HERCULES INC, SC 13D, 1995-03-27

HERCULES INC
SC 13D, 1995-03-27
PLASTIC MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

Alliant Techsystems Inc.
----------------------------------------------------------
(Name of Issuer)

Common Stock
----------------------------------------------------------
(Title of Class and Securities)

427056 10 6
----------------------------------------------------------
(CUSIP Number of Class of Securities)

Michael B. Keehan, Esq.
Vice President and General Counsel
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
(302) 594-5000
----------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)

March 15, 1995
---------------------------------------------------------
(Date of Event which Requires
Filing of this Statement)

If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box: ( )

Check the following box if a fee is being paid with this
statement: (X)

<PAGE> 2
SCHEDULE 13D
Page 2 of ___ Pages
CUSIP No. 427056 10 6

-----------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS

HERCULES INCORPORATED
-----------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (X)

-----------------------------------------------------------------
(3) SEC USE ONLY

-----------------------------------------------------------------
(4) SOURCE OF FUNDS

00
-----------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )

-----------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware
-----------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF
SHARES 3,862,069
BENEFICIALLY -----------------------------------
OWNED BY (8) SHARED VOTING POWER
EACH
REPORTING 0
PERSON -----------------------------------
WITH (9) SOLE DISPOSITIVE POWER

3,862,069
-----------------------------------
(10) SHARED DISPOSITIVE POWER

0
-----------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

3,862,069
-----------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( X )

-----------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11

28.2
-----------------------------------------------------------------
(14) TYPE OF REPORTING PERSON

CO
-----------------------------------------------------------------

2
<PAGE> 3
Item 1. Security and Issuer.

This statement relates to the common stock, par value $.01 per share
(the "Common Stock"), of Alliant Techsystems Inc., a Delaware corporation (the
"Issuer"). The address of the principal executive offices of the Issuer is 600
Second Street N.E., Hopkins, Minnesota 55343-8384.

Item 2. Identity and Background.

This statement is filed on behalf of Hercules Incorporated, a Delaware
corporation ("Hercules" or the "Reporting Person"). Hercules is a diversified,
worldwide producer of chemicals and related products.

The name, business address and present principal occupation or
employment, and the name, principal business and address of any corporation or
other organization in which such employment is conducted, of the Reporting
Person, as well as any executive officer and director of the Reporting Person,
are set forth below.

<TABLE>
<CAPTION>
Present Principal
Occupation or
Employment;
Filing Person Citizenship Business Address
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hercules Incorporated Hercules Plaza
1313 N. Market Street
Wilmington, Delaware 19894-0001

Thomas L. Gossage Chairman, Hercules Plaza
President and Chief Executive 1313 N. Market Street
Officer of Wilmington, Delaware 19894-0001
Hercules; Director; U.S.A.

R. Keith Elliott Executive Vice President and Hercules Plaza
Chief Financial Officer of 1313 N. Market Street
Hercules; Director; U.S.A. Wilmington, Delaware 19894-0001
</TABLE>

3
<PAGE> 4
<TABLE>
<CAPTION>
Present Principal
Occupation or
Employment;
Filing Person Citizenship Business Address
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Vincent J. Corbo Senior Vice Hercules Plaza
President, 1313 N. Market Street
Technology of Wilmington, Delaware 19894-0001
Hercules; U.S.A.

Herbert K. Pattberg President, Hercules Plaza
Hercules Europe; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001

Robert J.A. Fraser Group Vice Hercules Plaza
President and President, 1313 N. Market Street
Hercules Food & Functional Wilmington, Delaware 19894-0001
Products Company; U.S.A.

C. Doyle Miller Group Vice Hercules Plaza
President and President, 1313 N. Market Street
Hercules Chemical Specialties Wilmington, Delaware 19894-0001
Company; U.S.A.

Michael B. Keehan Vice President and General Hercules Plaza
Counsel of Hercules; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001

Edward V. Carrington Vice President, Human Resources, Hercules Plaza
of Hercules; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001

James R. Rapp Vice President, Corporate Hercules Plaza
Relations, of Hercules; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001

James D. Beach Vice President, Operations Hercules Plaza
Support, of Hercules; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001
</TABLE>

4
<PAGE> 5
<TABLE>
<CAPTION>
Present Principal
Occupation or
Employment;
Filing Person Citizenship Business Address
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
George Mackenzie Vice President, Finance, of Hercules Plaza
Hercules; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001

Israel J. Floyd Corporate Hercules Plaza
Secretary and 1313 N. Market Street
Assistant General Counsel, Legal Wilmington, Delaware 19894-0001
Section of
Hercules; U.S.A.

Jan M. King Treasurer of Hercules Plaza
Hercules; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001

Vikram Jog Controller of Hercules Plaza
Hercules; U.S.A. 1313 N. Market Street
Wilmington, Delaware 19894-0001

Manfred Caspari Director; Germany John-Mott-Strasse 1
D-71522 Backnang
Germany

Richard M. Fairbanks, III Managing Director for Domestic Center for Strategic and International
and International Issues, Center Studies (CSIS)
for Strategic and International 1800 K Street, N.W.
Studies; Director; U.S.A. Washington, D.C. 20006-2202

Edith E. Holiday Director; U.S.A. 3239 38th St., N.W.
Washington, D.C. 20016-3728

Robert G. Jahn Professor, Aerospace Sciences, Princeton University
Princeton University; Director; Dept. of Mechanical and Aerospace
U.S.A. Engineering
D-334 Engineering Quadrangle
Princeton, New Jersey 08544-0001
</TABLE>

5
<PAGE> 6
<TABLE>
<CAPTION>
Present Principal
Occupation or
Employment;
Filing Person Citizenship Business Address
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gaynor N. Kelley Chairman and Chief Executive Perkin-Elmer Corporation
Officer of Perkin-Elmer 761 Main Avenue
Corporation; Director; U.S.A. Norwalk, Connecticut 06859-0002

Ralph L. MacDonald, Jr. Principal, Island Capital Island Capital Corporation
Corporation; Director; U.S.A. 1890 South 14th Street
Suite 201-Bldg. 300
Amelia Island, Florida 32034-4730

H. Eugene McBrayer Director; U.S.A. 4802 East Mercer Way
Mercer Island, Washington 98040-4736

Paula A. Sneed Senior Vice President, Marketing Kraft Foods
Services, of Kraft Foods; 250 North Street
Director; U.S.A. White Plains, New York 10625-0001

Lee M. Thomas Senior Vice President, Paper, of Georgia-Pacific Corporation
Georgia-Pacific Corporation; P.O. Box 740075
Director; U.S.A. Atlanta, Georgia 30374-0075
</TABLE>

During the last five years, neither the Reporting Person nor any
person listed above has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), nor has the Reporting Person or
any person listed above been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
Federal or State securities laws or finding any violation with respect to such
laws.

Item 3. Source and Amount of Funds or Other Consideration.

The securities were issued to the Reporting Person which are the
subject of this filing (the "Hercules Shares") pursuant to

6
<PAGE> 7
the Purchase and Sale Agreement, dated as of October 28, 1994 (the "Transaction
Agreement"), as amended on March 15, 1995, between the Issuer and the Reporting
Person, pursuant to which the Reporting Person agreed to sell, and the Issuer
agreed to purchase, certain assets related to the aerospace operations
conducted by the Hercules Aerospace Company division of the Reporting Person
(the "HAC Business"). The consummation of the purchase and sale of the HAC
Business (the "Transaction") took place on March 15, 1995 (the "Closing"). The
consideration paid to the Reporting Person by the Issuer at the Closing
pursuant to the terms and conditions of the Transaction Agreement consisted of
(a) cash in the amount of $281,352,000, subject to adjustment, (b) 3,862,069
shares of Common Stock, constituting the Hercules Shares, and (c) the
assumption by the Issuer of certain liabilities of the Reporting Person related
to the HAC Business.

Item 4. Purpose of Transaction.

The Hercules Shares were acquired by the Reporting Person in
connection with the sale by the Reporting Person to the Issuer of the HAC
Business pursuant to the terms and conditions of the Transaction Agreement.

Pursuant to the Transaction Agreement, the Issuer acquired from
Hercules the HAC Business and, in consideration therefor, the Issuer: (i) paid
Hercules cash in the amount of $281,352,000, subject to adjustment; (ii) issued
to Hercules 3,862,069 shares of Common Stock; and (iii) assumed certain
liabilities of the HAC Business.

Upon the consummation of the Transaction, Hercules owned approximately
28% of the then outstanding shares of Common Stock. At the Closing, the Issuer
and Hercules entered into a Stockholder's Agreement (the "Stockholder's
Agreement") to establish certain terms and conditions of Hercules' ongoing
relationship with the Issuer. The Stockholder's Agreement provides, among
other things, that, through the fifth anniversary of the closing date of the
transaction (subject to earlier termination under limited circumstances,
including in the event Hercules and its controlled affiliates own, at any time,
less than 5% of the voting securities of the Issuer), Hercules will: (i) be
entitled to designate two of the eight non-employee members of the Board of
Directors of Alliant; (ii) be required to vote its shares of Common Stock for
the election of directors in

7
<PAGE> 8
accordance with the recommendation of the Board, so long as the Board's
nominees consist of the individuals meeting the requirements set forth in the
Stockholder's Agreement, which individuals shall include the required designees
of Hercules (but otherwise will be entitled to vote its shares as it deems
appropriate); and (iii) be subject to a standstill arrangement (which, among
other things, will prohibit Hercules and its controlled affiliates from owning
more than 40% of the then outstanding voting securities of the Issuer and from
taking certain other actions involving control of the Issuer). Upon
consummation of the Transaction, R. Keith Elliott, Executive Vice President and
Chief Financial Officer of Hercules, and one of Hercules' designees, became the
non-employee Chairman of the Board of the Issuer, and Thomas L. Gossage,
Chairman, President and Chief Executive Officer of Hercules, and one of
Hercules' designees, became a director of the Issuer. In addition, subject
to limited exceptions, until the first anniversary of the Closing, neither
Hercules nor its controlled affiliates will be permitted to dispose of any of
their shares of voting securities of the Issuer without the prior written
consent of the Issuer, and subject to certain exceptions, any dispositions
from and after the first anniversary of the Closing will be subject to a
right of first refusal by the Issuer. After the first anniversary of the
Closing (and subject to certain restrictions), Hercules will be entitled to
certain registration rights in respect of the shares of Common Stock
acquired by Hercules pursuant to the Transaction Agreement.

The descriptions contained in this Statement on Schedule 13D of the
terms and conditions of the Transaction, the Transaction Agreement, the
Stockholder's Agreement and any other related documents are qualified in their
entirety by reference to the text of the Transaction Agreement, a copy of which
is attached hereto (without Schedules and Exhibits), and the Stockholder's
Agreement, a copy of which is attached hereto, which are incorporated herein by
reference.

Upon the consummation of the purchase and sale of the HAC Business, R.
Keith Elliott, Executive Vice President and Chief Financial Officer of
Hercules, became the non-employee Chairman of the Board of the Issuer. The
Issuer granted Mr. Elliott options to purchase 172,000 shares of Common Stock
at an exercise price of $30 per share. The Reporting Person disclaims
beneficial ownership of the options granted to Mr. Elliott by the Issuer and
the shares of Common Stock which may be purchased upon the exercise thereof.

8
<PAGE> 9
Except as described above, the Reporting Person has no present plans
or proposals which relate to or would result in: (a) the acquisition by any
person of additional securities of the Issuer, or the disposition of securities
of the Issuer; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer or any of
its subsidiaries; (d) any change in the present Board of Directors or
management of the Issuer, including any plans or proposals to change the number
or term of Directors or to fill any existing vacancies on the Board; (e) any
material change in the present capitalization or dividend policy of the Issuer;
(f) any other material change in the Issuer's business or corporate structure;
(g) changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person; (h) causing a class of securities of the Issuer to be
delisted from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national securities
association; (i) a class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or (j) any action similar to any of those
enumerated above.

Item 5. Interest in Securities of the Issuer.

(a)(b) Hercules beneficially owns 3,862,069 shares of Common Stock,
representing approximately 28.2% of the 12,343,810 shares of such class of
securities outstanding after giving effect to the consummation of the
Transaction, as to which shares of Common Stock it has sole voting power and
dispositive power.

9
<PAGE> 10
Except as stated above, neither the Reporting Person nor any
person listed in Item 2 beneficially owns any shares of Common Stock.

(c) Upon the consummation of the purchase and sale of the HAC
Business, R. Keith Elliott, Executive Vice President and Chief Financial
Officer of Hercules, became the non-employee Chairman of the Board of the
Issuer. The Issuer granted Mr. Elliott options to purchase 172,000 shares of
Common Stock at an exercise price of $30 per share. The Reporting Person
disclaims beneficial ownership of the options granted to Mr. Elliott by the
Issuer and the shares of Common Stock which may be purchased upon the
exercise hereof.

Except as stated above and pursuant to the Transaction Agreement,
neither the Reporting Person nor any person listed in Item 2 has effected any
transaction in shares of Common Stock during the past sixty days.

(d) Not applicable.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to the Securities of the Issuer.

At the Closing, the Issuer and Hercules entered into a Stockholder's
Agreement (the "Stockholder's Agreement") to establish certain terms and
conditions of Hercules' ongoing relationship with the Issuer. The
Stockholder's Agreement provides, among other things, that, through the fifth
anniversary of the closing date of the transaction (subject to earlier
termination under limited circumstances, including in the event Hercules and
its controlled affiliates own, at any time, less than 5% of the voting
securities of the Issuer), Hercules will: (i) be entitled to designate two of
the eight non-employee members of the Board of Directors of Alliant; (ii) be
required to vote its shares of Common Stock for the election of directors in
accordance with the recommendation of the Board, so long as the Board's
nominees consist of the individuals meeting the requirements set forth in the
Stockholder's Agreement, which individuals shall include the required designees
of Hercules (but otherwise will be entitled to vote its shares as it deems
appropriate); and (iii) be subject to a standstill arrangement (which, among
other

10
<PAGE> 11
things, will prohibit Hercules and its controlled affiliates from owning more
than 40% of the then outstanding voting securities of the Issuer and from
taking certain other actions involving control of the Issuer). Upon
consummation of the Transaction, R. Keith Elliott, Executive Vice President and
Chief Financial Officer of Hercules, and one of Hercules' designees, became the
non-employee Chairman of the Board of the Issuer, and Thomas L. Gossage,
Chairman, President and Chief Executive Officer of Hercules, and one of
Hercules' designees, became a director of the Issuer. In addition, subject
to limited exceptions, until the first anniversary of the Closing, neither
Hercules nor its controlled affiliates will be permitted to dispose of any
of their shares of voting securities of the Issuer without the prior written
consent of the Issuer, and subject to certain exceptions, any dispositions
from and after the first anniversary of the Closing will be subject to a
right of first refusal by the Issuer. After the first anniversary of the
Closing (and subject to certain restrictions), Hercules will be entitled to
certain registration rights in respect of the shares of Common Stock acquired
by Hercules pursuant to the Transaction Agreement.

Item 7. Material to be Filed as Exhibits.

1. Purchase and Sale Agreement, dated as of October 28, 1994,
between Alliant Techsystems Inc. and Hercules Incorporated
(incorporated by reference to Exhibit 99 (1) of the Report on
Form 8-K of Hercules Incorporated, filed November 15, 1994).

2. Stockholder's Agreement dated March 15, 1995 between Alliant
Techsystems Inc. and Hercules Incorporated.

11
<PAGE> 12
SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

Dated: March 27, 1995

HERCULES INCORPORATED

By: /s/ Thomas L. Gossage
------------------------
Thomas L. Gossage
President and
Chief Executive Officer

12
<PAGE> 13

<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
<S> <C>
1. Purchase and Sale Agreement,
dated as of October 28, 1994,
between Alliant Techsystems Inc.
and Hercules Incorporated
(incorporated by reference to
Exhibit 99(1) of the Report on Form
8-K of Hercules Incorporated,
Filed November 15, 1994)

2. Stockholder's Agreement dated
March 15, 1995 between
Alliant Techsystems Inc. and
Hercules Incorporated
</TABLE>

<PAGE> 1

STOCKHOLDER'S AGREEMENT

PART OF THE DEFINITIVE AGREEMENTS
REFERRED TO IN THE
PURCHASE AND SALE AGREEMENT
BETWEEN HERCULES AND ALLIANT
<PAGE> 2
TABLE OF CONTENTS

STOCKHOLDER'S AGREEMENT

<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C>
1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Board Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Voting and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Acquisition of Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Certain Prohibited Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. Disposition of Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9. Legend on Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10. Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17. Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
18. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
19. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
20. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
21. Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>

i
<PAGE> 3

STOCKHOLDER'S AGREEMENT

STOCKHOLDER'S AGREEMENT, dated March 15, 1995 (the "Agreement"),
between ALLIANT TECHSYSTEMS INC., a Delaware corporation (the "Company"), and
HERCULES INCORPORATED, a Delaware corporation (the "Stockholder").

WHEREAS, simultaneously with the execution of this Agreement, pursuant
to a Purchase and Sale Agreement, dated as of October 28, 1994 (the
"Transaction Agreement"), between the Company and the Stockholder, (i) the
Stockholder is selling to the Company, and the Company is purchasing from the
Stockholder, the HAC Business (as defined in the Transaction Agreement) and
(ii) in consideration therefor, the Company is delivering to the Stockholder
the Cash Portion of the Purchase Price (as defined in the Transaction
Agreement) and is issuing to the Stockholder 3,862,069 shares of the Company's
common stock, par value $.01 per share (the "Common Stock"); and

WHEREAS, the Company and the Stockholder desire to establish in this
Agreement certain terms and conditions of the Stockholder's relationship with
the Company.

NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in the Transaction Agreement, the parties
hereto agree as follows:

1. Representations and Warranties.

(a) The Company represents and warrants to the
Stockholder as follows:

(i) The Company has full power and authority to
execute, deliver and perform this Agreement;

(ii) This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that (x) the enforceability hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting creditors' rights, (y) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought, and (z) the rights to indemnity
and contribution hereunder may be limited by federal or state securities laws
or the public policy underlying such laws;

<PAGE> 4
(iii) The execution, delivery and performance of
this Agreement by the Company do not violate or conflict with or constitute a
default under the Company's certificate of incorporation, by-laws or any
material agreement to which it is a party or by which it or its property is
bound;

(iv) As of the date hereof, no other party is
entitled to any registration or similar right with respect to any securities of
the Company; and

(v) The Company is not aware of any voting trust,
voting agreement or arrangement with respect to any of its voting securities.

(b) The Stockholder represents and warrants to the
Company as follows:

(i) The Stockholder has full power and authority
to execute, deliver and perform this Agreement;

(ii) This Agreement has been duly and validly
authorized, executed and delivered by the Stockholder and constitutes a valid
and binding obligation of the Stockholder, enforceable against the Stockholder
in accordance with its terms, except that (x) the enforceability hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting creditors' rights, (y) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought, and (z) the rights to indemnity
and contribution hereunder may be limited by federal or state securities laws
or the public policy underlying such laws;

(iii) The execution, delivery and performance of
this Agreement by the Stockholder do not violate or conflict with or constitute
a default under the Stockholder's certificate of incorporation, by-laws or any
material agreement to which it is a party or by which it or its property is
bound;

(iv) As of the date hereof, neither the
Stockholder, nor any of its "controlled affiliates" (as defined below),
beneficially own any shares of Common Stock (or any options, warrants, rights
or other securities exercisable for, exchangeable for or convertible into
shares of Common Stock, whether immediately or after the passage of time
(collectively, "Conversion Securities")) other than shares issued pursuant to
the Transaction Agreement and shares owned by the trustee of any Exempt Plan
(as defined below); and

- 2 -
<PAGE> 5
(v) The Stockholder is acquiring the shares of
Common Stock pursuant to the Transaction Agreement for investment purposes only
and not with a view to the distribution thereof in violation of any applicable
state or federal securities laws.

(c) As used in this Agreement, the term "controlled
affiliate" means any corporation, partnership or other entity that is
"controlled by", "controlling" or "under common control with" (as such terms
are defined under Rule 405 under the Securities Act of 1933 (the "Securities
Act") the applicable party, and for purposes hereof, when such term is used
with respect to the Stockholder, shall include all directors of the Stockholder
who are also officers of the Stockholder.

2. Term of Agreement. The term (the "Term") of this Agreement
shall commence on the date hereof and shall continue until the earlier to occur
of (i) the fifth anniversary of the Closing Date and (ii) the date on which the
Voting Power of the Voting Securities beneficially owned by the Stockholder and
its controlled affiliates shall represent less than five percent (5%) of the
Total Voting Power; provided, however, that the provisions of Section 8 hereof
shall survive any termination of this Agreement other than pursuant to the
preceding clause (ii). For the purposes of this Agreement, (i) the term
"Voting Securities" shall mean all securities of the Company entitled to vote
generally in the election of directors of the Company, (ii) any reference to
the Stockholder's and its controlled affiliates' beneficial ownership of Voting
Securities shall exclude all Voting Securities held by any pension, savings or
employee benefit plan of the Stockholder, the trustee(s) of which make the
investment decisions with respect to the plan funds and the decisions with
respect to the voting of shares of stock purchased with plan funds
independently of the Stockholder and the Stockholder's controlled affiliates
(for purposes of this Agreement, any such pension, savings or employee benefit
plan shall be referred to as an "Exempt Plan"), (iii) the term "Voting Power"
shall mean voting power in the general election of directors of the Company,
and (iv) the term "Total Voting Power" shall mean the total combined Voting
Power of all the Voting Securities then outstanding.

3. Board Representation.

(a) During the Term, the Board of Directors of the
Company (the "Board") shall consist of ten members, of which: (i) until August
1, 1996, four members (or such fewer number as may be agreed to by Capstay
Partners, L.P. ("Capstay") and, thereafter, three members (or such fewer number
as may be agreed to by Capstay)), shall be designees of Capstay; (ii) no more
than two members shall be employees of the Company or its subsidiaries, one of
whom shall be the chief executive officer of the Company; and (iii) two members
shall

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<PAGE> 6
be designees of the Stockholder. During the Term, the Company shall use its
best efforts and shall exercise all authority under applicable law to cause to
be elected or appointed, as the case may be, (x) as directors of the Company a
slate of directors consisting of individuals meeting the requirements of the
previous sentence, (y) (I) as chairman of the Executive/Finance Committee of
the Board, the Chairman of the Board, (II) as chairman of the Personnel and
Compensation Committee of the Board, a designee of Capstay, and (III) as
chairman of the Nominating Committee of the Board, a designee of the
Stockholder and (z) as members of such Nominating Committee (in addition to the
chairman), a designee of Capstay and a director of the Company that is not a
designee of the Stockholder or Capstay or an employee of the Company. Any
nominees, and any alternate or successor nominees, designated by the
Stockholder must be reasonably satisfactory to the directors of the Company who
are neither employees of the Company nor affiliates or designees of the
Stockholder; provided, however, that nominees who are executive officers or
directors of the Stockholder shall not be subject to the foregoing requirement
unless and until either (i) the Stockholder becomes a party to any business
combination transaction and is not the surviving corporation thereof, or (ii)
any "person" or "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) becomes the
beneficial owner of Voting Securities of the Stockholder representing more than
fifty percent (50%) of the total combined Voting Power of all then outstanding
Voting Securities of the Stockholder.

(b) Notwithstanding the provisions of Section 3(a), the
Stockholder shall not be entitled to designate any person as a nominee for
election to the Board if the election of such person would result in any
violation of applicable law or order of any Authority, or render the Company
unable in any material respect to conduct its business.

(c) Any director who has been designated by the
Stockholder shall not be entitled to vote in respect of any action taken by the
Board or the Company relating to any business transaction between the Company
and the Stockholder or relating to this Agreement or any of the other
Definitive Agreements, or any amendment, modification or waiver hereof or
thereof.

(d) In the event that the nominees designated by the
Stockholder are not nominated to serve on the Board as set forth above, other
than through the fault of the Stockholder, the provisions of Sections 3, 4, 5,
6 and 7 of this Agreement shall automatically terminate and be of no further
force or effect.

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<PAGE> 7
4. Voting and Other. (a) Each of the Stockholder and Capstay
agree that, during the Term (i) it will, and will cause their respective
controlled affiliates to, be present, in person or represented by proxy, at all
stockholder meetings of the Company for the election of directors, so that all
Voting Securities beneficially owned by it and its controlled affiliates shall
be counted for the purpose of determining the presence of a quorum for the
election of directors at such meetings, and (ii) it will, and will cause its
controlled affiliates to, vote, or act by consent with respect to, all Voting
Securities beneficially owned by it and its controlled affiliates for the
election of the nominees for the Board nominated by the nominating committee of
the Board, so long as such nominees consist of individuals meeting the
requirements of the first sentence of Section 3(a) hereof. Other than the
foregoing, there shall be no restrictions on the Stockholder's or its
controlled affiliates' or Capstay or its controlled affiliates' ability to vote
any Voting Securities.

(b) Neither the Stockholder or its controlled affiliates,
nor Capstay or its controlled affiliates shall participate in the Closing
Repurchase (as defined herein).

5. Acquisition of Voting Securities. During the Term, the
Stockholder will not, and will cause each of its controlled affiliates not to,
acquire, offer or propose to acquire, or agree to acquire, directly or
indirectly, any Voting Securities or Conversion Securities; provided, however,
that the Stockholder and its controlled affiliates may acquire Voting
Securities and/or Conversion Securities pursuant to this Agreement: (a) as
provided in the Transaction Agreement, (b) by way of stock dividends, stock
splits, reorganization, recapitalization, merger, consolidation or other
similar transactions made available to holders of Common Stock generally, or
(c) in open market or privately negotiated transactions which do not violate
the federal securities laws if, after giving effect to such transactions, the
Stockholder and its controlled affiliates would not beneficially own more than
40% of the Total Voting Power. If, at any time during the Term, the
Stockholder and its controlled affiliates shall become the beneficial owners of
more than 40% of the Total Voting Power as a result of purchases of Common
Stock by the Company, recapitalizations or other comparable actions by the
Company, the Stockholder and/or its controlled affiliates will promptly, and in
any event within 60 days after becoming aware of such fact, sell such number of
Voting Securities or Conversion Securities as shall be necessary to reduce the
beneficial ownership interest of the Stockholder and its controlled affiliates
to 40% or less of the Total Voting Power in compliance with the provisions of
this Agreement (other than Section 7(a) or (b) below) .

Notwithstanding any other provision of this Agreement (i) any Voting
Securities acquired by the Stockholder or its controlled affiliates subsequent
to the date hereof and within the Term

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<PAGE> 8
shall be subject only to the provisions of Sections 4, 5 and 6 of this
Agreement and shall not be subject to any other provision of this Agreement and
(ii) purchases of Voting Securities or Conversion Securities made by the
trustees of any Exempt Plan shall not be construed as purchases by the
Stockholder or its controlled affiliates.

6. Certain Prohibited Actions. During the Term, without the
prior written consent of the Company duly authorized by the Board, the
Stockholder will not, and will cause each of its controlled affiliates not to,
singly or as part of a "group", directly or indirectly, through one or more
intermediaries (i) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" (as such terms are defined or used in
Regulation 14A under the Exchange Act) with respect to the Voting Securities
(including by the execution of actions by written consent), become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) with respect to the Company or seek to
advise or influence any person or entity with respect to the voting of any
Voting Securities; (ii) initiate, propose, or participate in the solicitation
of stockholders for the approval of, one or more stockholder proposals with
respect to the Company as described in Rule 14a-8 under the Exchange Act or
induce any other individual or entity to initiate any stockholder proposal
relating to the Company; (iii) form, join, influence or participate in a
"group", act in concert with any other person or entity or otherwise become a
"person", for the purpose of acquiring, holding, voting or disposing of any
Voting Securities or taking any other actions prohibited under this Section 6;
(iv) make any proposal or, except as may be required by law, any public
announcement relating to a tender or exchange offer for any Voting Securities,
or a merger, business combination, sale of assets, liquidation, restructuring,
recapitalization or other extraordinary corporate transaction relating to the
Company or its material assets; (v) act, alone or in concert with others
(including by providing financing for another party), to seek or offer to
control the Company (provided that actions of the Stockholder's nominees on the
Board pursuant to Section 3(a) shall not be deemed a violation of the
foregoing); (vi) deposit any Voting Securities in a voting trust or subject any
Voting Securities to any arrangement or agreement with respect to the voting
thereof; (vii) disclose any intention, plan or arrangement inconsistent with
the foregoing prohibitions or advise or assist any other person in connection
with the foregoing prohibitions; or (viii) seek, request or propose any waiver,
modification, amendment or termination of any provision of Section 5 or Section
6 of this Agreement (other than any request or proposal made or solicited by
the Company or a request by the Stockholder to the Company to obtain
clarification of any provision of this Agreement);

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<PAGE> 9
provided, however, that nothing contained herein shall prohibit the Company
from publicly announcing its position with respect to any matter concerning the
Company.

7. Disposition of Voting Securities.

(a) Except as specifically provided in Section 5 hereof,
until the first anniversary of the date hereof and subject to the provisions of
Sections 7(d), (e) and (f) below, the Stockholder shall not, and shall cause
its controlled affiliates not to, transfer any Voting Securities, whether by
sale, assignment, pledge, encumbrance, gift, bequest, appointment or otherwise,
without the prior written consent of the Company in each instance.

(b) Except as specifically required in Section 5 or 8
hereof, from and after the first anniversary of the date hereof, the
Stockholder and its controlled affiliates may freely sell or transfer Voting
Securities, subject to (i) compliance with federal and state securities laws
and (ii) the provisions of this Section 7(b) and Section 7(c) below. In the
case of any proposed sale or transfer pursuant to this Section 7(b), the
Stockholder shall, and shall cause its controlled affiliates to, comply with
the following provisions:

(i) Promptly upon receipt of a bona fide offer or
the finalization of the terms of a proposed sale or transfer of Voting
Securities to a third party, the Stockholder or its controlled affiliate shall
notify the Company in writing of its intention to sell, transfer or dispose of
such Voting Securities, specifying the number of Voting Securities proposed to
be sold or transferred, the identity or identities of the prospective purchaser
or purchasers thereof, the proposed purchase price therefor, the manner of sale
and the material terms of any agreement relating thereto. Such notification
shall hereinafter be referred to as the "Stockholder Notice".

(ii) The Company shall have the right, exercisable
by written notice of exercise given to the Stockholder or its controlled
affiliate within 5 business days following receipt by the Company of the
Stockholder Notice to purchase (or to cause a person or persons designated by
the Company to purchase) all, but not less than all, of the Voting Securities
specified in such Stockholder Notice at the price, in the manner and on the
terms specified therein. If the purchase price specified in the Stockholder
Notice includes any property other than cash, the purchase price at which the
Company (or its designee) shall be entitled to purchase shall be (x) the amount
of cash, if any, specified in such Stockholder Notice plus (y) cash in an
amount equal to the value of the property specified therein. In

- 7 -
<PAGE> 10
the event that the purchase price specified in the Stockholder Notice includes
property other than cash, and the Company notifies the Stockholder of its
irrevocable determination to exercise its right to purchase all of the Voting
Securities specified in the Stockholder Notice so long as the value of such
property does not exceed an amount specified in the Company's notice, which
represents the Company's good faith estimate of the value of such property (the
"Company's Valuation"), and the Stockholder or its controlled affiliate does
not agree with such value, the value of such property shall be determined by
two independent financial advisors, one such financial advisor to be selected
by the Company and another to be selected by the Stockholder or its controlled
affiliate, in each case, within 5 days after notice is given from the
Stockholder or its controlled affiliate, to the other party, to the effect that
they are unable to agree as to such value. If, within 5 days after being
selected, the two financial advisors have not agreed as to such value, a third
financial advisor shall be selected within 5 days thereafter by the mutual
consent of the first two financial advisors, or, if such first two financial
advisors shall fail to agree upon the selection of a third financial advisor in
such time, such selection shall be made as promptly as practicable by the
American Arbitration Association. Within 5 days of its selection, the third
financial advisor shall determine the value of such property, which
determination shall be final and binding on all parties hereto. The Company
and the Stockholder or its controlled affiliate shall each bear the costs
incurred in connection with the retention of the respective financial advisor
selected by them. All costs incurred as a result of the retention of a third
financial advisor (including any costs incurred in connection with the
assistance provided by American Arbitration Association) shall be borne equally
between the Company, on the one hand, and the Stockholder or its controlled
affiliate, on the other hand. In the event that the value of such property as
determined pursuant to the preceding sentence is (a) less than or equal to the
Company's Valuation, the Company shall be deemed to have exercised its right to
purchase all of the Voting Securities specified in such Stockholder Notice as
of the date that the purchase price was determined pursuant to this clause (ii)
and (b) greater than the Company's Valuation, the Company shall have five
business days from such date to determine whether to purchase the Voting
Securities specified in such Stockholder's Notice at the purchase price
determined pursuant to this clause (ii).

(iii) If the Company exercises its option to
purchase all, but not less than all, of the Voting Securities being offered
(including by designation of another purchaser or purchasers), the closing of
the purchase of such Voting Securities shall take place as promptly as
practicable, but (unless extended as provided herein) in no event shall such
closing take place more than 5 business days after the later of (a) the date
the Company gives

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<PAGE> 11
notice of such exercise; and (b) the date the purchase price for such Voting
Securities was determined pursuant to clause (ii) above; provided that, if any
governmental or regulatory approval is required for the closing of such
purchase, the Company and the Stockholder shall each use their respective best
efforts to obtain such approval as promptly as practicable and such closing
shall occur not later than 5 days after such approval is obtained.

(iv) Notwithstanding anything contained herein,
the Company shall not have the right to transfer its right of first refusal
contained herein to any purchaser or purchasers, if the nature or identity of
such purchaser or purchasers is reasonably likely to delay the closing of such
purchase for a longer period of time than if the Company were the purchaser.

(v) If the Company elects not to exercise, or
fails to exercise within the time specified for such exercise, its option
provided herein in respect of any particular Stockholder Notice, the
Stockholder or its controlled affiliate shall be free, during the period of 90
calendar days following the last day of the period during which the Company was
permitted to exercise such option (or any earlier date on which the Company
gives notice of an election not to exercise such option), or such period longer
than 90 days as may be reasonably necessary for the Stockholder to obtain all
requisite governmental approvals, to sell the Voting Securities specified in
the Stockholder Notice in the manner, to the purchasers and on the terms and
for not less than the consideration specified in such Stockholder Notice. Any
proposed transfer by the Stockholder or its controlled affiliate of Voting
Securities other than in accordance with the provision hereof or after the
expiration of the applicable 90-calendar day period referred to in this clause
(v) will give rise to a separate right of first refusal of the Company pursuant
to the provisions of this Section 7(b).

(vi) Notwithstanding the foregoing provisions of
this Section 7(b), following the second anniversary of the date hereof, the
Stockholder may, from time to time, sell pursuant to Rule 144 under the
Securities Act (or any successor provision) the number of Voting Securities
then permitted under Rule 144 (or any successor provision) without compliance
with the foregoing provisions of this Section 7(b).

(c) The Stockholder shall not, and shall cause its
controlled affiliates not to, at any time during the Term, knowingly sell or
transfer Voting Securities to (x) any person (including that person's
controlled affiliates and any group in which that person or its controlled
affiliates shall be a member if the Stockholder knows of the existence of such

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<PAGE> 12
a group or affiliates), other than an underwriter in connection with a public
offering of Voting Securities, which would, after giving effect to such sale or
transfer, beneficially own in the aggregate Voting Securities representing in
excess of 10% of the Total Voting Power, or (y) any Foreign Person. For
purposes of this Agreement, the term "Foreign Person" shall have the meaning
given to it under the Regulations Pertaining to Mergers, Acquisitions, and
Takeovers by Foreign Persons, 56 Fed. Reg. 58,774 et seq. (November 21, 1993)
(31 C.F.R. Part 800).

(d) Notwithstanding anything to the contrary in this
Agreement, the Stockholder and its controlled affiliates shall be free without
any restrictions at all times during the Term to sell or transfer Voting
Securities (i) if a third party makes a bona fide offer to purchase Voting
Securities which represent more than fifty percent (50%) of the Total Voting
Power of the outstanding Voting Securities, which offer is approved and
recommended by the Board (if such recommendation shall not have been withdrawn
or adversely modified prior thereto), (ii) if a third party acquires beneficial
ownership of Voting Securities which represent 30% or more of the Total Voting
Power of the outstanding Voting Securities, (iii) to the Company pursuant to
any offer made by the Company to repurchase Voting Securities made to all
stockholders generally (other than the repurchase, by tender offer, open market
purchase, recapitalization or otherwise, of up to 1.5 million shares of Common
Stock to be consummated within six months of the date hereof (the "Closing
Repurchase")), or (iv) at any time after the first anniversary of the date
hereof on the New York Stock Exchange (or any other national securities
exchange on which the Common Stock is then listed), in the event that the
Company publicly announces or continues to effect a stock repurchase program.

(e) Notwithstanding anything to the contrary in this
Agreement, the Stockholder may from time to time sell or transfer free of any
restriction other than as set forth below (the "Permitted Disposition") to
selected individuals who are directors, officers or employees of the
Stockholder up to a maximum of 350,000 shares of Voting Securities, in the
aggregate, during the Term. Any shares disposed of pursuant to the Permitted
Disposition will be included in calculating the Stockholder's ownership of
Voting Securities for the purposes of Section 5 above. The Stockholder agrees
to take all action necessary to ensure that such shares are not sold prior to
the first anniversary of the date hereof and remain subject to Section 7(c)
above.

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<PAGE> 13
(f) The Stockholder agrees to notify the Company promptly
if the Stockholder receives written or oral notice that any United States
government agency is alleging that the Stockholder is under "foreign ownership,
control or influence" within the meaning of the Department of Defense
Industrial Security Manual (as defined in the Transaction Agreement). Upon the
Company's receipt of either (a) such notice from the Stockholder or (b) notice
from any United States government agency that the United States government
considers the Company to be under such "foreign ownership, control or
influence" due to the Stockholder's ownership of the Company's securities, the
Stockholder shall cooperate with the Company in the development of a plan of
action to insure continuation of the Company's facilities security clearances.
The Stockholder agrees that it shall either (x) agree to all such arrangements
as the United States government may require to nullify or negate the effects of
the foreign ownership, control or influence on the Company and thereby enable
the Company to retain its eligibility for facilities security clearances or (y)
if arrangements satisfactory to the United States government are not in effect
within 90 days from the date of the Company's receipt of the aforesaid notice
(or such shorter period as may be prescribed by the United States government),
then the Stockholder shall (i) immediately cease to have any rights to
designate any person to the Board and (ii) sell, and cause each of its
controlled affiliates to sell, all of its Voting Securities (or so much thereof
as shall be necessary to nullify or negate the aforesaid effects) in compliance
with (x) clauses (i), (ii), (iii) and (iv) of paragraph (b) and paragraph (c)
of Section 7 above or (y) paragraph 8 below, as soon as practicable, but in any
event within 120 days after the end of such 90-day period (or such shorter
period). In order to effectuate such sale, the Stockholder shall be entitled
to request the registration of the Voting Securities owned by it pursuant to
the provisions of Section 8(a) below. Such 120-day period shall be extended
for the period of any postponement by the Company under the provisions of
Section 8.

8. Registration Rights.

(a) (i) At any time commencing 270 days after the
date hereof and continuing thereafter until the date on which the Stockholder
and its controlled affiliates own Voting Securities representing less than 5%
of the Total Voting Power, the Stockholder shall have the right to make written
demand upon the Company (each, a "Stockholder Demand"), on not more than three
separate occasions (subject to the provisions of this Section 8), to register
under the Securities Act all or any portion of the shares of Voting Securities
issued to it pursuant to the Transaction Agreement and owned by the Stockholder
or its controlled affiliates (the shares subject to such demand hereunder being
referred to as the "Subject

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<PAGE> 14
Stock"), which Stockholder Demand shall specify the intended method or methods
of disposition of such Subject Stock and the Company shall use its best efforts
to cause such shares to be registered under the Securities Act as soon as
reasonably practicable so as to permit promptly the disposition thereof in
accordance with the intended method or methods of disposition stated in the
Stockholder Demand (including, but not limited to, an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule) under the
Securities Act (a "Rule 415 Offering") if the Company is then eligible to
register such Subject Stock on Form S-3 (or a successor form); so long as at
the time of the Stockholder Demand relating to such Rule 415 Offering, the
Stockholder represents to the Company that it has a present intention to sell
all of the Subject Stock included in such Stockholder Demand); provided,
however, that each such demand shall cover at least 750,000 shares of Subject
Stock (subject to adjustment for stock splits, reverse stock splits and stock
dividends after the date hereof). In connection therewith, the Company shall
prepare, and as promptly as practicable (and in any event within 60 days of the
receipt of the request), file, on Form S-3 if permitted or otherwise on the
appropriate form, a registration statement under the Securities Act to effect
such registration. The Stockholder agrees to provide all such information and
materials and to take all such action as may be reasonably required in order to
permit the Company to comply with all applicable requirements of the Securities
Act and the Securities and Exchange Commission (the "Commission") and to obtain
any desired acceleration of the effective date of such registration statement.
If the offering to be registered is to be underwritten, the managing
underwriters shall be a nationally recognized investment banking organization
selected by the Stockholder and be subject to the approval of the Company
(which approval shall not be unreasonably withheld or delayed), and the
Company, the Stockholder and such underwriters shall enter into an underwriting
agreement containing customary terms and conditions.

(ii) Notwithstanding the foregoing, the Company
(w) shall not be obligated to cause a registration statement pursuant to this
Section 8(a) to become effective prior to the first anniversary of the date
hereof, (x) shall not be obligated to prepare or file more than one
registration statement pursuant to this Section 8(a) during any twelve-month
period, (y) shall not be obligated to cause any special audit to be undertaken
in connection with any such registration and (z) shall be entitled to postpone
for a reasonable period of time, but not in excess of 90 days, the filing of
any registration statement otherwise required to be prepared and filed by the
Company if (1) the Company is, at such time, conducting or about to conduct an
underwritten public offering of securities and is advised by its managing
underwriter or underwriters that such offering would in its or their opinion be
materially

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<PAGE> 15
adversely affected by the registration so requested (any postponement pursuant
to this clause (1) shall be referred to as a "Company delay") or (2) the
Company determines in its reasonable judgment and in good faith that the
registration and distribution of the shares of Subject Stock would interfere
with any pending or imminent material financing (other than an underwritten
public offering), acquisition, disposition, corporate reorganization or other
material transaction or development involving the Company. In no event shall
the Company invoke a Company delay more than once in any twelve-month period.
In the event of any Company delay, the Stockholder shall have the right to
withdraw the request for registration by giving written notice to the Company
within 20 days after receipt of the notice of postponement (and, in the event
of such withdrawal, such request shall be ignored for purposes of determining
the number of registrations to which the Stockholder is entitled pursuant to
this Section 8(a)) and following any such delay, the Company will not file any
registration statement (other than for purposes of a stock option or other
employee benefit plan) without providing the Stockholder (x) with notice that
the Company delay is no longer in effect and (y) an opportunity for 30 days to
exercise its rights to a demand registration statement.

(iii) In the event that, at any time while any Rule
415 Offering remains effective, the Company determines in its reasonable
judgment and in good faith that the sale of Subject Stock would require
disclosure of material information which the Company has a bona fide business
purpose for preserving as confidential or that the Company is unable to comply
with SEC requirements, the Stockholder shall, upon written notice of such good
faith determination, suspend sales of Subject Stock for a period (a "Blackout
Period") beginning on the date of receipt of such notice and expiring on the
earlier of (x) the date upon which such material information is disclosed to
the public or ceases to be material or the Company is able to comply with SEC
requirements, as the case may be, and (y) 45 days after the receipt of such
notice from the Company.

(iv) The Company shall agree not to effect any
public sale or distribution of any Voting Securities within 15 days before and
90 days (or such shorter period as may be agreed by the parties hereto) after,
the effective date of any registration statement filed pursuant to Section 8(a)
(except as part of such underwritten registration or pursuant to registration
of securities to be issued pursuant to a stock option or other employee benefit
or similar plan or securities to be proposed to be issued in exchange for
securities or assets of, or in connection with a merger or consolidation with,
another corporation).

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<PAGE> 16
(v) The Company and any other stockholder having
"piggyback" registration rights shall be entitled to register securities on any
registration statement filed pursuant to Section 8(a), provided that if the
offering pursuant to such registration statement is to be made by or through
underwriters, the Company and/or any such stockholder agree to offer its stock
by or through the underwriters selected by the Stockholder and execute an
underwriting agreement in customary form; provided, further, that if the
underwriter managing the offering advises the Stockholder in writing that in
the underwriter's opinion the inclusion of such stock (or any portion thereof)
would materially adversely affect such offering, the Company and the other
stockholders shall reduce or eliminate the shares they propose to register
(among them as they may agree), to the extent required to eliminate such
material adverse effect. If the Company or any other Stockholder has been
permitted to participate in a proposed offering pursuant to this Section 8(a),
the Stockholder may determine not to consummate the sale of such Subject Stock,
in which event, it will have no liability to the Company or such other
Stockholder and, in the event that the Company or such other person(s)
determine to go forward with the registration, such registration statement will
be ignored for purposes of determining the number of registrations to which the
Stockholder is entitled pursuant to Section 8(a).

(b) If, at any time commencing after the first
anniversary of the date of this Agreement and continuing thereafter until the
Stockholder and its controlled affiliates own Voting Securities representing
less than 5% of the Total Voting Power, the Company proposes to register any
Voting Securities under the Securities Act (other than (i) pursuant to Section
8(a) above, (ii) securities to be issued pursuant to a stock option or other
employee benefit or similar plan, or (iii) securities proposed to be issued in
exchange for securities or assets of, or in connection with a merger or
consolidation with, another corporation), the Company shall, as promptly as
practicable, give written notice to the Stockholder of the Company's intention
to effect such registration. If, within 15 days after receipt of such notice,
the Stockholder submits a written request to the Company (a "Stockholder
Request") specifying the amount of Subject Stock that it proposes to sell or
otherwise dispose of in accordance with this Section 8(b), the Company shall
use its best efforts to include the shares specified in the Stockholder's
request in such registration. Notwithstanding the foregoing, if the offering
pursuant to such registration statement is to be made by or through
underwriters, the Company shall not be required to include Subject Stock
therein if either (A) the Stockholder does not agree to offer its stock by or
through the underwriters selected by the Company for the registration of the
shares of Voting Securities and execute an underwriting agreement in customary
form or (B) the underwriter managing the offering

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<PAGE> 17
advises the Stockholder in writing that in the underwriter's opinion the
inclusion of such stock (or any portion thereof) would materially adversely
affect such offering; provided, however, that (x) in the case of a registration
statement to effectuate the sale of securities for the account of the Company,
the Stockholder shall, after inclusion of the Company shares, be treated on a
pro rata basis with any other stockholder included in such registration, based
on the number of shares proposed to be registered by each such stockholder and
(y) in the case of a registration statement filed at the request or demand of
another stockholder, shall be treated on a similar pro rata basis with all
other selling stockholders after giving priority to the stockholder making such
request or demand. No registration effected under this Section 8(b) shall
relieve the Company of its obligation to effect any registration upon request
under Section 8(a). If the Stockholder has been permitted to participate in a
proposed offering pursuant to this Section 8(b), the Company thereafter may
determine either not to file a registration statement relating thereto, or to
withdraw such registration statement, or otherwise not to consummate such
offering, without any liability hereunder other than the expenses referred to
in Section 8(e).

(c) The Stockholder, and any underwriters participating
in such offering, shall use all reasonable efforts to effect as wide a
distribution of the Stockholder's shares offered pursuant to the registration
statement as is reasonably practicable, and in no event shall any sale (other
than a sale to underwriters making such a distribution) of shares of Subject
Stock be made knowingly to (i) any person (including its affiliates and any
group in which that person or its affiliates shall be a member if the
Stockholder or underwriters know of the existence of such a group or affiliate)
that, after giving effect to such sale, would beneficially own Voting
Securities representing 10% or more of the Total Voting Power or (ii) any
Foreign Person. The Stockholder shall secure the agreement of the
underwriters, in connection with any underwritten offering of its Subject Stock
pursuant to Section 8(a), to comply with the foregoing.

(d) In connection with any offering of shares of Subject
Stock registered pursuant to Section 8(a) or (b), the Company shall (i) furnish
to the Stockholder such number of copies of any prospectus (including
preliminary and summary prospectuses) and conformed copies of the registration
statement (including amendments or supplements thereto and, in each case, all
exhibits) and such other documents as it may reasonably request, but only while
the Company shall be required under the provisions hereof to cause the
registration statement to remain current; (ii)(A) use its best efforts to
register or qualify the Subject Stock covered by such registration statement
under such blue sky or other state

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<PAGE> 18
securities laws for offer and sale as the Stockholder shall reasonably request
and (B) keep such registration or qualification in effect for so long as the
registration statement remains in effect; provided, however, that the Company
shall not be obligated to qualify to do business as a foreign corporation under
the laws of any jurisdiction in which it shall not then be qualified or to file
any general consent to service of process in any jurisdiction in which such a
consent has not been previously filed or subject itself to taxation in any
jurisdiction wherein it would not otherwise be subject to tax but for the
requirements of this Section 8(d); (iii) use its best efforts to cause all
shares of Subject Stock covered by such registration statement to be registered
with or approved by such other federal or state government agencies or
authorities as may be necessary in the opinion of counsel to the Company to
enable the Stockholder to consummate the disposition of such shares of Subject
Stock; (iv) notify the Stockholder, at any time when a prospectus relating to
the registration of its Subject Stock is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made, not misleading and (subject to the
good faith determination of the Board as to whether to permit sales under such
registration statement), at the request of the Stockholder promptly prepare and
furnish to it a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made, not misleading; (v) comply with all
applicable rules and regulations of the Commission; (vi) use its best efforts
to list, if required by the rules of the applicable securities exchange or, if
securities of the same class are then so listed, the Subject Stock covered by
such registration statement on the New York Stock Exchange or on any other
securities exchange on which the Subject Stock is then listed; (vii) before
filing any registration statement or any amendment or supplement thereto, and
as far in advance as is reasonably practicable, furnish to the Stockholder and
its counsel copies of such documents; the Company shall not file any such
document which contains statements referring to the Stockholder to which the
Stockholder shall reasonably object; and (viii) reasonably cooperate with the
Stockholder in effecting any underwritten offering, including causing its
officers and employees to participate in any "road shows" or similar
presentations relating thereto. In connection with any offering of Subject
Stock registered pursuant to this Section 8, the Company shall (x) furnish to
the underwriter, if any, or the Stockholder unlegended

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<PAGE> 19
certificates representing ownership of the Subject Stock being sold in such
denominations as requested and (y) instruct any transfer agent and registrar of
the Subject Stock to release any stop transfer orders with respect to such
Subject Stock. Upon any registration becoming effective pursuant to Section
8(a), the Company shall use its best efforts to keep such registration
statement current and to comply with the provisions of the Securities Act with
respect to the disposition of all Subject Stock for a period of 90 days (or 180
days, if the Company is eligible to use a Form S-3, or successor form), plus in
either case, with respect to a Rule 415 Offering, a period of time equal to any
Blackout Period, or such shorter period as shall be necessary to effect the
distribution of the Subject Stock.

The Stockholder agrees that upon receipt of any notice from the
Company of the happening of any event of the kind described in subdivision (iv)
of this Section 8(d), it will forthwith discontinue its disposition of Subject
Stock pursuant to the registration statement relating to such Subject Stock
until its receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (iv) of this Section 8(d) and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all copies
then in its possession of the prospectus relating to such Subject Stock current
at the time of receipt of such notice. If the Stockholder's disposition of
Subject Stock is discontinued pursuant to the foregoing sentence, unless the
Company thereafter extends the effectiveness of the registration statement to
permit dispositions of Subject Stock by the Stockholder for an aggregate of 90
days (or 180 days, if the Company is eligible to use a Form S-3, or successor
form), plus in either case, with respect to a Rule 415 Offering, a period of
time equal to any Blackout Period, whether or not consecutive, the registration
statement shall be ignored for purposes of determining the number of
registrations to which the Stockholder is entitled pursuant to Section 8(a).

(e) In connection with any registration pursuant to
Section 8(a) or (b): (i) the Stockholder shall only be responsible for
applicable agent fees, transfer taxes, discounts and commissions and
underwriting discounts and commissions related to shares of Subject Stock being
sold by the Stockholder and (ii) the Company shall pay all other fees and
expenses in connection with any registration statement under this Agreement,
including, without limitation, all registration and filing fees, all printing
costs, all fees and expenses of complying with securities or blue sky laws,
fees and disbursements of the Company's counsel and accountants and any
disbursements of underwriters customarily paid by issuers in secondary
offerings and the fees and disbursements of only one Stockholder's counsel.

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<PAGE> 20
(f) In the case of any offering registered pursuant to
this Section 8, the Company agrees to indemnify and hold the Stockholder, each
underwriter, if any, of the Subject Stock under such registration and each
person who controls any of the foregoing within the meaning of Section 15 of
the Securities Act, and any officer, employee or partner of the foregoing,
harmless against any and all losses, claims, damages or liabilities (including
reasonable legal fees and other reasonable expenses incurred in the
investigation and defense thereof) to which they or any of them may become
subject under the Securities Act or otherwise (collectively "Losses"), insofar
as any such Losses shall arise out of or shall be based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of such Subject Stock (as amended
if the Company shall have filed with the Commission any amendment thereof), or
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the prospectus relating to the sale of such Subject Stock (as
amended or supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto), or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the indemnification agreement contained in
this Section 8(f) shall not apply to such Losses which shall arise out of or
shall be based upon any such untrue statement or alleged untrue statement, or
any such omission or alleged omission, which shall have been made in reliance
upon and in conformity with information furnished in writing to the Company by
the Stockholder or any such underwriter, as the case may be, specifically for
use in connection with the preparation of the registration statement or
prospectus contained in the registration statement or any such amendment
thereof or supplement thereto.

(g) In the case of each offering registered pursuant to
this Section 8, the Stockholder and each underwriter, if any, participating
therein shall agree, substantially in the same manner and to the same extent as
set forth in paragraph (f) of this Section 8, severally to indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, and the directors and officers
of the Company, with respect to any statement in or omission from such
registration statement or prospectus contained in such registration statement
(as amended or as supplemented, if amended or supplemented as aforesaid), if
such statement or omission shall have been made in reliance upon and in
conformity with information furnished in writing to the Company by the
Stockholder or such underwriter, as the case may be, specifically for

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<PAGE> 21
use in connection with the preparation of such registration statement or
prospectus contained in such registration statement or any such amendment
thereof or supplement thereto.

(h) Each party indemnified under paragraph (f) or (g) of
this Section 8 shall, promptly after receipt of notice of the commencement of
any claim against such indemnified party in respect of which indemnity may be
sought hereunder, notify the indemnifying party in writing of the commencement
thereof. The failure of any indemnified party to so notify an indemnifying
party shall not relieve the indemnifying party from any liability in respect of
such action which it may have to such indemnified party on account of the
indemnity agreement contained in paragraph (f) or (g) of this Section 8, unless
(and only to the extent) the indemnifying party was prejudiced by such failure,
and in no event shall such failure relieve the indemnifying party from any
other liability which it may have to such indemnified party. In case any
action in respect of which indemnification may be sought hereunder shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may desire, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under paragraph (f) or (g) of this Section 8
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof, other than reasonable costs of
investigation (unless such indemnified party reasonably objects to such
assumption on the grounds that there may be defenses available to it which are
different from or in addition to those available to such indemnifying party in
which event the indemnified party shall be reimbursed by the indemnifying party
for the reasonable expenses incurred in connection with retaining separate
legal counsel).

(i) If the indemnification provided for in this Section 8
is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the amount paid or payable by such indemnified party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the offering to which such
contribution relates as well as any other relevant equitable

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<PAGE> 22
considerations. The relative fault shall be determined by reference to, among
other things, each party's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, and the
opportunity to correct and prevent any statement or omission. The amount paid
or payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
investigation or proceeding, to the extent such party could have been
indemnified for such expenses if the indemnification provided for in this
Section 8 was available to such party.

The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(i) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

(j) The Parties acknowledge and agree that the
indemnification provisions set forth in this Section 8 shall not be subject in
any manner to any indemnification provisions contained in the Transaction
Agreement.

(k) Notwithstanding any provision of Section 7 hereof,
the Stockholder and its controlled affiliates shall be free to sell Subject
Stock that is subject to a registration pursuant to Section 8(a) or (b), free
of any right of first refusal on the part of the Company; provided, however,
that upon receipt by the Company of a Stockholder Demand or a Stockholder
Request, the Company shall have the right, exercisable by written notice of
exercise given to the Stockholder or its controlled affiliate within five
business days following receipt by the Company of the Stockholder Demand or
Stockholder Request, as the case may be, to purchase all, but not less than all
of the Voting Securities specified in such Stockholder Demand or Stockholder
Request, as the case may be, at a price per share equal to 98.5% of the
quotient of (a) the sum of the closing prices of the Common Stock on the NYSE
for each of the five business days immediately preceding the date of the
Stockholder Demand or Stockholder Request, as the case may be, divided by (b)
five. In the event that the Company exercises its option to purchase all, but
not less than all, of the Voting Securities subject to the Stockholder Demand
or Stockholder Request, as the case may be, the closing of the purchase of such
Voting Securities shall take place as promptly

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<PAGE> 23
as practicable, but in no event shall such closing take place more than five
business days after the date the Company gives notice of such exercise.

9. Legend on Certificates.

(a) The Stockholder hereby acknowledges and agrees that,
during the Term, each of the certificates representing Voting Securities
received or acquired by the Stockholder or any controlled affiliate in
accordance with this Agreement shall be subject to stop transfer instructions
and shall include the following legend, to the extent applicable:

The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended, or the
securities laws of any state. The shares represented by this
certificate may not be transferred whether by sale, assignment,
pledge, encumbrance, gift, bequest, appointment or otherwise, and
Alliant Techsystems Inc. ("Alliant Techsystems") will not register the
transfer of such shares, except pursuant to and subject to that
certain Stockholder's Agreement between Alliant Techsystems and
Hercules Incorporated. A copy of such agreement is on file with the
Secretary of Alliant Techsystems.

The Company agrees (i) to have such legend removed promptly
upon the sale or other disposition of any Voting Securities pursuant to Section
7(b) (v) or Section 8 hereof and (ii) to have such legend (other than the first
sentence thereof) removed promptly following any sale or other disposition of
Voting Securities permitted by this Agreement or the expiration of the Term.

10. Rights Plan. The Company agrees that, during the Term, so
long as the Stockholder is in compliance with its obligations under Sections 5
and 6 of this Agreement, the Company shall not declare the Stockholder to be an
"Adverse Person" under the Rights Plan or take other action under the Rights
Plan, or a successor plan, which would treat the Stockholder as an "Acquiring
Person" or similar entity under the Rights Plan or a successor plan. For
purposes of this Agreement, the term "Rights Plan" shall mean the Rights
Agreement, dated as of September 28, 1990, between the Company and
Manufacturers Hanover Trust Company, now operating under the name of Chemical
Bank, as amended.

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<PAGE> 24
11. Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.

12. Amendment and Modification. Subject to applicable law and
Section 6 hereof, this Agreement may be amended, modified and supplemented only
by written agreement of the Company and the Stockholder; provided, however,
that any amendment or modification of Section 3 (with respect to the number of
Capstay designees on the Board only) or Section 4 hereof shall also require the
consent of Capstay, so long as Capstay and its controlled affiliates own Voting
Securities representing more than 2.5% of the Total Voting Power.

13. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be made in writing by hand
delivery, registered first-class mail, telecopier or air courier guaranteeing
overnight delivery:

(a) If to the Company, to:

Alliant Techsystems Inc.
600 Second Street NE
Hopkins, Minnesota 55343-8384
Telecopier: (612) 931-5920
Attention: Daryl L. Zimmer, Esq.

with a copy to:

Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Telecopier: (212) 593-5955
Attention: Marc Weingarten, Esq.

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<PAGE> 25
or to such other person or address as the Company shall furnish to the
Stockholder and Capstay in writing;

(b) If to the Stockholder, to:

Hercules Incorporated
Hercules Plaza, Room 8410 NE
Wilmington, Delaware 19894-0001
Telecopier: (302) 594-7252
Attention: Michael B. Keehan, Esq.
Vice President and General Counsel

with a copy to:

Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Box 636
Wilmington, Delaware 19899
Telecopier: (302) 651-3001
Attention: Robert B. Pincus, Esq.

or to such other person or address as the Stockholder shall furnish to the
Company and Capstay in writing.

Capstay Partners, L.P.
450 Park Avenue
Suite 1902
New York, New York 10022
Telecopier: (212) 319-4419
Attention: Joel M. Greenblatt

or to such other person or address as Capstay shall furnish to the Company and
the Stockholder in writing.

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<PAGE> 26
All such notices, requests, demands and other communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail, postage
prepaid, if sent by registered first-class mail; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to an air courier
guaranteeing overnight delivery.

14. Severability. In the event that any provision(s) of this
Agreement shall be held illegal, invalid or unenforceable under applicable law,
then such illegality, invalidity or unenforceability shall not affect any other
provisions(s) hereof and this Agreement shall remain in force and be
effectuated as if such illegal, invalid or unenforceable provision is not part
of this Agreement; provided, however, (i) if the deletion of any provision of
this Agreement frustrates a material purpose or right of the Company or the
Stockholder, then such Company or Stockholder may terminate this Agreement
forthwith and without further liability or obligation and (ii) absent such
frustration and to the extent legally possible, the Company and the Stockholder
shall seek in good faith alternate provisions or arrangements to achieve the
same purposes as such provision.

15. Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, legal representatives, successors
(including any successor by merger, reorganization, consolidation or other
business combination) and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other party.

16. Governing Law. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to its conflicts of law doctrine.

17. Jurisdiction and Venue. The Company, the Stockholder and
Capstay hereby agree that any suit, claim, action or proceeding relating to or
arising under this Agreement shall be brought exclusively in a state court of
Delaware (a "Delaware Court"). Each of the Company, the Stockholder and
Capstay hereby consents to personal jurisdiction in any such action brought in
any such Delaware Court, consents to service of process upon it and waives any
objection it may have to venue in any such Delaware Court or to any claim that
any such Delaware Court is an inconvenient forum. The Company, the Stockholder
and Capstay hereby waive trial by jury in any suit, claim, action or proceeding
in any court relating to or

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<PAGE> 27
arising under this Agreement. The Company, the Stockholder and Capstay confirm
that the foregoing waiver is informed and freely made.

18. Counterparts. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

19. Headings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof or affect
in any way the meaning or interpretation of this Agreement.

20. Entire Agreement. This Agreement and the Transaction
Agreement set forth the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein, and supersede all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of any party hereto. Capitalized terms used in this
Agreement which are not defined herein have the respective meanings set forth
in the Transaction Agreement.

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<PAGE> 28
21. Third Parties. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation, other than the
parties hereto (including Capstay Partners, L.P.) and their successors or
assigns, any rights or remedies under or by reason of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.

ALLIANT TECHSYSTEMS INC. HERCULES INCORPORATED

By /s/ Daryl L. Zimmer By /s/ R. Keith Elliott

Name and Title Name and Title

Agreed for purposes of Section 4 hereof only:

CAPSTAY PARTNERS, L.P.

By: Gotham Capital Partners, L.L.C.

By /s/ Daniel L. Nir
-----------------------------------------
Daniel L. Nir, Managing Member
Name and Title

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