THIRD AMENDMENT TO THE SELLER NOTE SECURITIES PURCHASE

Exhibit 10.46 THIRD AMENDMENT TO THE SELLER NOTE SECURITIES PURCHASE
AGREEMENT AND FIRST AMENDMENT TO RIGHTS AGREEMENT      THIS THIRD AMENDMENT TO THE SELLER NOTE SECURITIES PURCHASE AGREEMENT AND FIRST AMENDMENT TO RIGHTS AGREEMENT (the "Amendment") is made effective as of August 29, 2008 (the "Effective Date") between Alion Science and Technology Corporation, a Delaware corporation (the "Company"), and Illinois Institute of Technology, an Illinois not-for-profit corporation ("IIT"). Individuals Bahman Atefi and Stacy Mendler join this Amendment for purposes of Section 11 of this Amendment only and for no other purpose. Alion Science and Technology Corporation Employee Ownership, Savings and Investment Trust (the "Trust") joins this Amendment for purposes of Section 2 of this Amendment only and for no other purpose.      WHEREAS, the Company and IIT Research Institute, an Illinois not-for-profit corporation affiliated with and controlled by IIT ("IITRI") entered into that certain Seller Note Securities Purchase Agreement dated as of the 20th day of December 2002 (the "Original Seller Note Securities Purchase Agreement"), pursuant to which, among other documents, the Company issued to IITRI its 6% junior subordinated promissory note (the "Seller Note") in the principal amount of Thirty-Nine Million Nine Hundred Thousand United States Dollars ($39.9 million) and warrants to purchase One Million Eighty Thousand Four Hundred Thirty-Six and Eight-Tenths (1,080,436.8) shares of the Company’s $0.01 par value per share common stock ("Common Stock");      WHEREAS, as of July 1, 2004, IITRI transferred to IIT all its rights and interests in the Seller Note Securities Purchase Agreement, and IIT and the Company amended the Original Seller Note Securities Purchase Agreement as of that time;      WHEREAS, the Company and IIT entered into an agreement captioned First Amendment to the Seller Note Securities Purchase Agreement as of June 30, 2006 and another agreement captioned Second Amendment to the Seller Note Securities Purchase Agreement as of January 9, 2008 (the Original Seller Note Securities Purchase Agreement as so amended is hereinafter referred to as the "Seller Note Securities Purchase Agreement");      WHEREAS, the Company and IIT desire to amend Section 2 and Section 10.1 of the Seller Note Securities Purchase Agreement as set forth herein;      WHEREAS, the Company, IITRI and the Trust entered into that certain Rights Agreement dated as of the 20th day of December 2002 (the "Rights Agreement"), and      WHEREAS, IIT is IITRI’s successor in interest under the Rights Agreement as a result of the aforesaid transfer of IITRI’s rights in and to the Original Seller Note Securities Purchase Agreement to IIT as of July 1, 2004, and the Company, the Trust and IIT desire to amend Section 2(c) of the Rights Agreement as set forth herein.      NOW, THEREFORE, in consideration of the premises set forth above and the respective covenants and agreements contained in this Amendment, and for other good and valuable

consideration, the receipt and sufficiency of which is hereby mutually acknowledged, and intending to be legally bound, the parties hereto hereby agree as follows:      1.  Amendments to the Seller Note Securities Purchase Agreement .           (a) Authorization of Securities Section 2 of the Seller Note Securities Purchase Agreement is hereby deleted and replaced in its entirety with the following:           " Authorization of Securities; etc.      (a) The Company originally authorized the issue of its Junior Subordinated Notes due December 20, 2010 (herein, together with any notes issued in exchange thereof or replacement thereof, called the "Notes") in the aggregate principal amount of $39,900,000 (the "Original Principal Amount"). As of August 29, 2008, the Company amended and restated the Notes among other things to modify the interest payable on the Notes beginning December 21, 2008 and to extend the maturity date of the Notes, and the Company re-issued as of such date to the then sole holder of the Notes, Illinois Institute of Technology, an Illinois not-for-profit corporation ("IIT"), the amended and restated Notes which are due August 6, 2013. The amended and restated Notes are to be substantially in the form of Exhibit 2(a) attached hereto.      (b) The Company has authorized the issue of its warrants evidencing rights to purchase 1,080,436.8 shares of its Common Stock (subject to adjustment) (herein, together with any warrants issued in exchange therefor or replacement thereof, called the "Original Warrants"). As of August 29, 2008, the Company authorized the issue of warrants evidencing rights to purchase an additional 550,000 shares of its Common Stock (subject to adjustment) (herein, together with any warrants issued in exchange therefor or replacement thereof, called the "New Warrants"). The Original Warrants and the New Warrants are hereinafter referred to collectively as the "Warrants". The Original Warrants are to be substantially in the form of Exhibit 2(b)(1) and the New Warrants are to be substantially in the form of Exhibit 2(b)(2) attached hereto.      (c) Interest on the amended and restated Notes shall be calculated in one of three manners, with the applicable manner of calculation being dependent upon specific time periods occurring between the Notes’ original issuance date and the Maturity Date of the amended and restated Notes. Each manner of calculation and the time period to which it applies is as follows. First, interest on the amended and restated Notes shall accrue at 6% per annum computed on the actual number of days elapsed in any year (based on a year of twelve 30-day months and a 360 day year). Beginning December 20, 2002 and through and including the fourth anniversary of the Closing Date, interest on the Notes shall be payable quarterly in arrears in the form of non-compounding payment-in-kind notes ("PIK Notes"). The PIK Notes are to be substantially in the form of Exhibit 2(c)(1) attached hereto. Interest paid in PIK Notes will not be compounded and PIK Notes will therefore be non-interest bearing obligations, payable as provided in the PIK Notes. Second, during the period beginning the day after the fourth anniversary of the Closing Date through and including the day which is the sixth anniversary of the Closing Date, interest on the Notes shall be payable quarterly in arrears in the form of

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compounding payment-in-kind notes ("Compounding PIK Notes"). The Compounding PIK Notes are to be substantially in the form of Exhibit 2(c)(2) attached hereto. Interest paid in Compounding PIK Notes during the period beginning after the fourth anniversary of the Closing Date through and including the sixth anniversary of the Closing Date will be compounded as follows:           (i) Interest paid in Compounding PIK Notes during the period beginning the day after the fourth anniversary of the Closing Date through and including the fifth anniversary of the Closing Date (the "Fifth Year") will be paid at a rate of 6% per annum on the Original Principal Amount plus additional interest at a rate of 6% per annum payable on the interest payable on the Original Principal Amount during the immediately preceding twelve months (which yields an effective rate of interest accrual of 6.36% during the Fifth Year); and      (ii) Interest paid in Compounding PIK Notes during the period beginning the day after the fifth anniversary of the Closing Date through and including the sixth anniversary of the Closing Date (the "Sixth Year") will be paid at a rate of 6% per annum on the Original Principal Amount plus additional interest at a rate of 6% per annum payable on the interest payable on the Original Principal Amount during the immediately preceding twenty-four months (which yields an effective rate of Interest accrual of 6.7416% during the Sixth Year).      Third, provided the Company makes the first principal prepayment set forth in Section 2(d) below, then as of December 21, 2008 the aggregate principal amount of the amended and restated Notes shall be increased to $51,703,538.40, which represents the net principal amount after taking into account of such prepayment and the capitalization of PIK Notes and Compounding PIK Notes to the principal of the Notes for the time period December 21, 2002 through and including December 20, 2008 (the "Capitalized Principal Amount"); provided, however, that if the Company fails to make said first principal payment, then the aggregate principal amount of the Notes shall be Fifty-Four Million Seven Hundred Three Thousand Five Hundred Thirty-Eight and 40/100 DOLLARS ($54,703,538.40) and in such an event the Capitalized Principal Amount shall be deemed to be Fifty-Four Million Seven Hundred Three Thousand Five Hundred Thirty-Eight and 40/100 DOLLARS ($54,703,538.40). Beginning with the day after the sixth anniversary of the Closing Date (the "Interest Adjustment Date") through and including the Maturity Date, interest on the Notes shall be payable quarterly in arrears at a rate of 16% per annum on the Capitalized Principal Amount or the Revised Principal Amount (as defined below) as applicable computed on the actual number of days elapsed in any year (based upon a year of twelve 30-day months and a 360 day year). Five-Eighths of any interest payable from the Interest Adjustment Date through and including the Maturity Date shall be payable quarterly in arrears in the form of compounding PIK Notes substantially in the form of Exhibit 2(c)(3) and the remaining Three-Eighths shall be payable quarterly in arrears in cash. Accordingly, the Company shall pay during such time interest quarterly in arrears in the amount of 10% per annum in compounding PIK Notes and pay during such time interest quarterly in arrears in the amount of 6% per annum in cash. The first installment of interest on the Notes for the Original Principal Amount was payable on March 31, 2003, and thereafter interest is payable on the Notes, quarterly in arrears on the last Business Day of March, June, September and December of

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each year, commencing March 31, 2003; provided , however, that for all interest payable after the Interest Adjustment Date, such quarterly payments of interest on the Notes for the Capitalized Principal Amount shall be due and payable on October 1, January 2, April 1 and July 1 of each year, and the first payment of interest after the Interest Adjustment Date shall be due and payable on April 1, 2009 (and such first payment of interest shall include interest accrued during the months of January, 2009 through March, 2009 plus interest accrued during the time December 21, 2008 through and including December 31, 2008). Accrued and unpaid interest is due and payable on the Maturity Date. In no event shall the amount paid or agreed to be paid by the Company as interest on any Note exceed the highest lawful rate permissible under any law applicable thereto.      (d) Subject to the Company being permitted to repay principal under the Notes pursuant to Section 4.04(a) of the Company’s Indenture dated as of February 8, 2007 and under Section 6.09(c) (as the same section may be renumbered in the future) of the Company’s Senior Credit Facility dated as of August 2, 2004 (the "Term B Senior Credit Facility"), as amended, the Company shall prepay without premium principal on the Notes prior to the Maturity Date according to the following schedule:

     The applicable Revised Principal Amount (or the Capitalized Principal Amount if the Company has not been permitted pursuant to Section 4.