Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


AMONG


ALLIEDSIGNAL INC.,


ALLIEDSIGNAL TECHNOLOGIES, INC.,


ALLIEDSIGNAL DEUTSCHLAND GMBH


AND


L-3 COMMUNICATIONS CORPORATION


DATED AS OF MARCH 30, 1998


ASSET PURCHASE AGREEMENT


Page
---- ARTICLE 1. PURCHASE AND SALE................................................................................... 1
1.1 Purchase and Sale........................................................................ 1
1.2 Non-Assignable Assets.................................................................... 3
1.3 Excluded Assets.......................................................................... 3
1.4 Transfer of the Assets................................................................... 4
1.5 Sale and Transfer of ELAC Shares......................................................... 4
1.6 License Agreement........................................................................ 5


ARTICLE 2. CLOSING; PURCHASE PRICE............................................................................. 5
2.1 Closing Date and Place................................................................... 5
2.2 Purchase Price........................................................................... 5
2.3 Income Taxes............................................................................. 5
2.4 Cash True-Up............................................................................. 5
2.5 Allocation of Purchase Price............................................................. 6
2.6 Payments................................................................................. 6
2.7 Transfer Taxes........................................................................... 6


ARTICLE 3. ASSUMPTION OF LIABILITIES AND OBLIGATIONS............................................................ 7
3.1 Assumed Liabilities...................................................................... 7
3.2 Excluded Liabilities..................................................................... 7


ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS........................................................... 8
4.1 Corporate Status......................................................................... 8
4.2 Authorization............................................................................ 8
4.3 Compliance............................................................................... 9
4.4 [Intentionally left blank]............................................................... 9
4.5 Personal Property........................................................................ 9
4.6 Intellectual Property.................................................................... 10
4.7 Contracts and Binding Commitments........................................................ 10
4.8 Title.................................................................................... 11
4.9 Litigation............................................................................... 11
4.10 Environmental Matters.................................................................... 11
4.11 Employee Benefit Plans and Policies...................................................... 12
4.12 Material Changes......................................................................... 13
4.13 [Intentionally left blank]............................................................... 15
4.14 Compliance with Law...................................................................... 15
4.15 Consents................................................................................. 15
4.16 Taxes.................................................................................... 15
4.17 Permits and Licenses..................................................................... 16
4.18 Ownership of ELAC Shares................................................................. 16
4.19 Labor Relations.......................................................................... 16
4.20 Brokerage Fees........................................................................... 17


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Page
----
4.21 Government Contracts..................................................................... 17
4.22 Government Furnished Equipment........................................................... 19
4.23 Entire Business.......................................................................... 19
4.24 Real Estate.............................................................................. 19
4.25 Insurance................................................................................ 20
4.26 Affiliate Transactions................................................................... 20
4.27 No Additional Representations............................................................ 21


ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................................... 21
5.1 Corporate Status......................................................................... 21
5.2 Authorization............................................................................ 21
5.3 Compliance............................................................................... 21
5.4 Due Diligence............................................................................ 22
5.5 Financing................................................................................ 22
5.6 Investment Representation................................................................ 22
5.7 Conveyances and Restrictions............................................................. 22
5.8 Brokerage Fees........................................................................... 22


ARTICLE 6. EMPLOYEES AND EMPLOYEE BENEFITS..................................................................... 22
6.1 Employment............................................................................... 22
6.2 Compensation and Benefits - U.S. Employees............................................... 23
6.3 Severance and WARN Act................................................................... 24
6.4 Health Care Continuation Liability....................................................... 24
6.5 Pension Plan............................................................................. 24
6.6 Savings Plan............................................................................. 26
6.7 Labor Agreements......................................................................... 27


ARTICLE 7. PRE-CLOSING COVENANTS............................................................................... 27
7.1 [Intentionally left blank]............................................................... 27
7.2 [Intentionally left blank]............................................................... 27
7.3 [Intentionally left blank]............................................................... 27
7.4 [Intentionally left blank]............................................................... 27
7.5 Workers' Compensation.................................................................... 27
7.6 Insurance-Primary Casualty Program....................................................... 27
7.6.1 Claims Responsibility and Procedures........................................ 27
7.7 No Inconsistent Action................................................................... 28
7.8 [Intentionally left blank]............................................................... 28
7.9 Non-Solicitation......................................................................... 28
7.10 Refunds and Remittances.................................................................. 28
7.11 Enforcement of Confidentiality Provisions................................................ 28
7.12 Novation of Government Contracts......................................................... 28
7.13 Further Actions.......................................................................... 28
7.14 Letters of Credit........................................................................ 29
7.15 1985 Capitalization of ELAC.............................................................. 29
7.16 MCDV Subcontract......................................................................... 29


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Page
-----


ARTICLE 8. CONDITIONS TO CLOSING............................................................................... 30
8.1 Conditions to the Obligations of Purchaser............................................... 30
8.2 Conditions to the Obligations of Sellers................................................. 31


ARTICLE 9. TERMINATION AND SURVIVAL............................................................................ 31
9.1 Termination.............................................................................. 31
9.2 Effect of Termination.................................................................... 32


ARTICLE 10. CLOSING DOCUMENTS.................................................................................. 32
10.1 Documents to be Delivered by Sellers..................................................... 32
10.2 Documents to be Delivered by Purchaser................................................... 33


ARTICLE 11. POST CLOSING OBLIGATIONS........................................................................... 34
11.1 Further Assurances....................................................................... 34
11.2 Access to Books and Records.............................................................. 34
11.3 Cooperation in Litigation................................................................ 34
11.4 Proprietary Information.................................................................. 34
11.5 Covenant Not to Compete.................................................................. 35
11.6 Change of Name........................................................................... 35
11.7 Tax Election............................................................................. 35
11.8 Research and Experimental Expenses....................................................... 35
11.9 Pooling Arrangement...................................................................... 35


ARTICLE 12. INDEMNIFICATION.................................................................................... 35
12.1 Indemnification by Sellers............................................................... 35
12.2 Tax Indemnification...................................................................... 36
12.3 Indemnification by Purchaser............................................................. 36
12.4 Indemnification Procedure................................................................ 37
12.5 Survival and Limitations................................................................. 38
12.6 Adjustment for Insurance and Taxes....................................................... 38
12.7 Environmental Liabilities................................................................ 39
12.8 Facility Sale Agreement.................................................................. 39


ARTICLE 13. MISCELLANEOUS...................................................................................... 39
13.1 Expenses................................................................................. 39
13.2 Notices.................................................................................. 39
13.3 Confidentiality.......................................................................... 40
13.4 Counterparts............................................................................. 40
13.5 Entire Agreement/Termination of December Agreement....................................... 40
13.6 Construction............................................................................. 41
13.7 Assignment............................................................................... 41
13.8 Amendment................................................................................ 41
13.9 Applicable Law........................................................................... 41
13.10 No Third Party Rights.................................................................... 41
13.11 Exhibits and Schedules................................................................... 41


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Page
----
13.12 Waivers.................................................................................. 41
13.13 Severability............................................................................. 42
13.14 Bulk Sales Law........................................................................... 42
13.15 Knowledge of Sellers..................................................................... 42
13.16 Personal Liability....................................................................... 42


EXHIBIT A -- License Agreement
EXHIBIT B -- Transition Services Agreement


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SCHEDULES


1 Products


1.1(a) Personal Property


1.3(j) Excluded Assets


4.6(a) Intellectual Property


4.6(c) Licensed Intellectual Property


4.6(d) Intellectual Property


4.7 Contracts


4.8 Title and Leases


4.9 Litigation


4.10 Environmental Disclosure


4.11 Benefit Plans and Policies


4.12 Material Changes


4.14 Compliance with Law


4.15 Consents


4.16 ELAC Taxes


4.17 Permits and Licenses


4.19 Labor Relations


4.19(x) Labor Relations


4.21(a) - (e) Government Contracts


4.22 Government Furnished Equipment


4.23 Entire Business


4.24 Real Estate


4.25 Insurance


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4.26 Affiliate Transactions


6.2(a) Retention Agreements


6.5(b) Actuarial Methods and Assumptions


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ASSET PURCHASE AGREEMENT
------------------------


ASSET PURCHASE AGREEMENT (the "Agreement") dated as of March 30, 1998 among AlliedSignal Inc., a Delaware corporation ("AlliedSignal"), AlliedSignal Technologies, Inc., an Arizona corporation and a wholly owned subsidiary of AlliedSignal ("ASTI"), AlliedSignal Deutschland GmbH, a German corporation and a wholly owned subsidiary of AlliedSignal ("AS Deutschland" and, collectively with ASTI and AlliedSignal, the "Sellers"), and L-3 Communications Corporation, a Delaware corporation ("Purchaser").


WITNESSETH:


WHEREAS, AlliedSignal is engaged exclusively through AlliedSignal's Ocean Systems business unit ("Ocean Systems") and through AlliedSignal ELAC Nautik GmbH ("ELAC"), a wholly owned subsidiary of AS Deutschland, in the business (the "Business") of developing, manufacturing and selling the products and services (the "Products") listed on Schedule 1 hereto, together with services associated with such Products; all of which Products as produced by the Business during the last 24 months are listed in Schedule 1 hereto;


WHEREAS, certain of the intellectual property used by Ocean Systems is owned by ASTI;


WHEREAS, AlliedSignal desires to sell and Purchaser desires to purchase the assets of Sellers primarily related to, or used primarily in connection with, the Business as described herein.


NOW, THEREFORE, in consideration of the mutual covenants, agreements representations and warranties contained herein, the parties agree as follows:


ARTICLE 1. PURCHASE AND SALE


1.1 Purchase and Sale of Assets and Stock. Subject to the terms and conditions of this Agreement and except as otherwise provided herein, at the Closing (as defined in Section 2.1), Sellers shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase and accept from Sellers, all direct or indirect right, title and interest of Sellers in the assets, whether tangible or intangible, real or personal, primarily related to, or used primarily in connection with, the Business prior to the Closing, other than Excluded Assets (as defined in Section 1.3), together with all of AS Deutschland's right, title and interest in the ELAC capital stock described in Section 1.1(o) below (the "Assets"), including, without limitation, the following:


(a) all machinery and equipment, fixtures, furniture, office equipment, vehicles, boats, ships, tools and other tangible personal property set forth on Schedule 1.1(a) as of the date indicated thereon (collectively, the "Personal Property");


(b) all accounts receivable and other receivables as of the Closing Date, whether recorded or unrecorded (the "Accounts Receivable");


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(c) all inventory and other supplies on hand, in transit or on order as of the Closing Date, wherever located, including raw materials, work-in-process and finished goods (the "Inventory");


(d) subject to the exclusions set forth in Section 1.3(f) and (h), all intellectual property, including without limitation all (i) inventions, discoveries, processes, formulae, designs, methods, techniques, procedures, concepts, developments, technology, new and useful improvements thereof and know-how relating thereto, whether or not patented or eligible for patent protection; copyrights and copyrightable works, including computer applications, programs, software, databases and related items; trademarks, service marks, trade names (including, but not limited to, the "Ocean Systems" trade name), brand names, logos and trade dress, the goodwill of any business symbolized thereby, and all common-law rights relating thereto; trade secrets and other confidential information; (ii) registrations, applications, recordings, and licenses or other similar agreements related to the foregoing; (iii) rights to sue at law or in equity for any infringement or other impairment of the foregoing occurring prior to the Closing Date; and (iv) rights to obtain reissues, re-examinations, continuations, continuations-in-part, divisions, extensions, renewals or other legal protections pertaining to the foregoing (the "Intellectual Property");


(e) all contracts, agreements, arrangements and/or commitments (the "Contracts");


(f) all transferable governmental and other permits, licenses, approvals, certificates of inspection, filings, franchises and other authorizations relating to the Assets including, but not limited to, those listed in Schedules 4.10 and 4.17 hereto (the "Permits and Licenses");


(g) prepaid expenses, except insurance premiums, but only if and to the extent of the benefit conferred by such prepaid expenses to the Business after the Closing Date;


(h) all transferable rights of Sellers pursuant to any express or implied warranties, representations or guarantees relating to any Personal Property or made by suppliers furnishing goods or services to Sellers;


(i) all lists, files and documents, including, but not limited to, all business records, tangible data, computer software, electronic media and management information systems, disks, files, customer lists, supplier lists, blueprints, specifications, designs, drawings, plans, operation or maintenance manuals, bids, personnel records, policy manuals, invoices, credit reports, sales literature, tax, financial and accounting records and all other books and records (the "Books and Records").


(j) all interests in real estate, whether leased or owned, excluding the land, building and improvements located at Sylmar, California (the "Facility"),


(k) all security (including cash) deposited with third parties and all security bonds;


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(l) all goodwill and going concern value (without any representation as to any value thereof);


(m) all claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind against other parties (other than those related to Excluded Assets or Excluded Liabilities);


(n) all insurance proceeds arising out of or related to damage, destruction or loss of any property or asset of or used primarily in connection with the Business to the extent of any damage or destruction that remains unrepaired, or to the extent any property or asset remains unreplaced, at the Closing Date; and


(o) all the issued and outstanding capital stock and rights in respect of such capital stock of ELAC (the "ELAC Shares").


1.2 Non-Assignable Assets. Notwithstanding anything to the contrary contained in this Agreement, to the extent the sale, assignment, transfer, conveyance or delivery to Purchaser of any Asset, or any other item to be delivered at Closing, such as a permit, license or consent, is prohibited by any foreign, federal, state or local statutes, laws or regulations applicable to the Assets or the operation of the Business (an "Applicable Law") or would require any governmental or third party authorizations, approvals, consents or waivers which shall not have been obtained prior to the Closing (after Sellers' reasonable best efforts to obtain them), this Agreement shall not constitute a sale, assignment, transfer, conveyance or delivery thereof. Following the Closing, the parties shall use reasonable best efforts and cooperate with each other to obtain promptly such authorizations, approvals, consents or waivers; provided, however, that neither Sellers nor Purchaser shall be required to pay any consideration therefor, other than filing, recordation or similar fees payable to any governmental authority, which fees shall be paid in accordance with Section 2.6. Pending such authorization, approval, consent or waiver, the parties shall cooperate with each other in any commercially reasonable and lawful arrangements designed to provide to Purchaser the benefits of use of such Asset. Once such authorization, approval, consent or waiver is obtained, the Sellers shall promptly assign, transfer, convey and deliver such Asset to Purchaser for no additional consideration. To the extent that any such Asset cannot be transferred or the full benefits of use of any such Asset cannot be provided to Purchaser following the Closing, then Purchaser and Sellers shall enter into such arrangements for no additional consideration from Purchaser (including subleasing or subcontracting if permitted) to provide Purchaser the economic (taking into account tax costs and benefits) and operational equivalent of obtaining such authorization, approval, consent or waiver.


1.3 Excluded Assets. Notwithstanding anything to the contrary contained in this Agreement, the following are not included in the Assets and not intended to be sold, assigned, transferred or conveyed to Purchaser hereunder (the "Excluded Assets"):


(a) assets primarily related to, or used primarily in connection with, Sellers' businesses other than the Business, including, but not limited to, the assets primarily related to, or used primarily in connection with, Sellers' avionics repair and overhaul business conducted at the Facility;


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(b) except as set forth in Section 2.4, cash, cash
equivalents and overdrafts;


(c) intercompany receivables and intercompany prepaid expenses, other than (i) trade receivables of the Business for goods delivered in the ordinary course of business and (ii) the intercompany note receivable between Ocean Systems and ELAC with respect to cash in the AlliedSignal German cash pool (the "Intercompany Note");


(d) Books and Records which Sellers are required by law to retain; provided, however, that in the event of such legal requirement, Sellers shall retain copies of such Books and Records and deliver the original Books and Records to Purchaser unless Sellers are legally obligated to retain the original records in which case the copies of such Books and Rec ...