{"id":43296,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/asset-purchase-agreement-hughes-aircraft-co-and-alliant.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"asset-purchase-agreement-hughes-aircraft-co-and-alliant","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/asset-purchase-agreement-hughes-aircraft-co-and-alliant.html","title":{"rendered":"Asset Purchase Agreement &#8211; Hughes Aircraft Co. and Alliant Techsystems Inc."},"content":{"rendered":"<pre>                           ASSET PURCHASE AGREEMENT\n\n\n                         DATED AS OF DECEMBER 22, 1996\n\n\n                                BY AND BETWEEN\n\n\n\n                            HUGHES AIRCRAFT COMPANY\n\n                                      AND\n\n                           ALLIANT TECHSYSTEMS INC.\n\n \n                           ASSET PURCHASE AGREEMENT\n\n\n          ASSET PURCHASE AGREEMENT, dated as of December 22, 1996, by and\nbetween HUGHES AIRCRAFT COMPANY, a Delaware corporation (\"Purchaser\"), and\nALLIANT TECHSYSTEMS INC., a Delaware corporation (\"Seller\").\n\n\n                             W I T N E S S E T H :\n                             - - - - - - - - - -\n\n          WHEREAS, Seller is engaged in the business and related activities of\nits Marine Systems Group, including the design, research, development,\nmanufacture and sale of torpedo systems, underseas acoustic surveillance\nsystems, naval sonar and mine countermeasure systems and naval contract\nengineering services (the \"Business\"); and\n\n          WHEREAS, Purchaser desires to acquire from Seller and Seller desires\nto sell to Purchaser substantially all of the assets and business of the\nBusiness on the terms and conditions set forth herein;\n\n          NOW, THEREFORE, in consideration of the premises and the mutual\nrepresentations, warranties, covenants, and agreements hereinafter set forth,\nthe parties hereto hereby agree as follows:\n\n\n                                   ARTICLE I\n\n                                  DEFINITIONS\n\n          Each reference contained in this Agreement to:\n\n          \"Adverse Environmental Condition\" shall mean any of the matters\nreferred to in clauses (i), (ii) or (iii) of the definition of Environmental\nClaim.\n\n          \"Affiliate\" shall mean, with respect to any given Person, any other\nPerson that directly, or indirectly through one or more intermediaries,\ncontrols, or is controlled by, or is under common control with, such Person.\nThe term \"control\" (including, with correlative meaning, the terms \"controlled\nby\" and \"under common control with\"), as used with respect to any Person, means\nthe possession, directly or indirectly, of the power to direct or cause the\ndirection of the management and policies of such Person, whether through the\nownership of voting securities, by contract or otherwise.\n\n          \"Agreement\" shall refer to this Asset Purchase Agreement, as the same\nmay be amended from time to time.\n\n                                       1\n\n \n          \"Ancillary Agreements\" shall refer to the Bill of Sale, the Transition\nAgreement and the Assumption Agreement.\n\n          \"Arbiter\" shall have the meaning ascribed to such term in Section\n4.1(c) hereof.\n\n          \"Asset Acquisition Statement\" shall have the meaning ascribed to such\nterm in Section 12.4(f) hereof.\n\n          \"Assets\" shall refer collectively to the Purchased Assets and the\nLeased Assets.\n\n          \"Assumed Liabilities\" shall have the meaning ascribed to such term in\nSection 2.3 hereof.\n\n          \"Assumption Agreement\" shall refer to the Assumption Agreement to be\nexecuted at Closing by Purchaser.\n\n          \"Audited Closing Date Balance Sheet\" shall refer to the Adjusted\nClosing Date Balance Sheet as certified by Seller's Auditors.\n\n          \"Auditors' Report\" shall have the meaning ascribed to such term in\nSection 4.1(b) hereof.\n\n          \"Authorization\" shall refer to any federal, state, local or other\ngovernmental consent, license, permit, grant or authorization.\n\n          \"Backlog Contract\" shall have the meaning ascribed to such term in\nSection 5.7(a)(xiv).\n\n\n          \"Best Efforts\" shall mean the taking of all reasonable efforts to\neffect a result, but shall not require the incurrence of unreasonable expenses.\n\n          \"Bill of Sale\" shall refer to the Bill of Sale to be executed at\nClosing by Seller.\n\n          \"Business\" shall have the meaning ascribed to such term in the first\nrecital hereof.\n\n          \"Business Day\" shall refer to a day, other than a Saturday or a\nSunday, on which commercial banks are not required or authorized to close in the\nCity of New York.\n\n          \"Closing\" shall refer to the consummation of the several transactions\nprovided for in Article II, all upon the terms and subject to the conditions set\nforth in this Agreement, which closing shall commence at 9:00 A.M., local time\nat the location specified in Section 9.1 below.\n\n                                       2\n\n \n          \"Closing Date\" and \"day of the Closing\" shall refer to the day upon\nwhich the consummation of the several transactions provided for in Article II\noccurs.\n\n          \"Closing Date Balance Sheet\" shall refer to the balance sheet of the\nBusiness, prepared by Seller in accordance with the provisions of Section\n4.1(a)(1) hereof.\n\n          \"Closing Date Financial Information\" shall have the meaning ascribed\nto such term in Section 4.1(a)(1) hereof.\n\n          \"Closing Date Net Assets\" shall have the meaning ascribed thereto in\nSection 4.1(a)(1) hereof.\n\n          \"Closing Date Schedule of Net Assets\" shall have the meaning ascribed\nthereto in Section 4.1(a)(1) hereof.\n\n          \"COBRA\" shall refer to the Consolidated Omnibus Budget Reconciliation\nAct of 1985, as amended.\n\n          \"Code\" shall refer to the Internal Revenue Code of 1986, as amended.\n\n          \"Contaminant\" shall mean, collectively, any (a) petroleum or petroleum\nproducts, or derivative or fraction thereof, flammable material, explosives,\nradioactive materials (including radon gas), asbestos in any form that is or\ncould become friable, urea formaldehyde foam insulation (\"UFI\"), and\npolychlorinated biphenyls (\"PCBs\"), and (b) any chemical, material, substance or\nwaste, (i) which is defined on the date hereof as or included in the definition\nof \"hazardous substances\", \"hazardous wastes\", \"hazardous materials\", \"toxic\nsubstances\", \"restricted hazardous wastes\", \"contaminants\", \"pollutants\" or\nwords of similar import under any applicable Environmental Laws or (ii) the\nemission, discharge, release, storage, transport, disposal, management, handling\nor use of which is regulated under or subject to any applicable Environmental\nLaws.\n\n          \"Contracts\" shall mean all written or oral bids, quotations,\nproposals, contracts (including, without limitation, Government Contracts and\nany Lease Contracts), agreements, commitments, understandings, licenses, teaming\narrangements, associate contractor agreements, advance agreements, Memoranda of\nUnderstanding, Memoranda of Agreements and sales and purchase orders, of Seller\nrelating to the Business.\n\n          \"Copyrights\" shall mean all copyrights, whether or not registered, and\nregistrations and applications for registration thereof, and all rights therein\nprovided by law, multinational treaties or conventions.\n\n          \"Damages\" shall refer, in respect of any obligation to indemnify any\nPerson pursuant to the terms of this Agreement, to any losses, claims, damages,\nliabilities (liquidated or unliquidated, accrued, contingent or otherwise),\nobligations, judgments, settlements, \n\n                                       3\n\n \nreasonable out-of-pocket costs, expenses and attorneys' fees (including such\ncosts, expenses and attorneys' fees incurred in connection with any\ninvestigation (if such investigation results in an enforcement action) or in\nenforcing such right of indemnification against any Indemnitor), fines and\npenalties, if any.\n\n          \"Definitive Closing Date Net Assets\" shall refer to the Closing Date\nNet Assets as reflected in the Auditor's Report, unless Purchaser shall have\nobjected thereto, in which event \"Definitive Closing Date Net Assets\" shall\nrefer to the Closing Date Net Assets as reflected in the report of the Arbiter.\n\n          \"Deloitte &amp; Touche\" shall refer to the public accounting firm of\nDeloitte &amp; Touche L.L.P. or any successor organization.\n\n          \"Documents\" shall refer to any books, records, files, papers, tapes,\nmicrofilms and any other documents.\n\n          \"Employee Benefit Plan\" shall have the meaning ascribed to such term\nby Section 3(3) of ERISA.\n\n          \"Employee Pension Benefit Plan\" shall have the meaning ascribed to\nsuch term by Section 3(2) of ERISA.\n\n          \"Employees\" shall have the meaning ascribed to such term by Section\n5.8 hereof.\n\n          \"Environmental Claim\" shall mean any accusation, allegation, notice of\nviolation, action, claim, demand, abatement or other order or directive\n(conditional or otherwise), judgment, lien or other assessment by any Person\nfor personal injury (including sickness, disease or death), tangible or\nintangible property damage, damage to the environment, pollution, contamination\nor other adverse effects on the environment, or for fines, penalties or\nrestrictions, resulting from or based upon (i) the existence, or the\ncontinuation of the existence, of a Release (including, without limitation,\nsudden or non-sudden, accidental or non-accidental leaks or spills), of, or\nexposure to, or Release of any Contaminant in, into or onto the environment,\nincluding, without limitation, the air, groundwater, surface water or any\nsurface or subsurface strata, at, in, by, from, or related to the Facilities,\n(ii) the transportation, storage, treatment or disposal of any Contaminant in\nconnection with the operation of the Facilities or (iii) the violation, or\nalleged violation, of any applicable Environmental Laws or any Environmental\nPermits.\n\n          \"Environmental Costs and Liabilities\" means any and all losses,\nliabilities, obligations, damages, fines, penalties, judgments, actions, claims,\ncosts and expenses (including, without limitation, fees, disbursements and\nexpenses of legal counsel, experts, engineers and consultants and the costs of\ninvestigation and feasibility studies and Remedial \n\n                                       4\n\n \nAction) arising from or under any Environmental Law or order or Contract with\nany governmental authority or other Person.\n\n          \"Environmental Laws\" shall mean all applicable Laws, in each case as\namended or supplemented from time to time, and any judicial or administrative\ninterpretation thereof, including, without limitation, any applicable judicial\nor administrative order, consent decree or judgment relating to the regulation\nand protection of human health, safety, the environment and natural resources\n(including, without limitation, ambient air, surface water, groundwater, wet\nlands, land surface or subsurface strata, wildlife, aquatic species and\nvegetation).  Environmental Laws include, but are not limited to, the\nComprehensive Environmental Response, Compensation, and Liability Act of 1980,\nas amended (42 U.S.C. (S) 9601 et seq.) (\"CERCLA\"); the Hazardous Material\n                               -- ---                                     \nTransportation Act, as amended (49 U.S.C. (S) 1801 et seq.); the Federal\n                                                   -- ---               \nInsecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. (S) 136 et\n                                                                          --\nseq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. (S)\n---                                                                         \n6901 et seq.) (\"RCRA\"); the Toxic Substances Control Act, as amended (15 U.S.C.\n     -- ---                                                                    \n(S) 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. (S) 740 et seq.);\n         -- ---                                                     -- ---   \nthe Federal Water Pollution Control Act, as amended (33 U.S.C. (S) 1251 et\n                                                                        --\nseq.); the Occupational Safety and Health Act, as amended (29 U.S.C. (S) 651 et\n---                                                                          --\nseq.) (\"OSHA\"); and the Safe Drinking Water Act, as amended (42 U.S.C. (S) 300f\n---                                                                            \net seq.), the Atomic Energy Act of 1954, as amended (42 U.S.C. (S)(S) 2014, 2021\n-- ---                                                                          \nto 2021d, 2022, 2111, 2113 and 2114), and any and all regulations promulgated\nthereunder, and all applicable analogous state and local counterparts,\nequivalents, or similar statutes or ordinances, rules or regulations.\n\n          \"Environmental Investigation\" shall mean environmental testing,\nassessment and investigation.\n\n          \"Environmental Lien\" means any lien in favor of any governmental\nauthority pursuant to Environmental Laws.\n\n          \"Environmental Permit\" shall mean any permit, approval, authorization,\nlicense, variance, or permission required under any applicable Environmental\nLaws.\n\n          \"ERISA\" shall refer to the Employee Retirement Income Security Act of\n1974, as amended.\n\n          \"Excluded Assets\" shall have the meaning ascribed to such term in\nSection 2.2 hereof.\n\n          \"Excluded Liabilities\" shall have the meaning ascribed to such term in\nSection 2.4 hereof.\n\n          \"Export Control Laws\" shall mean all Laws, now or hereafter in effect,\nand in each case as amended or supplemented from time to time, and any judicial\nor administrative \n\n                                       5\n\n \ninterpretations thereof, relating to the export or reexport of commodities and\ntechnologies. Export Control Laws include, but are not limited to, the Export\nAdministration Act of 1979, 24 U.S.C. (S)(S) 2401-2420; the International\nEmergency Economic Powers Act, 50 U.S.C. (S)(S) 1701-1706; the Trading with the\nEnemy Act, 50 U.S.C. (S)(S) 1 et seq.; the Arms Export Control Act, 22 U.S.C.\n                              -- ---                          \n(S)(S) 2778, 2779; and the International Boycott Provisions of Section 999 of\nthe Code.\n\n          \"Exhibit\" shall refer to the written Exhibit to this Agreement which\nis hereby incorporated into and made a part of this Agreement for all purposes.\n\n          \"Facilities\" shall mean real property owned, leased or used by Seller\nand related to the Business, other than any such property which is an Excluded\nAsset.\n\n          \"Financial Statements\" shall have the meaning ascribed to such term in\nSection 5.5(a) hereof.\n\n          \"GAAP\" shall refer to generally accepted accounting principles in the\nUnited States as of the date of the Interim Date Balance Sheet, without\nreference to changes therein as might otherwise be applicable to subsequent\nperiods, consistently applied.\n\n          \"Government Contract\" shall refer to any bid, quotation, proposal,\ncontract, agreement, commitment or sale or purchase order that is with the\nUnited States Government, a foreign government or a department or agency of the\nUnited States Government or a foreign government, including, among other things,\nall contracts to supply goods and services, and subcontracts issued by or\nawarded to the Business.\n\n          \"HSR Act\" shall refer to the Hart-Scott-Rodino Antitrust Improvements\nAct of 1976, as amended.\n\n          \"Indemnification Event\" shall refer to any action, proceeding or claim\nfor which a Person is entitled to indemnification under this Agreement.\n\n          \"Indemnitor\" shall refer to the indemnifying Person in the case of any\nobligation to indemnify established pursuant to the terms of this Agreement.\n\n          \"Intellectual Property\" shall refer to all Patents, Trademarks,\nCopyrights, mask work registrations, Software and (a) trade secrets and\nproprietary technical information (including ideas, formulas, compositions,\ninventions, and conceptions of inventions whether patentable or unpatentable and\nwhether or not reduced to practice); (b) technology (including know-how and\nshow-how), manufacturing and production processes and techniques, research and\ndevelopment information, drawings, specifications, designs, plans, proposals,\ntechnical data and copyrightable works, whether secret or proprietary or not;\n(c) copies and all tangible embodiments of all of the foregoing, in whatever\nform or medium; (d) all rights to obtain and rights to apply for patents, and to\nregister trademarks and copyrights; and (e) all rights to sue \n\n                                       6\n\n \nfor and recover and retain damages, costs or attorneys' fees for present and\npast infringement of any of the intellectual property rights hereinabove set\nout.\n\n          \"Intellectual Property Licenses\" shall have the meaning ascribed to\nsuch term in Section 5.20(c)(2).\n\n          \"Interests\" shall have the meaning ascribed to such term in Section\n3.1(a) hereof.\n\n          \"Interim Date Balance Sheet\" shall have the meaning ascribed to such\nterm in Section 5.5(a)(1) hereof.\n\n          \"Interim Date Net Assets\" shall have the meaning ascribed thereto in\nSection 5.5(a)(2) hereof.\n\n          \"Interim Financial Statements\" shall have the meaning ascribed to such\nterm in Section 5.5(a)(1)(B) hereof.\n\n          \"Law\" shall mean any federal, state, local, or foreign law (including\ncommon law), constitution, statute, code, ordinance, rule, regulation, executive\norder, or other requirement.\n\n          \"Lease Contract\" shall refer to any Contract which is a lease of or\nrental agreement with respect to Property (other than the facility Leases and\nother Leases) or an installment sale contract arising out of the sale of\nProperty.\n\n          \"Leased Assets\" shall refer to those assets leased to Seller which, if\nowned by Seller, would be Purchased Assets (excluding any Leased Property), all\nof which are listed on Schedule 1(b).\n\n          \"Leased Property\" shall have the meaning ascribed to such term in\nSection 5.19(a) hereof.\n\n          \"Leases\" shall have the meaning ascribed to such term in Section\n5.19(a) hereof.\n\n          \"Licensed Intellectual Property\" shall have the meaning ascribed to\nsuch term in Section 5.20(c)(2).\n\n          \"Liens\" shall have the meaning ascribed to such term in Section 5.16\nhereof.\n\n          \"Loss\" shall mean any loss, cost, damage, liability, deficiency, fine,\npenalty or expense (including, without limitation, reasonable attorney's and\nother professional fees), \n\n                                       7\n\n \ninvestigation, removal, cleanup and remedial costs (voluntarily or involuntarily\nincurred) and modification costs incurred to permit continued or resumed normal\noperation of the Facilities.\n\n          \"Material Adverse Effect\" shall mean any material and adverse effect\non the business, condition (financial or otherwise), revenues, earnings, assets,\nprospects or results of operations of the specified Person.\n\n          \"Mukilteo Facility\" shall mean the facility located at 6500 Harbour\nHeights Parkway, Mukilteo, Washington 98275.\n\n          \"Multiemployer Plan\" shall have the meaning ascribed to such term by\nSection 4001(a)(3) of ERISA.\n\n          \"Multiple Employer Plan\" shall have the meaning ascribed thereto in\nSection 5.8(a) hereof.\n\n          \"Occupants\" shall have the meaning ascribed to such term in Section\n5.19(a) hereof.\n\n          \"Owned Property\" shall have the meaning ascribed to such term in\nSection 5.19(a) hereof.\n\n          \"PBGC\" shall refer to the Pension Benefit Guaranty Corporation.\n\n          \"Patents\" shall refer to all (a) inventions, whether or not\npatentable, whether or not reduced to practice, or whether or not yet made the\nsubject of a pending patent application or applications; (b) ideas and\nconceptions of potentially patentable subject matter, including without\nlimitation, any patent disclosures, whether or not reduced to practice and\nwhether or not yet made the subject of a pending patent application or\napplications; (c) all national (including the U.S.) and multinational statutory\ninvention registrations, patents, patent registrations and patent applications\n(in the U.S. or any foreign country, and including all reissues, divisions,\ncontinuations, continuations-in-part, extension and reexaminations) and all\nrights therein provided by law, multinational treaties or conventions and all\nimprovements to the inventions disclosed in each such registration, patent or\napplication.\n\n          \"Permitted Encumbrances\" shall have the meaning ascribed to such term\nin Section 5.19(a) hereof.\n\n          \"Person\" shall include an individual, a partnership, a corporation, or\na division or business unit thereof, a trust, an unincorporated organization, a\nfederal, state, local or foreign government or any department or agency thereof\nand any other entity.\n\n                                       8\n\n \n          \"Program Performance Reserve Ratio\" shall be the percentage ratio\nderived by dividing the program performance reserve amount at any date by the\nrelated remaining program revenue at such date.\n\n          \"Property\" shall include all property and all other assets of\nwhatsoever nature including, without limitation, real and personal property,\nwhether tangible or intangible, and claims, rights and choses in action, other\nthan Intellectual Property.\n\n          \"Prospective Employees\" shall have the meaning ascribed to such term\nin Section 11.1(c) hereof.\n\n          \"Purchased Assets\" shall have the meaning ascribed to such term in\nSection 2.1 hereof.\n\n          \"Purchased Intellectual Property\" shall refer to the Intellectual\nProperty which is owned by or licensed by Seller, and which is used in, related\nto or necessary to the operation of, the Business as it is currently operated or\nreasonably contemplated to be operated in the future, provided that this\ndefinition shall not imply that Seller is obligated to acquire or convey\nIntellectual Property which it does not currently own or have rights to use.\n\n          \"Purchaser\" shall refer to Hughes Aircraft Company, a Delaware\ncorporation, having its principal executive office at 7200 Hughes Terrace, Los\nAngeles, California 90045.\n\n          \"Registered Intellectual Property\" shall have the meaning ascribed to\nsuch term in Section 5.20(c)(2).\n\n          \"Release\" shall mean any release, spill, emission, abandonment of any\ncontainer or receptacle containing any Contaminant, leaking, pumping, injection,\ndeposit, disposal, discharge, dispersal, leaching, or migration of any\nContaminant into the environment, or into or out of any property, including the\nmovement or migration, gradual or otherwise, of any Contaminant through or in\nthe air, soil, surface water, groundwater, or land surface or subsurface strata\nor formation.\n\n          \"Remedial Action\" shall mean all actions required under Environmental\nLaws to (a) clean up, remove, treat, monitor or in any other way address the\nRelease of any Contaminant in the environment; (b) prevent the further Release\nor threat of further Release, or minimize the further Release of any Contaminant\nso it does not migrate or endanger or threaten to endanger public health or\nwelfare of the environment; or (c) perform pre-remedial studies and\ninvestigations and post-remedial monitoring and care with respect to any Release\nor any threatened Release; or (d) bring the Facilities and the operations\nconducted thereon into compliance with all applicable Environmental Laws and\nEnvironmental Permits.\n\n          \"Revised Statements\" shall have the meaning ascribed to such term in\nSection 12.4(f)(1) hereof.\n\n                                       9\n\n \n          \"Schedule\" shall refer to one of several written Schedules to this\nAgreement, each of which is hereby incorporated into and made a part of this\nAgreement for all purposes.\n\n          \"Seller's Auditors\" shall mean Deloitte &amp; Touche.\n\n          \"Seller\" shall refer to Alliant Techsystems Inc., a Delaware\ncorporation, having its principal executive office at 600 Second Street, N.E.,\nHopkins, Minnesota 55343-8384.\n\n          \"Seller Employee Benefit Plans\" and \"Seller Employee Pension Plans\"\nshall have the meaning ascribed thereto in Section 5.8(a) hereof.\n\n          \"Seller Property\" shall have the meaning ascribed to such term in\nSection 5.19(a) hereof.\n\n          \"Software\" shall mean all computer software, (including, without\nlimitation, source code, object code, flow charts, operating systems and\nspecifications, data, data bases, files, documentation, and other materials\nrelated thereto), and all Patent, Copyright, mask work registrations trade\nsecret or other proprietary rights associated therewith.\n\n          \"SQQ-89 REA\" shall have the meaning ascribed to such term in Section\n2.1(m) hereof.\n\n          \"Subsidiary\" shall refer to a corporation (or equivalent legal entity\nunder foreign law) of which another Person owns directly or indirectly more than\n50% of the stock, the holders of which are ordinarily and generally, in the\nabsence of contingencies or understandings, entitled to vote for the election of\ndirectors and any partnership (or equivalent legal entity under foreign law) in\nwhich such other Person owns directly or indirectly more than a 50% interest.\n\n          \"substantially-performed\" shall mean, with respect to a Government\nContract, that all contract deliverables under all options which have previously\nbeen exercised have been provided to the customer.\n\n          \"Taxes\" shall mean (A) all federal, state, local and foreign taxes,\ncharges, fees, levies, imposts, duties or other assessments, including, without\nlimitation, income, gross receipts, excise, employment, sales, use, transfer,\nlicense, payroll, franchise, severance, stamp, occupation, windfall profits,\nenvironmental (including taxes under Code section 59A), premium, federal highway\nuse, commercial rent, customs duties, capital stock, paid up capital, profits,\nwithholding, Social Security, single business and unemployment, disability, real\nproperty, personal property, registration, ad valorem, value added, alternative\nor add-on minimum, estimated, or other tax or governmental fee of any kind\nwhatsoever, imposed or required to be withheld by the United States or any\nstate, local, foreign government or subdivision or agency thereof, including any\ninterest, fines, assessments, penalties or additions thereto, whether disputed\nor not, and (B) any Taxes for which Seller is liable as a transferee,\n\n                                       10\n\n \nindemnitor, guarantor, surety or in a similar capacity under any contract,\narrangement, understanding or commitment, whether oral or written.\n\n          \"Tax Return\" shall mean any report, return, information return or\nother information required to be supplied to a taxing authority in connection\nwith Taxes.\n\n          \"Third Party Assets\" shall mean all government, customer or other\nthird party-owned Property, equipment and information.\n\n          \"Trademarks\" shall mean all trademarks, service marks, trade dress,\nlogos, trade names and corporate names, whether or not registered, including all\ncommon law rights, and registrations and applications for registration thereof,\nincluding all of the goodwill associated with or represented by any of the\nforegoing, and including, but not limited to, all marks registered in the United\nStates Patent and Trademark Office, the Trademark Offices of the States and\nTerritories of the United States of America, and the trademark offices of other\nnations throughout the world, and all rights therein provided by multinational\ntreaties or conventions.\n\n          \"Transferred Employees\" shall have the meaning ascribed to such term\nin Section 11.1(c) hereof.\n\n          \"Transition Agreement\" shall refer to the Transition Services\nAgreement to be executed at Closing by Purchaser, Seller and Parent,\nsubstantially on the terms set forth in Schedule 12.5.\n\n          \"Year-End Financial Statements\" shall have the meaning ascribed to\nsuch term in Section 5.5(a)(1)(a) hereof.\n\n\n                                  ARTICLE II\n\n                               BASIC TRANSACTION\n\n          Upon the terms and subject to the conditions set forth in this\nAgreement, at the Closing the following transactions shall occur:\n\n          2.1  Purchase and Sale of Assets.  On the terms and subject to the\n               ---------------------------                                  \nconditions set forth in this Agreement, at the Closing, Purchaser shall purchase\nfrom Seller, and Seller shall sell, transfer, assign, convey and deliver to\nPurchaser, all of Seller's right, title and interest in and to the Business,\nincluding, without limitation, in and to all of the assets, properties, rights,\ngoodwill, contracts and claims of the Business (except as otherwise set forth in\nSection 2.2 hereof), wherever located, whether tangible or intangible, real or\npersonal, known or unknown, actual or contingent, as the same shall exist as of\nthe Closing, subject to subsection (o) below (such rights, title and interest in\nand to all such assets, properties, rights, \n\n                                       11\n\n \ncontracts and claims, being collectively referred to herein as, the \"Purchased\nAssets\"). The Purchased Assets shall include, without limitation, the following\nassets:\n\n          (a)  all fee owned real property, leasehold and other interests in\n     real property listed on Schedule 2.1(a), together with all improvements,\n     fixtures and all other appurtenances thereto and rights in respect thereof;\n\n          (b)  all inventory (including work in process, raw materials and\n     finished goods), goods in transit, unbilled revenues and other properties\n     and rights associated with the performance of Contracts and the operation\n     of the Business, supplies, machinery, equipment, test equipment,\n     demonstration equipment, computers, tools, dies, spare parts, vehicles,\n     furniture, office materials and other tangible personal property, whether\n     or not such assets are located at the properties referred to in clause (a)\n     above;\n\n          (c)  all accounts receivable and notes receivable and other claims for\n     money or other obligations due (or which hereafter will become due) to\n     Seller arising out of the Business together with any unpaid interest\n     accrued thereon from the respective obligors and any security or collateral\n     therefor, but excluding any sums owed by any Affiliate of Seller as\n     intercompany advances or accounts, other than any thereof arising from the\n     purchase and sale of goods or services in the ordinary performance of the\n     Contracts of the Business;\n\n          (d)  all of Seller's interest in the Purchased Intellectual Property,\n     including, without limitation, all results of the Business' research and\n     development activities and other Intellectual Property developed or\n     acquired for the Business, or related to, or of use or potential use in\n     connection with any current or contemplated potential future products of\n     the Business or parts, components or subassemblies used or purchased by the\n     Business;\n\n          (e)  all proceeds under any insurance contract or arrangement relating\n     to the Business in respect of Assumed Liabilities or damage to Assets;\n\n          (f)  all right, title and interest in, to and under all Contracts,\n     subject in each case to the terms of such Contracts;\n\n          (g)  all books and records (including such books and records as are\n     contained in computerized storage media) of the Business, including all\n     inventory, purchasing, accounting, sales, export, import, research,\n     engineering, manufacturing, maintenance, repairs, marketing, banking,\n     documents and records constituting Purchased Intellectual Property,\n     shipping records, personnel files for Transferred Employees and all files,\n     customer and supplier lists, records, literature and correspondence,\n     whether or not physically located on any of the premises referred to in\n     clause (a) above, but excluding personnel files for employees of Seller who\n     are not Transferred Employees, provided \n\n                                       12\n\n \n     Seller may retain copies of all books and records related to Excluded\n     Liabilities, Excluded Assets and Employees;\n\n          (h)  any other tangible assets of Seller which are used in the\n     Business and which are of a nature not customarily reflected in the books\n     and records of a business, such as assets which have been written off for\n     accounting purposes but which are still used by or of value to the\n     Business;\n\n          (i)  all Authorizations which are transferable and which are used in\n     the Business, as presently conducted;\n\n          (j)  all goodwill associated with the Business;\n\n          (k)  all rights under non-disclosure agreements with employees and\n     agents of Seller and under confidentiality agreements with prospective\n     purchasers of the Business or with other third parties to the extent\n     relating to the Business;\n\n          (l)  all deposits, prepaid charges, insurance, sums and fees, offset\n     credit balances in any country, refunds, and causes of action;\n\n          (m)  the SQQ-89 Request for Equitable Adjustment (\"SQQ-89 REA\"), the\n     Hydroscience Receivable described in Section 7.20, the NT37 Inventory\n     described in Section 7.21, and the Ocean Bottom Cable Royalty described in\n     Section 7.22;\n\n          (n)  any other asset of Seller, other than Excluded Assets, in respect\n     of which there is an Assumed Liability; and\n\n          (o)  other than to the extent related to a liability asserted against\n     Seller, all rights of recovery, rights of set-off and rights of recoupment\n     of Seller in connection with the Business.\n\n          2.2  Excluded Assets.  Notwithstanding anything herein to the\n               ---------------                                         \ncontrary, the Purchased Assets shall not include any of the following assets\nrelated to the Business (collectively, the \"Excluded Assets\"):\n\n          (a)  Cash and cash equivalents, including petty cash accounts or cash\non hand or in bank accounts, certificates of deposit, commercial paper and other\nsimilar securities related to the Business;\n\n          (b)  Any books or records relating to the Business which Seller is\nrequired by law to retain in its possession;\n\n          (c)  Federal income tax refund entitlements or other tax attributes\nrelated to the Business with respect to any period prior to the Closing Date;\n\n                                       13\n\n \n          (d)  The account receivable payable by Armada de Chile, Contract\nNumber MK46-ILS119 in the amount of $2.93 million.\n\n          2.3  Assumption of Liabilities.  On the terms and subject to the\n               -------------------------                                  \nconditions set forth in this Agreement, at the Closing, Purchaser will assume\nand become responsible for the following liabilities and obligations of Seller\n(the \"Assumed Liabilities\"):\n\n          (a)  the Contracts being transferred to Purchaser hereunder (to the\nextent that such liabilities and obligations remain unsatisfied or are required\nto be performed on or after the Closing Date);\n\n          (b)  Employees and employee benefits solely to the extent specifically\nset forth in Article XI hereof, and those certain employment contracts between\nSeller and the individuals set forth on Schedule 2.3(b) with respect to any\npotential severance and severance related liabilities;\n\n          (c)  once the Remedial Action set forth in the Remedial Plan\ncontemplated by Section 7.7 hereof is complete, on-site Environmental Claims and\nEnvironmental Costs and Liabilities of Seller, irrespective of when they arise,\nat the Mukilteo Facility; and\n\n          (d)  Except to the extent otherwise specifically provided herein, any\nliability or obligation reflected on Column Four of the Closing Date Schedule of\nNet Assets irrespective of the amount reserved.\n\n          2.4  Excluded Liabilities.  Seller and Purchaser expressly understand\n               --------------------                                            \nand agree that Purchaser shall not assume, pay, perform or discharge or become\nliable for any and all obligations, commitments or liabilities of any and every\nnature whatsoever of Seller including (without limitation) all obligations,\ncommitments or liabilities (whether recourse or non-recourse to Seller) which\nrelate to, are secured by or otherwise encumber any of the Assets, including,\nwithout limitation, (a) liabilities arising out of, or relating to, the\noperation of the Business prior to the Closing, (b) liabilities resulting from\nEnvironmental Claims or Remedial Action relating to the operation of the\nBusiness prior to the Closing, (c) claims that the operation of the Business\ninfringes the Intellectual Property rights of any Person, (d) except as\notherwise provided in Section 12.4(c), or Section 12.4(g), all liabilities of\nSeller or any Affiliate of Seller for Taxes, and, in each case, which are not\nAssumed Liabilities and (e) liabilities arising out of any performance incentive\npayment obligations under the contracts described on Schedule 2.3(b)\n(collectively, the \"Excluded Liabilities\").\n\n          2.5  Purchase Price.  On the terms and subject to the conditions set\n               --------------                                                 \nforth in this Agreement, and subject to adjustment as provided in Article IV\nhereof, at the Closing, Purchaser will pay to Seller $141,000,000, allocated as\nprovided in Section 12.4(f) hereof by wire transfer of immediately available\nfunds to an account designated by Seller not later than three Business Days\nprior to the Closing Date.\n\n                                       14\n\n \n                                  ARTICLE III\n\n                       CERTAIN AGREEMENTS OF THE PARTIES\n\n          3.1  Certain Provisions Relating to Assets.  (a) To the extent that a\n               -------------------------------------                           \nContract, Authorization or other asset which would otherwise be included within\nthe definition of \"Assets\", or any claim, right or benefit arising thereunder or\nresulting therefrom (each an \"Interest\" and collectively the \"Interests\"), is\nnot capable of being sold, assigned, transferred or conveyed without the\napproval, consent or waiver of the issuer thereof or the other party thereto, or\nany third person (including a government or governmental unit or agency), and\nsuch approval, consent or waiver has not been obtained prior to the Closing, or\nif such sale, assignment, transfer or conveyance or attempted sale, assignment,\ntransfer or conveyance would constitute a breach thereof or a violation of any\nlaw, decree, order, regulation or other governmental edict, this Agreement shall\nnot constitute a sale, assignment, transfer or conveyance thereof, or an\nattempted sale, assignment, transfer or conveyance thereof.\n\n          (b)  Seller and Purchaser shall use their best efforts  and shall\ncooperate to obtain all approvals, consents or waivers necessary to convey to\nPurchaser each Interest as of the Closing.  The failure to obtain any approval,\nconsent or waiver necessary to convey any Interest to Purchaser shall not affect\nthe obligations of the parties to close hereunder.\n\n          (c)  To the extent any of the approvals, consents or waivers necessary\nto convey any Interest (other than Government Contracts with respect to which\nSection 7.6 shall govern) to Purchaser have not been obtained by Seller as of\nthe Closing, Seller shall, during the remaining term of such Interest, use its\nbest efforts, to (1) at the request of Purchaser, cooperate with Purchaser to\nobtain the consent of any such third party (provided that Purchaser shall not be\nobligated to pay any consideration therefor), (2) at the request of Purchaser,\ncooperate with Purchaser in any reasonable and lawful arrangements designed to\nprovide the benefits of such Interest to Purchaser (including, with respect to\nany Property leased by Seller which would otherwise be an Asset and as to which\nSeller has been unable to obtain the lessor's consent to the assignment thereof\nto Purchaser, to sublease such Property (to the extent permitted under the\npertinent lease) to Purchaser, upon substantially the same terms and conditions\nas are set forth in such lease with respect to Seller), so long as Purchaser\ncooperates with Seller in such arrangements and promptly reimburses Seller for\nany and all payments required to be made by Seller after the Closing Date by the\nterms of the document governing such Interest (as the same shall be in effect on\nthe date hereof), and (3) enforce, at the request of Purchaser and at the\nexpense and for the account of Purchaser, any rights of Seller arising from such\nInterest against the issuer thereof or the other party or parties thereto\n(including the rights to elect to terminate any such Interest in accordance with\nthe terms thereof upon the advice of Purchaser).\n\n                                       15\n\n \n                                  ARTICLE IV\n\n                            POST-CLOSING ADJUSTMENT\n\n          4.1  Closing Date Balance Sheet.  (a)(1) Within 45 days after the\n               --------------------------                                  \nClosing Date, Seller shall deliver to Seller's Auditors a balance sheet of the\nBusiness as it existed immediately prior to the Closing (the \"Closing Date\nBalance Sheet\"), prepared in accordance with GAAP applied on a basis consistent\nwith that employed by Seller in the preparation of the Interim Date Balance\nSheet and using the same accounting methods, policies, practices and procedures\nwith consistent classifications, judgments, and valuation and estimation\nmethodologies as used in the preparation of the Interim Date Balance Sheet,\nincluding those adjustments required by Section 4.1(b).  The Closing Date\nBalance Sheet shall be accompanied by an additional schedule of information (the\n\"Closing Date Schedule of Net Assets\") (i) the first column of which shall be a\ncopy of the Closing Date Balance Sheet, (ii) the second column of which\naccurately details all adjustments necessary to reflect the elimination of all\nassets and liabilities which are reflected on the Closing Date Balance Sheet but\nnot sold to or assumed by Purchaser in accordance with the terms of this\nAgreement (it being understood by the parties that the profit accrual rates on\nContracts will not be affected by the elimination of any such assets or\nliabilities not sold or assumed, the costs of which are normally included in\nestimated costs at completion), (iii) the third column of  which accurately\ndetails the adjustments required by Section 4.1(a)(2) below, and (iv) the fourth\ncolumn of which accurately presents the assets and liabilities of the Business\nas at the Closing Date after giving effect to the adjustments reflected in the\nsecond and third columns thereof and indicates the Net Assets as at the Closing\nDate (the \"Closing Date Net Assets\").  The Closing Date Balance Sheet and the\nClosing Date Schedule of Net Assets are referred to collectively as the \"Closing\nDate Financial Information.\"\n\n          (2)  The third column of the Closing Date Schedule of Net Assets\nindicates all adjustments to the Closing Date Balance Sheet which are necessary\nto remove the effects, if any, resulting from any change in the assets or\nliabilities of the Business during the period from the date of the Interim Date\nBalance Sheet through the Closing Date, caused by any of the following: (A) any\nchange resulting from a change in GAAP, including those promulgated after the\nInterim Date Balance Sheet is prepared, regardless of whether or not otherwise\nrequired to be made, except as agreed to between Seller and Purchaser; (B) any\nchange resulting from a change of an accounting policy, practice, procedure,\nallocation method or estimation technique from that followed in preparing the\nInterim Date Balance Sheet; (C) any extraordinary or non-recurring gains or any\ntransactions not in the ordinary course of business consistent with past\npractices of Seller and not otherwise required by this Section 4.1; (D) the\ninclusion in the Closing Date Balance Sheet of any Asset or any Liability which\nwas not, but could have been, reflected in the Interim Date Balance Sheet; (E)\nany corrections relating to mathematical mistakes, mistakes in the application\nof accounting principles, or oversight or misuse of facts that existed at the\ndate of the Interim Date Balance Sheet and affected the determination of any\namounts in the Interim Date Balance Sheet; and (F) any change in the amount\nrequests for equitable adjustment or claims made or to be made \n\n                                       16\n\n \nby Seller under any contract relating to the Business which has not been\napproved by the Purchaser pursuant to the approach described in Schedule\n4.1(a)(2)(F); (G) any change in the amount of Seller's reserves for the Business\nfrom the amounts of the reserves reflected on Schedules 5.5(c) and 5.5(d) as of\nthe Interim Date Balance Sheet, except as noted on Schedules 4.1(a)(2)(G)(A) and\n4.1(a)(2)(G)(B). For purposes of Sections 4.1(a)(2)(A), (B), (D) and (E), any\npotential adjustment having an individual value of less than $50,000 (the \"Small\nAdjustment\") shall not be considered as a column three adjustment until the\ntotal cumulative value of all such Small Adjustments when measured on a net\nbasis exceeds $100,000, in which case only the excess value above $100,000 shall\nbe reflected in column three of the Closing Date Schedule of Net Assets. In\npreparing the Closing Date Financial Information, Seller shall use the same\ntechniques and methodologies in determining its estimates and judgments for\nevaluating the status of its Contracts and Government Contract rate reserves as\nwere used in preparing the Interim Financial Statements, except that the third\ncolumn of the Closing Date Schedule of Net Assets shall (A) reverse all\nreductions and increases in reserves from the amounts contained in the Interim\nDate Balance Sheet and reflected on Schedule 5.5(d), except as noted on Schedule\n4.1(a)(2)(G)(A) and (B) make such adjustments as are necessary to cause each\nprogram estimate at completion profit margin percentage on the remaining revenue\nto equal the related estimate at completion profit percentage reflected on\nSchedule 5.5(c) as of the date of the Interim Date Balance Sheet, except as\nnoted on Schedule 4.1(a)(2)(G)(B) and (C) make such adjustments as are necessary\nto cause each Program Performance Reserve Ratio at Closing to equal the related\nProgram Performance Reserve Ratio reflected on Schedule 5.5(c) as of the date of\nthe Interim Date Balance Sheet. For all purposes of this Agreement, reserves\nshall be deemed to include (without limitation) balance sheet reserves and\/or\ncontract level reserves whether related to accounts receivable, billed or\nunbilled, contracts in process, inventories, fixed assets or any other Purchased\nAsset, regardless of whether any such reserve is recorded as an offset to such\nAssets' carrying value or is included as an accrued liability in the Closing\nDate Balance Sheet. Notwithstanding the above, no adjustments shall be made to\nthis third column of the Closing Date Schedule of Net Assets under any of the\nprovisions of Section 4.1(a)(2) if the adjustment pertains to assets or\nliabilities which are reflected on the Closing Date Balance Sheet but are not\nsold to or assumed by Purchaser under the terms of this Agreement.\n\n          (3) The third column of the Closing Date Schedule of Net Assets shall\nmake any adjustments necessary to remove any values remaining on the accounts\nlisted on Schedule 4.1(a)(3) after considering previous amounts assigned to\nthese accounts under the provisions of Section 4.1(a)(1)(i), Section\n4.1(a)(1)(ii) and Section 4.1(a)(1)(iii), such that the value assigned to column\nfour for these accounts in the Closing Date Schedule of Net Assets shall be\nzero.\n\n          (4) The third column of the Closing Date Schedule of Net Assets shall\nmake any adjustments necessary to eliminate the effect of any accounting or\naudit adjustments posted between the Interim Date Balance Sheet and the Closing\nDate Balance Sheet to write down or write up the carrying value of the MK46 New\nBrighton H1602 Account.  It is the expectation of Purchaser and Seller that a\npotential write down of approximately $500,000 \n\n                                       17\n\n \nmay be reflected in this account in the Closing Date Balance Sheet, and it is\nthe intention of this provision to eliminate the effect of this or any other\nsuch accounting or audit adjustment to the value of the MK46 New Brighton H1602\nAccount from the price adjustment provisions of Section 4.1.\n\n          (5) In the event that sales of the NT37 inventory have occurred or\nthat cash collections have occurred on the SQQ-89 REA or the Hydroscience\nReceivable between the Interim Date and the Closing Date, the following details\nthe calculation of the Purchase Price adjustment necessary to reflect these\noccurrences: (i) sale of NT37 inventory and cash is collected by Seller;\nPurchase Price is reduced by Purchaser's share of proceeds per Section 7.21 of\nthis Agreement; (ii) sale of NT37 inventory and a collectible account receivable\nexists on the Closing Date Balance Sheet; Purchase Price is increased by\nSeller's share of this receivable per Section 7.21 of this Agreement; (iii) cash\ncollection on the SQQ-89 REA; Purchase Price is reduced by Purchaser's share of\nthe proceeds per Section 7.19 of this Agreement; (iv) cash collection on the\nHydroscience Receivable; Purchase Price is reduced by Purchaser's share of the\nproceeds per Section 7.20 of this Agreement.\n\n          (b)  Seller shall engage Seller's Auditors (at Seller's and\nPurchaser's expense shared equally) to, within 60 days after Seller's delivery\nof the Closing Date Financial Information under Section 4.1(a) above:  (i) read\nthis Agreement and all other documents and instruments deemed necessary by\nSeller's Auditors to discharge their obligations required under this Agreement;\n(ii) audit the Closing Date Balance Sheet in accordance with generally accepted\nauditing standards; and (iii) deliver to Seller, Purchaser and Deloitte &amp; Touche, a draft certificate in the form set forth in Exhibit A hereto (the final\nversion of which is referred to as the \"Auditors' Report\") together with the\nClosing Date Balance Sheet to which such draft Auditors' Report relates.  The\nAuditors' Report shall report, without qualification or other limitation arising\nout of the scope of the audit, that, the Closing Date Balance Sheet presents\nfairly the financial condition of the Business at the Closing Date in conformity\nwith GAAP, and that:\n\n          (1)  the Closing Date Balance Sheet does not give effect to any\npurchase accounting (or similar related) adjustments, or any other accounting\neffects, arising from the transactions provided for in this Agreement;\n\n          (2)  the Closing Date Balance Sheet does take into account all\nliabilities, accruals and other adjustments on or prior to the Closing Date\nwhich would be appropriate to a balance sheet being prepared at a financial\nyear-end including (without limitation) all liabilities and accruals necessary\nto present the Business as a stand-alone entity and any liabilities and accruals\nrelating to the Business which may have previously been recorded at the\ncorporate office or other organizational level, including (without limitation)\nall liabilities (A) for such charges as rentals, maintenance services, property\ntaxes, general and product liability insurance (including self-insurance\naccruals), (B) arising from the employment of the employees of the Business\n(including obligations for accrued bonuses, workers' compensation obligations\n(including claims filed and obligations incurred but not reported), medical,\ndental, \n\n                                       18\n\n \nseverance, profit sharing, vacation time, paid time off, other insurance\nand business expenses) and (C) arising from interorganizational transactions\n(i.e., transactions between the Business and any other business, division, unit\n-----                                                                          \nor Subsidiary of Seller) and intraorganizational transactions and expense\nallocations, accrued in accordance with the past customs and practices of the\nBusiness but only to the extent arising from the purchase and sale of goods or\nservices in the ordinary performance of the Contracts of the Business;\n\n          (3)  Reserves are provided on a Contract by Contract basis, as\nappropriate, for all Contracts with total estimated costs at completion\n(including all other overhead costs allocated to such Contracts in a manner\nconsistent with the methodology used in preparing the Interim Date Balance\nSheet) in excess of the firm negotiated ceiling price based on the most recently\ncompleted Contract cost estimates.  Adjustments have been made to reflect all\nother Contracts on the individual contract percentage of completion method\n(using Seller's historical methodology for determining the percentage of\ncompletion), based upon effort performed through the Closing Date, and utilizing\nthe most recently completed contract cost estimates.  When calculating the\nearnings associated with the most recently completed contract cost estimates,\nadjustments have been provided for the difference between booked Government\nContract overhead rates and the rates that are expected to be negotiated with\nthe government for all years open for audit by the government;\n\n          (4)  Property, plant and equipment amounts contained in the Closing\nDate Balance Sheet represent the respective book values of the specific Assets\nas at such date; and\n\n          (5)  In addition to the foregoing adjustments, the Closing Date\nBalance Sheet takes into account all proposed audit adjustments which are\nindividually in excess of $50,000 on a pre-tax basis.  It is understood by\nPurchaser and Seller that Seller's Auditors will establish the scope of its\naudits based upon its professional judgment of materiality as applied to the\nClosing Date Balance Sheet.\n\n          Seller covenants to make all such changes to the Closing Date Balance\nSheet as shall be necessary to enable Seller's Auditors to deliver the draft\ncertificate in substantially the form set forth in Exhibit A and to deliver the\nAuditor's Report.  Notwithstanding the above, Seller shall not be required to\nmake any changes where its existing accounting policies, practices, procedures,\nallocation methods or estimation techniques are in compliance with GAAP and\nconsistent with past practices, including those used in preparing the Interim\nDate Balance Sheet.\n\n          (c)  Within 30 Business Days after the receipt of the Closing Date\nFinancial Information, the Closing Date Balance Sheet and the draft Auditors'\nReport on the Closing Date Balance Sheet, Purchaser shall notify Seller of any\nobjections thereto and shall attempt in good faith to reach an agreement with\nSeller as to the matter or matters in dispute.  If Purchaser and Seller,\nnotwithstanding such good faith effort, shall have failed to resolve the matter\nor matters in dispute within 20 Business Days after Purchaser advises Seller of\nits objections, then Seller immediately will cause Seller's Auditors to issue\nthe Auditors' Report \n\n                                       19\n\n \nand the related financial statements and schedule and deliver copies thereof to\nSeller, Purchaser and Purchaser's representative. Any remaining disputed matters\nshall be finally and conclusively determined by an independent auditing firm of\nrecognized national standing (the \"Arbiter\") selected by Purchaser and Seller,\nwhich shall not be the regular auditing firm of Purchaser or Seller. Promptly,\nbut not later than 30 Business Days after its acceptance of its appointment, the\nArbiter shall determine (based solely on presentations by Seller and Purchaser\nto the Arbiter and not by independent review) only those issues in dispute and\nshall render a report as to the disputes and containing a revised Closing Date\nSchedule of Net Assets, which report shall be conclusive and binding upon the\nparties hereto. In resolving any disputed item, the Arbiter may not assign a\nvalue to any particular item greater than the greatest value for such item\nclaimed by either party or less than the smallest value for such item claimed by\neither party, in each case, as presented to the Arbiter. For purposes of the\nArbiter's determination of Definitive Closing Date Net Assets, the amounts to be\nincluded shall be the appropriate amounts from the Closing Date Schedule of Net\nAssets for assets and liabilities that are being sold or assumed as to items\nthat are not in dispute, and the amounts determined by the Arbiter as to items\nthat were submitted for resolution by the Arbiter.\n\n          (d)  For purposes of complying with the terms set forth herein, each\nparty shall cooperate with and make available to the other party and its\nauditors and representatives, all information, records, data, auditors' working\npapers, and access to its personnel, shall permit access to its facilities and\nshall permit the other party and its auditors and representatives to make copies\nof all information, records, data and auditors' working papers, in each case as\nmay be reasonably required in connection with the analysis of the Interim Date\nBalance Sheet, the draft Auditors' Report, the Auditors' Report, the Closing\nDate Financial Information, the Audited Closing Date Balance Sheet and the\nresolution of any dispute(s) thereunder.  Without limiting the generality of the\nforegoing, Seller shall cause Seller's Auditors to make available at its office\nto Purchaser and Purchaser's representative immediately after delivery of the\ndraft Auditors' Report pursuant to Section 4.1(b) above the workpapers therefor\npertaining only to the Business and not to other operations and businesses of\nSeller (which may be copied by Purchaser if Purchaser so elects), subject to\napproval by Deloitte &amp; Touche.  Purchaser's auditors shall also have access to\nSeller's Auditors' workpapers pertaining only to the Business and not to other\noperations and businesses of Seller (including those relating to prior audits)\nas necessary for the purpose of providing regular auditing services to the\nBusiness.\n\n          4.2  Post-Closing Adjustment.  As soon as the Auditor's Report has\n               -----------------------                                      \nbeen delivered pursuant to the provisions set forth in Section 4.1 hereof and\neither all disagreements with respect to the Closing Date Net Assets have been\nresolved directly by Purchaser and Seller or the report of the Arbiter has been\nissued:  (a) in the event that the Definitive Closing Date Net Assets shall be\nless than the Interim Date Net Assets, then Seller shall pay to Purchaser the\namount of such difference in cash plus interest thereon from the Closing Date to\nthe date of such payment thereof at the per annum rate equal to the rate\nannounced by Citibank, N.A. in the City of New York as its base rate as in\neffect on the Closing Date; or (b) in the event that the Definitive Closing Date\nNet Assets shall be greater than the Interim Date Net Assets, then Purchaser\nshall pay to Seller the amount of such \n\n                                       20\n\n \ndifference in cash plus interest thereon from the Closing Date to the date of\nsuch payment thereof at the per annum rate equal to the rate announced by\nCitibank, N.A. in the City of New York as its base rate as in effect on the\nClosing Date. Any such cash payment pursuant to this Section 4.2 shall be made\nwithin 10 Business Days following the later of (i) the receipt by the parties of\nthe Audited Closing Date Balance Sheet and (ii) if there shall exist a dispute\nbetween the parties as to the amount of Closing Date Net Assets, the date of\nreceipt of the Arbiter's report, by bank wire transfer of immediately available\nfunds to an account designated by Purchaser or Seller, as the case may be. The\ncash payment pursuant to this Section 4.2 (other than the portion of any such\npayment made by Purchaser specifically denominated as interest hereunder) shall\nbe treated by the parties as an adjustment to the purchase price of the Assets.\nThe provisions of this Section 4.2 Post Closing Adjustment section, as well as\nprovisions contained in Section 4.1 and Section 5.5, are intended to measure the\ndifferences between the Interim Date Balance Sheet and the Closing Date Balance\nSheet on a comparable basis. Differences in accounting treatment as identified\nin Section 4.1(a)(2) between the Interim Date Balance Sheet and the Closing Date\nBalance Sheet are to be addressed under the Indemnification provisions of\nSection 12 of this Agreement, and no attempt will be made by either Purchaser or\nSeller to seek an economic adjustment under both the price adjustment terms of\nArticle IV and the indemnity provisions of Article XII of this Agreement.\n\n                                    ARTICLE V\n\n                   REPRESENTATIONS AND WARRANTIES OF SELLER\n\n          Seller represents and warrants to Purchaser as of the date hereof, and\nshall be deemed to have represented and warranted on the Closing Date, as\nfollows:\n\n          5.1  Organization and Authority of Seller.  Seller is a corporation\n               ------------------------------------                          \nduly organized, validly existing and in good standing under the laws of the\nState of Delaware with full power and authority, corporate and otherwise, to own\nand operate its properties and to carry on its business as and where presently\nconducted, to enter into and to perform its obligations under this Agreement and\neach of the Ancillary Agreements to which it is a party and to consummate the\ntransactions contemplated hereby and thereby.  Seller is duly qualified or\notherwise authorized to do business as a foreign corporation and is in good\nstanding in each jurisdiction set forth in Schedule 5.1, except where the\nfailure to so qualify would not have Material Adverse Effect.\n\n          5.2  Authorization of Agreements.  The execution, delivery and\n               ---------------------------                              \nperformance of this Agreement and each of the Ancillary Agreements to which it\nis a party by Seller have been duly authorized by all necessary action,\ncorporate or otherwise, of Seller, and this Agreement has been, and each of the\nAncillary Agreements to which it is a party will be, duly executed and delivered\nby Seller and this Agreement constitutes, and each of the Ancillary Agreements\nto which it is a party when executed will constitute, the valid and binding\nobligation of Seller, enforceable in accordance with its terms.\n\n                                       21\n\n \n          5.3  No Conflicts.  Except as described in Section 5.4, the execution,\n               ------------                                                     \ndelivery and performance by Seller of this Agreement and each of the Ancillary\nAgreements to which it is a party and the consummation of the transactions\ncontemplated hereby and thereby do not and will not (with or without the giving\nof notice or the passage of time or both) (a) conflict with the certificate of\nincorporation or by-laws of Seller or, except as set forth in Schedule 5.3,\nconflict with, violate, or result in the breach or termination of, or constitute\na default under, (1) any Authorization, lease, agreement, contract, commitment,\nletter of intent, memorandum of understanding or other document or instrument,\nor (2) any order, judgment, injunction or decree of any court or governmental\nauthority, foreign or domestic, to which Seller is a party or by which it or any\nof its assets or properties are bound; (b) constitute a violation of any law,\nstatute or regulation of any governmental authority, domestic or foreign,\napplicable to Seller; (c) result in the creation of any lien, charge or\nencumbrance upon any of the assets or properties of Seller or (d) give to any\nother Person any rights whatsoever, including rights of termination,\ncancellation or acceleration, in or with respect to any of the properties or\nassets of Seller except to the extent that the occurrence of any of the\nforegoing would not have a material adverse effect on (i) the ability of Seller\nto enter into and perform its obligation under this Agreement or (ii) the\nbusiness, operations, prospects or financial condition of Seller.\n\n          5.4  Consents.  No consent, approval or authorization of, or\n               --------                                               \ndesignation, declaration or filing with, any governmental authority or other\nthird party is required on the part of Seller in connection with Seller's\nexecution, delivery and performance of this Agreement (including, without\nlimitation, the sale, assignment, transfer and conveyance to Purchaser of all\nInterests) and the Ancillary Agreements to which it is a party, except for (a)\nany required filings with the Federal Trade Commission and the Department of\nJustice pursuant to the HSR Act and due expiration of the waiting period\n(including any extensions) thereunder, (b) any novations required in connection\nwith Government Contracts, (c) any filings required under the Department of\nDefense Industrial Security Manual for Safeguarding Classified Information (the\n\"DoD Manual\"), (d) any filings required under United States Export Control Laws\nand (e) those consents or approvals which are listed in Schedule 5.4.\n\n          5.5  Financial Statements.  (a)(1) Set forth in Schedule 5.5(a)(1) are\n               --------------------                                             \ncomplete and correct copies of the following financial statements:\n\n          (A)  the unaudited balance sheet for the Business for the fiscal year\n     ended March 31, 1996 and the related statement of operating income and\n     statement of operating cash flows for the year then ended (the \"Year-End\n     Financial Statements\").  The unaudited balance sheet of the Business as at\n     March 31, 1996 and the notes thereto are sometimes referred to in this\n     Agreement as the \"March 31, 1996 Balance Sheet\";\n \n          (B)  the unaudited balance sheet of the Business as at July 31, 1996,\n     and the related statement of operating income and statement of operating\n     cash flows for the four-month period then ended (together with Schedule\n     5.5(a)(2) referred to below, the \n\n                                       22\n\n \n     \"Interim Financial Statements\"). The unaudited balance sheet of the\n     Business as at July 31, 1996 and the notes thereto are sometimes referred\n     to in this Agreement as the \"Interim Date Balance Sheet\".\n\n          (2)  Attached hereto as Schedule 5.5(a)(2) is a schedule (i) the first\ncolumn of which is a copy of the Interim Date Balance Sheet, (ii) the second\ncolumn of which accurately details all adjustments necessary to reflect the\nelimination of all assets and liabilities which are reflected on the Interim\nDate Balance Sheet but not sold to or assumed by Purchaser in accordance with\nthe terms of this Agreement, except that no amount shall appear in this second\ncolumn for any vacation accrual that is not to be assumed by Purchaser at\nClosing, (it being understood by the parties that the profit accrual rates on\nContracts will not be affected by the elimination of any such assets or\nliabilities not sold or assumed, the costs of which are normally included in\nestimated costs at completion), (iii) the third column of which shall make any\nadjustments necessary to remove any values remaining on the accounts listed on\nSchedule 4.1(a)(3) after considering previous amounts assigned to these accounts\nunder the provisions of Section 5.5(a)(2)(i) and Section 5.5(a)(2)(ii), such\nthat the value assigned to column four for these accounts in this Interim Date\nSchedule of Net Assets shall be zero; and (iv) the fourth column of which\naccurately presents the assets and liabilities of the Business as at the date of\nthe Interim Date Balance Sheet after giving effect to the adjustments reflected\nin the second and third columns thereof and indicates the Net Assets as at the\ndate of the Interim Date Balance Sheet (the \"Interim Date Net Assets\").\n\n          The Year-End Financial Statements and the Interim Financial Statements\n(including the schedules thereto) are sometimes referred to herein collectively\nas the \"Financial Statements\".\n\n          (3)  The Interim Date Balance Sheet takes into account all\nliabilities, accruals and other adjustments on or prior to the date thereof\nwhich would be appropriate to a balance sheet being prepared at a financial\nyear-end and gives effect to the following adjustments:\n\n          (A) Reserves have been provided on a Contract by Contract basis, as\n     appropriate, for all Contracts with total estimated costs at completion\n     (including all other overhead costs allocated to such Contracts) in excess\n     of the firm negotiated ceiling price based on the most recently completed\n     Contract cost estimates.  Adjustments have been made to reflect all other\n     Contracts on the individual contract percentage of completion method (using\n     Seller's historical methodology for determining the percentage of\n     completion), based upon effort performed through the date of such balance\n     sheet, and utilizing the most recently completed contract cost estimates.\n     When calculating the earnings associated with the most recently completed\n     contract cost estimates, adjustments have been provided for the difference\n     between booked Government Contract overhead rates and the rates that are\n     expected to be negotiated with the government for all years open for audit\n     by the government.  Reserves shall be deemed to include (without\n     limitation) balance sheet reserves related to accounts receivable, whether\n     billed or unbilled, contracts in process, inventories, \n\n                                       23\n\n \n     fixed assets or any other assumed asset, regardless of whether any such\n     reserve is recorded as an offset to such assets' carrying value or is\n     included as an accrued liability in the Interim Date Balance Sheet; and\n\n          (B)  Property, plant and equipment amounts contained therein represent\n     the respective book values of the specific Assets as at the date of the\n     Interim Date Balance Sheet and provision has been made for the disposition\n     of any idle or excess property, plant and equipment in accordance with\n     Federal Acquisition Regulation 31.205-16.\n\n          The Interim Date Balance Sheet does not give effect to any purchase\naccounting adjustments arising from the transactions provided for in this\nAgreement.\n\n          (b)  The Financial Statements are in agreement with the books and\nrecords regularly maintained by Seller and its Subsidiaries and were prepared in\naccordance with GAAP (except as otherwise required by Section 5.5(a)(3)(B), or\nas disclosed in the notes to the Financial Statements) and using the same\naccounting methods, policies, practices and procedures with consistent\nclassifications, judgments, and valuation and estimation methodologies as those\nused by Seller with respect to the Business in preparing its historical\nfinancial statements, except as otherwise expressly noted on Schedule 5.5(a)(1).\nSubject to normal year-end adjustments with respect to the Interim Financial\nStatements (which adjustments, individually and in the aggregate, are not\nmaterial) the Financial Statements present fairly the financial position of the\nBusiness as of the dates specified therein and the results of operations for the\nfiscal periods then ended, taking into account all liabilities and accruals\nnecessary to present the Business as a stand-alone entity and any liabilities\nand accruals which may have previously been recorded at the corporate office or\nother organizational level, including (without limitation) all liabilities (A)\nfor such charges as rentals, maintenance services, property taxes, general and\nproduct liability insurance (including self-insurance accruals), (B) arising\nfrom the employment of the employees of the Business (including obligations for\naccrued bonuses, workers' compensation obligations (including claims filed and\nobligations incurred but not reported), medical, dental, severance, profit\nsharing, vacation time, paid time off, other insurance and business expenses)\nand (C) arising from interorganizational transactions (i.e., transactions\n                                                       ----              \nbetween the Business and any other business, division, unit or Subsidiary of\nSeller) and intraorganizational transactions and expense allocations, accrued in\naccordance with the past customs and practices of the Business.\n\n          (c)  Set forth in Schedule 5.5(c) is a complete and correct list on a\nContract by Contract basis, for all Contracts having a total contract value in\nexcess of $500,000, of the EAC profit rates reflected in the Interim Date\nBalance Sheet with respect to all Contracts relating to the Business, as well as\nPerformance Reserves, Rate Reserves and Warranty Reserves included in Program\nReserves.\n\n          (d)  Set forth in Schedule 5.5(d) is a complete and correct list on a\nContract by Contract basis of all reserves for warranties, reserves for bad\ndebts, rate reserves and gross \n\n                                       24\n\n \nmargin reserves maintained by Seller with respect to the Business as of the date\nof the Interim Date Balance Sheet.\n\n          5.6 Absence of Certain Developments.  Except as set forth on Schedule\n              -------------------------------                                  \n4.1(a)(3) and the reduction in projected sales to $125 million for the fiscal\nyear ending March 31, 1997, since July 31, 1996, there has not been any Material\nAdverse Change in the business, condition, revenues, earnings, assets or results\nof operations of the Business.\n\n          5.7  Material Contracts and Leases.  (a) To the extent permitted by\n               -----------------------------                                 \ngovernment regulations applicable to classified documents, Schedule 5.7 contains\na listing of all Contracts described in clauses (i) through (xv) below to which\nSeller is a party and which relate to or involve the Business as currently\noperated by Seller or which are material to the continued operation of the\nBusiness by the Purchaser.  True, correct and complete copies of the Contracts\nreferred to in clauses (i)-(xv) below and listed on Schedule 5.7 have been\ndelivered to or made available to Purchaser and its agents and representatives.\n\n               (i)  Each Government Contract which involves performance of\n     services or delivery of goods and\/or materials by Seller;\n\n              (ii)  Each note, debenture, letter of credit, bond or surety,\n     other evidence of indebtedness, guarantee, loan, credit or financing\n     agreement or instrument or other contract for money borrowed, including any\n     agreement or commitment for future loans, credit or financing in excess of\n     $75,000;\n\n             (iii)  Each Contract not in the ordinary course of business\n     involving expenditures or receipts of Seller in excess of $250,000;\n\n              (iv)  Each lease, rental or occupancy agreement, license,\n     installment and conditional sale agreement, and other Contract affecting\n     the ownership of, leasing of, title to, use of, or any leasehold or other\n     interest in, any real or personal property and involving aggregate payments\n     in excess of $250,000;\n\n               (v)  Each license agreement or other material Contract with\n     respect to any Intellectual Property of Seller or any other Person,\n     including any agreements with current or former employees, consultants, or\n     contractors of Seller regarding the ownership, appropriation or the\n     nondisclosure of Intellectual Property;\n\n              (vi)  Each collective bargaining agreement or other Contract\n     to or with any labor union or other employee representative of a group of\n     employees relating to wages, hours, and other conditions of employment;\n\n             (vii)  Each joint venture Contract, co-production or partnership\n     agreement, or limited liability company agreement;\n\n                                       25\n\n \n            (viii)  Each Contract requiring capital expenditures after the\n     date hereof in an amount in excess of $250,000 or otherwise material to\n     Seller;\n\n              (ix)  Each distributorship, agency or manufacturer's\n     representative agreement;\n\n               (x)  Each management, consulting or employment Contract or\n     severance agreement, including, without limitation, any Contract (A) to\n     employ or terminate executive officers or other personnel and other\n     Contracts with present or former officers, directors or shareholders of\n     Seller or (B) that will result in the payment by, or the creation of any\n     commitment or obligation (absolute or contingent) to pay on behalf of\n     Seller any severance, termination, \"golden parachute,\" or other similar\n     payments to any present or former personnel following termination of\n     employment or otherwise as a result of the consummation of the transactions\n     contemplated by this Agreement;\n\n              (xi)  Each distribution, franchise, license, sales representative,\n     commission, consulting, agency or advertising Contract which is not\n     cancelable on thirty (30) calendar days notice without liability to Seller;\n\n             (xii)  Each material option to buy any property, real or personal,\n     or material option to sell any real property or personal property;\n\n            (xiii)  Each Contract containing covenants limiting the freedom of\n     Seller to engage in any line of business or compete with any Person\n     anywhere in the world;\n\n             (xiv)  Each open sales order, contract or firm written quotation\n     for more than $250,000 (\"Backlog Contracts\"); and\n\n              (xv)  Each Contract pursuant to which Seller is required to\n     indemnify a third party (other than with respect to product warranties in\n     the ordinary course of business).\n\n          (b)  Except as set forth on Schedule 5.7, all the Contracts listed\npursuant to paragraph (a) hereof are (i) in full force and effect and (ii)\nrepresent the legal, valid and binding obligations of Seller and, to the\nknowledge of Seller, represent the legal, valid and binding obligations of the\nother parties thereto.  Except as set forth on Schedule 5.7(b), no condition\nexists or event has occurred which, with notice or lapse of time or both, would\nconstitute a default under such Contracts by Seller or any other party thereto,\nexcept where the occurrence of such event or existence of any such condition\nwould not have a Material Adverse Effect on the Business.\n\n                                       26\n\n \n          (c)  Except as set forth in Schedule 5.7(c), there is no outstanding\nbid for the sale of goods or services by Seller for which the total costs\nestimated at the time of the bid, including allocable overhead and general and\nadministrative expenses, as estimated in good faith by Seller would exceed 93%\nof the proposed price set forth in such bid on the applicable Contract.\n\n          (d)  Except as set forth in Schedule 5.7(d), there is no unexercised\noption for the sale of goods or services by Seller for which the most recent\nestimated total costs of completing the unexercised option, including allocable\noverhead and general and administrative expenses, as estimated in good faith by\nSeller exceeds 93% of the price for such goods and services in respect of the\napplicable Contract.\n\n          (e)  Except as set forth on Schedule 5.7(e), there are no Contracts\nfor the sale of goods or services by Seller as to which at the time of the most\nrecent scheduled contract milestone for any such Contract the work scheduled was\nmore than sixty (60) days late.\n\n          (f)  Except as set forth on Schedule 5.7(f), there are no Contracts,\noptions or bids for the sale of goods or services by Seller which include a\nliquidated damages clause for late delivery.\n\n          (g)  Except as set forth on Schedule 5.7(g), there are no Contracts\nfor the sale of goods or services by Seller which require Seller to be an\naccount party to a letter of credit or bank guarantee which allows the\nbeneficiary to draw funds without the specific consent of the account party, in\nthe absence of an arbitration or judicial ruling in favor of the beneficiary.\n\n          (h)  Except as set forth on Schedule 5.7(h), (i) there is no\noutstanding bid for the sale of goods or services where performance of\ncontractual effort will begin prior to contract award, and (ii) there are no\nexisting Contracts where performance will continue while awaiting additional\ncontractual funding.\n\n          5.8  Employee Benefit Plans.  In regard to the Business:   (a)\n               ----------------------                                   \nSchedule 5.8(a) sets forth all Employee Benefit Plans and any other material\nemployee benefit arrangements, policies or payroll practices, including, without\nlimitation, with respect to sick leave, vacation pay, severance pay, salary\ncontinuation for disability, consulting or other compensation agreements or\narrangements, workers' compensation, retirement, deferred compensation, bonus,\nstock purchase, hospitalization, medical insurance, life insurance and\nscholarship programs maintained by Seller to which Seller has contributed or is\nor was obligated to contribute to or otherwise make payments to (hereinafter the\n\"Seller Employee Benefit Plans\"), in each case with respect to any employees of\nSeller who are employed in the Business as of fourteen (14) days prior to the\nClosing Date (hereinafter \"Employees\").  All Employee Pension Plans maintained\nby Seller, or to which Seller has contributed or is obligated to contribute, in\neach case with respect to any Employees (hereinafter, the \"Seller Employee\nPension Plans\") are separately listed on Schedule 5.8(a).  Schedule 5.8(a) also\n\n                                       27\n\n \nclearly sets forth which of such plans are Multiemployer Plans, multiple\nemployer plans subject to Sections 4063 and 4064 of ERISA (\"Multiple Employer\nPlans\"), plans other than Multiemployer Plans and Multiple Employer Plans that\nare subject to Section 412 of the Code and \"welfare benefit plans\" within the\nmeaning of Section 3(1) of ERISA which provide for continuing benefits or\ncoverage for any participant or any beneficiary or dependent of a participant\nafter such participant's termination of employment except as required by Section\n4980B of the Code and which is required to be paid 100% by the participant.\n\n          (b)  True, correct and complete copies of the following documents,\nwith respect to each of the Seller Employee Benefit Plans and Seller Employee\nPension Plans, have been made available or delivered by Seller to Purchaser:\n(A) any plans, insurance policies and service agreements and amendments thereto,\n(B) the most recent Forms 5500 and any financial statements attached thereto,\n(C) the last Internal Revenue Service determination letter, (D) summary plan\ndescriptions, and (E) the last actuarial reports, if any.\n\n          (c)  Except as set forth on Schedule 5.8(c), there are no pending or,\nto Seller's knowledge, threatened claims or lawsuits which have been asserted or\ninstituted against the Seller Employee Benefit Plans and\/or the Seller Employee\nPension Plans, the assets of any of the trusts under such plans or the plan\nsponsor or the plan administrator, or against any fiduciary of the Seller\nEmployee Benefit Plans and\/or Seller Employee Pension Plans (other than routine\nbenefit claims) nor does Seller have knowledge of facts which could form the\nbasis for any such claim or lawsuit.\n\n          (d)  [Intentionally Omitted]\n\n          (e)  [Intentionally Omitted]\n\n          (f)  [Intentionally Omitted]\n\n          (g)  [Intentionally Omitted]\n\n          (h)  Except as set forth in Schedule 5.8(h), neither the execution\nand delivery of this Agreement nor the consummation of the transactions\ncontemplated hereby will (i) result in any payment becoming due to any employee\n(current, former or retired) of the Seller, (ii) increase any benefits otherwise\npayable under any Seller Employee Benefit Plan or Seller Employee Pension Plan\nor (iii) result in the acceleration of the time of payment or vesting of any\nsuch benefits.\n\n          (i)  Neither Seller nor any Subsidiary of Seller has any contract or\ncommitment, to create any additional Seller Employee Benefit Plans or Seller\nEmployee Pension Plans or to modify any existing Seller Employee Benefit Plan or\nSeller Employee Pension Plans to the detriment of any employee.\n\n          (j)  [Intentionally Omitted]\n\n                                       28\n\n \n          5.9  Litigation; Violation of Law.  (a) There are no judicial,\n               ----------------------------                             \narbitral or administrative actions, proceedings, investigations or audits\n(including, but not limited to, any audits or investigations referred to in\nSection 5.9(b) hereof) pending or, to Seller's knowledge, threatened that\nquestion the validity of this Agreement or any action taken or to be taken by\nSeller in connection with this Agreement or any of the Ancillary Agreements, or\nwhich, if adversely determined, would have a Material Adverse Effect upon\nSeller's ability to enter into or perform its obligations under this Agreement.\n\n          (b)  Except as set forth on Schedule 5.9 or 5.13: (1) there are no\nsuits, actions, or legal, administrative, arbitration or other proceedings or\ngovernmental investigations or audits with respect to the Business, including,\nwithout limitation, any thereof related to any Government Contract or other\nContract to which Seller is a party or by which it is bound and which relates to\nor involves the Business, pending or, to Seller's knowledge, threatened, (2)\nthere are no orders, injunctions or decrees outstanding against Seller related\nto any Government Contract or other Contract involving the Business or pursuant\nto which Seller is performing services or supplying goods, (3) there are no\ninternal, or to Seller's knowledge, outside investigations (other than routine\naudits under Governmental Contracts) of Seller which relate to the Business\nconcerning any actual or potential liabilities which relate to Government\nContracts or other Contracts or with respect to which voluntary disclosure may\nbe necessary under the Defense Industry Initiatives, and (4) Seller has no\nknowledge of any claim or claims, whether asserted or unasserted, or other\nassertion of liability against Seller which relates to the Business and in each\ncase, (A) in which relief other than, or in addition to, money damages from\nSeller is sought, or (B) in which recovery of money damages from Seller in an\namount (individually or in the aggregate for all such claims and assertions of\nliability) in excess of $100,000 is sought.\n\n          (c)  Except as set forth in Schedule 5.9 or 5.13, Seller has not\nreceived any notice of violation of, and Seller is not in violation of, any\napplicable federal, state, local or foreign law, statute, ordinance, order, rule\nor regulation, or judgment entered by any federal, state, local or foreign court\nor governmental authority, relating in each case to the operation, conduct or\nownership of the properties or businesses of the Business, including but not\nlimited to, the federal antitrust laws, federal procurement laws, the state\nantitrust laws, the federal securities laws, the state securities laws (so\ncalled \"Blue Sky\" and similar laws), and all other federal, state or local laws,\nregulations or ordinances pertaining to the Business, except for any such\nviolations, which, individually or in the aggregate, would not have a Material\nAdverse Effect on the Business.\n\n          (d)  All Authorizations material to the current operations of the\nBusiness are in full force and effect without any default thereunder by Seller\nor, to the knowledge of Seller, by any other party thereto, and Seller has not\nreceived any notice, written or oral, of any claim or charge that Seller is\ncurrently in violation of or in default under any Authorization or\nAuthorizations necessary to any of the current operations of the Business.\n\n                                       29\n\n \n          5.10  Taxes.  (a) Except as set forth in Schedule 5.10, Seller has\n                -----                                                       \ntimely filed all Tax Returns required to be filed and all such Tax Returns were\ncorrect and complete in all material respects.  Seller has timely paid all Taxes\nthat are due, or claimed by any taxing authority to be due, or has provided for\nall such Taxes on its financial statements in accordance with GAAP.\n\n          (b)  Except as set forth in Schedule 5.10, no assessment, audit or\nother proceeding by any taxing authority, court, or other governmental or\nregulatory authority has occurred or is pending, or to the knowledge of Seller,\nthreatened with respect to the Taxes or Tax Returns of Seller.\n\n          (c)  Except as set forth in Schedule 5.10, none of the Assets is: (1)\n\"tax-exempt use property\" within the meaning of Section 168(h)(1) of the Code,\n(2) used predominantly outside the United States within the meaning of Proposed\nTreasury Regulation Section 1.168-2(g)(5), (3) \"Tax-exempt bond financed\nproperty\" within the meaning of Section 168(g)(5) of the Code, or (4) \"limited\nuse property\" as that term is used in Rev. Proc. 76-30.  Following the Closing,\nnone of the Assets will be property that Purchaser or any of its Affiliates will\nbe required to treat as being owned by any other Person pursuant to the\nprovisions of Section 168(f)(8) of the 1954 Code.\n\n          (d)  Seller is not a foreign person within the meaning of Section 1445\nof the Code.\n\n          (e)  With respect to Leased Assets placed in service on or before the\ndate hereof, each Lease Contract (excluding property sold on installment sales\ncontracts) will be treated as a lease for federal income tax purposes.\n\n          (f)  Seller has complied with all applicable laws, rules and\nregulations relating to the payment and withholding of Taxes and has duly and\ntimely withheld from employee salaries, wages and other compensation and has\npaid over to the appropriate taxing authorities all amounts required to be so\nwithheld and paid over for all periods under all applicable laws.\n\n          5.11  Material Changes.  Except as set forth in Schedule 5.11 or the\n                ----------------                                              \nInterim Date Balance Sheet, whether or not in the ordinary course of business,\nsince July 31, 1996, there has not been, occurred or arisen:  (1) any material\ndamage or destruction to properties or assets of Seller, whether covered by\ninsurance or not; (2) any increase in the compensation payable, or to become\npayable, by Seller to any officer or employee employed in the Business whose\nremuneration during 1996 exceeded the rate of $75,000 per year, or any material\nincrease in benefits or benefit plan costs or any material change in any bonus,\ninsurance, pension, compensation or other benefit plan made for or with or\ncovering any officer or employee of Seller employed in the Business; (3) any\nmaterial extraordinary or non-recurring loss (as defined in Opinion Number 30 of\nthe Accounting Principles Board of the American Institute of Certified Public\nAccountants) suffered by Seller; or (4) any waiver by Seller of any material\nrights of substantial value.\n\n                                       30\n\n \n          5.12  Affiliate Agreements.  Schedule 5.12(a) sets forth a list of all\n                --------------------                                            \nContracts and invoices outstanding as of the date of this Agreement which relate\nto (i) the provision of products or services to the Business by any other\ndivision, unit, Subsidiary or Affiliate of Seller or (ii) the provision of\nproducts or services by the Business to any other division, unit, Subsidiary or\nAffiliate of Seller.  Except as set forth on Schedule 5.12(b) and in Section\n12.6, all such Contracts are terminable at will by Seller without penalty, are\nassignable by Seller to Purchaser and, following the assignment thereof by\nSeller to Purchaser pursuant hereto, will be terminable at will by Purchaser\nwithout penalty.\n\n          5.13  Contracts with the United States Government.  (a) Schedule\n                -------------------------------------------               \n5.13(a) contains a complete list of all open Government Contracts with respect\nto the Business to which Seller is a party.\n\n          (b)  Seller has complied in all material respects with all applicable\nfederal procurement laws and regulations including, without limitation, the\nTruth in Negotiations Act, the Cost Principles and Cost Accounting Standards,\nand the Federal Acquisition Regulation and all supplements thereto, in\nconnection with such Government Contracts, and Seller is not aware of any\nallegation by any Person that Seller has not so complied.\n\n          (c)  All of the Government Contracts relating to or involving the\nBusiness have been legally awarded and are binding on the parties thereto and\nSeller is in compliance in all material respects with all terms and conditions\nin such Government Contracts, including all terms and conditions incorporated\nexpressly by reference or by operation of law therein.\n\n          (d)  To Seller's knowledge, except as set forth on Schedule 5.13(d),\nSeller has not received any notice, written or oral, of performance or\nadministrative deficiencies relating to or involving any of such Government\nContracts.\n\n          (e)  The pricing, cost accounting, estimating, material management and\naccounting, property and resource planning and procurement systems relating to\nthe Business have been properly disclosed to and, to the extent required by\napplicable regulations, approved by the United States government and such\ndisclosures are in material compliance with applicable federal procurement laws\nand regulations, including the Cost Principles and Cost Accounting Standards.\n\n          (f)  To the Seller's knowledge, no officer, director, employee, agent,\nor representative of Seller has made with respect to the Business (1) any\nillegal political contributions, (2) material payments from corporate funds not\nrecorded on the books and records of Seller, (3) payments from corporate funds\nthat were falsely recorded on the books and records of Seller, (4) any payments\nfrom corporate funds, promises to pay, or authorization of payment, or offer,\ngift or promise to give, to any government officials or any foreign political\nparty, official thereof or candidate for foreign political office, or to any\nperson while knowing that all or a portion of such funds will be offered\ndirectly or indirectly to any foreign official or any foreign political party,\nparty official, or candidate for foreign political office for the purpose of\ninfluencing the action of such official, party official, or candidate for\nforeign\n\n                                       31\n\n \npolitical office or the action of the government, or foreign political party, in\norder to obtain, retain or direct business to or obtain, retain or direct\nlicenses or other special treatment for the Business.\n\n          (g)  Except as set forth in Schedule 5.13(g), neither Seller, any of\nSeller's Affiliates nor, to Seller's knowledge, any of their respective\ndirectors, officers or employees has been debarred or suspended from\nparticipation in the award of Government Contracts or subcontracts or from\notherwise conducting business with the United States government or any agency\nthereof, nor are there any facts or circumstances which may form the basis of a\ndebarment or suspension proceeding, in any such case, relating to or involving\nthe Business.\n\n          (h)  Except as set forth in Schedule 5.13(h), Seller has not received\nany notice of any \"stop orders\", \"cure notice\", \"show cause notice\" or any\n\"terminations for convenience or default\" of any of the Government Contracts\nrelating to or involving the Business.\n\n          (i)  Seller holds such security clearances as are required to perform\nits respective Government Contracts or subcontracts.  To Seller's knowledge,\nthere are no facts or circumstances that could result in the suspension or\ntermination of such clearances, or that could render Seller ineligible for such\nsecurity clearances in the future.  All security measures required by the\nDepartment of Defense Industrial Security Manual have been implemented.\n\n          (j)  [Intentionally Omitted]\n\n          (k)  Except as set forth on Schedule 5.13(k), there is no cost type\nGovernment Contract relating to or involving the Business with a ceiling, cap or\nshare ratio, which is or is likely to be exceeded.\n\n          5.14  Export Control and Related Matters.  (a) In connection with the\n                ----------------------------------                             \nBusiness, Seller is in substantial compliance with all United States and foreign\nExport Control Laws.\n\n          (b)  Except as set forth on Schedule 5.14(b), Seller has all necessary\nauthority under the Export Control Laws to conduct operations relating to the\nBusiness including, but not limited to, (1) all necessary licenses for any\npending export transactions, (2) all necessary licenses and clearances for the\ndisclosure of information to foreign persons and (3) all necessary registrations\nwith government agencies with authority to implement the Export Control Laws.\n\n          (c)  Seller has not participated directly or indirectly in any\nboycotts or other similar practices in violation of the regulations of the\nUnited States Department of Commerce or Section 999 of the Code.\n\n                                       32\n\n \n          5.15  Subsidiaries; Cooperative Business Agreements.  (a)  There are\n                ---------------------------------------------                 \nno Subsidiaries of Seller that are engaged, in whole or in part, in the Business\nor that own or lease any of the Assets.\n\n          (b)  Schedule 5.15(b) contains a complete and correct list of all of\nthe teaming arrangements, advance agreements, associate contractor agreements,\nMOUs and MOAs to which Seller is a party and which relate to or involve the\nBusiness.\n\n          5.16  Personal Property.  Except for property furnished by the\n                -----------------                                       \ngovernment or prime contractors, Seller owns or leases, and the Assets\nconstitute, sufficient tangible personal Property to conduct the business and\noperations of the Business in all material respects as presently conducted.\nSchedule 5.16(a) contains a complete and correct list of all tangible personal\nProperty that constitute Assets used by the Seller in the operation of the\nBusiness in the ordinary course.  Schedule 5.16(b) separately identifies all\nThird Party Assets, including, without limitation, tooling and test equipment,\nnecessary to perform the obligations under or for which Purchaser could be held\naccountable under the Government Contracts transferred to Purchaser pursuant to\nthis Agreement, and such Third Party Assets are maintained by Seller in\naccordance with a government approved property management system.  Schedule\n5.16(c) separately identifies all Third Party Assets, including, without\nlimitation, tooling and test equipment, necessary to carry on the Business, not\naccountable under the Government Contracts and included in the Assets.  Except\nas set forth on Schedule 5.16(d), Seller now has, and on the Closing Date will\nhave, good and valid title to all such tangible personal Property owned by it as\nof the date of this Agreement, free and clear of all liens, security interests,\nmortgages, claims, levies, charges, pledges, hypothecations, conditional sale or\nretention contracts and encumbrances of any nature whatsoever (collectively,\n\"Liens\"), except for Liens of the type referred to in Section 5.19(a) hereof.\nExcept as set forth on Schedule 5.16(e), upon consummation of the transactions\ncontemplated by this Agreement, Purchaser will be entitled to continue to use\nall tangible personal Property owned or used by Seller in the Business on the\ndate hereof.\n\n          5.17  Environmental Matters.  (a)  Except as disclosed in Schedule\n                ---------------------                                       \n5.17:\n\n          (1)  the Facilities and the operations of the Business are in\ncompliance in all material respects with all Environmental Laws;\n\n          (2)  (a) Seller has obtained all Environmental Permits necessary for\nthe operations of the Business, all such Environmental Permits are in good\nstanding, and Seller is in material compliance with all terms and conditions of\nsuch Environmental Permits; (b) there are no judicial or administrative\nproceedings pending nor, to the knowledge of Seller, threatened to revoke,\ncancel, suspend or adversely modify any such Environmental Permits; and (c) no\nnotice to or approval by a governmental authority is required under or pursuant\nto any such Environmental Permits as a result of the transaction contemplated\nhereunder;\n\n                                       33\n\n \n          (3)  none of the Facilities or the operations of the Business is\nsubject to any Environmental Claim nor, to the knowledge of Seller, has any such\nEnvironmental Claim been threatened;\n\n          (4)  to the knowledge of Seller, none of the Facilities or the\noperations of the Business is the subject of any federal, state or local\ninvestigation evaluating whether any of the Facilities or the Business is not in\ncompliance with Environmental Laws or whether any Remedial Action is needed to\nrespond to a Release of any Contaminant nor, to the knowledge of the Seller, is\nany such investigation threatened;\n\n          (5)  [Intentionally Omitted]\n\n          (6)  to the knowledge of Seller, Seller is not subject to any\nEnvironmental Costs and Liability with respect to any Contaminant and no facts\nor circumstances exist which could give rise to Environmental Costs and\nLiabilities in each case related to the Business in excess of $500,000;\n\n          (7)  to the knowledge of Seller, there is not currently, nor has there\nbeen in the past, on, under, in or about any of the Facilities (a) any above\nground storage tanks which are owned or operated by Seller; (b) underground\nstorage tanks; (c) surface impoundments or dikes; (d) any asbestos-containing\nmaterials or presumed asbestos-containing materials; (e) and polychlorinated\nbiphynels; or (f) radioactive substances;\n\n          (8)  To the knowledge of Seller, Seller has not received any notices\nof any violation or alleged violation of, or any liability under or pursuant to\nany Environmental Law relating to the operations of the Business or the\nFacilities and there are no outstanding or, to the knowledge of Seller,\nthreatened writs, injunctions, Environmental Liens, judgments, decrees,\nadministrative orders or settlement agreements arising under or pursuant to\nEnvironmental Laws against Seller or the Facilities and there are no outstanding\ncompliance schedules or requirements under any of the Environmental Permits;\n\n          (9)  To the knowledge of Seller, neither the Facilities nor any real\nproperty formerly owned, operated or leased by or for the Business is listed or\nhas been proposed for listing on the National Priorities List (\"NPL\"), the\nComprehensive Environmental Response Compensation and Liability and Information\nSystem (\"CERCLIS\") or any analogous list identifying possibly contaminated sites\nand neither Seller nor any predecessor of Seller has been named as a\n\"potentially responsible party\" with respect to or received any request for\ninformation or demand from any party concerning, its potential involvement in or\nat any site listed or proposed for listing on the NPL, the CERCLIS or analogous\nstate list or for which a condition exists which may give rise to Remedial\nAction under any applicable Environmental Laws, in each such case, which relates\nto or involves the Business;\n\n          (b)  [Intentionally Omitted]\n\n                                       34\n\n \n          (c)  Except as disclosed in Schedule 5.17, to the knowledge of Seller,\nSeller has provided Purchaser with copies of or made available all environmental\nreports, investigations, studies, audits, assessments, tests, reviews or other\nenvironmental analyses relating to the Business, the Facilities or any real\nproperty owned, operated or leased by or for the Business that are in the\npossession, custody or control of Seller or its subsidiaries relating to a\npotential liability in excess of $500,000.\n\n          5.18  [Intentionally Omitted]\n\n          5.19  Real Property.  (a)  Schedule 2.1(a) sets forth a complete list\n                -------------                                                  \nof all real property and interests in real property owned in fee by Seller and\nused in, held for use by or related to the Business (individually, an \"Owned\nProperty\"), including the address and description of the improvements thereon,\nand sets forth a complete list of all real property and interests in real\nproperty leased by Seller, as lessee and used in, held for use by or related to\nthe Business (individually, a \"Leased Property\"), including the names of the\nlessee and lessor and a description of the premises and the lease (collectively,\nthe \"Leases\"); and Schedule 5.19 sets forth a complete list of all Persons (the\n\"Occupants\") that occupy any portion of the Owned Property or Leased Property\npursuant to an agreement with Seller, including the names of the parties thereto\nand a description of the premises and the agreement.  True, complete and correct\ncopies of the Leases (together with any recorded memoranda or short-form leases)\nas the same have been amended, modified, supplemented or assigned have been\ndelivered or made available to Seller.  Seller has provided to the extent\navailable all title insurance policies, title reports, surveys and instruments\nor documents affecting title with respect to the Owned Property and Leased\nProperty in the possession of Seller or an Affiliate of Seller.  Except as set\nforth on Schedule 5.19, Seller or an Affiliate of Seller owns and has (1)\nmarketable and insurable fee simple title to all Owned Properties and (2) valid\nleasehold estates in all Leased Properties (Owned Property and Leased Property\nare sometimes referred to individually as a \"Seller Property\" and collectively\nas \"Seller Properties\"), in each case free and clear of all Liens and\nencumbrances of any nature except (A) as set forth on Schedule 5.19, such minor\ncovenants, restrictions, easements and encroachments, if any, not listed on\nSchedule 5.19, as do not materially interfere with such property's present, or\nto the extent known to Seller, proposed use or the business operations thereon\n(the Liens and encumbrances described in the foregoing clauses (A) and (B) are\ncollectively hereinafter referred to as \"Permitted Encumbrances\").  Seller is in\npeaceful, exclusive and undisturbed possession of the Seller Properties, with\nthe exception only of the Occupants.\n\n          (b)  Neither Seller nor, to Seller's knowledge, any other party is in\ndefault under any of the Leases, and to Seller's knowledge no event has occurred\nwhich, with notice, lapse of time or both, would constitute a default\nthereunder.  No previous or current party to any such Lease has furnished notice\nto Seller of or made a claim against Seller with respect to any breach or\ndefault thereunder.\n\n          (c)  With respect to those Leases that were transferred to Seller or\nany of Seller's Affiliates by a third party, to Seller's knowledge all necessary\nconsents to such \n\n                                       35\n\n \ntransfers have been obtained and are in full force and effect and neither Seller\nnor any Affiliate of Seller has received any notice that any such third party's\nacts or omissions has given rise to any breach of the underlying lease or\nsublease to which it is a party.\n\n          (d)  Except to the extent otherwise disclosed by Seller elsewhere in\nthis Agreement, to the knowledge of Seller, each Owned Property and each Leased\nProperty complies in all material respects with all applicable Laws, including\nwithout limitation, zoning and subdivision, and no notice of violation of Law\nhas been received by Seller or any Affiliate of Seller or, to the knowledge of\nSeller, has been issued by any public or governmental authority with respect to\nany Seller Property, which noncompliance or violation, if not remedied, would\nprevent, hinder or impair the ability of Purchaser to use such Seller Property\nconsistent with its present use.\n\n          (e)  [Intentionally Omitted]\n\n          (f)  To the knowledge of Seller, all utility systems required in\nconnection with use, occupancy and operation of each Seller Property are\nsufficient for their present purposes and are fully operational and in working\norder.\n\n          (g)  Except as set forth on Schedule 5.19(g), other than options,\nrights of first refusal or other similar arrangements in favor of the Seller or\nany Affiliate of Seller under the Leases which have not been exercised as of the\ndate hereof, neither Seller nor any Affiliate of Seller has entered into any\ncontract, arrangement or understanding with respect to the future ownership,\ndevelopment, use, occupancy or operation of any of the Facilities.\n\n          (h)  To the knowledge of Seller, no termination rights have been\nexercised or threatened by any party with respect to the Leases.\n\n          (i)  To Seller's knowledge, there is no material default or violation\nof an Authorization necessary for the current and continued operation or use of\nSeller's Property. Seller has not received any notice from any governmental\nentity to the effect that there is lacking any Authorization required in\nconnection with the current or continued use or operation of any Owned Property.\n\n          (j)  There does not exist any actual or, to the knowledge of Seller,\nthreatened condemnation or eminent domain proceedings that affect any Owned\nProperty or any part thereof, and none of Seller or its Affiliates has received\nany written notice of the intention of any governmental entity or other Person\nto take or use all or any part thereof.\n\n          (k)  Except as set forth in Schedule 5.19(k), to the knowledge of\nSeller there is no actual or pending imposition of any assessments for public\nimprovements with respect to any Seller Property, except for customary annual\nassessments under state and local law.\n\n                                       36\n\n \n          (l)  Except as set forth on Schedule 5.19(l), no labor has been\nperformed or material furnished for any portion of any Owned Property for which\nany Lien, having a value in excess of $50,000 in the aggregate can be claimed,\nexcept as covered by insurance.\n\n          (m)  [Intentionally Omitted]\n\n          (n)  Seller has not received any written notice from any insurance\ncompany that has issued a policy to Seller with respect to any Seller Property\nrequiring performance of any structural or other repairs or alterations to such\nSeller Property.\n\n          (o)  The transactions contemplated hereby will not constitute a\ndefault under, or result in any change in the material terms of any Lease,\nprovided that consent to the assignment thereof to Purchaser, if required by\nsuch Lease, is obtained prior to the Closing.  For purposes of this Section\n5.19(o), rent, other monetary obligations or term shall constitute \"material\nterms of any Lease.\"\n\n          5.20  Intellectual Property.  (a) Unless otherwise indicated in\n                ---------------------                                    \nSchedule 5.20, the Purchased Intellectual Property constitutes all of the\nIntellectual Property owned by or licensed to Seller relating to, used in, or\nnecessary to the operation of the Business.\n\n          (b)  Unless otherwise indicated in Schedule 5.20, Seller owns the\nentire right, title and interest in and to the Purchased Intellectual Property\n(including, without limitation, the right to use and license the same) free and\nclear of all liens and encumbrances.\n\n          (c)  Schedule 5.20 sets forth complete and correct lists of:\n\n          (1)  all patents, trademark registrations, copyright registrations,\n     mask work registrations and applications for any of them which are part of\n     the Purchased Intellectual Property (the \"Registered Intellectual\n     Property\");\n\n          (2)  all Contracts (\"Intellectual Property Licenses\") between Seller\n     and any other Person (other than licenses for off-the-shelf Software\n     purchased by Seller in the ordinary course) granting Seller a license in,\n     or rights with respect to, the Intellectual Property of any Person\n     (\"Licensed Intellectual Property\") relating to the Business;\n\n          (3)  all Intellectual Property, including without limitation, Software\n     (other than off-the-shelf Software purchased by Seller in the ordinary\n     course), owned by any Person (other than Seller) that is used in, or is\n     necessary to the operation of, the Business.\n\n          (4)  all Contracts between Seller and any other Person pursuant to\n     which Seller grants a license to, or rights with respect to, the Purchased\n     Intellectual Property to any Person; and\n\n                                       37\n\n \n          (5)  all Intellectual Property which is the subject of the obligations\n     of Seller described in Section 3.1(c) hereof.\n\n          (d)  Neither this Agreement, nor the consummation of the transactions\ncontemplated hereby, will (i) result in the termination, suspension, breach, or\nviolation of any Contract between Seller and any Person relating to Intellectual\nProperty; or (ii) will result in the termination, suspension, breach, or\nviolation of Intellectual Property Licenses.  Except as set forth on Schedule\n5.20, all of Seller's rights under the Intellectual Property Licenses are\ntransferable to Purchaser in connection with the transactions contemplated by\nthis Agreement and Purchaser will be entitled to continue to use all of the\nLicensed Intellectual Property to the same extent and under the same conditions\nthat it has heretofore been used in the Business, without financial obligations\nto any other Person.\n\n          (e)  The Purchased Intellectual Property together with the Licensed\nIntellectual Property constitutes all of the Intellectual Property used in, or\nnecessary to, the operation of the Business.\n\n          (f)  To Seller's knowledge, the operation of the Business by Seller\ndoes not infringe or violate the Intellectual Property rights of any Person.\n\n          (g)  Schedule 5.20 sets forth a list of all notices or claims received\nby and suits or proceedings pending against Seller or, to Seller's knowledge,\nreceived by or pending against any customer of Seller, which notices, claims,\nsuits or proceedings assert infringement of any Intellectual Property of any\nPerson as a result of the operation of the Business or activities of any such\ncustomer with regard to any product or service supplied by the Business and\nSeller has no knowledge of any basis for any additional claims, suits or\nproceedings against it or any customer for any such infringement.\n\n          (h)  To Seller's knowledge, (i) no person is infringing,\nmisappropriating or otherwise violating any right of Seller in the Purchased\nIntellectual Property and (ii) there are no interferences, pending or\nthreatened, involving any of the Patents that constitute \"Assets,\" and Seller\nknows of no basis for any such interference.\n\n          (i)  All of the material Registered Intellectual Property is valid and\nsubsisting and all actions (including, without limitation, the payment of\nrenewal and maintenance fees) necessary to maintain or renew, as the case may\nbe, the registrations and applications to register such Registered Intellectual\nProperty have been taken.\n\n          (j)  To Seller's knowledge, there exist no notices, claims, suits or\nproceedings made or brought by Seller pending against any third party asserting\ninfringement or misappropriation of any of the Purchased Intellectual Property.\n\n          (k)  No Purchased Intellectual Property is owned or controlled by any\nofficer, director or employee of Seller or any of its Affiliates.\n\n                                       38\n\n \n          5.21  Employees and Employee Relations.  (a) Seller has provided\n                --------------------------------                          \nPurchaser with access to a list of all Employees and the salary for each.\n\n          (b)  Except as set forth on Section 5.21(b), there is no strike, work\nstoppage, slowdown, picketing or lockout pending or, to Seller's knowledge,\nthreatened against or involving Employees or Seller with respect to the\nBusiness.  Except as set forth on Schedule 5.21(b), there has been no such\nstrike, work stoppage, slowdown, picketing or lockout at any time in respect of\nthe Business in the past five years.\n\n          (c)  There is no pending or, to Seller's knowledge, threatened strike,\nwork stoppage, slowdown, picketing or lockout with respect to the employees of\nany of the suppliers or customers of the Business that could reasonably be\nexpected to have a Material Adverse Effect on the Business.\n\n          (d)  Seller is not a party to, nor has any obligations under, any\ncollective bargaining agreement involving any Employees, except as set forth on\nSchedule 5.21(d).\n\n          (e)  To Seller's knowledge, there is no organizing activity involving\nany Employees pending or threatened by any labor union or group of employees.\nThere are no representation proceedings pending or threatened with the National\nLabor Relations Board, and no labor organization or group of Employees has made\na pending demand for recognition.\n\n          (f)  Except as set forth on Schedule 5.21(f), there are no unfair\nlabor practice charges, or complaints pending or, to Seller's knowledge,\nthreatened by or on behalf of any employee or group of Employees.\n\n          (g)  Except as set forth on Schedule 5.21(g), there are no complaints\nor charges pending or, to Seller's knowledge, threatened to be filed with any\nfederal, state or local court, governmental agency or arbitrator based on,\narising out of, in connection with, or otherwise relating to employment,\ntermination of employment or retirement from employment with Seller in respect\nof the Business.\n\n          (h)  Except as set forth on Schedule 5.21(h), to Seller's knowledge,\nSeller is in compliance with all Laws, and all orders of any court, governmental\nagency or arbitrator, relating to employment, including all such Laws relating\nto wages, hours, collective bargaining, discrimination, civil rights,\naffirmative action and the payment of withholding and\/or Social Security and\nsimilar taxes, except where such non-compliance could not reasonably be expected\nto have a Material Adverse Effect.\n\n          5.22  Product Warranty.  Except as set forth on Schedule 5.22, no\n                ----------------                                           \nproducts heretofore sold by Seller are now subject to any guarantee or warranty\nother than Seller's standard terms and conditions of sale, a copy of which has\nbeen furnished to Purchaser.  To Seller's knowledge, Seller has committed no\nact, and there has been no omission, which would result in, and there has been\nno occurrence which would give rise to, any material \n\n                                       39\n\n \nproduct liability or liability for breach of warranty (whether covered by\ninsurance or not) on the part of Seller, with respect to products sold or\nservices rendered prior to the Closing in the operation of the Business.\n\n          5.23  Backlog.  Schedule 5.23 sets forth, with respect to each Backlog\n                -------                                                         \nContract, the backlog of Seller.  With respect to each such Contract, Seller has\ndisclosed in writing or otherwise made available to Purchaser the name of each\ncustomer (where permitted) and the dollar amount of backlog.\n\n          5.24  Insurance.  Schedule 5.24 contains an accurate and complete list\n                ---------                                                       \nof all policies of insurance owned by Seller under which Seller, in respect of\nthe Business, or any properties or assets of Seller which are used in the\nBusiness, is insured.  To Seller's knowledge, all such policies (i) are in full\nforce and effect and (ii) are sufficient for compliance by Seller with all\napplicable requirements of Law and all agreements to which Seller is a party or\nsubject, in each case with respect to the Business.\n\n          5.25  Brokers' and Finders' Fees.  Except for Merrill Lynch &amp; Co. and\n                --------------------------                                     \nLehman Bros., whose fees will be paid by Seller, no Person acting on behalf of\nSeller or any of its Affiliates or under the authority of any of the foregoing\nis or will be entitled to any brokers' or finders' fee or any other commission\nor similar fee, directly or indirectly, from any of the parties hereto in\nconnection with any of the transactions contemplated hereby.\n\n          5.26  [Intentionally Omitted]\n\n          5.27  Knowledge.  Whenever the representations and warranties set\n                ---------                                                  \nforth in this Article V are qualified by or use the phrase \"to the knowledge of\nSeller\" or words of like import, it indicates that those executive officers of\nSeller listed on Schedule 5.27 have received no written notice of or have no\nactual knowledge of the existence or nonexistence of relevant facts contrary to\nthe provisions of such representations and warranties.\n\n          5.28  No Other Representations and Warranties.  EXCEPT AS SET FORTH\n                ---------------------------------------                      \nHEREIN, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE,\nWHETHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY OF\nMERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY,\nWITH RESPECT TO THE PURCHASED ASSETS, OR ANY PART THEREOF, OR AS TO THE\nCONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER\nLATENT OR PATENT.  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY\nPROVIDED IN THIS ARTICLE V, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY\nKIND OR NATURE, WHETHER EXPRESS OR IMPLIED, THAT THE BUSINESS OR BUYER'S\nOWNERSHIP, POSSESSION, OPERATION OR USE OF THE PURCHASED ASSETS WILL YIELD ANY\nGIVEN OR STATED ECONOMIC, FINANCIAL, PROFIT OR BUSINESS RESULT TO BUYER OR WILL\nRESULT IN BUYER HAVING ANY GIVEN STANDING OR \n\n                                       40\n\n \nPOSITION IN ANY BUSINESS (INCLUDING THE BUSINESSES), MARKET OR PRODUCT.\nIRRESPECTIVE OF ANY INFORMATION SUPPLIED BY SELLER TO PURCHASER IN CONNECTION\nWITH THE SALE OF THE PURCHASED ASSETS, WHICH WERE FOR DISCUSSION PURPOSES ONLY,\nEXCEPT AS SET FORTH HEREIN, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY\nKIND OR NATURE, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROJECTIONS,\nBUDGETS OR FORECASTS RELATED TO ANY FUTURE EARNINGS, NET WORTH, OPERATIONS,\nPHYSICAL CONDITION, OR BUSINESS PROSPECTS OF THE BUSINESS OR THE PURCHASED\nASSETS.\n\n\n                                  ARTICLE VI\n\n                  REPRESENTATIONS AND WARRANTIES OF PURCHASER\n\n          Purchaser represents and warrants to Seller as of the date hereof, and\nshall be deemed to have represented as of the Closing Date, as follows:\n\n          6.1  Organization and Authority of Purchaser.  Purchaser is a\n               ---------------------------------------                 \ncorporation duly organized, validly existing and in good standing under the laws\nof the State of Delaware with full power and authority, corporate and otherwise,\nto enter into and to perform its obligations under this Agreement and each of\nthe Ancillary Agreements to which it is a party and to consummate the\ntransactions contemplated hereby and thereby.\n\n          6.2  Authorization of Agreements.  The execution, delivery and\n               ---------------------------                              \nperformance of this Agreement and each of the Ancillary Agreements to which it\nis a party by Purchaser has been duly authorized by all necessary action,\ncorporate or otherwise, of Purchaser, and this Agreement has been, and each of\nthe Ancillary Agreements to which it is a party will be, duly executed and\ndelivered by Purchaser and this Agreement constitutes, and each of the Ancillary\nAgreements to which it is a party when executed will constitute, the valid and\nbinding obligation of Purchaser, enforceable in accordance with its terms.\n\n          6.3  No Conflicts.  The execution, delivery and performance of this\n               ------------                                                  \nAgreement and each of the Ancillary Agreements to which it is a party by\nPurchaser and the consummation of the transactions contemplated hereby and\nthereby do not and will not (with or without the giving of notice) (a) conflict\nwith the certificate of incorporation or by-laws of Purchaser or conflict with,\nor result in the breach or termination of, or constitute a default under any\norder, judgment, injunction or decree of any court or governmental entity,\nforeign or domestic, to which Purchaser is a party or by which it or any of its\nassets and properties are bound or (b) constitute a violation of any law,\nstatute or regulation of any governmental authority, domestic or foreign,\napplicable to Purchaser, except to the extent that the occurrence of any of the\nforegoing would not have a material adverse effect on the ability of Purchaser\nto enter into and perform its obligations under this Agreement.\n\n                                       41\n\n \n          6.4  Consents.  No consent, approval or authorization of, or\n               --------                                               \ndesignation, declaration or filing with, any governmental authority or other\nthird party is required on the part of Purchaser in connection with Purchaser's\nexecution, delivery and performance of this Agreement and the Ancillary\nAgreements to which it is a party, except for (a) any required filings with the\nFederal Trade Commission and the Department of Justice pursuant to the HSR Act\nand due expiration of the waiting period (including any extensions) thereunder,\n(b) any novations required in connection with the Government Contracts, (c) any\nfilings required under the DoD Manual and (d) any required filings under United\nStates Export Control Laws.\n\n          6.5  Litigation.  There are no judicial or administrative actions,\n               ----------                                                   \nproceedings or investigations pending or, to Purchaser's knowledge, threatened\nthat question the validity of this Agreement or any action taken or to be taken\nby Purchaser in connection with this Agreement or that, if adversely determined,\nwould have a material adverse effect upon Purchaser's ability to enter into or\nperform its obligations under this Agreement or any of the Ancillary Agreements\nto which it is a party.\n\n          6.6  Brokers' and Finders' Fees.  Except for Dillon, Read &amp; Co. Inc.,\n               --------------------------                                      \nwhose fees will be paid by Purchaser, no Person acting on behalf of Purchaser or\nany of its Affiliates or under the authority of any of the foregoing is or will\nbe entitled to any brokers' or finders' fee or any other commission or similar\nfee, directly or indirectly, from any of the parties hereto in connection with\nany of the transactions contemplated hereby.\n\n          6.7  Purchaser's Financial Capacity.  Purchaser possesses the\n               ------------------------------                          \nimmediately available financial resources and capacity to pay the Purchase\nPrice, discharge the Assumed Liabilities and otherwise perform each and all of\nits obligations under this Agreement.\n\n          6.8  Insurance.  Purchaser acknowledges and agrees that all insurance\n               ---------                                                       \npolicies and programs maintained by Seller and related to the Business and\/or\nthe Purchased Assets shall be terminated as of the Closing Date, and Purchaser\nshall be responsible for all insurance related to the Business and\/or the\nPurchased Assets from and after the Closing Date.\n\n          6.9  Knowledge.  Whenever the representations and warranties set forth\n               ---------                                                        \nin this Article VI are qualified by or use the phrase \"to the knowledge of\nPurchaser\" or words of like import, it indicates that those executive officers\nof Purchaser listed on Schedule 6.9 have received no written notice of or have\nno actual knowledge of the existence or nonexistence of relevant facts contrary\nto the provisions of such representations and warranties.\n\n          6.10 No Additional Representations and Warranties.  Except for the\n               --------------------------------------------                 \nrepresentations and warranties expressly provided in this Article VI or\notherwise expressly provided in this Agreement, Purchaser makes no\nrepresentation or warranty of any kind or nature, whether express or implied.\n\n                                       42\n\n \n                                  ARTICLE VII\n\n                                   COVENANTS\n\n          7.1  Investigation by Purchaser.  (a)  Through the Closing Date,\n               --------------------------                                 \nSeller will give or cause to be given to Purchaser and its representatives and\nagents access to all the premises, books, records and key employees of Seller\nand will cause its officers and employees to furnish to Purchaser financial and\noperating data and other information with respect to the Assets and the conduct\nof the Business as Purchaser shall from time to time reasonably request and\nPurchaser shall have the right, but not the obligation, to retain one or more\nenvironmental professionals to conduct an Environmental Investigation of the\nMukilteo Facility, which Environmental Investigation shall include the right to\nconduct such tests of soil, groundwater, surface water or air that Purchaser may\nrequire to determine whether any material violations of Environmental Laws,\nincluding the presence of Contaminants requiring Remedial Action, exist at such\nreal property as of or prior to the Closing; provided, however, that any such\n                                             --------  -------               \ninvestigations shall be conducted during normal business hours and in such\nmanner as not to unreasonably interfere with the operation of the Business.\nNotwithstanding any provision to the contrary contained in this Section 7.1 or\nelsewhere in this Agreement, Seller will not be obligated to make any disclosure\npursuant to this Agreement in violation of applicable laws or regulations\npertaining to classified information with respect to Government Contracts, nor\nwill Seller have any liability to Purchaser for any breach of a representation\nor warranty or otherwise with respect to any non-disclosure of information by\nSeller by reason of Seller's compliance with such laws and regulations; provided\nthat, in any such case, Seller has described to Purchaser in writing prior to\nthe execution hereof the general nature of the information not disclosed and the\nparticular law or regulation which prohibits such disclosure.\n\n          (b)  Purchaser will treat, and will cause its employees,\nrepresentatives, consultants and advisors to treat, such documents and\ninformation concerning Seller or the Business furnished to Purchaser and its\nrepresentatives and agents in connection with this Agreement confidentially in\naccordance with the terms and provisions of that certain Confidentiality\nAgreement, dated April 9, 1993, between Purchaser and Seller.\n\n          7.2  Satisfaction of Conditions.  (a) Prior to the Closing, at\n               --------------------------                               \nSeller's sole expense, Seller will obtain from Honeywell Inc. written permission\nto assign to Purchaser a royalty-free right and license for the use of Honeywell\nPatents as set forth on Schedule 5.20, which Seller currently owns or licenses\nunder the Intellectual Property Agreement dated September 24, 1990 between\nSeller and Honeywell.  Purchaser's sole remedy for breach of this Section 7.2\nshall be money damages for the failure to deliver the Honeywell patents under\nsuch agreement, it being understood that the Damages from such failure will\nconstitute Damages under Section 8.1(a).\n\n          (b)  Each of the parties hereto shall use its Best Efforts to cause\nthe conditions to the Closing to be satisfied as promptly as practicable, except\nas otherwise provided with respect to assignments and novations in Section 7.6\nhereof.\n\n                                      43\n\n \n          7.3  Conduct of Seller.  Seller hereby covenants with Purchaser that,\n               -----------------                                               \nduring the period from the date hereof to the Closing Date:\n\n          (a)  Operations in the Ordinary Course of Business; Notice of Any\n               ------------------------------------------------------------\nInconsistency. Subject to the terms of this Agreement, Seller will conduct the\n-------------                                                                 \nBusiness only in the ordinary and usual course and will use its Best Efforts\n(consistent with the terms of this Agreement) to preserve intact Seller's\nbusiness organization (to the extent relating to or involving the Business),\nkeep available the services of its officers and employees who are employed in\nthe Business, and use its best efforts to maintain satisfactory relationships\nwith other parties to its contracts and with all suppliers, clients, customers\nand others having business relationships with it (to the extent relating to or\ninvolving the Business).\n\n          (b)  Forbearances.  Seller agrees, except as provided by or as\n               ------------                                             \ncontemplated in this Agreement, that it will not without the prior written\nconsent of Purchaser:\n\n          (1)  incur any debt, liability or obligation, direct or indirect,\nwhether accrued, absolute, contingent or otherwise (in each case on behalf of or\nwith respect to the Business), other than liabilities incurred in the ordinary\ncourse of business;\n\n          (2)  assume, guarantee, endorse or otherwise become responsible for\nthe obligations of, or make any advances to (in each case on behalf of or with\nrespect to the Business), any other Person, except in the ordinary course of\nbusiness;\n\n          (3)  mortgage, pledge or otherwise encumber any of its properties or\nassets which are used in or related to the Business or would otherwise comprise\nAssets;\n\n          (4)  sell, license, lease, transfer or dispose of any of its\nproperties or assets which are used in or related to the Business or would\notherwise comprise Assets, or waive or release any rights which relate to or\ninvolve the Business, or compromise, release or assign any indebtedness owed to\nit or any claims held by it which relate to or involve the Business, in each\ncase other than in the ordinary and usual course of business;\n\n          (5)  make any investment of a capital nature on behalf of or which\nrelates to the Business whether by contributions to capital, property transfers\nor otherwise, or by the purchase of any property or assets of any other Person,\nother than in the ordinary course of business consistent with past practices;\n\n          (6)  enter into, terminate or substantially amend or supplement any\nContract or Lease which relates to the Business unless the same is done in the\nordinary and usual course of business and except as expressly contemplated by\nthis Agreement;\n\n          (7)  enter into, terminate, modify or supplement any collective\nbargaining agreement which may involve Employees;\n\n                                      44\n\n \n          (8)  increase, except for currently scheduled base salary increases,\nin any manner the compensation or fringe benefits of any of its Employees or\ncommit itself to any employment agreement with or for the benefit of such\nEmployees which calls for annual payments in excess of $50,000 or, except as\nprovided in Schedule 7.3, establish or create any, or materially modify as to\nbenefits any existing, Seller Employee Benefit Plan or other compensation plan,\nprogram or arrangement which relates to any Employee, unless such increase or\nenhancement is mutually agreed upon by the parties;\n\n          (9)  take any action which is inconsistent with any of Seller's\nrepresentations, warranties or covenants contained in this Agreement;\n\n          (10) waive or commit to waive any rights of significant value to the\nproperties, assets, business, operations or financial condition of the Business;\n\n          (11) enter into any Contract on behalf of or which relates to the\nBusiness with any Affiliate of Seller; or\n\n          (12) enter into a Contract (other than this Agreement) to do any of\nthe things described in clauses (1) through (11) above.\n\n          (c)  Insurance.  Seller will cause all insurance policies currently in\n               ---------                                                        \neffect with respect to Seller's properties, assets, or operations (to the extent\nrelating to the Business) to be maintained in force, or replaced with\nsubstantially comparable coverages to be maintained in force until the Closing\nDate.\n\n          7.4  HSR Act Compliance.  Each party hereto hereby agrees hereto that,\n               ------------------                                               \nwith respect to each reportable transaction to which it is a party, each will,\nas soon as reasonably practicable, take all action (to the extent not previously\ntaken) necessary in order to file with the Federal Trade Commission and the\nDepartment of Justice all filings, reports and other information required under\nthe HSR Act in order to commence the running of the waiting period thereunder,\nto continue the running of said waiting period (including any extensions) and\nprevent or minimize any tolling thereof, to cause such waiting period to expire\nwithout enforcement action, and to provide to each other such cooperation as may\nbe reasonably necessary in order to cause such filings and reports to be\nprepared and duly filed and all waiting periods to expire, all to the extent\ninvolving the transactions contemplated hereby.\n\n          7.5  Pending or Threatened Litigation.  Between the date hereof and\n               --------------------------------                              \nthe Closing Date, each party hereto shall inform the other party hereto promptly\nupon obtaining knowledge of any pending or threatened litigation or other fact\nor event which may reasonably be anticipated to (a) prevent, delay or adversely\naffect the consummation of the transactions contemplated hereby or (b) cause any\nof its representations and warranties contained herein to be inaccurate.\n\n                                      45\n\n \n          7.6  Assignments; Novations.  (a)  Seller and Purchaser will use Best\n               ----------------------                                          \nEfforts in effecting, if necessary, the transfer or assignment of all licenses,\nregistrations or other documents pertaining to the Business which were issued by\ngovernment agencies under the authority of the Export Control Laws.\n\n          (b)  Government Contracts.  The parties acknowledge that, in\n               --------------------                                   \naccordance with FAR (S) 42.1204 and other applicable U.S. Government policy and\nguidance, Seller and Purchaser are required to enter into a novation agreement\nor agreements with the U.S. Government.  Seller and Purchaser will cooperate\nfully with each other and will use all reasonable efforts to obtain consents to\nthe assignment, or the novation, of all Government Contracts, and Seller hereby\nagrees expeditiously to take all steps necessary to file and to use all\nreasonable efforts to obtain approvals of all required novations or assignments,\nincluding the execution and delivery of agency agreements appointing Purchaser\nas an agent of Seller with respect to each Government Contract relating to or\ninvolving the Business until such Government Contract is novated, and the\nprovision of the guarantee of performance required for novation of contracts\npursuant to FAR (S)(S) 42.1201, 42.1204(e).  Nothing in this Agreement, however,\nshall require (1) Seller or Purchaser to pay any consideration for any such\nconsent or novation, or (2) Purchaser to accept any conditions, requirements,\namendments or limitations (other than those contained in the underlying\ncontract) which Purchaser determines, in its sole discretion, to be\nunacceptable.\n\n          (c)  Performance Under Non-Assigned Contracts.  With respect to any\n               ----------------------------------------                      \nGovernment Contracts that cannot be assigned to Purchaser or novated on the\nClosing Date, Seller and Purchaser shall cooperate so that the performance\nobligations of Seller thereunder shall, unless not permitted by such Government\nContract, be deemed to be subcontracted or delegated to Purchaser until such\nGovernment Contract has been assigned or novated.  Purchaser or any of its\nSubsidiaries, as a subcontractor or delegate, shall perform such Government\nContracts and Seller shall, as soon as practicable, pay over to Purchaser in\nfull any amounts received by Seller as a result of performance by Purchaser of\nsuch Government Contracts.  Prior to the assignment or novation of such\nGovernment Contracts to Purchaser, Seller, as the contracting party, shall take\nsuch timely action as is reasonably necessary to allow Purchaser or any of its\nSubsidiaries to perform such Government Contracts and to protect any rights that\nmay exist or accrue under such Government Contracts until they are assigned or\nnovated.\n\n          (d)  Assignment After Closing.  If, after the Closing Date, Seller and\n               ------------------------                                         \nPurchaser obtain the necessary consent for the assignment or novation of a\nGovernment Contract for which an assignment or novation is required, then such\nGovernment Contract shall be deemed to be assigned and transferred to Purchaser\npromptly after Seller and Purchaser obtain such consent or novation.  Effective\nupon the assignment of a Government Contract to Purchaser, the Government\nContract shall be deemed to be assumed by Purchaser provided that Seller shall\nreimburse Purchaser for any monetary benefit received by Seller (net of actual\ncosts paid or incurred by Seller in connection with such Government Contract\nprior to consent or novation) that would have accrued to Purchaser had the\nGovernment Contract been assigned \n\n                                      46\n\n \nor novated as of the Closing Date. Any subcontract or other Government Contract\nwhich Seller and Purchaser have theretofore entered into or agreed upon in\nrespect of such contract shall be terminated effective as of the date of such\nassignment.\n\n          (e)  Bids.  Seller and Purchaser shall cooperate with each other and\n               ----                                                           \nuse their Best Efforts to preserve all bids, quotations and proposals made in\nthe ordinary course of business of the Business and to facilitate the award\nthereof consistent with applicable legal requirements. Any contracts awarded to\nSeller pursuant to such bids, quotations and proposals shall be deemed to be\nassumed and, in the case of Contracts with the U.S. Government, shall be deemed\nto be \"Government Contracts\" for purposes of this Agreement and shall be\ngoverned by this Section 7.6.\n\n          7.7  Assessment and Remedial Work.  (a) Purchaser shall conduct and\n               ----------------------------                                  \ncomplete, or retain consultants to conduct, complete and deliver to Seller, at\nPurchaser's expense, within 180 days of the date hereof, a final report of an\nEnvironmental Investigation of environmental conditions, including test results\nand an evaluation of compliance with Environmental Laws at the Mukilteo\nFacility.  Upon failure of Purchaser to deliver to Seller within 180 days of the\ndate hereof a final report of an Environmental Investigation of environmental\nconditions, Seller may, at Purchaser's expense, conduct and complete or retain\nconsultants to conduct or complete and deliver to Purchaser a final report of an\nEnvironmental Investigation of environmental conditions, including test results\nand an evaluation of compliance with Environmental Laws at the Mukilteo\nFacility.\n\n          (b)  Within 90 days of receiving a such a final report prepared by\nPurchaser or its consultants which indicates a Release or Adverse Environmental\nCondition at the Mukilteo Facility, Seller and Purchaser shall jointly prepare a\nproposed remediation plan containing Remedial Actions (\"Remedial Plan\") based\nupon the Environmental Investigation, which, among other things, shall\nreasonably itemize Releases, Adverse Environmental Conditions and estimated\nremediation costs.  The Remedial Plan shall provide for Remedial Actions to be\ntaken at a cost reasonably responsive to the condition and as required by\nEnvironmental Laws at the date of delivery of the Remedial Plan, provided,\nhowever, that without the prior consent of Purchaser, the Remedial Actions shall\nnot, when complete, adversely affect in a material manner the appearance or\noperations of the Mukilteo Facility. If Seller and Purchaser are unable in good\nfaith to agree upon the Remedial Plan within such 90 day period, Seller and\nPurchaser shall agree upon a mutually acceptable environmental consulting firm\nto prepare the Remedial Plan, consistent with the terms of this subsection (b),\nwhich shall be final, binding and conclusive with respect to the parties hereto.\nThe cost of such consulting firm shall be borne equally by Purchaser and Seller.\n\n          (c)  If required by law, rule or regulation, Purchaser and Seller\nshall jointly approach the governmental authority having jurisdiction under the\nEnvironmental Laws for approval of the Remedial Action and\/or recommendation as\nto what other Remedial Action is required, if any.\n\n                                      47\n\n \n          (d)  Within 60 days after completion and acceptance of the final\nRemedial Plan and upon receiving the approvals or recommendations, if required\nby law, rule or regulation from the appropriate governmental authority, Seller\nand Purchaser shall jointly prepare a bid package and solicit bids on behalf of\nPurchaser from not less than three (3) reputable contractors with experience in\nenvironmental remediation to implement the Remedial Plan, as approved by the\nappropriate governmental authority, if any.  All work shall be performed in a\nworkmanlike manner, shall be staged in such a manner as to minimize disruption\nat the Mukilteo Facility and shall provide for replacing or repairing damaged or\naltered portions of the Mukilteo Facility in a manner comparable to their\noriginal construction.  The contract shall promptly be awarded to one (1) of\nsuch three (3) contractors after receiving the bids and shall cause the\ncontractor to commence and complete work expeditiously and with reasonably\nminimal disruption to the Mukilteo Facility or its operations.\n\n          (e)  Subject to Section 12.2(d) and (e), Seller shall indemnify and\nhold Purchaser harmless for all costs of Remedial Action taken under the\nRemedial Plan at the Mukilteo Facility, including without limitation costs\nincurred to comply with legal requirements, removal and cleanup costs as if such\ncosts were Damages under Section 12.2(b).\n\n          7.8  Environmental Permit Identification and Transfer.  (a)  Schedule\n               ------------------------------------------------                \n7.8 sets forth the Environmental Permits necessary, to Seller's knowledge, to\noperate the Business from and after the Closing Date. Seller either shall\ntransfer existing Environmental Permits of Seller to Purchaser where permissible\nor assist Purchaser to obtain new Environmental Permits for Purchaser. Seller\nand Purchaser shall cooperate to identify all Environmental Permits requiring\npre-approval from a Governmental Authority prior to transferring such\nEnvironmental Permits to Purchaser.\n\n          (b)  In the event that any Environmental Permits, including waivers,\nrequired under any applicable Environmental Laws in connection with Purchaser's\noperation of the Business following the Closing Date have not been assigned or\ntransferred by Seller to Purchaser on or prior to the date which is five years\nafter the Closing Date, or otherwise obtained by Purchaser, prior to the Closing\nDate, Seller will, at the request of Purchaser, cooperate with Purchaser at\nPurchaser's cost in any reasonable and lawful arrangement designed to provide to\nPurchaser the benefits of any such Environmental Permits, including waivers,\nheld by Seller in connection with the Business.  Seller's obligations shall\ninclude, but not be limited to, to the extent reasonably possible and lawful,\nmaintaining existing Environmental Permits and allowing Purchaser to operate\nunder these existing Permits until either existing Environmental Permits are\ntransferred or new Environmental Permits are obtained by Purchaser.  Purchaser\nshall indemnify Seller for any Loss or Damages incurred by Seller after Closing\narising directly or indirectly from use of Seller's permits or waivers by the\nPurchaser.\n\n          7.9  Non-Compete.  (a) For a period of three (3) years after the\n               -----------                                                \nClosing Date, Seller shall not and shall cause its Affiliates not to:  (1) offer\nemployment to Transferred Employees while employed by Purchaser; (2) cause,\ninduce or encourage any customer, \n\n                                      48\n\n \nsupplier, manufacturer or licensor of the Business, or any other Person who has\na business relationship with the Business, to terminate or change any such\nrelationship in a manner which would be materially adverse to the Business; (3)\nconduct, participate or engage, directly or indirectly, in any activities\nrelated to the design, development, manufacture and sale of torpedo systems,\nunderseas acoustic surveillance systems, naval sonar and mine countermeasure\nsystems and naval contract engineering services; provided, however, that the\n                                                 --------  -------\nrestrictions contained in this Section 7.9 shall not restrict the acquisition by\nSeller, directly or indirectly, of less than 5% of the capital stock of any\nPerson engaged in a business directly or indirectly in competition with the\nBusiness, and further provided that no restrictions imposed on the Seller by\nthis Section 7.9 shall cause Seller's remaining businesses to limit or cease\nconducting business in the manner in which they are currently being conducted.\n\n          (b)  The covenants and undertakings contained in this Section 7.9\nrelate to matters which are of a special, unique and extraordinary character and\na violation of any of the terms of this Section 7.9 will cause irreparable\ninjury to Purchaser, the amount of which will be impossible to estimate or\ndetermine and which cannot be adequately compensated.  Therefore, Purchaser will\nbe entitled to an injunction, restraining order or other equitable relief from\nany court of competent jurisdiction in the event of any breach of this Section\n7.9.  The rights and remedies provided by this Section 7.9 are cumulative and in\naddition to any other rights and remedies which Purchaser may have hereunder or\nat law or in equity.  In the event that Purchaser were to seek damages for any\nbreach of this Section 7.9, the portion of the consideration delivered to Seller\nhereunder which is attributed by the parties to the foregoing covenant shall not\nbe considered a measure of or limit on such damages.\n\n          (c)  Section 7.9 shall not prohibit Seller from producing, selling\ncomponents, or subcomponents of the systems described above, so long as the\ncomponents are not integrated in a manner that materially competes with the\nsystems sold by the Business and further provided that notwithstanding Section\n13.5, Section 7.9 shall not bind any third party which purchases the business or\nassets of Seller or any entity into which Seller consolidates or merges.\n\n          (d)  The parties hereto agree that, if any court of competent\njurisdiction in a final nonappealable judgment determines that a specified time\nperiod, a specified geographical area, specified business limitation or any\nother relevant feature of this Section 7.9 is unreasonable, arbitrary or against\npublic policy, then a lesser time period, geographical area, business limitation\nor other relevant feature which is determined to be reasonable, not arbitrary\nand not against public policy may be enforced against the applicable party.\n\n          7.10 Certain Payments to Employees.  Seller shall make whatever\n               -----------------------------                             \npayments may become due, and satisfy any and all claims or liabilities that may\nexist, now or in the future, in connection with or arising out of any agreements\nof Seller or its Affiliates with any of their employees concerning or relating\nto any payment or bonus in respect of a change-of-control of the Business\ncontemplated herein or the acquisition of all or a substantial portion of the\nBusiness.\n\n                                      49\n\n \n          7.11 Bureau of Alcohol, Tobacco and Firearms.  At least 45 days prior\n               ---------------------------------------                         \nto the proposed Closing, Seller shall provide Purchaser with a list of all\nlicenses or permits issued by the Bureau of Alcohol, Tobacco and Firearms\n(\"BATF\") to Seller and\/or its Subsidiaries that, to Seller's knowledge, are\nnecessary for the ownership and\/or operation of the Purchased Assets.  In\naddition, Seller shall cooperate with Purchaser and assist Purchaser in either\ntransferring existing BATF licenses or permits of Seller or obtaining new BATF\nlicenses and permits for Purchaser.\n\n          7.12 Books and Records; Personnel.  For a period of six years after\n               ----------------------------                                  \nthe Closing Date (or such longer period as may be required by any governmental\nbody or ongoing legal proceeding):\n\n          (a)  Purchaser shall not dispose of or destroy any of the business\nrecords and files of the Business.  If Purchaser wishes to dispose of or destroy\nsuch records and files after that time, it shall first give 30 days' prior\nwritten notice to Seller and Seller shall have the right, at its option and\nexpense, upon prior written notice to Purchaser, within such 30 day period, to\ntake possession of the records and files within 60 days after the date of the\nSeller's notice.\n\n          (b)  Purchaser shall allow Seller and any of its directors, officers,\nemployees, counsel, representatives, accountants and auditors (collectively, the\n\"Seller Representatives\") access to all business records and files of the\nBusiness which are transferred to it in connection herewith, which are\nreasonably required by such party in anticipation of, or preparation for, any\nexisting or future litigation, arbitration, administrative proceeding or tax\nreturn preparation during regular business hours and upon reasonable notice at\nPurchaser's principal place of business or at any location where such records\nare stored, and Seller shall have the right, at its own expense, to make copies\nof any such records and files; provided, however, that any such access or\n                               --------  -------                         \ncopying shall be had or done in such a manner so as not to unreasonably\ninterfere with the normal conduct of Purchaser's business or operations.\n\n          (c)  Purchaser shall make available to Seller or the Seller\nRepresentatives, upon written request and at Seller's expense (i) personnel to\nassist Seller in locating and obtaining records and files maintained by\nPurchaser and (ii) any of the personnel previously in Seller's employ whose\nassistance or participation is reasonably required by Seller in anticipation of,\nor preparation for, existing or future litigation, arbitration or administrative\nproceeding, tax return preparation or other matters in which Seller or any of\nits Affiliates is involved and which is related to any of the Business;\nprovided, however, that any such access to personnel shall be had in such a\n--------  -------                                                          \nmanner so as not to unreasonably interfere with the normal conduct of\nPurchaser's business or operations.\n\n          (d)  Seller shall allow Purchaser or any of its directors, officers,\nemployees, counsel, representatives, accountants and auditors (the \"Purchaser\nRepresentatives\") access to all business records and files of the Business\nretained by Seller, which are reasonably required by such party in anticipation\nof, or preparation for, any existing or future litigation, \n\n                                      50\n\n \narbitration, administrative proceeding or tax return preparation during regular\nbusiness hours and upon reasonable notice at Seller's principal place of\nbusiness or at any location where such records are stored, and Purchaser shall\nhave the right, at its own expense, to make copies of any such records and\nfiles; provided, however, that any such access or copying shall be had or done\n       --------  -------\nin such a manner so as not to unreasonably interfere with the normal conduct of\nthe Seller's business or operations.\n\n          (e)  Seller shall make available to Purchaser or the Purchaser\nRepresentatives, upon written request and at Purchaser's expense (i) personnel\nto assist Purchaser in locating and obtaining records and files maintained by\nSeller and (ii) any other personnel whose assistance or participation is\nreasonably required by Purchaser in anticipation of, or preparation for,\nexisting or future litigation, arbitration or administrative proceeding, tax\nreturn preparation or other matters in which Purchaser or any of its respective\nAffiliates is involved and which is related to any of the Business; provided,\n                                                                    -------- \nhowever, that any such access to personnel shall be had or done in such a manner\n-------                                                                         \nso as not to unreasonably interfere with the normal conduct of the Seller's\nbusiness or operations.\n\n          7.13 Use of Name, etc.  Purchaser shall be entitled for a period of\n               ----------------                                              \nnot more than 90 days following the Closing Date to use any signs, purchase\norders, invoices, sales orders, labels, letterheads or shipping documents\nexisting on the Closing Date that bear any \"Alliant Techsystems Inc.\" name, mark\nor logo, in each case where the removal of such name, mark or logo would be\nimpractical; provided, however, that to the extent practicable, Purchaser shall\n             --------  -------                                                 \nplace a stamp, mark or other notation on any such item that identifies any\nBusiness as its busi  ness (and not that of Seller), such language may include\nuse of \"Alliant Techsystems Inc.\" name, mark or logo as used in conjunction with\nany mark of Purchaser; provided, however, that Purchaser will use such mark,\n                       --------  -------                                    \nname or logo only to the extent necessary to make an orderly transition with\nrespect to the goodwill of the Business and may not use such mark, name or logo\nin any advertising without Seller's prior written consent.\n\n          7.14 [Intentionally Omitted]\n\n          7.15 Bulk Sales Laws.  Purchaser and Seller hereby agree to waive the\n               ---------------                                                 \ncompliance by either party with the so called \"bulk sales\" provisions of Article\n6 of the Uniform Commercial Code as it is in effect in the states where\nPurchased Assets may be located and any other \"bulk sales\" or \"bulk transfer\"\nlaws of any jurisdiction that may be applicable to the transactions contemplated\nherein.  Seller unconditionally agrees to indemnify and hold harmless Purchaser\nfrom any Damages relating to the failure of Seller or Purchaser to so comply\nwith such provisions or laws, except with respect to Damages arising out of\nAssumed Liabilities.\n\n          7.16 Mail; Payments.  Except as otherwise agreed by the parties, each\n               --------------                                                  \nparty authorizes and empowers the other party on and after the Closing Date to\nreceive and open all mail and other communications received by such party and,\nif such mail or communication relates to the other party, to forward it\nimmediately to such other party.  Each party agrees \n\n                                      51\n\n \npromptly (but, in any event, not more than five (5) business days after receipt\nthereof) to pay when received and cleared or deliver to the other party any\nmonies or checks which have been mistakenly sent by customers to it and which\nshould properly have been sent to such other party (including any payments in\nrespect of accounts receivable transferred to Purchaser pursuant to this\nAgreement).\n\n          7.17 Intentionally Omitted.\n               --------------------- \n\n          7.18 Purchaser's Assistance Relating to Excluded Liabilities.  During\n               -------------------------------------------------------         \nnormal business hours, Purchaser shall provide Seller with employees to assist\nSeller in pursuing any litigation or other actions relating to or involving the\nExcluded Liabilities.  Upon notice from Purchaser, Seller shall promptly\nreimburse Purchaser for all costs incurred by Purchaser in providing such\nemployees.\n\n          7.19 REA.  Purchaser shall reasonably pursue collection of the SQQ-89\n               ---                                                             \nREA claim and all recoveries therefrom will go first to reimburse Purchaser for\nall costs incurred by Purchaser in connection therewith and the balance thereof\nshall be split thirty-three and one-third percent (33-1\/3%) to Purchaser and\nsixty-six and two-thirds percent (66-2\/3%) to Seller, provided, however, that\n                                                      --------  -------      \nPurchaser shall not be required to incur attorney fees and expenses in excess of\n$240,000 in connection with the pursuit of the SQQ-89 REA and, upon incurring\nsuch amount of fees and expenses, Purchaser shall have no further obligation to\npursue the SQQ-89 REA.  If Purchaser discontinues its collection of the SQQ-89\nREA, after the expenditure of $240,000 of third party attorneys fees and\nexpenses, Seller may acquire from Purchaser that claim by payment to Purchaser\nof $240,000 plus reasonably allocated salaries, benefits and out-of-pocket costs\nof Buyers' personnel incurred in processing the claim.  If Purchaser fails to\npursue the SQQ-89 REA prior to expending $240,000 in attorneys' fees and\nexpenses, then Seller may pursue the claim at its own expense and shall receive\nall proceeds of such claim.\n\n          7.20 Hydroscience Receivable.  Purchaser shall reasonably pursue\n               -----------------------                                    \ncollection of the receivables from sale of AESOP Systems to Hydroscience\nCorporation (the \"Hydroscience Receivable\") and shall pay sixty-six and two-\nthirds (66-2\/3%) percent of the proceeds, less costs of collection, to Seller.\n\n          7.21 NT37 Inventory.  For a period of three (3) years after the\n               --------------                                            \nClosing, Purchaser shall reasonably pursue the sale of inventory located at the\nMukilteo Facility for sale in connection with NT37 Torpedo Systems or upgrade\nkits (the \"NT37 Inventory\") and shall pay fifty (50%) percent of the proceeds,\nless the costs of sale, to Seller after the Purchaser receives $2.4 million from\nthe sale of such inventory.\n\n          7.22 Ocean Bottom Cable Systems.  Purchaser and Seller shall enter\n               --------------------------                                   \ninto an agreement for payment to Seller for a period of three (3) years after\nthe Closing of a royalty on the sale by Purchaser of Ocean Bottom Cable Systems\nand components (provided that it is \n\n                                      52\n\n \nsubstantially similar technology to that in existence as of the Closing Date)\nequal to five (5%) percent of gross sales proceeds (the \"Ocean Bottom Cable\nRoyalty\").\n\n          7.23 Non-Infringement.  Purchaser agrees not to assert any claim of\n               ----------------                                              \ninfringement or for royalty or other payment by Seller after the Closing with\nrespect to the Purchased Intellectual Property to the extent that Seller has\nused within a two-year period prior to the date hereof such Purchased\nIntellectual Property as of the Closing Date in its other businesses other than\nthe Business.\n\n                                  ARTICLE VII\n\n                           CONDITIONS TO THE CLOSING\n\n          8.1  Conditions to Purchaser's Obligation to Effect the Closing.  The\n               ----------------------------------------------------------      \nobligation of Purchaser to consummate the transactions contemplated by this\nAgreement to occur at the Closing is subject to the satisfaction, at or prior to\nthe Closing, of each of the following conditions (any of which may be waived by\nPurchaser):\n\n          (a)  Representations and Warranties of Seller.  The reasonably\n               ----------------------------------------                 \nanticipated Losses and Damages resulting from breaches of representations,\nwarranties and covenants by Seller would not exceed $10 million in the\naggregate.\n\n          (b)  No Injunctions.  No injunction restraining consummation of any of\n               --------------                                                   \nthe material transactions contemplated by this Agreement shall be in effect.  No\naction shall be pending or threatened by the United States Department of Justice\nor the Federal Trade Commission to enjoin or materially adversely affect the\ntransactions contemplated herein.\n\n          (c)  HSR Act.  All applicable waiting periods in respect of the\n               -------                                                   \ntransactions contemplated by this Agreement under the HSR Act shall have\nexpired.\n\n          (d)  Delivery by Seller of Documents.  Seller shall have delivered to\n               -------------------------------                                 \nPurchaser documents executed by Seller reasonably sufficient to transfer the\nBusiness to Purchaser as contemplated herein, provided that Purchaser has\nreasonably cooperated in their preparation.\n\n          8.2  Conditions to Seller's Obligations to Effect the Closing.  The\n               --------------------------------------------------------      \nobligations of Seller to consummate the transactions contemplated by this\nAgreement to occur at the Closing are subject to the satisfaction, at or prior\nto the Closing, of each of the following conditions (any of which may be waived\nby Seller):\n\n          (a)  Representations and Warranties of Purchaser.  The reasonably\n               -------------------------------------------                 \nanticipated Losses and Damages from breaches of representations, warranties and\ncovenants by Purchaser would not exceed $10 million in the aggregate.\n\n                                      53\n\n \n          (b)  No Injunctions.  No injunction restraining consummation of any of\n               --------------                                                   \nthe material transactions contemplated by this Agreement shall be in effect.  No\naction shall be pending or threatened by the United States Department of Justice\nor the Federal Trade Commission to enjoin or materially adversely affect the\ntransactions contemplated herein.\n\n          (c)  HSR Act.  All applicable waiting periods in respect of the\n               -------                                                   \ntransactions contemplated by this Agreement under the HSR Act shall have\nexpired.\n\n          (d)  Delivery by Purchaser of Documents.  Purchaser shall have\n               ----------------------------------                       \ndelivered to Seller documents executed by Purchaser reasonably sufficient to\ncomplete the transaction as contemplated herein, provided that Seller has\nreasonably cooperated in their preparation.\n\n                                   ARTICLE IX\n\n                     THE CLOSING; TERMINATION OF AGREEMENT\n\n          9.1  The Closing.  The Closing shall be held within five Business Days\n               -----------                                                      \nafter each of the conditions precedent set forth in Sections 8.1 and 8.2 have\nbeen satisfied or waived.  The Closing shall be held at the offices of Weil,\nGotshal &amp; Manges LLP, 767 Fifth Avenue, New York, New York 10153.  At the\nClosing, all of the transactions provided for in Article II hereof shall be\nconsummated on a substantially concurrent basis.\n\n          9.2  Termination.  Anything in this Agreement to the contrary\n               -----------                                             \nnotwithstanding, this Agreement and the transactions contemplated hereby may be\nterminated in any of the following ways at any time before the Closing and in no\nother manner:\n\n          (1)  By mutual written consent of Purchaser and Seller;\n\n          (2)  By Purchaser or Seller (if such terminating party is not then in\ndefault of any obligation hereunder), if the Closing has not occurred on or\nbefore June 30, 1997).\n\n          (3)  By either Purchaser or Seller if there shall be in effect a non-\nappealable order of a court of competent jurisdiction permanently prohibiting\nthe consummation of the transactions contemplated hereby.\n\n          In the event this Agreement is terminated pursuant to this Section\n9.2, all further obligations of the parties hereunder shall terminate, except\nfor the obligations set forth in Sections 7.1(b), 12.3 and 13.8, and except that\nnothing in this Section 9.2 shall relieve any party hereto of any liability for\nbreach of this Agreement.\n\n                                      54\n\n \n                                   ARTICLE X\n\n                           DELIVERIES AT THE CLOSING\n\n          10.1 Deliveries by Seller at the Closing.  At the Closing, Seller\n               -----------------------------------                         \nshall deliver, or cause to be delivered, to Purchaser, the following items:\n\n          (a)  The duly executed Bill of Sale and such other executed\nassignments, bills of sale or certificates of title, each dated the Closing Date\nand in form and substance reasonably satisfactory to counsel to Purchaser, as\nare reasonably necessary to transfer to Purchaser all of Seller's right, title\nand interest in, to and under the Assets.\n\n          (b)  A certificate executed by Seller stating that Seller is not a\nforeign person within the meaning of Section 1445 of the Code, which certificate\nshall set forth all information required by, and otherwise be executed in\naccordance with, Treasury Regulation Section 1.1445-2(b).\n\n          (c)  A counterpart of the Transition Agreement, duly executed by a\nduly authorized officer of Seller.\n\n          (d)  Duly executed assignments, sufficient to transfer all of Seller's\nright, title and interest in and to the Registered Intellectual Property to\nPurchaser, in a form suitable for recording in the various appropriate national\nor regional patent, trademark, copyright offices or other governmental offices.\n\n          (e)  Duly executed assignments, to the extent required, to permit\nPurchaser to exercise or otherwise enjoy any of Seller's rights under any\nIntellectual Property Licenses.\n\n          (f)  Certificates of the Secretary or an Attesting Secretary of\nSeller, dated the Closing Date, (A) as to the incumbency and signatures of the\nofficers or representatives of Seller executing this Agreement and each of the\nAncillary Agreements and any other certificate or other document to be delivered\npursuant hereto or thereto, together with evidence of the incumbency of such\nSecretary or Assistant Secretary, and (B) certifying attached resolutions of the\nBoard of Directors of Seller, which authorize and approve the execution and\ndelivery of this Agreement and each of the Ancillary Agreements to which Seller\nis a party and the consummation of the transactions contemplated hereby and\nthereby.\n\n          (g)  Duly executed and acknowledged general quit claim deed, in form\nacceptable to Purchaser, conveying good and marketable title to the Owned\nProperty in fee simple, free and clear of all Liens and encumbrances except\nPermitted Encumbrances.\n\n          (h)  Duly executed and acknowledged assignments, in form and substance\nreasonably acceptable to Purchaser, transferring to Purchaser all of Seller's\nright, title and interest in and to the Leases.\n\n                                       55\n\n \n          (i)  Fully executed originals (to the extent available) of each Lease\ntogether with all amendments, extensions, assignments and memoranda thereof.\n\n          (j)  Landlord estoppel certificates, to the extent available, from\neach landlord under the real estate leases as set forth on Schedule 5.19\nindicating that such leases are in full force and effect, that there are no\ndefaults or events, which, with the passage of time or the giving of notice or\nboth, would become defaults under such leases, and as to such other matters as\nPurchaser may reasonably request all to the extent the same may be obtained\nthrough the best efforts of Seller.\n\n          10.2 Deliveries by Purchaser at the Closing.  At the Closing,\n               --------------------------------------                  \nPurchaser shall deliver, or cause to be delivered, to Seller, the following\nitems:\n\n          (a)  The duly executed Assumption Agreement referred to in Section\n2.2.\n\n          (b)  A counterpart of each Lease of any facility, duly executed by a\nduly authorized officer of Purchaser.\n\n          (c)  A counterpart of the Transition Agreement, duly executed by a\nduly authorized officer of Purchaser.\n\n          (d)  Certificates of the Secretary or an Assistant Secretary of\nPurchaser, dated the Closing Date, (A) as to the incumbency and signatures of\nthe officers or representatives of Purchaser executing this Agreement and each\nof the Ancillary Agreements and any other certificate or other document to be\ndelivered pursuant hereto or thereto, together with evidence of the incumbency\nof such Secretary or Assistant Secretary, and (B) certifying attached\nresolutions of the Board of Directors of Purchaser, which authorize and approve\nthe execution and delivery of this Agreement and each of the Ancillary\nAgreements to which Purchaser is a party and the consummation of the\ntransactions contemplated hereby and thereby.\n\n\n                                  ARTICLE XI\n\n                        EMPLOYEES AND EMPLOYEE BENEFITS\n\n          11.1 Employment.  (a) Purchaser shall, at least fourteen (14) days\n               ----------                                                   \nprior to the Closing Date, make offers of employment, effective as of the\nClosing Date, to (i) all Employees in active status on such date (excluding\nhowever, those Employees employed at Seller's Minnesota facilities) and (ii) all\nEmployees who, on such date are on a leave of absence for purposes of jury duty,\nfuneral leave, military leave, or scheduled vacation.\n\n          (b)  Purchaser shall, at the same time as set forth in paragraph (a)\nabove, make offers of employment to Employees who are on a personal or temporary\nmedical leave of \n\n                                       56\n\n \nabsence, effective as of the date such person actually returns to work, provided\nsuch Employee has been cleared to return to work through Purchaser's disability\nprogram manager, and such return is within 180 days of the Closing Date.\n\n          (c)  Employees who are given offers of employment shall hereinafter be\nreferred to as \"Prospective Employees\".  All Prospective Employees who accept\nPurchaser's offer of employment in writing on or before the Closing Date  and\nwho report for their assigned duty by the Closing Date, or upon their scheduled\nreturn date shall be hereinafter referred to as \"Transferred Employees\".\n\n          (d)  Seller shall deliver to Purchaser, at least thirty (30) days\nprior to the Closing Date, Schedule 11.1(d) listing all Employees including\nsalaries for each.  Such list shall identify any Employee who is on a personal\nor medical leave of absence.\n\n          (e)  Seller shall continue to be responsible for all employment,\nbenefit and pension obligations, costs and expenses in respect of (i) retirees\nof the Business (\"Retirees\"),  (ii) vested terminated employees in respect of\nthe Business, and  (iii) any Prospective Employees prior to such Prospective\nEmployee becoming a Transferred Employee or who does not become a Transferred\nEmployee, e.g. those Prospective Employees who do not accept Purchaser's offered\n          ---                                                                   \nemployment on or before the Closing Date or who do not report to work on the\nClosing Date or upon their scheduled return date (including any medical, Retiree\nmedical or other benefits being paid to such individuals).\n\n          (f)  Except as expressly provided otherwise in this Article XI,\nPurchaser shall offer Transferred Employees employment with Purchaser at a\nsalary similar to that in effect immediately prior to the Closing Date;\nprovided, however, that such other terms, benefits and pensions from the Closing\nDate shall be provided as set forth in Section 11.3 hereof.\n\n          (g)  Beginning on the date of execution of this Agreement and for up\nto six (6) months following the Closing Date, upon request of Purchaser, Seller\nshall, within a reasonable period of time, provide Purchaser reasonable access\nto data (including computer data) regarding the dates of hire, credited service\ndates, compensation and job descriptions of Employees.\n\n          (h)  Seller hereby authorizes Purchaser to enter into discussions with\nand to advise any Employee concerning the terms of any future employment of such\nindividuals by Purchaser and will permit Purchaser reasonable access to\nEmployees for such purposes, provided, however, that a representative of Seller\nis present at all such discussions.  Seller shall not discourage any Employee\nfrom accepting an offer of employment made by Purchaser to such Employee.\nExcept with the prior knowledge and cooperation of Purchaser or as expressly\nprovided in this Article XI, Seller will not authorize any of its officers,\nemployees or agents to have any written or oral communications with any\nEmployees concerning the transaction contemplated by this Agreement or the\neffect of the transaction upon such \n\n                                       57\n\n \nEmployees' employment or the terms or conditions of the Employees' employment or\nthe benefits payable to or in respect of them.\n\n          11.2 Certain Notice to Employees and Continuation of Benefits. Seller\n               --------------------------------------------------------        \nand Purchaser shall cooperate to provide complete and adequate notice to\nEmployees regarding the effect of their becoming Transferred Employees.  Such\nnotice shall include a description of the effect such transfer shall have on the\nbenefits provided or available to them  under any Seller Employee Benefit Plans\nor Seller Employee Pension Plans and the benefits to be provided to Transferred\nEmployees by Purchaser following the Closing.  Seller and Purchaser shall\ncooperate in coordinating any and all other communications to the Employees\nabout the transaction.\n\n          11.3 Employee Benefits. (a) Effective on the Closing Date, Purchaser\n               -----------------                                              \nshall provide the Transferred Employees with such pensions and other employee\nbenefits as set forth in Schedule 11.3.  Purchaser reserves the right to modify\nor terminate any such pension and other employee benefits, at any time or from\ntime to time.  Purchaser shall be under no obligation to assume or replicate any\nof the Seller Employee Benefit Plans or Seller Employee Pension Plans. Purchaser\nshall amend its Employee Benefit Plans (as such term is defined in ERISA section\n3(3)) and Employee Pension Benefit Plans (as such term is defined in ERISA\nsection 3(2)) and all other employee benefit arrangements, plans, policies or\npractices, such that, effective as of the Closing Date, such plans recognize\nTransferred Employees' Credited Service (as such term is defined in the Alliant\nTechsystems Inc. Retirement Plan) with Seller for purposes of eligibility,\nvesting, early retirement incentives, pre-existing condition exclusions and\nwaiting periods; provided, however, that such plans may contain, in the\n                 --------  -------                                     \ndiscretion of Purchaser, exclusions for pre-existing conditions as were\napplicable under the health and welfare benefits provided to such Transferred\nEmployees by Seller before the Closing Date and as allowed by law.  In no event\nwill Purchaser provide or be under any obligation to provide post-retirement\nmedical or life insurance benefits or medicare supplemental benefits to\nTransferred Employees.\n\n          (b)  From and after the Closing Date, Seller shall remain solely\nresponsible for all obligations, costs and expenses under all Seller Employee\nBenefit Plans or Seller Employee Pension Plans in respect of Employees' claims\nincurred or conditions existing prior to the Closing Date, whether such claims\nare made or reported before or after the Closing Date, provided, however, that\nin no event shall Seller be obligated to pay claims made after nine (9) months\nfollowing the Closing Date.\n\n          (c)  Health Care Plan Deductibles.  Any health care plan expenses\n(excluding office visit copays) incurred by Transferred Employees on or after\nJanuary 1, 1997 and prior to the Closing Date will be recognized by Purchaser's\nhealth care plan for purposes of plan year 1997 deductibles, copays, and out of\npocket maximums.  Seller agrees to cooperate in the transmission of data to\nPurchaser's claims administrator.\n\n                                       58\n\n \n          (d)  Worker's Compensation.  Responsibility for workers' compensation\nclaims in respect of the Business arising out of conditions having a date of\ninjury (or, in the case of a claim relating to occupational disease, the last\nsignificant exposure) prior to the Closing Date shall remain with Seller.\nPurchaser shall have responsibility for workers' compensation claims in respect\nof the Business arising out of conditions having a date of injury (or, in the\ncase of a claim relating to occupational disease, the last significant exposure)\non or after the Closing Date. Provided, however, that in no event shall Seller\npay claims made after nine (9) months following the Closing Date.\n\n          (e)  Vacation.  Purchaser shall, effective as of the Closing, (i)\nrecognize Transferred Employees' service with Seller for purposes of future\nPersonal Time Off (\"PTO\") accruals, and (ii) recognize Transferred Employees\naccrued and unused vacation with Seller as of the Closing; provided, however,\nthat such recognition shall not exceed one week less than the Purchaser's PTO\naccrual maximums as applied to each Transferred Employee.  Seller shall, within\ntwo weeks following the Closing Date, pay to each Transferred Employee, the\namount of vacation accrual in excess of the amount to be recognized under the\nPurchaser's PTO plan each such Transferred Employee has, if any, as of the\nClosing Date.  Such amounts shall be treated as income for tax and benefits\npurposes.\n\n          (f)  Relocation Agreements.  With respect to costs associated with any\nrelocation agreements between Seller and an Employee, Seller shall remain liable\nfor all costs incurred prior to the Closing Date and Purchaser shall be liable\nfor any and all costs incurred on or after the Closing Date, subject to Section\n2.3(b) hereof and Schedule 2.3(b).\n\n          11.4 Retirement and 401(k) Plan.\n               -------------------------- \n\n          (a)  401(k) Plan.  Seller shall amend the Alliant Techsystems Inc.\n               -----------                                                  \n401(k) Plan (hereinafter \"Alliant 401(k) Plan\") to fully vest all Transferred\nEmployees effective as of the Closing Date.  Seller shall further amend the\nAlliant 401(k) Plan to permit lump sum distributions as of the Closing Date in\nrespect of all Transferred Employees who are participants in the Alliant 401(k)\nPlan.  Such Transferred Employees shall be entitled to transfer their accrued\nentitlements under such Alliant 401(k) Plan to Purchaser's 401(k) Plan at any\ntime after the Closing Date (subject to any applicable time limits imposed by\nERISA), and Purchaser and Seller shall cooperate fully in that regard.\n\n          (b)  Retirement Plan.  Seller shall amend the Alliant Techsystems Inc.\n               ---------------                                                  \nRetirement Plan to fully vest all Transferred Employees effective as of the\nClosing Date.  The Alliant Techsystems Inc. Retirement Plan shall further be\namended to provide that any Transferred Employee who meets the eligibility\nrequirements to retire may do so at the earliest of (a) their date of retirement\nfrom Purchaser or (b) their date of termination from Purchaser.\n\n          (i)  Seller shall amend the Alliant Techsystems Inc. Retirement Plan\nso that any Transferred Employee who is at least age 52 with at least 15 years\nof Credited Service (as\n\n                                       59\n\n \ndefined in the Alliant Techsystems Inc. Retirement Plan) as of the Closing Date\nshall have their age and service with Purchaser counted (to a maximum of 3\nadditional years of age and 3 additional years of service) for purposes of\ndetermining early retirement eligibility and the applicable early retirement\nreduction factors under the Alliant Techsystems Inc. Retirement Plan. Further,\nany Transferred Employee who is at least age 52 and is within 3 years of having\n85 points (age plus years of Credited Service) as of the Closing Date, shall\nhave their age and service with Purchaser counted (for a maximum of 3 additional\nyears of age and 3 additional years of service) for purposes of reaching the 85\npoint early retirement reduction eligibility under the Alliant Retirement Inc.\nRetirement Plan. Such service with Purchaser shall not be counted beyond such\ntarget dates. Seller shall administer the Alliant Techsystems Inc. Retirement\nMedical Plan, and Purchaser shall compensate Seller for those services as set\nforth on Schedule 12.5.\n\n          (ii)  Unless set forth in this Agreement, Seller retains the right to\nchange, amend or terminate any Seller Employee Pension Plans, Seller Employee\nBenefit Plans, or any employee benefit arrangement, plan, practice or policy at\nany time prior to or following the Closing, provided, however, that any such\nchange, amendment or termination will not result in any benefits for Transferred\nEmployees who were eligible for retirement at the Closing Date less than those\nthey would have received had they retired immediately prior to Closing.\n\n          (iii)  Seller shall retain all liabilities associated with the\nSellers' Supplemental Employee Retirement Plan for any Transferred Employees.\n\n          (iv)  A Transferred Employee who meets the eligibility requirements to\nretire at the Closing Date (other than those Employees described under Section\n11.4(b)(i) who have not attained age 55 as of the Closing Date) shall be\nentitled to participate in the Seller's Retiree Medical Benefit Program\ncommencing as of the date of his retirement or termination from Purchaser if and\nto the extent such Transferred Employee had retired immediately prior to the\nClosing.  Seller shall not be obligated to provide any Transferred Employee who\nbecomes eligible for early retirement solely pursuant to Section 11.4(b)(i)\nafter the Closing Date with Retiree Medical Benefits.\n\n\n          11.5 No Third Party Beneficiaries.  Nothing contained in this\n               ----------------------------                            \nAgreement or the schedules hereto, express or implied, shall confer upon any\nlabor organization, Employee, Potential Employee, Transferred Employee, employee\nof Purchaser, or employee of Seller any rights or remedies including, without\nlimitation, any right to employment or continued employment for any specified\nperiod, any nature or kind whatsoever under or by reason of this Agreement.\n\n          11.6 Indemnification  (a) Seller shall indemnify and hold Purchaser\n               ---------------                                               \nharmless from any Loss, Damage or expense it may incur (including reasonable\nattorneys' fees) with respect to any claims of Employees, Potential Employees,\nTransferred Employees or other employees, former employees or retirees of Seller\narising out of or in connection with their \n\n                                       60\n\n \nemployment or non-employment with Seller, or termination by Seller, including,\nbut not limited to, claims arising out of or in connection with any of the\nSeller Employee Benefit Plans and Seller Employee Pension Plans and claims\narising out of post-retirement medical and\/or life insurance benefits promised,\nprovided or subsidized (whether or not terminated by Seller) whether before or\nafter the Closing Date. This indemnity, except for any claim arising out of or\nin connection with any of the Seller Employee Benefit Plans and Seller Employee\nPension Plans and claims arising out of post-retirement medical and\/or life\ninsurance benefits, shall be subject to the Threshold Amounts and Second\nThreshold Amounts under Section 12(d) hereof.\n\n          (b)  Purchaser shall indemnify and hold Seller harmless from any Loss,\nDamage or expense it may incur (including reasonable attorneys' fees) with\nrespect to any claims of Employees, Potential Employee, Transferred Employees or\nother employees, former employees or retirees of Seller arising out of or in\nconnection with their employment or non-employment with Purchaser, or\ntermination by Purchaser, including, but not limited to, claims arising out of\nor in connection with any Employee Benefit Plan (as such term is defined in\nSection 3(3) of ERISA, maintained by Purchaser.\n\n          11.7 Employment Matters.  Except as may be required by law or as set\n               ------------------                                             \nforth in this Agreement and Schedule 11.7,  Seller will, prior to the Closing\nDate, refrain from directly or indirectly, in respect of the Business:\n\n          (a)  making any representation or promise, oral or written, to any\nEmployee concerning any Seller Employee Benefit Plan or Seller Employee Pension\nPlan, which representation or promise is materially inconsistent with the terms\nof such Plan then in effect, other than representations or promises made\npursuant to materials or other communications prepared in cooperation with the\nPurchaser;\n\n          (b)  making any change to, or amending in any way, the employment\ncontracts, salaries, wages, or other compensation of any Employee other than\nchanges or amendments that (i) are made in the ordinary course of business and\nconsistent with past practice, (ii) do not and will not result in increases of\nmore than 5% in the salary, wages or other compensation of any such person, and\n(iii) do not and will not exceed, in the aggregate, 5% of the total salaries,\nwages, and other compensation of all employees of such entity unless mutually\nagreed upon by the parties;\n\n          (c)  except as provided herein, adopting, entering into, materially\namending or altering, or terminating, partially or completely, any Seller\nEmployee Benefit Plan or Seller Employee Pension Plan relating to or affecting\nany Employee unless mutually agreed upon by the parties;\n\n          (d)  except as provided herein, adopting, entering into, materially\namending or altering, or terminating, partially or completely, any employment,\nagency or representation \n\n                                       61\n\n \ncontract or agreement that is, or had it been in existence on the effective date\nof this Agreement would have been, required to be disclosed in Schedule 5.8(a);\n\n          (e)  entering into any contract with an Employee that is not\nterminable, without penalty or other liability, upon not more than 60 calendar\ndays' notice;\n\n          (f)  assuming, entering into, materially amending or altering, or\nterminating any labor or collective bargaining agreement to which the Business\nis affected thereby; and\n\n          (g)  hiring any additional Employee, agent, or other similar\nrepresentative of the Seller whose annual salary or wage (excluding bonus and\ncommission) exceeds $50,000 unless mutually agreed to by the parties.\n\n          11.8 Intellectual Property.  Purchaser shall provide complete and\n               ---------------------                                       \nadequate notice to Employees that they will be required, upon becoming\nTransferred Employees, to sign a new employment agreement containing provisions\nconcerning Intellectual Property.\n\n          11.9 Spending Accounts. Purchaser and Seller shall cooperate to\n               -----------------                                         \naddress the transition treatment of healthcare and dependent care reimbursement\naccounts.\n\n\n                                  ARTICLE XII\n\n                      CLOSING AND POST-CLOSING COVENANTS;\n                                INDEMNIFICATION\n\n          12.1 Survival of Representations and Warranties.  The representations\n               ------------------------------------------                      \nand warranties of the parties contained in Articles V and VI of this Agreement\nshall survive the Closing through and including the second anniversary of the\nClosing Date; provided, however, that the representations and warranties of (i)\n              --------  -------                                                \nSeller set forth in Sections 5.1, 5.2, 5.10 and 5.25 and (ii) Purchaser set\nforth in Sections 6.1, 6.2 and 6.6 hereof, shall survive this Agreement in\nperpetuity.\n\n          12.2 Indemnification.  (a)  Purchaser shall fully and promptly pay,\n               ---------------                                               \nperform, discharge, defend, indemnify and hold harmless Seller and its\nAffiliates and Subsidiaries, and their respective directors, officers, employees\nand agents, from and against any and all Damages arising out of, based upon or\nwith respect to:  (1) the failure of any representation or warranty made by\nPurchaser herein to have been true and correct in all respects when made or\ndeemed to have been made (including, without limitation, all statements made on\nany Schedule hereto or in any Exhibit hereto), (2) the breach by Purchaser of\nany of the covenants and agreements on its part to be performed under this\nAgreement, (3) the Assumed Liabilities, (4) the ownership of the Purchased\nAssets or the operation of the Business (including, without limitation, the\nmanufacture and sale of products sold after the Closing Date, the leasing of\nProperty (real and personal), the incurrence of commitments and obligations, the\nprovision of \n\n                                       62\n\n \nservices, the giving of warranties, indemnities or warnings, and the receipt by\nPurchaser, after the Closing Date, of any rebate, recoupment, recovery or refund\nthat results in an obligation on the part of Purchaser to make a payment to, or\ncredit in favor of the customer under any Government Contract) by Purchaser\nafter the Closing Date, except for the Excluded Liabilities, (5) any and all\nEnvironmental Costs and Liabilities or Damages arising out of, based upon or\nattributable to any Environmental Claim or Remedial Action which is attributable\nto (but only to the extent attributable to) the operation or ownership of the\nBusiness or the Facilities by Purchaser from and after the Closing.\n\n          (b)  Seller shall fully and promptly pay, perform, discharge, defend,\nindemnify and hold harmless Purchaser and its Affiliates and Subsidiaries and\ntheir respective directors, officers, employees, agents and customers, past,\npresent or future, from and against any and all Damages arising out of, based\nupon or with respect to:  (1) the failure of any representation or warranty made\nby Seller herein to have been true and correct in all respects when made or\ndeemed to have been made (including, without limitation, all statements made on\nany Schedule hereto or in any Exhibit hereto), (2) the breach by Seller of any\nof the covenants and agreements on its part to be performed under this\nAgreement, (3) the ownership of the Assets or the operation of the Business\n(including, without limitation, the sale of products before the Closing Date,\nthe leasing of property (real and personal), the incurrence of commitments and\nobligations, the provision of services, the giving of warranties, indemnities or\nwarnings, and the receipt by the Seller, whether before or after the Closing\nDate, of any rebate, recoupment, recovery or refund that results in an\nobligation on the part of Purchaser to make a payment to, or credit in favor of\nthe customer under any Government Contract) by Seller on or before the Closing\nDate, whether asserted before or after the Closing Date, except for the Assumed\nLiabilities, (4) without duplication, any and all Excluded Liabilities, and (5)\nsubject to the obligations under Section 2.3(c) and Section 7.7, any and all\nDamages or Environmental Costs and Liabilities arising out of, based upon, or\nattributable to (but only to the extent attributable to) any Environmental Claim\nor Remedial Action arising out of or based upon anything relating to the\nBusiness prior to the Closing, and the operation or ownership of the Business or\nthe Facilities by the Seller prior to the Closing.\n\n          (c)  For the purposes of administering the indemnification provisions\nof this Section 12.2, the following procedures shall apply from and after the\nClosing Date:\n\n          (1)  Each indemnified party shall notify the Indemnitor of any\nIndemnification Event in writing within 30 days following the receipt of notice\nof the commencement of any action or proceeding or within 60 days of (A) the\nassertion of any claim against such indemnified party or (B) the discovery by\nsuch indemnified party of any loss, giving rise to indemnity pursuant to this\nSection 12.2 (any 30 or 60 day notification requirement shall begin to run, in\nthe case of a claim which is amended so as to give rise to an Indemnification\nEvent, from the first day such claim is amended to include any claim which is an\nIndemnification Event hereunder) and shall indicate in such notification whether\nsuch indemnified party is requesting indemnification with respect to such\nIndemnification Event and the amount of indemnification initially anticipated\n(if the same is capable of estimation).  \n\n                                       63\n\n \nThe failure to give notice as required by this Section 12.2(c)(1) in a timely\nfashion shall not result in a waiver of any right to indemnification hereunder\nexcept to the extent that the Indemnitor's ability to defend against the event\nwith respect to which indemnification is sought is materially adversely affected\nby the failure of the indemnified party to give notice in a timely fashion as\nrequired by this Section.\n\n          (2)  After notification is given as aforesaid, the Indemnitor shall be\nentitled (but not obligated) to assume the defense or settlement of any such\naction or proceeding, or to participate in any negotiations or proceedings to\nsettle or otherwise eliminate any claim; provided, however, that in the event\n                                         --------  -------                   \nthe Indemnitor assumes any such defense or settlement or any such negotiations,\nit shall actively pursue such defense, settlement or negotiations in good faith.\nIf the Indemnitor fails to elect in writing within 10 Business Days after the\nnotification referred to above to assume the defense, the indemnified party may\nengage counsel to defend, settle or otherwise dispose of such action or\nproceeding.\n\n          (3)  In cases where the Indemnitor has assumed the defense or\nsettlement with respect to an Indemnification Event, the Indemnitor shall be\nentitled to assume the defense or settlement thereof with counsel of its own\nchoosing, which counsel shall be reasonably satisfactory to the indemnified\nparty, provided that the Indemnitor shall not be entitled to settle, compromise,\ndecline to appeal, or otherwise dispose of any such action, proceeding or claim\nwithout the consent or agreement of the indemnified party (which consent will\nnot be unreasonably withheld or delayed) provided, that if the terms of the\nsettlement provide only for payment of monies and do not provide for any\nagreement to act or refrain from acting in any manner and such consent is\nwithheld, then the Indemnitor's liability shall be limited to the amount for\nwhich the Indemnitor agreed with the claimant to settle together with\nIndemnitor's cost and attorneys' fees to the date such settlement was rejected\nby the indemnified party.\n\n          (4)  In any case in which the Indemnitor assumes the defense or\nsettlement thereof, the indemnified party shall be entitled to continue to\nparticipate at its own cost in any such action or proceeding or in any\nnegotiations or proceedings to settle or otherwise eliminate any claim for which\nindemnification is being sought and shall have the right to employ its own\ncounsel in any such case, but the fees and expenses of such counsel shall be at\nthe expense of such indemnified party unless (A) the employment of such counsel\nshall have been authorized in writing by the Indemnitor in connection with the\ndefense of such suit, action, claim or proceeding, (B) the Indemnitor shall not\nhave employed counsel (reasonably satisfactory to the indemnified party) to take\ncharge of the defense of such action, suit, claim or proceeding within 10\nBusiness Days after notice of commencement of the action, suit, claim or\nproceeding, or (C) such indemnified party shall have reasonably concluded that\nthere may be defenses available to it which are different from or additional to\nthose available to the Indemnitor which, if the Indemnitor and the indemnified\nparty were to be represented by the same counsel, could result in a conflict of\ninterest for such counsel or materially prejudice the prosecution of the\ndefenses available to such indemnified party.  If any of the events specified in\nclauses (B) or (C) of the preceding sentence shall have occurred or shall\notherwise be applicable, then the reasonable fees and expenses of one counsel or\nfirm of counsel selected \n\n                                       64\n\n \nby the indemnified party shall be borne by the Indemnitor. In no event shall an\nIndemnitor be liable to any indemnified party for the cost of employing or using\nin-house legal counsel regardless of whether such Indemnitor has, or has not,\nassumed the defense or settlement of such action, proceeding or claim.\n\n          (5)  In the event indemnification is requested, the relevant\nIndemnitor, its representatives and agents shall have access to the premises,\nbooks and records of the indemnified party or parties seeking such\nindemnification to the extent reasonably necessary to assist it in defending or\nsettling any action, proceeding or claim; provided, however, that such access\n                                          --------  -------                  \nshall be conducted in such manner as not to interfere unreasonably with the\noperation of the business of the indemnified party or parties and shall only\ntake place in the presence of a representative of the indemnified party or\nparties unless otherwise so agreed and the indemnified party shall not be\nrequired to disclose any information with respect to itself or any of its\nAffiliates or former Affiliates (other than any such Affiliate or former\nAffiliate which is a party to this Agreement), and shall not be required to\nparticipate in the defense of any claim to be indemnified hereunder (except as\notherwise expressly set forth herein), unless such disclosure or participation\nis otherwise required or reasonably necessary in the defense of any claim to be\nindemnified hereunder.\n\n          (6)  Any amount which is required to be paid by an Indemnitor to any\nparty, including any reimbursement to which the indemnified party is entitled,\nshall be paid by such Indemnitor promptly.\n\n          (d)  Except with respect to Damages resulting from a violation by\nSeller of federal procurement laws or other criminal statutes, which shall not\nbe limited by this Section 12.2(d), Seller shall not be liable to any Person\nunder Sections 12.2(b) unless and until the aggregate amount determined to be\nowing to such Person by Seller under Section 12.2(b) exceeds $1 million (the\n\"Threshold Amount\"), and, at such time as such Threshold Amount is exceeded,\nSeller shall be liable for seventy-five (75%) and Purchaser shall be liable for\ntwenty-five percent (25%) of the next $4 million (the \"Second Threshold Amount\")\nof Losses, Damages and Environmental Costs and Liabilities claimed by Purchaser\nunder Sections 12.2(b) hereof. In addition to the limitation set forth in the\nimmediately preceding sentence, indemnification under Section 12.2(b) by Seller\nof Purchaser shall be only for Losses, Damages and Environmental Costs and\nLiabilities in an amount equal to or greater than $50,000 individually or where\na series of related Losses exceeds $50,000.   Seller shall not in any event be\nliable under Sections 12.2(b) to make payments, in the aggregate, exceeding the\namount received by Seller pursuant to Section 2.5 hereof.  The foregoing\nlimitations shall not be applicable in respect of (A) the failure of any\nrepresentation or warranty made by Seller to have been true and correct under\nSections 5.10 or 5.25 or (B) the breach by Seller of any of the covenants and\nagreements on its part to be performed under Sections 12.3 and 12.4 hereof.\n\n          In measuring the economic consequences of any claim being asserted\nunder the representations and warranties of Section 5.5 for Financial\nStatements, the economic impact of \n\n                                       65\n\n \nall such issues (both positive and negative) must be taken into consideration\n---\nand the resulting claim must be measured on a net basis, taking into account the\n                                              ---\npost-closing adjustment provided in Article IV. The economic impact will be\ndetermined based only on issues associated with the Purchased Assets and Assumed\nLiabilities, and it will not take into consideration any issues associated with\nExcluded Assets, Excluded Liabilities, or any other assets or liabilities\nreflected on any financial statements that are not sold to or assumed by\nPurchaser in accordance with the terms of this Agreement.\n\n          (e)  Except with respect to Damages resulting from a violation of\nfederal procurement laws or other criminal statutes and subject to the\nlimitations set forth below, Purchaser shall reimburse Seller quarterly, upon\nreceiving an invoice from Seller, for amounts paid by Seller (i) within five (5)\nyears from the Closing Date with respect to Damages paid by Seller to third\nparties in respect of defending claims relating to the ownership or operation of\nthe Business prior to the Closing which claims were neither pending nor, to\nSeller's knowledge, threatened, as of the Closing Date, and (ii) amounts paid by\nSeller pursuant to Section 7.7(e). Such reimbursements shall be up to an\naggregate amount equal to the then remaining Threshold Amount and\/or Second\nThreshold Amount, as applicable, as described in Section 12.2(d).  For purposes\nof this Section 12.2(e), the amount paid by Purchaser to Seller shall be paid at\na rate equal to the rate at which the Threshold Amount and\/or Second Threshold\nAmount would be reduced if the amount sought to be reimbursed by Seller were an\namount which Purchaser were seeking an indemnity under Section 12.2(b).   For\nexample, if the reimbursement sought by Seller under this subsection 12.2(e)\nwere $1,200,000, and assuming no prior reduction of the Threshold or Second\nThreshold Amounts had occurred under this subsection 12.2(e) or subsection\n12.2(d) above, Purchaser would pay Seller 100% of the first $1,000,000 and 25%\nof the next $200,000, or $1,050,000. The Threshold Amount and Second Threshold\nAmount shall be reduced by any amount reimbursed by Purchaser to Seller under\nthis Section 12.2(e).\n\n          (f)  Indemnification by Purchaser of Seller shall be only for Losses,\nDamages and Environmental Costs and Liabilities in an amount equal to or greater\nthan $25,000 individually or where a series of related Losses exceeds $25,000.\nThe foregoing limitations shall not be applicable in respect of (X) the failure\nof any representation or warranty made by Purchaser to have been true and\ncorrect under Section 6.6 or (Y) the indemnity by Purchaser contained in Section\n11.6(b) or the breach by Purchaser of the covenants and agreements on its part\nto be performed under Sections 12.3 and 12.4 hereof.\n\n          12.3 Payment of Brokers' or Finders' Fees.  Seller shall pay any and\n               ------------------------------------                           \nall brokers' or finders' fees, or any other commission or similar fee, payable\nto any person acting on behalf of Seller or any of its Affiliates or under the\nauthority of any of them, in connection with any of the transactions\ncontemplated herein, and Purchaser shall pay any and all brokers' or finders'\nfees, or any other commission or similar fee, payable to any person acting on\nbehalf of Purchaser or any of its Affiliates or under the authority of any of\nthem, in connection with any of the transactions contemplated herein, in each\ncase regardless of \n\n                                       66\n\n \nwhether any claim for payment is asserted before or after the closing of the\ntransactions contemplated hereby, or before or after any termination of this\nAgreement.\n\n          12.4 Tax Matters.  (a)  Seller and Purchaser shall cooperate fully\n               -----------                                                  \nwith each other and make available or cause to be made available to each other\nin a timely fashion such Tax data, prior Tax Returns and filings and other\ninformation as may be reasonably required for the preparation by Purchaser or\nSeller of any Tax Returns, elections, consents or certificates required to be\nprepared and filed by Purchaser or Seller and any audit or other examination by\nany taxing authority, or judicial or administrative proceeding relating to\nliability for Taxes.  Purchaser and Seller will each retain and provide to the\nother party all records and other information which may be relevant to any such\nTax Return, audit or examination, proceeding or determination, and will each\nprovide the other party with any final determination of any such audit or\nexamination, proceeding or determination that affects any amount required to be\nshown on any Tax Return of the other party for any period.  Each of Purchaser\nand Seller will retain copies of all Tax Returns, supporting work schedules and\nother records relating to tax periods or portions thereof ending prior to or on\nthe Closing Date.\n\n          (b)  Seller shall be responsible for the preparation and filing of all\nfederal and state income and franchise Tax returns, and all other Tax returns\nrequired to be filed by Seller, relating to the Business or the Assets for all\nperiods ending on or before Closing Date.  Seller shall make all payments\nrequired with respect to any such Tax return as shown thereon.\n\n          (c)  Purchaser and Seller shall share equally in the cost of (A) all\ntransfer and documentary Taxes and fees imposed with respect to instruments of\nconveyance in the transaction contemplated hereby and (B) all sales, use, gains,\nexcise and other transfer or similar Taxes incurred in connection with the\ntransactions contemplated by this Agreement (including any Tax liability arising\nfrom an adjustment to or the filing of an amended Tax Return in respect of Taxes\nshared by Purchaser and Seller pursuant to this Section 12.4(c)).  The Purchaser\nshall bear its share and the Seller shall remit the Purchaser's share of all\napplicable sales taxes which the Purchaser incurs as a result of the\nacquisition.  The Seller will not render any sales taxes on those assets for\nwhich Purchaser supplies the appropriate exemption certificates.  Purchaser and\nSeller agree to cooperate in the filing of all necessary documentation and all\nTax Returns, reports and forms filed in connection with Taxes relating to the\noperations, activities or Assets of the Business with respect to all such Taxes,\nincluding any available pre-sale filing procedure.\n\n          (d)  Seller shall be responsible for, and shall indemnify and hold\nharmless, Purchaser and its Subsidiaries and Affiliates in respect of any\nDamages attributable to all Taxes with respect to the ownership, use or leasing\nof the Assets on or prior to the Closing Date.\n\n          (e)  Seller and Purchaser agree that the transaction contemplated by\nthis Agreement constitutes a sale of a trade or business within the meaning of\nSection 41(f)(3) of \n\n                                       67\n\n \nthe Code. Seller agrees to provide Purchaser upon request with all information\nnecessary to permit Purchaser to timely apply the provisions of Section\n41(f)(3)(A) of the Code with respect to the assets. Seller agrees to furnish\nPurchaser by not later than the Closing Date clearance certificates or similar\ndocuments that may be required by any state, local or other taxing authority to\nrelieve Purchaser of any obligations to withhold any portion of the purchase\nconsideration to be transferred pursuant to Article II hereof.\n\n          (f)  (1)  Not later than 180 days following the Closing, Purchaser\nshall provide to Seller copies of Form 8594 and any required exhibits thereto\n(the \"Asset Acquisition Statement\") with Purchaser's proposed allocation of the\npurchase price paid by Purchaser with respect to the Assets.  Within 30 days\nafter the receipt of such Asset Acquisition Statement, Seller shall propose to\nPurchaser any changes to such Asset Acquisition Statement or shall indicate its\nconcurrence therewith, which concurrence shall not be unreasonably withheld.\nThereafter, Purchaser shall provide to Seller from time to time revised copies\nof the Asset Acquisition Statement (the \"Revised Statements\") so as to report\nany matters on the Asset Acquisition Statement that need updating (including\npurchase price adjustments, if any).  Within 30 days after the receipt of any\nRevised Statement, Seller shall propose to Purchaser any changes to such Revised\nStatement or shall indicate its concurrence therewith, which concurrence shall\nnot be unreasonably withheld.  Subject to and in accordance with Section\n12.4(f)(2) hereof, Purchaser and Seller shall endeavor in good faith to resolve\nany differences with respect to the Asset Acquisition Statement or any Revised\nStatements within 30 days after Purchaser's receipt of notice of objections or\nsuggested changes from Seller.  The costs of preparing the Asset Acquisition\nStatement and any supporting materials (including any appraisals) shall be borne\nsolely by Purchaser.  Nothing in this Section 12.4(f)(1) or (2) shall be\nconstrued to require that an appraisal of the assets be performed.\n\n          (2)  Subject to the provisions of the following sentence of this\nSection 12.4(f)(2), the purchase price for the Assets shall be allocated in\naccordance with the Asset Acquisition Statement or, if applicable, the last\nRevised Statements, provided by Purchaser to Seller pursuant to Section\n12.4(f)(1) hereof, and all Tax Returns and reports filed by Purchaser and Seller\nshall be prepared consistently with such allocation.  If Seller shall have\nwithheld its consent to such allocation (which consent shall not be unreasonably\nwithheld) and Purchaser and Seller have acted in good faith to resolve the\ndifferences with respect to the items on the Asset Acquisition Statement or any\nRevised Statement and, thereafter, Purchaser and Seller are unable to resolve\nsuch differences which, in the aggregate, are material in relation to the\naggregate purchase price for the Assets, Purchaser and Seller shall file all Tax\nReturns and reports consistent with the allocation provided in such statements\nexcept with respect to the items that are the subject of such material\ndifference.\n\n          (g)  All federal and state income and franchise Taxes for any taxable\nperiod that includes the Closing Date, real and personal property Taxes, state\nand local ad valorem Taxes and assessments applicable to the Business or the\nAssets shall be prorated by the parties as of the Closing Date, and all such\nTaxes applicable to periods of time on or prior to the Closing Date shall be the\nsole obligation, responsibility and expense of Seller and shall be \n\n                                       68\n\n \nExcluded Liabilities. All such assessments and Taxes applicable to periods after\nthe Closing Date shall be the sole obligation, responsibility and expense of\nPurchaser. All real property, personal property and similar taxes and\ninstallments of general and special assessments, if any, with respect to the\nPurchased Assets shall be prorated on the basis of actual days elapsed between\nthe commencement of the relevant fiscal tax year and the Closing Date, based on\na 365-day year and the tax payable within the current tax year. Following the\nClosing Date, each Party shall, upon request of the other Party, immediately\nreimburse the other Party for any such taxes for which said Party is responsible\nbut have been paid by or are owed by the other Party and for collections made by\none Party on behalf of the other Party.\n\n          12.5 Transition Services.  As soon as practicable following the date\n               -------------------                                            \nhereof and prior to Closing, the parties will enter into the Transition Services\nAgreement to provide certain services to be provided by Seller to Purchaser for\nthe transition of certain support services for the Business which are currently\nperformed by Seller and which will in the future be performed by Purchaser.  The\nterms of that agreement are set forth on Schedule 12.5.  These services shall be\npriced at cost through general overhead plus a nominal administrative fee not to\nexceed 2%.  The duration of the services provided will vary depending on the\nservice, but both parties will use their best efforts to minimize duration, not\nto exceed 12 months.  All costs will be invoiced monthly from Seller to\nPurchaser, such invoices to show actual cost breakdown on a format agreed by the\nparties.  Invoices shall be payable within 30 days.\n\n          12.6 Supply Contracts.  As soon as practicable after the signing\n               ----------------                                           \nhereof and prior to the Closing Date, Seller and its Affiliates and Purchaser\nand its Affiliates will negotiate in good faith with each other to convert\nexisting interdivisional supply agreements into supply contracts between\nPurchaser and Seller.  In each case the provider of goods, services, parts,\ncomponents or materials agrees to continue or to cause its appropriate Affiliate\nto continue to provide, at the same quality as now provided, such goods,\nservices, parts, components or materials for the period of the existing\nagreement but in no event less than one year from the Closing Date.  For\nexisting active purchase orders and priced options awarded within 90 days\nfollowing Closing Date, the price to be charged by the providing business to the\nbuying business shall be cost through general overhead plus 5%.  For follow-on\nbusiness and unpriced options or options awarded later than 90 days following\nClosing Date, the price shall be negotiated between the providing business and\nthe buying business.\n\n\n                                  ARTICLE XII\n\n                                    GENERAL\n\n          13.1 Amendments.  This Agreement may be amended, modified, superseded\n               ----------                                                      \nor canceled and any of the terms, covenants, representations, warranties or\nconditions hereof may be waived only by an instrument in writing signed by each\nof the parties hereto or, in the case of a waiver, by or on behalf of the party\nwaiving compliance.\n\n                                       69\n\n \n          13.2 Integrated Contract.  This Agreement, including the Schedules and\n               -------------------                                              \nExhibits hereto, any written amendments to the foregoing satisfying the\nrequirements of Section 13.1 hereof, the Ancillary Agreements and the\nConfidentiality Agreement referred to in Section 7.1(b) hereof, constitute the\nentire agreement among the parties with respect to the subject matter hereof and\nthereof, and supersede any previous agreements and understandings between the\nparties with respect to such matters.\n\n          13.3 Governing Law.  This Agreement and the legal relations between\n               -------------                                                 \nthe parties shall be governed by and construed in accordance with the laws of\nthe State of New York without regard to the principles regarding the choice of\nlaw.\n\n          13.4 Notices.  Any notice or other communications required or\n               -------                                                 \npermitted hereunder shall be in writing and shall be deemed to have been duly\ngiven when delivered personally or transmitted by telex or telecopier, receipt\nacknowledged, or in the case of documented overnight delivery service or\nregistered or certified mail, return receipt requested, postage prepaid, on the\ndate shown on the receipt therefor,\n\n          (a)  if to Purchaser, to:\n\n                    Hughes Aircraft Company\n                    7200 Hughes Terrace\n                    Los Angeles, California  90080-0028\n                    Attention:  Secretary\n                    Telecopy:  (310) 649-1983\n\n                    with a copy to:\n\n                    Weil, Gotshal &amp; Manges LLP\n                    767 Fifth Avenue\n                    New York, New York  10153\n                    Attention:  Jeffrey J. Weinberg, Esq.\n                    Telecopy:  (212) 310-8007\n\n          (b)  if to Seller, to:\n\n                    Alliant Techsystems Inc.\n                    600 Second Street Northeast\n                    Hopkins, Minnesota 55343-8343\n                    Attention:  Daryl L. Zimmer, Esq.\n                    Vice President and General Counsel\n                    Telecopy:   (612) 931-5920\n\n\n                    with a copy to:\n\n                                       70\n\n \n                    Malkerson Gilliland Martin LLP\n                    901 Marquette Avenue, Suite 1500\n                    Minneapolis, Minnesota 55402\n                    Attention:  Michael S. Gilliland, Esq.\n                    Telecopy:   (612) 334-1414\n\nor to such other address(es) as shall be furnished in writing by any such party\nto each of the other parties hereto in accordance with the provisions of this\nSection 13.4.\n\n          13.5 Assignment.  Neither this Agreement nor any of the rights and\n               ----------                                                   \nobligations of the parties hereunder may be assigned by any of the parties\nhereto without the prior consent of each other party hereto, except that either\nparty may assign any or all of its rights and\/or obligations hereunder to any\nentity controlling, controlled by or under common control with such party, and,\nwith respect to Purchaser, any such entity may assign such rights and\/or\nobligations to a direct or indirect Subsidiary of Purchaser or to Purchaser,\nprovided that in all events the Assignee shall assume all obligations of the\nAssignor under this Agreement.  Notwithstanding the foregoing, Purchaser shall\nremain liable for all of its obligations under this Agreement. Subject to the\nfirst sentence of this Section 13.5, this Agreement shall be binding upon and\ninure to the benefit of the parties hereto and their respective successors and\nassigns and no other person shall have any right, obligation or benefit\nhereunder.\n\n          13.6 Headings.  The descriptive headings of the several Articles and\n               --------                                                       \nSections of this Agreement are inserted for convenience only and do not\nconstitute a part of this Agreement.\n\n          13.7 Counterparts.  This Agreement may be executed in one or more\n               ------------                                                \ncounterparts, all of which shall be considered one and the same agreement, and\nshall become effective when one or more counterparts have been signed by each of\nthe parties hereto and delivered, in person or by telecopier, receipt\nacknowledged, to the other party hereto.\n\n          13.8 Expenses.  Whether or not the transactions contemplated by this\n               --------                                                       \nAgreement are consummated, except as otherwise expressly provided herein each of\nthe parties hereto shall be responsible for the payment of its own respective\ncosts and expenses incurred in connection with the negotiations leading up to\nand the performance of its respective obligations pursuant to this Agreement,\nincluding the fees of any brokers or advisors employed or retained by or on\nbehalf of such party.\n\n          13.9 Further Assurances.  From time to time after the Closing Date,\n               ------------------                                            \neach party to this Agreement shall, at its expense except as otherwise expressly\nprovided herein, do, execute, acknowledge and deliver any and all such other and\nfurther acts, assignments, transfers and any instruments of further assurance,\napprovals and consents as are reasonably necessary or proper to complete, ensure\nand perfect the consummation of the transactions contemplated hereby.\n\n                                       71\n\n \n          13.10 Public Announcements.  No party to this Agreement shall issue\n                -------------------- \nany press release or public announcement of any kind concerning the transactions\ncontemplated by this Agreement without prior consultation with the other party\nhereto.\n\n          13.11 Exhibits\/Schedules.  The exhibits and schedules to this\n                ------------------ \nAgreement are hereby incorporated and made a part hereof and are an integral\npart of this Agreement.\n\n                         [No more text on this page.]\n\n                                       72\n\n \n          13.12 Conflicting Provisions.  In the event of any conflict between\n                ----------------------\nthe provisions of this Agreement and the provisions of any Ancillary Agreement,\nthe provisions of this Agreement shall control.\n\n          IN WITNESS WHEREOF, each of the parties hereto has caused this\nAgreement to be executed on its behalf by its officers or representatives\nthereunto duly authorized, all as of the date first written above.\n\n                                HUGHES AIRCRAFT COMPANY\n                                \n                                \n                                By: \/s\/ Michael T. Smith\n                                    -------------------------------------\n                                    Name: Michael T. Smith\n                                    Title: Chairman of the Board\n                                \n                                \n                                ALLIANT TECHSYSTEMS INC.\n                                \n                                \n                                By: \/s\/ Richard Schwartz\n                                    -------------------------------------\n                                    Name: Richard Schwartz\n                                    Title: President and Chief Executive Officer\n\n                                       73\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6632,7618],"corporate_contracts_industries":[9388,9474],"corporate_contracts_types":[9623,9622],"class_list":["post-43296","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-alliant-techsystems-inc","corporate_contracts_companies-general-motors-corp","corporate_contracts_industries-autos__autos","corporate_contracts_industries-aerospace__ordnance","corporate_contracts_types-planning__asset","corporate_contracts_types-planning"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43296","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43296"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43296"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43296"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}