise is pursuant to an effective registration statement under the Securities Act or (ii) the exercise of such Warrants is exempt from the registration requirements of the Securities Act of 1933 and such securities are qualified for sale or exempt from qualification under the applicable securities laws of the states or other jurisdictions in which such Holders reside; provided further, however, that no Warrant shall be exercisable after March 15, 2017.
          In the event of a Combination, the Holder hereof will be entitled to receive upon exercise of the Warrants the kind and amount of shares of capital stock or other securities or other property as the Holder would have received had the Holder exercised its Warrants immediately prior to such Combination; provided, however, that in the event that, in connection with such Combination, consideration to holders of Common Stock in exchange for their shares is payable solely in cash or in the event of the dissolution, liquidation or winding-up of the Company, the Holder hereof will be entitled to receive such cash distributions on an equal basis with the holders of Common Stock or other securities issuable upon exercise of the Warrants, as if the Warrants had been exercised immediately prior to such Combination, less the Exercise Price.
          As provided in the Warrant Agreement, the number of shares of Common Stock issuable upon the exercise of the Warrants and the Exercise Price are subject to adjustment upon the happening of certain events.
          If the Alion Science and Technology Corporation Employee Ownership, Savings and Investment Trust (the “Trust”) proposes to sell 75% or more of the common stock of the Company to a bona fide unaffiliated third party or parties on an arm’s length basis in a single transaction or series of related transactions for cash or unrestricted marketable securities traded on U.S. stock exchange, over the counter or on a bulletin board, the Trust will have the right on 20 days notice to require the Holders to exercise, within 15 days after receipt of written notice from the Trust, all or a portion of their Warrants and to sell the shares underlying their Warrants that they obtain through their exercise, and to sell all or certain shares underlying Warrants they exercised in the past that they still hold, subject to certain limitations. If any Warrant holder fails to exercise within such 15 days, the Warrant holder will be deemed to have made a Cashless Exercise. The Trust’s drag-along rights will expire upon the consummation by the Company of a Qualified Public Offering.
          The Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with the transfer or exchange of

 

6

the Warrant Certificates pursuant to Section 2.04 of the Warrant Agreement, but not for any exchange or original issuance (not involving a transfer) with respect to temporary Warrant Certificates, the exercise of the Warrants or the Warrant Shares.
          Upon any partial exercise of the Warrants in certificated form, there shall be countersigned and issued to the Holder hereof a new Warrant Certificate representing those Warrants which were not exercised. This Warrant Certificate may be exchanged at the office of the Warrant Agent by presenting this Warrant Certificate properly endorsed with a request to exchange this Warrant Certificate for other Warrant Certificates evidencing an equal number of Warrants. No fractional Warrant Shares will be issued upon the exercise of the Warrants, but the Company shall pay an amount in cash equal to the Current Market Value per Warrant Share on the day immediately preceding the date the Warrant is exercised, multiplied by the fraction of a Warrant Share that would be issuable on the exercise of any Warrant.
          All shares of Common Stock issuable by the Company upon the exercise of the Warrants and payment therefor shall, upon such issue, be duly and validly issued and fully paid and non-assessable.
          The holder in whose name the Warrant Certificate is registered may be deemed and treated by the Company and the Warrant Agent as the absolute owner of the Warrant Certificate for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by notice to the contrary.
          The Warrants do not entitle any Holder hereof to any of the rights of a stockholder of the Company.
          This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Warrant Agent.
         
  ALION SCIENCE AND TECHNOLOGY CORPORATION,
 		  
  by      
    Name:      
    Title:      
 
         
  by      
    Name:      
    Title:      
 
DATED:
Countersigned:

 

7

         
WILMINGTON TRUST COMPANY,
as Warrant Agent,
 		    
by        
  Authorized Signatory     

 

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FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
ALION SCIENCE AND TECHNOLOGY CORPORATION
          The undersigned hereby irrevocably elects to exercise _______________ Warrants to acquire shares of Common Stock, par value $0.01 per share, of ALION SCIENCE AND TECHNOLOGY CORPORATION, at an exercise price per share of Common Stock of $0.01, and otherwise on the terms and conditions specified in the within Warrant Certificate and the Warrant Agreement therein referred to, surrenders this Warrant Certificate and all right, title and interest therein to ALION SCIENCE AND TECHNOLOGY CORPORATION and directs that the shares of Common Stock deliverable upon the exercise of such Warrants be registered or placed in the name and at the address specified below and delivered thereto.
          The undersigned hereby acknowledges the restrictions on transfer of the Warrant Shares as set forth fully in the Warrant Agreement. By accepting delivery of the Warrant Shares, any transferee shall be deemed to have agreed to be bound by the transfer restrictions contained in the Warrant Agreement as if the transferee had executed and delivered the Warrant Agreement.
Date: ______, ______
         
     
    1 
  (Signature of Owner)   
 
         
     
  (Street Address)   
 
         
     
  (City)               (State)               (Zip Code)   
 
         
  Signature Guaranteed by:
 		  
     
 
 
1   The signature must correspond with the name as written upon the face of the within Warrant Certificate (or the DTC participant in the case of book-entry Warrants) in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a national bank or trust company or by a member firm of any national securities exchange.

 

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Securities and/or check to be issued to:
Please insert social security or identifying number:
     Name:
     Street Address:
     City, State and Zip Code:
A new Warrant Certificate evidencing any unexercised Warrants evidenced by the within Warrant Certificate is to be issued to:
     Please insert social security or identifying number:
     Name:
     Street Address:
     City, State and Zip Code:

 

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          In connection with any transfer of any of the Warrants evidenced by this certificate occurring prior to the latter of: (i) the earliest date that is no less than two years after the Warrants Issue Date and on which all such Warrants (except for Warrants held by an affiliate of the Company) are no longer subject to any restrictions on transfer under the Securities Act including those pursuant to Rule 144 and (ii) the last date, if any, on which such Warrants were owned by the Company or any Affiliate of the Company, the undersigned certifies that such Warrants are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
  (1) o  to the Company; or
 
  (2) o  pursuant to an effective registration statement under the Securities Act of 1933; or
 
  (3) o  outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or
 
  (4) o  pursuant to Rule 144A under the Securities Act of 1933; or
 
  (5) o  pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933.
          If such transfer is being made pursuant to an offshore transaction in accordance with Rule 904 under the Securities Act, the undersigned further certifies that:
     (i) the offer of the Warrants was not made to a person in the United States;
     (ii) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;
     (iii) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903 or Rule 904 of Regulation S, as applicable;
     (iv) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act;
     (v) we have advised the transferee of the transfer restrictions applicable to the Warrants and the Warrant Shares;

 

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     (vi) if the circumstances set forth in Rule 904(b)(1) under the Securities Act are applicable, either (a) neither we nor any person acting on our behalf knows that the transferee is a U.S. person or (b) we have complied with the additional conditions therein, including (if applicable) sending a confirmation or other notice stating that the Warrants may be offered and sold during the distribution compliance period specified in Rule 903 of Regulation S only in accordance with Regulation S; pursuant to registration of the Warrants under the Securities Act; or pursuant to an available exemption from the registration requirements under the Securities Act; and
     (vii) we have advised the transferee that hedging transactions involving the Units or the Warrants may not be conducted unless in compliance with the Securities Act.
          Unless one of the boxes is checked, the Warrant Agent will refuse to register any of the Warrants evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (3) or (4) is checked, the Warrant Agent may require, prior to registering any such transfer of the Warrants, such legal opinions, additional certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.
         
     
     
  Signature   
     
 
Signature Guarantee:
             
 
           
 
           
Signature must be guaranteed
      Signature    
 
            
 
 

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY2
          The following increases or decreases in this Global Security:
                                 
                    Number of        
                    Warrants in     Signature  
                    this Global     of  
                    Warrant     authorized  
    Decrease in number     Increase in number     Certificate     officer of  
Date of   of Warrants in     of Warrants in this     following     Warrant  
Exchange   this Global Security     Global Security     such change     Agent  
 
                                
 
2   To be included only if the Warrant is in global form.

 

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Filed: March 25th, 2010
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