Exporter Guidance - BAE Systems Avionics Ltd. (UK) Changes to SELEX Airborne Systems Ltd.

Last Updated: January 2, 2008

The Office of Defense Trade Controls Compliance (DTCC) conducted an extensive review of issues relating to the BAE Systems plc sale to Finmeccanica SpA of a majority interest in the stock in BAE Systems Avionics Limited, since renamed SELEX Sensors and Airborne Systems Limited. As a result of that review, DTCC has received written acknowledgement from BAE Systems that it did not request prior authorization from the Department of State for the sale of stock in SELEX to Finmeccanica. BAE understands that this authorization should have been obtained to address those Department of State licenses and agreements (active and expired) to which BAE Systems Avionics was a party. BAE Systems has assured DTCC that it will obtain prior authorization for an intended resale, transfer or disposal affecting ITAR-controlled defense articles/services or seek guidance from the Department on legal and regulatory responsibilities. BAE Systems has updated its internal compliance policies and procedures accordingly. BAE Systems has also assured DTCC and provided evidence that BAE Systems has proper safeguards in place to protect defense technology and technical data, insuring that such information is not transferred to unauthorized personnel. BAE Systems indicated that it understands the legal and regulatory responsibilities required of foreign persons under the AECA and ITAR – primarily as those responsibilities relate to end-user and end-use controls imposed on U.S. origin defense articles and services (i.e., technology) exported overseas.

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Exporter Guidance

BAE Systems Avionics Ltd. of the United Kingdom has changed its name and ownership structure due to an acquisition by Finmeccanica SpA of Italy. The change is not simply a name change but involves a change in ownership. The acquisition is reported to have been completed on April 29, 2005. All valid Department of State export authorizations to which BAE Systems Avionics Ltd. is a party are affected and must be amended as noted below to properly reflect this change.

New Licenses Required: Valid State Department authorizations must be replaced by new licenses reflecting the new ownership structure. Requests for new licenses must be submitted to the Office of Defense Trade Controls Licensing. Note that the transaction involves a change in ownership of an approved party and therefore a DSP-119 (amendment form) cannot be used.

• Each new license application should include only the unshipped balance of quantity and dollar value (limited to DSP-5s and -85s), reference the previously approved license number, and be submitted as three complete copies.
• Each copy should include license attachments as well as proviso letters, when applicable.
• BAE notification to the applicant of its change in name and ownership structure should be included as supporting documentation.

Agreements Require Amending: Novation of technical assistance and manufacturing license agreements by amendment is required when BAE Systems Avionics Ltd. was a signatory. For agreements in which BAE Systems Avionics Ltd. was otherwise involved (e.g., sublicensee), an amendment is also required.

New Non-transfer and Use Certificate (DSP-83) Required: New certificates must be provided and signed by SELEX and the applicant. The DSP-83 certificate, however, will not be required at the time of license application or agreement amendment resubmission, but must be received by the applicant prior to export, as a condition of the new license or agreement amendment issuance.

ITAR Exemptions Restricted: As a general matter, such as contained in Section 125.4 of the ITAR, exemptions for exports in furtherance of previously issued licenses for which BAE Systems Avionics Ltd. was a party may not be claimed until such time as a new license is issued for exports to SELEX.

Reexport/Retransfer Approval Required: Authorization for the export of defense articles and/or defense services previously issued to BAE Systems Avionics Ltd. (UK) is required from DDTC prior to reexport/retransfer to SELEX. Submission must be in accordance with Section 123.9 of the ITAR.

Other Guidance

Referral to Department of Defense (DoD): Applicants are advised that in some cases, agreement amendments and license applications may be staffed to DoD. We expect all agreement novations will be staffed to DoD and must include the relevant technical data involved. Once license submissions have been assessed to determine a need for staffing to DoD, the applicant will be contacted to forward us if any additional data will be necessary for the referral.

Prioritize Submissions: In anticipation of a large numbers of requests from industry, we request each applicant prioritize its submissions in the order of urgency. In addition, this office will process requests with priority given by date received.

More Later: DDTC is seeking clarification with BAE about other mergers/acquisitions in which it is involved and, upon receipt of that information, will provide, as necessary, additional guidance regarding relevant defense trade authorizations.