1
Exhibit 2.1
CONFIDENTIAL
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RECAPITALIZATION AGREEMENT
AMONG
IS&S ACQUISITION CORP.
AND
TRW INC.
TRW IS&S INTERNATIONAL, INC.
TRW ENVIRONMENTAL MANAGEMENT COMPANY
TRW HOTEL COMPANY INC.
TRW MICROWAVE INC.
AND
TARGET MARKETING SERVICES, INC.
Dated as of February 9, 1996
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TABLE OF CONTENTS
PAGE
RECITALS 1
TERMS AND CONDITIONS 4
ARTICLE I - GENERAL PROVISIONS 4
1.1 Definitions 4
1.2 Other Definitions and Meanings; Interpretation 4
1.3 TRW's Knowledge 4
1.4 Parts of Disclosure Package; Disclosure of Exceptions 4
ARTICLE II - RECAPITALIZATION 5
2.1 Pre-Merger Recapitalization Transactions 5
2.2 Acquired Assets 6
2.3 Excluded Assets 8
2.4 Assumed Liabilities 9
2.5 Excluded Liabilities 10
2.6 Merger of Purchaser into Holdings 11
(a) The Merger 11
(b) The Closing 11
(c) Time, Date, and Place of Closing 11
(d) Actions at the Closing 12
(e) Effect of Merger 12
(i) General 12
(ii) Certificate of Incorporation 12
(iii) Bylaws 12
(iv) Directors and Officers 12
(v) Conversion of Holdings Shares 12
(vi) Conversion of Capital Stock of Purchaser 13
(f) Procedure for Payment 13
(g) Trademark Agreement 13
2.7 Purchase Price 13
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2.8 Adjustment 13
(a) Determination of Adjustment 13
(b) Certain Definitions 14
(c) Closing Audit 14
(d) Review by Operating Company 15
2.9 Payment of Adjustment 15
2.10 Method of Payment of Adjustment 16
2.11 No Set Off 16
2.12 Real Estate Conveyance 16
(a) Title Insurance Commitment 16
(b) Limited Warranty Deed 16
(c) Instructions 17
(d) Confirmation 17
(e) Title Company's Fee 17
ARTICLE III - REPRESENTATIONS AND WARRANTIES 17
3.1. TRW's General Representations and Warranties 17
(a) Organization and Existence 17
(b) Power and Authority 17
(c) Authorization 17
(d) Binding Effect 18
(e) No Default 18
(f) Finders 18
(g) Representations and Warranties True and Complete 18
3.2 TRW's Representations and Warranties 18
(a) Financial Statements 18
(b) Investments 19
(c) Subsidiary Companies 19
(d) Receivables 20
(e) Real Estate 20
(f) Personal Property 21
(g) Liabilities 21
(h) Litigation 21
(i) Contracts 22
(j) Intellectual Property 22
(k) Employee Benefits 23
(l) Permits and Approvals 23
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(m) Compliance with Laws and Environmental Matters 23
(n) Taxes 24
(o) Partnership 25
(p) No Material Events 25
(q) Customers and Suppliers 26
(r) Employees 26
(s) Transactions with Affiliates 26
(t) Required Consents 27
3.3 Purchaser's Representations and Warranties 27
(a) Organization and Existence 27
(b) Power and Authority 27
(c) Authorization 27
(d) Binding Effect 27
(e) No Default 27
(f) Finders 27
(g) Representations and Warranties True and Complete 28
3.4 Disclaimer 28
3.5 Survival 28
ARTICLE IV - ACTIONS BEFORE CLOSING 29
4.1 Access to Records 29
4.2 Interim Conduct of the Business 29
4.3 Purchaser's Approval of Certain Transactions 30
4.4 Other Agreements 31
4.5 Consents to Assignment 32
4.6 Government Approvals 32
4.7 Consent Orders and Assurances of Discontinuance 33
4.8 Public Announcements 33
4.9 Exclusivity 33
4.10 Termination of Intercompany Obligations 33
4.11 Name Changes 33
ARTICLE V - CONDITIONS 34
5.1 Conditions to Purchaser's Obligations 34
5.2 Conditions to TRW's Obligations 35
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ARTICLE VI - TAX MATTERS 37
6.1 Characterization of Transaction and Reporting of Purchase Price 37
6.2 Tax Returns 38
6.3 Liability for Pre-Closing Taxes 39
6.4 Tax Audits Relating to the Business 40
6.5 Code Section 338(h)(10) Election and Code Section 197(f)(9)(B) 40
6.6 Cooperation Regarding Tax Matters 41
6.7 Tax Sharing Agreements 41
6.8 Payment of Transfer Taxes and Other Charges 41
6.9 Survival of Obligations, Etc. 42
6.10 Other 42
ARTICLE VII - ACTIONS AFTER CLOSING 42
7.1 Further Conveyances 42
7.2 Further Consents to Assignment 42
7.3 Access to Former Business Records 43
7.4 Access to Former Employees 43
7.5 Use of TRW Trademark 44
7.6 Nondisclosure 44
ARTICLE VIII - EMPLOYEES AND EMPLOYEE BENEFITS 46
8.1 Employment of Initial Employees 46
8.2 Subsequent Terminations or Layoffs 46
8.3 Employee Benefits 46
8.4 Pension Plan 47
8.5 Medical, Dental and Vision Benefits 47
8.6 Life Insurance 48
8.7 Vacation 48
8.8 401(k) Plans 48
8.9 Workers' Compensation 49
8.10 No Rights 49
8.11 Family and Medical Leave Act 49
ARTICLE IX - INDEMNIFICATION 49
9.1 Indemnification of TRW 49
9.2 Indemnification of Transaction Companies 50
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9.3 Claims 50
(a) Notice 51
(b) Responsibility for Defense 51
(c) Right to Participate/Right to Assume Responsibility for 51
Defense of a Claim
(d) Settlement 52
9.4 Limitation on TRW Indemnification 54
9.5 Limitation on Transaction Companies Indemnification 54
9.6 Miscellaneous 54
ARTICLE X - AMENDMENT, WAIVER, AND TERMINATION 54
10.1 Amendment 54
10.2 Waiver 55
10.3 Termination 55
10.4 Procedure and Effect of Termination 55
ARTICLE XI - MISCELLANEOUS 56
11.1 Cooperation 56
11.2 Confidentiality 56
11.3 Severability 56
11.4 Expenses 56
11.5 Bulk Sales 57
11.6 Notices 57
11.7 Dispute Resolution 57
(a) Notice 58
(b) Negotiation 58
(c) Referral 58
(d) Stay 58
11.8 Exclusive Remedy 58
11.9 Assignment 59
11.10 No Third Parties 59
11.11 Incorporation by Reference 59
11.12 Governing Law 59
11.13 Counterparts 59
11.14 Complete Agreement 59
11.15 Consent to Jurisdiction 60
11.16 Waiver of Jury Trial 60
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APPENDICES
APPENDIX A CERTAIN DEFINITIONS
APPENDIX B DUE DILIGENCE REVIEW AND CERTIFICATIONS
APPENDIX C ADDITIONAL EXCLUDED ASSETS AND EXCLUDED LIABILITIES
APPENDIX D INTENTIONALLY OMITTED
APPENDIX E-1 SUPPLEMENTAL ACCOUNTING PRINCIPLES
APPENDIX E-2 SUPPLEMENTAL ACCOUNTING PRINCIPLES
APPENDIX E-3 SUPPLEMENTAL ACCOUNTING PRINCIPLES
APPENDIX F CONTENTS OF THE DISCLOSURE PACKAGE
APPENDIX G REQUIRED CONSENTS
APPENDIX H NONCOMPETITION AGREEMENT
APPENDIX I FORM OF TRANSITION AGREEMENT
APPENDIX J TRADEMARK AGREEMENT
APPENDIX K FORM OF SHARED ASSETS AGREEMENT
APPENDIX L SHARED LIABILITIES AGREEMENT
APPENDIX M DOCUMENTS TO BE DELIVERED BY TRW AT THE CLOSING
APPENDIX N DOCUMENTS TO BE DELIVERED BY THE PURCHASER AT THE CLOSING
APPENDIX O RETAINED EMPLOYEES
APPENDIX P TERMS OF HOLDINGS SHAREHOLDERS' AGREEMENT
APPENDIX Q TERMS OF SENIOR CONVERTIBLE PREFERRED STOCK OF HOLDINGS
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RECAPITALIZATION AGREEMENT
THIS RECAPITALIZATION AGREEMENT ("Agreement") is made the 9th day of
February, 1996, by and among TRW INC. ("TRW"), an Ohio corporation, TRW IS&S
INTERNATIONAL, INC. ("IS&S International"), an Ohio corporation, TARGET
MARKETING SERVICES, INC. ("Holdings"), a Delaware corporation, TRW HOTEL COMPANY
INC. ("TRW Hotel"), an Ohio corporation, TRW MICROWAVE INC. ("Microwave"), a
California corporation, TRW ENVIRONMENTAL MANAGEMENT COMPANY ("Operating
Company"), an Ohio corporation, and IS&S ACQUISITION CORP. ("Purchaser"), a
Delaware corporation.
RECITALS
A. The TRW Information Systems & Services Business provides consumer and
business credit decision support, marketing information services and real estate
information services to a variety of customers (the "Business").
B. The Business is organized as follows:
Consumer Information Services provides consumer credit reports to
banks, retailers, financial organizations and other credit-granting
organizations and provides information used for targeted marketing by
businesses in the credit, real estate, banking and direct marketing
industries.
Business Information Services provides business credit decision support
and demographic information for business-to-business credit granting
and direct marketing efforts.
Real Estate Information Services, through TRW REDI Property Data, an
Ohio general partnership ("Partnership"), provides property data
services and title information services to title companies, appraisers,
real estate brokers, lenders, county governments and other
organizations.
C. TRW, Holdings, IS&S International, Microwave, Operating Company, TRW
Hotel and Purchaser desire to consummate the recapitalization
transactions contemplated by this Agreement on the terms and conditions
set forth herein.
D. The Recapitalization will consist of the following transactions
(collectively, the "Recapitalization"), which transactions will be
consummated in the following order and, with the exception of steps 1
through 3 below, each will be conditioned upon the occurrence of the
other transactions:
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1. IS&S International will distribute to TRW, as a dividend, the Mexican
Investments (as herein defined) and all other Acquired Assets (as
herein defined) held by IS&S International;
2. TRW will transfer to Microwave, as a capital contribution, TRW's 60%
interest in the Partnership;
3. Microwave will acquire from TRW and assume, and TRW will assign and
transfer to Microwave, as a capital contribution, the Acquired Assets
(including, without limitation, the Mexican Investments and all TRW
Hotel Shares) and the Assumed Liabilities, and TRW and Microwave will
enter into a trademark agreement substantially in the form of the
Trademark Agreement;
4. Microwave will transfer to TRW Hotel, as a capital contribution,
Microwave's 60% interest in the Partnership;
5. TRW Hotel will purchase from Elsevier Realty Information, Inc.
("Elsevier"), Elsevier's 40% interest in the Partnership, with the
result that TRW Hotel will have 100% of the interests in the
Partnership and the Partnership's existence will terminate;
6. Operating Company will purchase from Microwave and assume, and
Microwave will sell, assign and transfer to Operating Company, the
Acquired Assets (including, without limitation, the Mexican
Investments, all TRW Hotel Shares and an assignment of Microwave's
rights and interests under the trademark agreement between TRW and
Microwave referred to above) and the Assumed Liabilities for an
aggregate consideration of One Billion One Hundred Million Dollars
($1,100,000,000), consisting of a Seven Hundred Fifty-Five Million
Dollars ($755,000,000) demand promissory note payable by Operating
Company to Microwave (the "Demand Note") and shares of stock in
Operating Company with an aggregate issuance price of Three Hundred
Forty-Five Million Dollars ($345,000,000);
7. TRW will transfer to Microwave, as a capital contribution, all
remaining outstanding shares of stock of Operating Company;
8. TRW will transfer to Microwave, as a capital contribution, all issued
and outstanding shares of stock of Holdings;
9. Holdings will purchase from Microwave, and Microwave will sell and
transfer to Holdings, all issued and outstanding shares of stock of
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Operating Company in consideration of the issuance by Holdings to
Microwave of shares of stock in Holdings with an aggregate issuance
price of Three Hundred Forty-Five Million Dollars ($345,000,000);
10. In connection with the Recapitalization, TRW, Microwave and Holdings
will make an election under Section 338(h)(10) of the Internal Revenue
Code of 1986, as amended (the "Code") and other related elections as
described in Article VI hereof;
11. Certain investors (the "Equity Investors") will make capital
contributions to Purchaser in an aggregate cash amount of not less
than Two Hundred Fifty-Five Million Dollars ($255,000,000) and
Purchaser will issue to the Equity Investors shares of stock in
respect thereof;
12. Purchaser will merge with and into Holdings, with Holdings surviving
the merger (the "Merger");
13. Pursuant to and immediately following the Merger, (a) the Equity
Investors in the aggregate will hold not more than 94.44% of the
shares of Holdings' outstanding common stock, (b) Microwave will hold
not less than 5.56% of Holdings' then outstanding common stock, and
(c) Microwave will receive Two Hundred Fifty-Five Million Dollars
($255,000,000) in cash and shares of Holding's senior convertible
preferred stock with an aggregate issuance price of Seventy-Five
Million Dollars ($75,000,000) and having the other terms set forth on
Appendix Q hereto;
14. Operating Company will obtain debt financing in an aggregate amount of
not less than Eight Hundred Five Million Dollars ($805,000,000) in the
form of senior secured credit facilities and senior subordinated
notes;
15. Operating Company will pay Seven Hundred Fifty-Five Million Dollars
($755,000,000) in cash to Microwave as payment in full of the Demand
Note; and
16. Operating Company and TRW will enter into the Trademark Agreement as a
replacement of the trademark agreement referred to in paragraphs 3 and
6 above which will be cancelled.
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TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
GENERAL PROVISIONS
1.1 DEFINITIONS: Appendix A to this Agreement sets forth the definitions of
certain terms used in this Agreement.
1.2 OTHER DEFINITIONS AND MEANINGS; INTERPRETATION: For purposes of this
Agreement, the term "parties" means (except where the context otherwise
requires) TRW, Holdings, IS&S International, Microwave, Operating Company, TRW
Hotel and Purchaser; the term "person" includes any natural person, firm,
association, partnership, corporation, governmental agency, or other entity
other than the parties; and the words "hereof", "herein", "hereby" and other
words of similar import refer to this Agreement as a whole. The table of
contents and the headings of the Articles and Sections of this Agreement have
been included herein for convenience of reference only and will not be deemed to
affect the meaning of the operative provisions of this Agreement. All dollar ($)
amounts referred to herein are in United States Dollars.
1.3 TRW'S KNOWLEDGE: Where a statement contained in this Agreement or an
Appendix hereto is said to be to "TRW's knowledge" (or words of similar import)
such expression means that, after having conducted a reasonable due diligence
review and in reliance on due diligence certifications resulting from that
review, both as described in Appendix B hereto, TRW believes the statement to be
true, accurate, and complete in all material respects.
1.4 PARTS OF DISCLOSURE PACKAGE; DISCLOSURE OF EXCEPTIONS: Neither the
reference to any item or matter in any of the nineteen (19) Parts to the
Disclosure Package (as herein defined), nor the inclusion of any document
therein, will disclose an exception to any representation or warranty, except to
the extent that such item, matter or document is disclosed under the caption
"Exceptions" in the Part referred to in such representation and warranty. In
addition to any item, matter or document which is specifically referenced in any
Part and thereby disclosed by such reference, any item, matter or document so
disclosed in any of said Parts will be deemed to have been disclosed in any
other Part to the extent that (a) it should have been disclosed on such other
Part and (b) it is apparent from the disclosure on such first Part that the
information disclosed is germane to the representation to which such other Part
relates.
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ARTICLE II
RECAPITALIZATION
2.1 PRE-MERGER RECAPITALIZATION TRANSACTIONS: On and subject to the terms
and conditions of this Agreement, prior to the Effective Time (as herein
defined), TRW will cause the following to occur:
(a) IS&S International will distribute to TRW, as a dividend, the
Mexican Investments and all other Acquired Assets held by IS&S
International;
(b) TRW will transfer to Microwave, as a capital contribution, TRW's 60%
interest in the Partnership;
(c) Microwave will acquire from TRW and assume, and TRW will assign and
transfer to Microwave, as a capital contribution, the Acquired Assets
(including, without limitation, the Mexican Investments and all TRW
Hotel Shares) and the Assumed Liabilities and TRW Microwave will enter
into a trademark agreement substantially in the form of the Trademark
Agreement;
(d) Microwave will transfer to TRW Hotel, as a capital contribution,
Microwave's 60% interest in the Partnership;
(e) TRW Hotel will purchase from Elsevier Elsevier's 40% interest in the
Partnership, with the result that TRW Hotel will hold 100% of the
interests in the Partnership and the Partnership's existence will
terminate;
(f) Operating Company will purchase from Microwave and assume, and
Microwave will sell, assign and transfer to Operating Company, the
Acquired Assets (including, without limitation, the Mexican Investments,
all TRW Hotel shares and an assignment of its rights and interests under
the trademark agreement between TRW and Microwave referred to above) and
the Assumed Liabilities for an aggregate consideration of One Billion
One Hundred Million Dollars ($1,100,000,000), consisting of the Demand
Note and shares of stock in Operating Company with an aggregate issuance
price of Three Hundred Forty-Five Million Dollars ($345,000,000);
(g) TRW will transfer to Microwave, as a capital contribution, all
remaining outstanding shares of stock of Operating Company;
(h) TRW will transfer to Microwave, as a capital contribution, all
issued and outstanding shares of stock of Holdings;
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(i) Holdings will purchase from Microwave, and Microwave will sell and
transfer to Holdings, all issued and outstanding shares of stock of
Operating Company in consideration of the issuance by Holdings to
Microwave of shares of stock in Holdings with an aggregate issuance
price of Three Hundred Forty-Five Million Dollars ($345,000,000); and
(j) In connection with the Recapitalization, TRW, Microwave and Holdings
will make an election under Section 338(h)(10) of the Code and other
related elections as described in Article VI hereof.
2.2 ACQUIRED ASSETS: For purposes hereof, the term "Acquired Assets" means
all assets, properties, and rights held or used by the members of the TRW Group
as of the Closing which relate to the conduct of the Business and, in the case
of tangible assets, are located on or at a Business Facility, subject, however,
to the provisions of Section 7.2 hereof and excluding the Excluded Assets.
Without limiting the generality of the foregoing, the Acquired Assets will
include all of the following assets which are used or held by the members of the
TRW Group in the conduct of the Business and, in the case of tangible assets,
are located on or at a Business Facility as of the Closing and are not
identified as Excluded Assets:
(a) The Databases;
(b) All Proprietary Software, Non-Proprietary Software, computer
systems, telecommunication systems and other systems and services used
primarily in the conduct of the Business;
(c) All notes and accounts receivable other than those to be retained by
TRW under the Supplemental Accounting Principles set forth in
Appendix E-1 hereto;
(d) All prepaid and similar items, including, without limitation, all
prepaid expenses, deferred charges, advance payments and other prepaid
items other than those to be retained by TRW under the Supplemental
Accounting Principles set forth in Appendix E-1 hereto;
(e) All inventories, wherever located, including, without limitation,
inventories of finished goods and operating supplies;
(f) All real property (whether as owner, lessor, lessee or otherwise),
including, without limitation, all land, buildings, improvements,
fixtures and appurtenances thereto and all such items under
construction;
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(g) All personal property (whether as owner, lessor, lessee or
otherwise), including, without limitation, all computer hardware,
communications equipment, machinery, furniture, office equipment, cars,
trucks and other vehicles;
(h) All supplier lists and all orders, contracts and commitments for the
purchase of goods and/or services, including, without limitation, all
such items relating to the purchase of data, products and supplies;
(i) All customer lists and all orders, contracts, commitments and
proposals for the sale of products and services, including, without
limitation, all agency agreements and all distribution and similar
arrangements;
(j) All other orders, contracts and commitments, including, without
limitation, all leases, licenses, causes of action, rights of action and
warranty and product liability claims against other persons;
(k) All IS&S Intellectual Property (whether as owner, inventor, employer
of an inventor, licensor, licensee or otherwise);
(l) The Mexican Investments;
(m) The TRW Hotel Shares;
(n) The CCB Shares;
(o) The capital stock of Xxxx;
(p) The capital stock of Operating Company;
(q) The REDI Trademark;
(r) All permits, approvals, qualifications and the like issued by any
government or governmental unit, agency, board, body or instrumentality,
whether federal, state or local and all applications therefor;
(s) The goodwill of the Business in or arising from the Acquired Assets;
and
(t) Subject to the provisions of Section 7.3 hereof, all business books
and records of the Business, including, without limitation, all
financial, operating, inventory, legal, personnel, payroll and customer
records and all sales and promotional literature, correspondence and
files; provided, however, that in
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the event that any such books or records are subject to any legal
privilege, the parties agree to cooperate to protect such privilege to
the extent practicable.
Notwithstanding the foregoing, any asset of the Business that requires a consent
for transfer or assignment and as to which consent for such transfer or
assignment has not been obtained by TRW prior to the Closing will be treated in
accordance with Section 7.2 hereof and will not be deemed to be transferred or
assigned to Purchaser as part of the Acquired Assets.
2.3 EXCLUDED ASSETS: Notwithstanding anything contained herein to the
contrary, TRW will retain the Excluded Assets. Subject only to the provisions of
the Other Agreements, for purposes hereof the term "Excluded Assets" means all
tangible assets used by TRW at a location other than a Business Facility
including, without limitation, the following rights, properties and assets of
TRW as the same will exist as of the Closing:
(a) All cash and cash equivalent items on the books of TRW as of the
Closing, including, without limitation, certificates of deposit, time
deposits, marketable securities and the proceeds of accounts receivable
received on or prior to the Closing Date;
(b) All rights, properties and assets of TRW used exclusively in
businesses other than the Business;
(c) All rights, properties and assets of the Business which will have
been transferred or disposed of prior to the Closing in transactions
conducted in the Ordinary Course of Business and not in breach of this
Agreement;
(d) The name and trademark and service xxxx "TRW" and the stylized "TRW"
logo or their variations which are used by TRW as part of any trademark
or trade name except for the rights granted pursuant to the Trademark
Agreement;
(e) All assets, whether or not used by TRW in its conduct of the
Business, which are identified as Additional Excluded Assets on
Appendix C hereto;
(f) All accounts or other receivables of the Business payable from TRW
or any subsidiary or affiliate of TRW; and
(g) All current and deferred income tax assets and refunds (including
interest) arising out of the conduct of the Business prior to the
Closing.
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2.4 ASSUMED LIABILITIES: Subject to any contrary terms contained in the
Other Agreements, the term "Assumed Liabilities" means all liabilities and
obligations of the TRW Group as of the Closing arising out of the conduct of the
Business, other than the Excluded Liabilities. Without limiting the generality
of the foregoing, the Assumed Liabilities will include the following liabilities
and obligations which arise or have arisen out of the conduct of the Business at
or prior to the Closing and are not identified as Excluded Liabilities:
(a) All liabilities and obligations incurred by TRW in its conduct of
the Business which are accrued on the books of the Business as of the
Closing;
(b) All liabilities and obligations of TRW under (i) purchase orders,
contracts, and other commitments for the purchase by TRW of products,
data, information, supplies, leases or services in the conduct of the
Business, and (ii) contracts, leases and purchase orders included in the
Acquired Assets, including, without limitation, rights arising as a
consequence of the assignment of the same by TRW to Purchaser hereunder;
(c) All liabilities and obligations arising out of, resulting from or
relating to claims arising out of the conduct of the Business which have
not been resolved or settled prior to the Closing;
(d) All liabilities and obligations arising out of, resulting from or
relating to claims, whether founded upon negligence, breach of warranty,
strict liability in tort or other similar legal theory, seeking
compensation or recovery for or relating to injury to person or damage
to property arising out of the conduct of the Business whether before or
after the Closing;
(e) All liabilities and obligations arising out of, resulting from or
relating to any violation of any statute, ordinance, regulation, order
or other governmental requirement, including, without limitation,
(i) the FCRA (ii) the Consent Orders or (iii) the Assurances of
Discontinuance, in connection with the conduct of the Business before
the Closing;
(f) All liabilities and obligations arising out of Purchaser's
obligations in connection with this Agreement and all liabilities and
obligations arising out of the obligations of Holdings, Operating
Company and TRW Hotel under Articles VII, VIII, IX and X hereof;
(g) All liabilities and obligations arising out of, resulting from or
relating to claims of infringement or other misappropriation of the
Intellectual Property rights of other persons with respect to the
production, preparation, use and
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sale of products and services by the Business whether before or after
the Closing; and
(h) All liabilities and obligations which are the responsibility of the
Transaction Companies under the Shared Liabilities Agreement.
2.5 EXCLUDED LIABILITIES: Notwithstanding anything contained herein to the
contrary, TRW will retain and timely discharge the Excluded Liabilities. For the
purposes hereof the term "Excluded Liabilities" means the following liabilities
and obligations of TRW:
(a) All liabilities and obligations (including, without limitation, any
Environmental Claim) incurred by TRW and its subsidiaries in connection
with the conduct of their businesses other than the Business;
(b) All liabilities and obligations of the Business which have been
fully discharged or satisfied by the members of the TRW Group before the
Closing in transactions in the Ordinary Course of Business and not in
breach of this Agreement;
(c) All liabilities and obligations arising out of, resulting from or
relating to any violation of any statute, ordinance, regulation, order
or other governmental requirement in existence prior to the Closing,
including, without limitation, (i) the FCRA, (ii) the Consent Orders or
(iii) the Assurances of Discontinuance, with respect to which either
(x) to the knowledge of TRW prior to the Closing, there exists a
threat of claim whether or not in writing other than in the Ordinary
Course of Business or (y) a written claim has been filed against any
member of the TRW Group prior to the Closing before any court or by
or before any administrative agency or any governmental authority;
(d) All obligations arising out of litigation, legal proceedings or
investigations at law or in equity or by or before governmental agencies
pending against TRW or any of its subsidiaries before the Closing,
including, without limitation, the matters listed in Part H of the
Disclosure Package;
(e) All liabilities and obligations arising out of the obligations of
the TRW Group in connection with this Agreement, excluding all
liabilities and obligations arising out of the obligations of Holdings,
Operating Company and TRW Hotel under Articles VII, VIII, IX and X
hereof;
(f) All accounts and notes payable of the Business payable to TRW or any
subsidiary or affiliate of TRW on the Closing Date;
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(g) All liabilities and obligations, whether or not arising primarily
out of the conduct of the Business, which (1) are to be retained by TRW
in accordance with Appendix E-1 or (2) which are identified as
Additional Excluded Liabilities on Appendix C hereto;
(h) All liability of the TRW Group for unpaid Taxes (i) related to the
operation of the Business for periods ending on or prior to the Closing
Date, or (ii) arising in connection with the transfer of the Acquired
Assets by TRW and Microwave to Operating Company;
(i) All liabilities and obligations arising out of, resulting from or
relating to the purchase of the Elsevier Partnership Interest and all
obligations of the parties arising out of, resulting from or relating to
the Partnership Agreement between TRW and Elsevier;
(j) Except as otherwise expressly provided by Article VIII hereof, all
liabilities and obligations arising out of, resulting from or relating
to any employee benefit plan, program, arrangement or agreement
maintained or contributed to by TRW or any entity (other than the
Partnership) which is or has been aggregated with TRW for purposes of
section 414 of the Code or section 4001 of ERISA; and
(k) All liabilities and obligations arising out of, resulting from or
relating to any Environmental Condition relating to the operations of
the Business or the Business Facilities existing on or before the
Closing and known to TRW.
2.6 MERGER OF PURCHASER INTO HOLDINGS:
(a) THE MERGER: On and subject to the terms and conditions of this
Agreement, the Purchaser will merge with and into Holdings at the
Effective Time. Holdings will be the corporation surviving the Merger.
(b) THE CLOSING: For purposes hereof, the term "Closing" means the
consummation of the transactions contemplated hereby.
(c) TIME, DATE, AND PLACE OF CLOSING: The Closing will occur at 10:00
a.m. (Eastern Standard U.S.A. Time) on the later of (i) the date on
which all of the conditions set forth in Article V of this Agreement are
satisfied or waived and (ii) the date which is 45 days after
satisfaction of the condition in Section 5.1(g) hereof (the "Closing
Date"). The Closing will take place at the offices of TRW at
1900 Richmond Road, Lyndhurst, Ohio, or at such other place
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as the parties may agree in writing. The Closing will be deemed to have
occurred as of the close of business on the Closing Date.
(d) ACTIONS AT THE CLOSING: At the Closing (i) the members of the TRW
Group will deliver to Purchaser the various certificates, instruments
and documents referred to on Appendix M hereto, (ii) Purchaser will
deliver to the members of the TRW Group the various certificates,
instruments and documents referred to on Appendix N hereto,
(iii) Holdings and Purchaser will file with the Secretary of State of
the State of Delaware a Certificate of Merger in the customary form (the
"Certificate of Merger"), and (iv) Purchaser will cause Holdings to
deliver the Merger Consideration to Microwave.
(e) EFFECT OF MERGER:
(i) GENERAL: The Merger will become effective at the time (the
"Effective Time") Holdings and Purchaser file the Certificate of
Merger with the Secretary of State of the State of Delaware. The
Merger will have the effects set forth in the Delaware General
Corporation Law. Holdings may, at any time after the Effective Time,
take any action (including executing and delivering any document) in
the name and on behalf of either Holdings or Purchaser in order to
carry out and effectuate the transactions contemplated by this
Agreement.
(ii) CERTIFICATE OF INCORPORATION: The Certificate of Incorporation of
Holdings will be amended and restated at and as of the Effective
Time to read as did the Certificate of Incorporation of Purchaser
immediately prior to the Effective Time.
(iii) BYLAWS: The Bylaws of Holdings will be amended and restated at and
as of the Effective Time to read as did the Bylaws of Purchaser
immediately prior to the Effective Time.
(iv) DIRECTORS AND OFFICERS. The directors and officers of Purchaser
will become the directors and officers of Holdings at and as of the
Effective Time (retaining their respective positions and terms of
office) and one director will be designated by TRW.
(v) CONVERSION OF HOLDINGS SHARES: At and as of the Effective Time,
(A) all the Holdings Shares (other than the Retained Holdings
Shares) will be converted into the right to receive an aggregate Two
Hundred Fifty-Five Million Dollars ($255,000,000) cash payment, plus
shares of Holdings' Senior Convertible Preferred Stock, with an
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issuance price of Seventy-Five Million Dollars ($75,000,000),
and having the other terms set forth in Appendix Q hereto
(collectively, the "Merger Consideration"), and (B) Microwave
will retain the Retained Holdings Shares. No Holdings Shares
will be deemed to be outstanding or to have any rights other
than those set forth above in this Section 2.6(e)(v) after the
Effective Time.
(vi) CONVERSION OF CAPITAL STOCK OF PURCHASER: At and as of the
Effective Time, each share of capital stock of Purchaser will be
converted into one share of capital stock of Holdings
representing in the aggregate not more than 94.44% of the then
issued and outstanding common equity of Holdings.
(f) PROCEDURE FOR PAYMENT: Immediately after the Effective Time,
(i) Holdings will make full payment of the Merger Consideration to the
holders of all the outstanding Holdings Shares (other than the Retained
Holdings Shares) (i.e., such payment will be made to Microwave), and
(ii) Operating Company will make payment of the Demand Note to
Microwave, each in the manner set forth in Section 2.10 hereof for
payment of the Adjustment.
(g) TRADEMARK AGREEMENT: Immediately after the Effective Time, Operating
Company and TRW will enter into the Trademark Agreement as a replacement
of the trademark agreement referred to in Section 2.1(c) hereof, and
such Section 2.1(c) trademark agreement will be cancelled.
2.7 PURCHASE PRICE: For purposes hereof, the term "Purchase Price" means
the sum of (a) the Seven Hundred Fifty-Five Million Dollars ($755,000,000)
original principal amount of the Demand Note plus (b) the Two Hundred Fifty-Five
Million Dollars ($255,000,000) cash and Seventy-Five Million Dollars
($75,000,000) value of the Senior Convertible Preferred Stock constituting the
Merger Consideration, plus (c) the Retained Holdings Shares with a value of
Fifteen Million Dollars ($15,000,000) which sum will be One Billion One Hundred
Million Dollars ($1,100,000,000) plus or minus the Adjustment.
2.8 ADJUSTMENT: The Adjustment will be determined as follows:
(a) DETERMINATION OF ADJUSTMENT: The Adjustment will be:
(i) the amount, if any, of the Closing Date Net Working Capital
Excess; plus
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(ii) the aggregate amount of foreign investments made and the
consideration paid for business acquisitions by the Business
commencing on the date hereof and ending on the Closing Date
that in each case are approved by Purchaser in accordance
with Section 4.3 hereof ("Approved Investments"); less
(iii) the amount, if any, of the Closing Date Net Working
Capital Deficiency.
(b) CERTAIN DEFINITIONS: For the purposes hereof:
(i) "Closing Date Net Working Capital Excess" means the amount
by which Net Working Capital on the Closing Date exceeds
Fifty-Three Million Dollars ($53,000,000);
(ii) "Closing Date Net Working Capital Deficiency" means the
amount by which Net Working Capital on the Closing Date is
less than Forty-Five Million Dollars ($45,000,000); and
(iii) "Net Working Capital" means the account balance of those
current assets of Holdings on a consolidated basis less the
account balance of those current liabilities of Holdings on
a consolidated basis determined by reference to the specific
accounts identified as a "Closing-Acquired Assets" account
or a "Closing-Assumed Liability" account, but excluding
those accounts identified as a "Closing-Excluded Assets"
account or a "Closing-Excluded Liabilities" account (and
excluding those amounts indicated as "to be determined
pursuant to the Shared Liabilities Agreement") in the
Supplemental Accounting Principles attached hereto as
Appendix E-2, but will exclude any step-up in the basis of
the REDI assets or liabilities resulting from the
acquisition of the remaining 40% interest in the REDI
partnership.
(c) CLOSING AUDIT: Promptly after the Closing, TRW will cause Ernst
& Young LLP (the "Auditors"), independent certified public
accountants, to conduct an audit of the Net Working Capital on
Closing Date and the Approved Investments. Within ninety (90) days
after the Closing, the Auditors will deliver to Operating Company
and TRW a report (the "Auditors' Report") based on the audit stating
the amount of the Net Working Capital and the Approved Investments
reflected on the books of the Business as of the Closing in
accordance with the Supplemental Accounting Principles described in
Appendix E-2. Operating Company, if it so elects, will have the
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right to have its own independent certified public accountants or
internal auditors observe the audit to be conducted by the Auditors.
(d) REVIEW BY OPERATING COMPANY: Following receipt of the Auditors'
Report, Operating Company will be afforded a period of thirty (30)
days to review the Auditor's Report (the "Review Period"). Operating
Company will be deemed to have accepted the entire Auditors' Report
unless, prior to the expiration of the Review Period, Operating
Company delivers to TRW and the Auditors written notice and a
detailed written explanation of those items in the Auditors' Report
which Operating Company disputes, in which case the Auditors' Report
and the items identified by Operating Company will be deemed to be
in dispute. Within a further period of thirty (30) days from the end
of the Review Period, the parties will attempt to resolve in good
faith any disputed items. Failing such resolution, the unresolved
disputed items will be referred for final binding resolution to the
firm of Xxxxxx Xxxxxxxx & Co. The items of Net Working Capital and
Approved Investments affected by such unresolved disputed items (if
any) will be deemed to be as determined by such firm in accordance
with the Supplemental Accounting Principles described in
Appendix E-2 within thirty (30) days of such reference. One half of
the cost of the determination by Xxxxxx Xxxxxxxx & Co. will be paid
by Operating Company and one half by TRW. The decision of Xxxxxx
Xxxxxxxx & Co. will be final and binding on the parties and will not
be subject to appeal or challenge for any reason.
2.9 PAYMENT OF ADJUSTMENT: The Adjustment will be paid as follows:
(a) If the Adjustment is a positive amount, Operating Company will
pay Microwave the amount of the Adjustment, together with interest
thereon (compounded monthly) at an annual rate equal to the Prime
Rate for the period from the Closing Date through and including the
date on which the Adjustment is paid, such payment to be made within
ten (10) business days after the final determination of the
Adjustment.
(b) If the Adjustment is a negative amount, then TRW will cause
Microwave to refund to Operating Company the amount of the
Adjustment together with interest thereon (compounded monthly) at an
annual rate equal to the Prime Rate for the period from the Closing
Date through and including the date on which the Adjustment is paid,
such payment to be made within ten (10) business days after the
final determination of the Adjustment.
(c) Any payment of the Adjustment will be treated for tax purposes
as an adjustment to the Demand Note.
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2.10 METHOD OF PAYMENT OF ADJUSTMENT: Payments of the Adjustment will be
made by delivery to the payee upon the prior request of the payee, by
depositing, by bank wire transfer, the required amount (in immediately available
funds) in an account of the payee, which account will be designated by the payee
for such purpose at least five (5) business days prior to the date of the
required payment.
2.11 NO SET OFF: The obligation of Microwave or Operating Company, as the
case may be, to pay the Adjustment as determined in accordance with the
provisions of Section 2.8 hereof will be absolute and unconditional and will not
be affected by any circumstance, including, without limitation, any set off,
counterclaim, recoupment, defense (other than payment itself), or other right
which either party may have or allege to have against the other for any reason
whatsoever.
2.12 REAL ESTATE CONVEYANCE: TRW's conveyance of the owned real estate
included as part of the Acquired Assets will be carried out as follows:
(a) TITLE INSURANCE COMMITMENT: Prior to the Closing, TRW will
obtain or will cause to be obtained a commitment from a
nationally-recognized title insurance company (the "Title
Company"), with a copy to Purchaser, that the Title Company will
issue to Operating Company or TRW Hotel, as the case may be, as
the owner of the real property listed in Annex E-1 to Part E of
the Disclosure Package at the Closing an ALTA Owner's Policy of
Title Insurance in an amount equal to the fair market value of the
insured real estate and in form and substance satisfactory to
Purchaser insuring fee simple title to such real estate to be in
Operating Company or TRW Hotel, as the case may be, as the owner
of the real property listed in Annex E-1 to Part E of the
Disclosure Package subject only to applicable zoning and building
laws and regulations, the lien of real estate taxes and
assessments not yet due and payable and such other Encumbrances
that do not have a material adverse impact on the use of the real
estate in the Business (the "Exceptions"), and the standard survey
reservations and any other standard reservations of the Title
Company.
(b) LIMITED WARRANTY DEED: Prior to the Closing, the owner of each
of the parcels of real property will execute and deliver to the
Title Company for safekeeping a limited warranty deed conveying
and warranting title to such real estate to be free and clear of
all liens and encumbrances created by, through or under such
owner, subject to the Exceptions and to minor encroachments which,
in the aggregate, do not have a significant effect on the
marketability of such real estate, together with such affidavits,
certificates, and other instruments as are ordinarily delivered to
a purchaser of real estate or filed in the public records of the
county in which the property is located.
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(c) INSTRUCTIONS: At the time such limited warranty deeds are
delivered to the Title Company, TRW, the owners of the real property
and Purchaser will deliver to the Title Company a joint letter
instructing the Title Company to hold such warranty deed until the
Closing and, at the Closing:
(1) if the Title Company is then prepared to issue to Operating
Company or TRW Hotel as the owner of the real estate the
Title Company's Owner's Policy of Title Insurance in the
form set forth in the commitment described in
Section 2.12(a) hereof, and upon joint telephonic
instructions from TRW, Operating Company and TRW Hotel, to
file the limited warranty deed for record in appropriate
public records, or
(2) otherwise, to return such limited warranty deed to TRW.
(d) CONFIRMATION: If the Title Company is instructed to file the
warranty deed for record, then such warranty deed will be deemed to
have been filed as of the close of business on the Closing Date.
(e) TITLE COMPANY'S FEE: TRW will pay the Title Company's fee or
premium in respect of the Owner's Policy of Title Insurance
described in Section 2.12(a) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 TRW'S GENERAL REPRESENTATIONS AND WARRANTIES: TRW as of the date hereof
hereby represents and warrants to Purchaser the following:
(a) ORGANIZATION AND EXISTENCE: Each of the TRW Signatories is a
corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation.
(b) POWER AND AUTHORITY: Each of the TRW Signatories has full power
and authority under its incorporating and governing documents and
the laws of its state of incorporation to execute, deliver and
perform this Agreement and each of the Other Agreements to which it
is a party and to consummate the transactions contemplated by this
Agreement and, if such other entity is a party thereto, the Other
Agreements.
(c) AUTHORIZATION: The execution, delivery and performance of this
Agreement and the Other Agreements by each of the TRW Signatories
which
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is a party thereto has been duly authorized by all requisite
corporate action on the part of each such company.
(d) BINDING EFFECT: This Agreement and, to the extent the TRW
Signatories are parties thereto, the Other Agreements are valid,
binding and legal obligations of each of the TRW Signatories.
(e) NO DEFAULT: Neither the execution and delivery of this Agreement
nor the full performance of its obligations hereunder by each of the
TRW Signatories will violate or breach or otherwise constitute or
give rise to a Default under the terms or provisions of such
entity's incorporating and governing documents or of any material
contract, commitment or other obligation to which any of such
entities is a party.
(f) FINDERS: Except by and pursuant to a certain agreement with
Bear, Xxxxxxx & Co. Inc., neither TRW nor any of its subsidiaries
has engaged and none are directly or indirectly obligated to any
person acting as a broker, finder or in any similar capacity in
connection with the transactions contemplated hereby.
(g) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE: Neither this
Agreement, including, without limitation, the representations and
warranties contained in this Section 3.1 and in Section 3.2 hereof,
the information set forth in the Disclosure Package, nor any
certificate furnished or to be furnished by or on behalf of the TRW
Group, contains or will contain any untrue statement of a material
fact.
3.2 TRW'S REPRESENTATIONS AND WARRANTIES: Concurrently with the execution
and delivery of this Agreement, TRW will deliver to Purchaser a disclosure
package (the "Disclosure Package") which will consist of nineteen (19) parts,
consecutively lettered A - S, inclusive. TRW hereby represents and warrants to
Purchaser that the Disclosure Package will contain the information required by
Appendix F hereto. In addition, TRW as of the date hereof hereby represents and
warrants to Purchaser the following:
(a) FINANCIAL STATEMENTS: Except as otherwise disclosed on
Annex A-3(B) to Part A, (1) the audited combined financial
statements contained in Annex A-1 to Part A are true and correct in
all material respects and present fairly, in all material respects,
the combined financial position of the Business, at December 31,
1995, 1994 and 1993 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles consistently applied; and (2) the audited
financial statements contained in Annex A-2 to Part A are true and
correct in all material respects and present fairly, in all material
respects, the financial
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position of the Partnership at December 31, 1995, 1994 and 1993 and
the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles
consistently applied.
(b) INVESTMENTS: Except as otherwise disclosed on Annex B-2 to
Part B, (1) Annex B-1 to Part B contains a complete list as of the
date hereof of (a) all direct or indirect interests of TRW or the
Partnership in the securities of any corporation or in any
partnership, joint venture or other entity relating to the Business
and (b) any agreement, understanding, contract or commitment
relating to an interest or investment in any such entity; (2) the
CCB Shares are fully paid and non-assessable and there are no
restrictions on the ability of TRW to sell and transfer the CCB
Shares; and (3) subject to investments arising out of the temporary
investment of short term cash and of TRW employee benefit plans,
neither TRW, the Partnership, IS&S International nor Xxxx owns or
holds, directly or indirectly, any equity interest, directly or
indirectly, in any corporation, partnership, joint venture,
business, firm or other entity which, to TRW's knowledge, engages in
any business in competition with the Business, and no member of the
TRW Group is a party to a commitment or agreement to acquire any
such interest. As provided in Appendix M, TRW will represent on and
as of the Closing as to the direct and indirect interests of TRW in
the securities of any partnership, joint venture or other entity
relating to the Business after giving effect to the transactions
referred to in Section 2.1 hereof.
(c) SUBSIDIARY COMPANIES: Except as otherwise disclosed on
Annex C-6(B) to Part C, (1) as of the date hereof (A) Microwave is a
wholly owned subsidiary of TRW, (B) Holdings is a wholly owned
subsidiary of TRW, (C) Operating Company is a wholly owned
subsidiary of TRW, (D) TRW Hotel is a wholly owned subsidiary of TRW
and (E) Xxxx is a wholly owned subsidiary of the Partnership;
(2) Annex C-1 to Part C lists the authorized and issued share
capital of each of Holdings, Operating Company, TRW Hotel and Xxxx
(the "Transaction Companies") (including all options, warrants,
convertible securities or other rights to acquire such share
capital) (collectively the "Shares"); (3) as of the date hereof, the
Shares are legally and beneficially owned as set forth on Annex C-1
free and clear of all preemptive rights, Encumbrances, restrictions,
and limitations; (4) all of the Shares are fully paid and
non-assessable; (5) each of the Transaction Companies is duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation and has the requisite corporate
power and authority to conduct its business as presently being
conducted by it (although certain filings and registrations may be
required following the Recapitalization which will not be undertaken
by TRW); (6) each of the Transaction Companies is duly qualified
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or licensed and in good standing to do business in each jurisdiction
where the failure to be so duly qualified or licensed and in good
standing as of the date hereof (prior to giving effect to the
Recapitalization) would be likely to have, individually or in the
aggregate, a Material Adverse Effect; (7) set forth as Annexes to
Part C are the Certificates or Articles of Incorporation and By-Laws
or Regulations, as the case may be, currently in effect and the
minutes of meetings of the board of directors and shareholders of
each of the Transaction Companies. As of immediately prior to the
Closing, the ownership of the Transaction Companies will be as set
forth in clauses (1) and (3) above, as modified by the effectiveness
of the transactions referred to in Section 2.1 hereof.
(d) RECEIVABLES: Except as otherwise disclosed on Annex D-3 to
Part D, (1) TRW, directly or indirectly, Xxxx or the Partnership
owns all notes receivable and accounts receivable listed on Annexes
D-1 and D-2 to Part D and Microwave will own as of the Closing all
notes receivable and accounts receivable that are Acquired Assets;
(2) all of such notes receivable and accounts receivable are or will
be valid receivables arising in the Ordinary Course of Business and
the reserves with respect thereto have been determined in accordance
with generally accepted accounting principles consistently applied;
and (3) none of such receivables are or will be owing to the
Business by other subsidiaries or affiliates of TRW except as may be
described in the Supplemental Accounting Principles set forth in
Appendix E-1.
(e) REAL ESTATE: Except as otherwise disclosed on Annex E-3(B) to
Part E, (1) TRW or the Partnership owns all of the real properties
listed as "owned" on Annex E-1 to Part E; (2) in all material
respects, TRW, Xxxx or the Partnership has the right under valid and
existing leases to occupy and control as a lessee (subject to the
terms of such leases and to the possible effect of the Bankruptcy
Code or similar laws in the event of a lessor's bankruptcy after the
Closing or the effect of a condemnation or confiscation of the
leased premises after the Closing) all of the real property listed
as "leased" on Annex E-2 to Part E (such leased property together
with all "owned" real property listed on Annex E-1 to Part E
hereinafter referred to as the "Business Facilities"); (3) neither
TRW nor the Partnership is in Default under any such lease, which
Default has had or is likely to have, individually or in the
aggregate, a Material Adverse Effect; (4) to TRW's knowledge, the
real properties listed on Annexes E-1 and E-2 are subject to no
zoning or similar restrictions which prohibit conduct of the
Business as the same is being conducted; and (5) the improvements to
the real property listed on Annexes E-1 and E-2 to Part E are in
reasonably good condition and repair, ordinary wear and tear
excepted except for such failures to be in such
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condition and repair would have individually or in the aggregate a
Material Adverse Effect.
(f) PERSONAL PROPERTY: (i) Except as otherwise disclosed on
Annex F-5(B) to Part F, (1) neither TRW nor the Partnership nor Xxxx
is in Default under any lease of personal property listed in the
Annexes to Part F, which Default has had or is likely to have,
individually or in the aggregate, a Material Adverse Effect;
(2) either TRW or the Partnership or Xxxx has good and marketable
title to, or a valid leasehold interest in, or license for, all of
the items of personal property which are Acquired Assets, free and
clear of all Encumbrances except for (x) properties and assets
disposed of in the Ordinary Course of Business since December 31,
1995 and (y) Encumbrances which have not had and are not likely to
have, individually or in the aggregate, a Material Adverse Effect;
(3) without limiting the generality of the foregoing, TRW or the
Partnership has, and upon the consummation of the Closing one of the
Transaction Companies will have, good and marketable title to, or a
valid leasehold interest in, or license for, all of the Acquired
Assets, free and clear of all Encumbrances, other than
(x) Encumbrances and restrictions on transfers which have not had,
and are not likely to have, individually or in the aggregate, a
Material Adverse Effect and (y) Encumbrances created by, through or
under the Transaction Companies, including, without limitation,
liens granted by the Transaction Companies to their lenders; and
(4) the items of personal property which are Acquired Assets are in
reasonably good condition and repair, ordinary wear and tear
excepted except for such failures to be in such condition and repair
would have individually or in the aggregate a Material Adverse
Effect and (ii) in addition, without limiting the generality of this
or any other clause in this Section 3.2, the Acquired Assets
constitute all of the assets necessary for the conduct of the
Business as currently conducted, except for such assets the absence
of which would not have a Material Adverse Effect.
(g) LIABILITIES: Except as otherwise disclosed on Annex G-3(B) to
Part G, no member of the TRW Group is in Default under or with
respect to any agreement, undertaking, note, bond, debenture,
mortgage, indenture, security agreement, guaranty or other
instrument, which Default has had or is likely to have, individually
or in the aggregate, a Material Adverse Effect.
(h) LITIGATION: Except as otherwise disclosed on Annex H-4(B) to
Part H, (1) there presently exists no litigation, proceedings,
actions, claims or investigations, pending, or to TRW's knowledge,
threatened against or affecting the Business which would,
individually or in the aggregate, have a Material Adverse Effect;
and (2) no member of the TRW Group is subject to any injunction,
order or decree of any court, agency or other governmental
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authority which has had or is likely to have, individually or in the
aggregate, a Material Adverse Effect.
(i) CONTRACTS: Except as otherwise disclosed on Annex I-10(B) to
Part I, (1) each of the agreements, contracts, commitments and other
obligations listed or included in Annexes I-1 through I-9 to Part I
is a valid and binding obligation of the member of the TRW Group
party thereto and, to TRW's knowledge, the other party or parties
thereto; (2) neither TRW nor the Partnership nor, to TRW's
knowledge, any other party thereto has terminated, canceled or
substantially modified any such contract, commitment or other
obligation; (3) neither TRW nor the Partnership nor, to TRW's
knowledge, any other party thereto is in Default under any such
agreement, contract, commitment or other obligation, which Default
is likely to have a Material Adverse Effect; and (4) neither TRW nor
the Partnership is a party to any collective bargaining agreement
with respect to the employees of the Business.
(j) INTELLECTUAL PROPERTY: Except as set forth on Annex J-8(B) to
Part J, (1) Annex J-7 is a complete and accurate list of the IS&S
Significant Intellectual Property; (2) a member of the TRW Group is
the owner of, or otherwise has a valid license or other right to
use, the IS&S Significant Intellectual Property reasonably necessary
for the conduct of the Business in the Ordinary Course of Business
or as proposed to be conducted in connection with present plans for
the Copernicus/File One system under development; (3) to TRW's
knowledge, the use of the IS&S Significant Intellectual Property in
the conduct of the Business in the Ordinary Course of Business and
as proposed to be conducted in connection with present plans for the
Copernicus/File One system under development does not infringe any
Intellectual Property of any third party; (4) to TRW's knowledge, no
member of the TRW Group has received notice of any claim and there
is no basis for any valid claim that any IS&S Significant
Intellectual Property is invalid and unenforceable by a member of
the TRW Group in the conduct of the Business; (5) members of the TRW
Group have taken reasonable security measures to protect the secrecy
and confidentiality of, and to restrict the use of, the IS&S
Significant Intellectual Property primarily as against Competing
Businesses, as defined in the Non-Competition Agreement, and have
entered, generally and as a matter of practice, into confidentiality
agreements with their employees and other persons who, either alone
or in concert with others, develop, invent or create IS&S
Significant Intellectual Property or who have knowledge of or access
to source code for the IS&S Significant Intellectual Property;
(6) no member of the TRW Group has granted any third party the right
to use, sublicense, distribute or acquire any IS&S Significant
Intellectual Property except such rights as have been entered into
in the Ordinary Course of
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Business; and (7) neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will cause a default under or alter or impair any rights or
give rise to any rights of termination or cancellation or loss of
any right or benefit with respect to any IS&S Significant
Intellectual Property provided that members of the TRW Group first
have ninety (90) days to cure such as by way of obtaining a license.
Consents required to be obtained in connection with the assignment
to any of the Transaction Companies of any IS&S Intellectual
Property will be obtained, to the extent required, in accordance
with the procedures set forth Sections 4.5 and 7.2 of this
Agreement.
(k) EMPLOYEE BENEFITS: (1) Except as otherwise listed on
Annex K-6(B) to Part K, neither TRW nor the Partnership has any
material pension, profit-sharing, employee stock option or stock
purchase, bonus, incentive compensation, life insurance or health
insurance plan applicable to any employees of the Business;
(2) Annex K-3 to Part K contains a complete list of each "Employee
Welfare Benefit Plan" (as defined in Section 3(1) of ERISA) and
Annex K-2 to Part K contains a list of each "Employee Pension
Benefit Plan" (as defined in Section 3(2) of ERISA) sponsored or
maintained by TRW or the Partnership for the benefit of employees
engaged in the operation of the Business; and (3) except as
otherwise disclosed in Part K, (x) each of TRW and the Partnership
has been and currently is in compliance in all material respects
with the applicable provisions of ERISA and the Code with respect to
each Employee Welfare Benefit Plan and each Employee Pension Benefit
Plan maintained by TRW or the Partnership for the benefit of
employees engaged in the operation of the Business, and (y) to the
knowledge of TRW, no event has occurred, and there exists no
condition or set of circumstances, which has resulted in or which
could result in the imposition of any liability on TRW or the
Partnership under ERISA or the Code with respect to any Employee
Welfare Benefit Plan or Employee Pension Benefit Plan maintained by
TRW or the Partnership for the benefit of employees engaged in the
operation of the Business.
(l) PERMITS AND APPROVALS: Except as otherwise disclosed on
Annex L-2(B) to Part L, the members of the TRW Group have been
granted and currently hold all material permits, approvals,
qualifications and other authorizations under any legal requirement
of any government agency or board, whether foreign, federal, state
or local, which are necessary for the conduct of the Business as the
same is currently being conducted or currently proposed to be
conducted by TRW, the Partnership, Xxxx and IS&S International as of
Closing, except where failure to have such permits, approvals,
qualifications or other authorizations has not had and is not likely
to have, individually or in the aggregate, a Material Adverse
Effect.
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(m) COMPLIANCE WITH LAWS AND ENVIRONMENTAL MATTERS: Except as
otherwise disclosed on Annex M-1 to Part M, (1) the operations of
the Business as heretofore and currently conducted were not and
are not in violation of, nor is any member of the TRW Group in
Default or in violation under, any laws, regulations or other
legal requirements except for such violations or Defaults as have
not had and are not likely to have, individually or in the
aggregate, a Material Adverse Effect; and (2) the operations of
the Business are not subject to any Environmental Conditions, and
TRW has not received any Environmental Claims nor, to TRW's
knowledge, are any such claims threatened, which have had or are
likely to have, individually or in the aggregate, a Material
Adverse Effect.
(n) TAXES: Except as otherwise disclosed on Annex N-1 to Part N,
(1) TRW, the Partnership and the Transaction Companies (i) have
timely filed with the appropriate taxing authorities all material
Tax Returns required to be filed and will file all such Tax
Returns required to be filed through the Closing related to the
operation of the Business and all such Tax Returns are true and
correct in all material respects and (ii) have paid in full all
Taxes shown to be due on such filed Tax Returns; (2) TRW, the
Partnership and all of the Transaction Companies have paid in full
all other Taxes that are due; (3) neither TRW, the Partnership nor
any of the Transaction Companies have received any written notice
of deficiency or assessment from any taxing authority with respect
to liabilities for income or other material Taxes of the Business
which have not been fully paid or finally settled; (4) there are
no liens with respect to Taxes upon any of the properties or
assets of the Business other than customary Liens for current
Taxes not yet due and payable with respect to any material Taxes
of TRW (relating to the Business), the Partnership or the
Transaction Companies; and (5) none of TRW, the Partnership and
the Transaction Companies have filed a consent under Code Section
341(f) concerning collapsible corporations. With respect to the
Business, neither TRW, the Partnership nor the Transaction
Companies have made any payment, are obligated to make any
payment, or are a party to any agreement that could obligate them
to make any payments that will not be deductible under Code
section 280G or subject to the excise tax of Code section 4999 by
reason of the change in control contemplated by this Agreement
(but not including any representation with respect to any other
change in control, including that of TRW). None of TRW, the
Partnership and the Transaction Companies have been a United
States real property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii) and each of TRW, the Partnership and
the Transaction Companies are a U.S. Person within the meaning of
Code Section 7701(a)(30). TRW is the "common parent" of an
"affiliated group" of
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corporations (as those terms are used in section 1504(a) of the Code
and the Treasury regulations promulgated under section 1502 of the
Code) that includes Microwave and all of the Transaction Companies
except Xxxx. TRW, Microwave and the Transaction Companies except
Xxxx were and are eligible to file consolidated federal income Tax
Returns for the taxable periods ending on or before the date hereof.
Microwave and the Transaction Companies except Xxxx will be included
in the U.S. federal consolidated return of TRW for the period
including the Closing Date. TRW, the Partnership and the Transaction
Companies have withheld from their employees, customers, and other
payees (and timely paid to the appropriate governmental authority)
all amounts required by the Tax withholding provisions of applicable
federal, state, local, and foreign laws (including, without
limitation, income, social security, and employment Tax withholding
for all types of compensation, and withholding or payments to
non-United States persons) for all periods, through the date hereof.
For federal income Tax purposes, none of the Transaction Companies
is a partner nor treated as a partner in any partnership; joint
venture, or any other entity treated as a partnership related to the
operation of the Business except as described in the
Recapitalization transactions.
(o) PARTNERSHIP: Except as otherwise disclosed on Annex O-2 to
Part O, (1) a copy of the Partnership Agreement between TRW and
Elsevier as currently in effect is set forth in Annex O-1 to Part O;
(2) the Partnership is a general partnership, duly organized and
validly existing under the laws of the State of Ohio; (3) the
Partnership is duly qualified or licensed to do business in each
jurisdiction where the failure to be so qualified or licensed would
have a Material Adverse Effect; (4) TRW's percentage ownership of
the Partnership is 60% ("TRW Partnership Interest") and the Elsevier
percentage ownership of the Partnership is 40% (the "Elsevier
Partnership Interest") (the TRW Partnership Interest and the
Elsevier Partnership Interest are collectively referred to as the
"Partnership Interests"); (5) pursuant to an Agreement of Purchase
and Sale among TRW, Elsevier and Xxxx Elsevier, Inc. dated as of
August 22, 1995, TRW has the right to purchase the Elsevier
Partnership Interest on the Closing Date; and (6) upon the
consummation of the transactions contemplated by this Agreement,
Purchaser will acquire good and marketable title to the Partnership
Interests, free and clear of all liens, charges, encumbrances or
security interests of any kind or nature.
(p) NO MATERIAL EVENTS: Except as otherwise disclosed on
Annex P-1(B) to Part P, the Business has been conducted only in the
Ordinary Course of Business since December 31, 1995, and no Material
Events have occurred since that date. Without limiting the
generality of the foregoing, except for those matters set forth in
Part P, which matters have not had, individually or
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in the aggregate, a Material Adverse Effect, (1) TRW, the
Partnership, Xxxx and IS&S International have conducted the Business
since December 31, 1995 so that TRW would not have been in violation
of Section 4.2 hereof if such Section had been applicable during the
period from December 31, 1995 through the date hereof; and (2) since
December 31, 1995, none of TRW, the Partnership, Xxxx and IS&S
International has taken any action which would have required the
approval of the Purchaser under Section 4.3 hereof if such action
had occurred after the date hereof and before the Closing.
(q) CUSTOMERS AND SUPPLIERS: Except as otherwise disclosed on
Annex Q-1 to Part Q, since December 31, 1995, (1) no significant
subscriber, reseller or other customer of the Business (or group of
subscribers, resellers and other customers which is significant in
the aggregate) has given TRW, the Partnership, Xxxx or IS&S
International notice or, to the knowledge of TRW, has taken any
other action to reduce materially the amount purchased of, data or
other goods or services from the Business as compared to 1995, the
result of which has caused or is likely to cause, individually or in
the aggregate, a Material Adverse Effect; and (2) no significant
vendor, contributor or other supplier to the Business (or group of
vendors, contributors and suppliers which is significant in the
aggregate) has given TRW, the Partnership, Xxxx or IS&S
International notice or, to the knowledge of TRW, has taken any
action to cease to sell, contribute or supply data or other goods or
services to the Business or restrict the amount, or change the price
or terms to the Business, of data or other goods or services in a
manner which has had or is likely to have, individually or in the
aggregate, a Material Adverse Effect.
(r) EMPLOYEES: Except as otherwise disclosed on Annex R-2 to Part R,
none of the employees of the Business is represented by a labor
union. To TRW's knowledge, no petition has been filed or proceedings
instituted by any employee or group of employees with any labor
relations board seeking recognition of a bargaining representative
and there is no organizational effort currently being made or
threatened by or on behalf of any labor union to organize any
employees of the Business. There are no controversies or disputes
pending between the Business on the one hand and any of its
employees on the other hand, except for controversies and disputes
with individual employees arising in the Ordinary Course of Business
which have not had and are not likely to have, individually or in
the aggregate, a Material Adverse Effect.
(s) TRANSACTIONS WITH AFFILIATES: Except as otherwise disclosed on
Annex S-5 to Part S, set forth in Annexes S-1 through S-3 are lists
of (1) all Contractual Obligations relating to the Business between
or among any of the Partnership, Xxxx, IS&S International, Holdings,
Operating Company and
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TRW Hotel, on the one hand, and TRW or any of its subsidiaries on
the other hand; (2) all other Contractual Obligations relating to
the Business, if any, between or among any of TRW and its
subsidiaries; and (3) the material services provided to the Business
by, and all material transactions between the Business and, TRW or
any of its subsidiaries (other than the Partnership, Xxxx and IS&S
International) during the fiscal year ended December 31, 1995 not
listed in Clauses (1) and (2) above; and (4) all material tangible
assets used in the conduct of the Business which are not located at
a Business Facility.
(t) REQUIRED CONSENTS: Except as listed in Appendix G, no consent or
approval is required under any of the contracts, leases, licenses,
permits, approvals and other similar items constituting part of the
Acquired Assets in order to consummate the transactions contemplated
hereby without breach, violation or loss of right thereunder, other
than such consents or approvals the absence of which would not,
individually, have a Material Adverse Effect.
3.3 PURCHASER'S REPRESENTATIONS AND WARRANTIES: Purchaser, as of the
date hereof, hereby represents and warrants to TRW the following:
(a) ORGANIZATION AND EXISTENCE: Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware.
(b) POWER AND AUTHORITY: Purchaser has full corporate power and
authority under its Certificate of Incorporation and By-Laws and
under the laws of Delaware to execute, deliver and perform this
Agreement and the Other Agreements and to consummate the
transactions contemplated hereby and thereby.
(c) AUTHORIZATION: The execution, delivery and performance of this
Agreement and the Other Agreements have been duly authorized by all
requisite corporate actions on the part of Purchaser.
(d) BINDING EFFECT: This Agreement is a valid, binding and legal
obligation of Purchaser.
(e) NO DEFAULT: Neither the execution and delivery of this Agreement
nor Purchaser's full performance of its obligations hereunder will
violate or breach or otherwise constitute or give rise to a Default
under the terms or provisions of Purchaser's Certificate of
Incorporation or By-laws or of any material contract, commitment or
other obligation to which Purchaser is a party.
(f) FINDERS: Other than in connection with the debt financing,
Purchaser has not engaged and is not directly or indirectly
obligated to any person acting as a
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broker, finder or in any other similar capacity in connection with
the transactions contemplated hereby.
(g) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE: Neither this
Agreement, including, without limitation, Purchaser's
representations and warranties of Purchaser in this Section 3.3, nor
any certificate furnished or to be furnished by or on behalf of
Purchaser contains or will contain any untrue statement of material
fact.
3.4 DISCLAIMER: Except as set forth in Article III of this Agreement, in
the Other Agreements or in the certificates furnished in connection herewith or
therewith, neither party has made any further representation or warranty, either
express or implied, concerning the subject matter of this Agreement or the Other
Agreements and neither party has relied on any such further representation or
warranty. This Agreement will not be governed by the warranties provided by
Article 2 of the Uniform Commercial Code or similar laws applicable to
commercial sales as adopted in any jurisdiction.
3.5 SURVIVAL: The parties' respective representations and warranties
contained in this Agreement will survive the Closing as set forth in this
Section 3.5. Neither party will have any liability to the other arising out of a
breach of any representation or warranty contained in Article III of this
Agreement, and any claim or cause of action based thereupon will expire and
terminate, unless the party claiming that such breach occurred delivers to the
other party written notice and a reasonably full explanation of the alleged
breach in light of the facts then known:
(a) On or before 5:00 p.m. (Eastern Standard U.S.A. Time) on the
first anniversary of the Closing with respect to all representations
and warranties, except as set forth in (b) and (c) below;
(b) On or before 5:00 p.m. (Eastern Standard U.S.A. Time) on the
third anniversary of the Closing for the representations contained
in Section 3.2(m) hereof; and
(c) On or before 5:00 p.m. (Eastern Standard U.S.A. Time) on the
thirtieth day following the expiration of the applicable statute of
limitations with respect to the matters covered in Sections 3.2(k)
and 3.2(n) hereof;
provided, however, that there will be no limitation as to the time in respect of
which any claim or cause of action may be made or initiated based on knowing,
intentional conduct that constitutes common law fraud.
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ARTICLE IV
ACTIONS BEFORE CLOSING
4.1 ACCESS TO RECORDS: Between the date of this Agreement and the Closing,
and subject to the obligation of confidentiality imposed by Section 11.2 hereof,
TRW will afford, and will cause each member of the TRW Group to afford, duly
authorized representatives of Purchaser, displaying appropriate credentials,
free and full access during normal business hours to all of the assets,
properties, books, contracts, records and documents of the Business and will
permit such representatives to make abstracts from, or take copies of, such
books, records or other documentation, or to obtain temporary possession of any
thereof as may be reasonably required by Purchaser, and TRW will furnish, and
will cause each member of the TRW Group to furnish, to Purchaser such
information concerning the Business and its assets, liabilities or condition as
Purchaser may reasonably request. Notwithstanding the foregoing, TRW will not be
obligated to afford, nor will it be obligated to cause each member of the TRW
Group to afford, such access, right to make abstracts or copies, obtain
temporary possession or provide information with respect to any books, records
or other documents that are subject to an attorney-client privilege, attorney
work product privilege or other legal privilege in connection with any
litigation, proceedings, actions, claims or investigations pending or threatened
against any member of the TRW Group or affecting the Business, provided that TRW
will supply to Purchaser a general description of the matter to which they
relate.
4.2 INTERIM CONDUCT OF THE BUSINESS: TRW hereby covenants to Purchaser
that, from the date of this Agreement to the Closing, TRW will conduct the
Business, and will cause each member of the TRW Group to conduct the Business,
only in the Ordinary Course of Business, subject to Purchaser's approval of
certain transactions pursuant to Section 4.3 hereof. Without limiting the
generality of the foregoing, insofar as the Business is concerned, TRW will use
all reasonable efforts, and will cause each member of the TRW Group to use all
reasonable efforts, to:
(a) preserve the Business' relationships with suppliers, customers,
employees, creditors and others having business dealings with the
Business;
(b) maintain in full force and effect existing policies of insurance
which materially affect the Business;
(c) maintain all Intellectual Property to be included as part of the
Acquired Assets in substantially the same standing as exists on the date
of this Agreement;
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(d) continue performance in the ordinary course of their obligations
under contracts, commitments or other obligations to be included as part
of the Acquired Assets; and
(e) continue to discharge liabilities and obligations in the Ordinary
Course of Business.
4.3 PURCHASER'S APPROVAL OF CERTAIN TRANSACTIONS: Except as may otherwise
be required under this Agreement, from the date of this Agreement to the
Closing, insofar as the Business is concerned, the members of the TRW Group will
refrain, and TRW will cause the Partnership to refrain, from any of the
following without the prior approval of Purchaser, which approval will not be
unreasonably withheld:
(a) incur or permit the incurrence of any obligation or other liability
which would constitute an Assumed Liability, except in the Ordinary
Course of Business or incur or permit the incurrence of any obligation
or other liability relating to debt for borrowed money, including,
without limitation, capitalized lease obligations;
(b) purchase or dispose of any real property or real property interest
to be included as part of the Acquired Assets;
(c) enter into any lease of real property used primarily in the Business
or any renewals thereof involving a term of more than one (1) year or
rental obligation exceeding One Hundred Thousand Dollars ($100,000) per
annum in any single case or Five Hundred Thousand Dollars ($500,000) per
annum in the aggregate;
(d) enter into any lease of personal property used primarily in the
Business or any renewals thereof involving a term of more than one (1)
year or rental obligation exceeding Five Hundred Thousand Dollars
($500,000) per annum in any single case or One Million Dollars
($1,000,000) per annum in the aggregate;
(e) voluntarily permit to be incurred any Encumbrances on any of the
Acquired Assets, except in the Ordinary Course of Business;
(f) increase the rate of compensation for any of the employees of the
Business or otherwise enter into or alter any employment agreement
primarily affecting the Business, except for normal merit or
cost-of-living increases and incentive payments in accordance with the
past practices of TRW and the Partnership, including the withholding or
application of special incentives
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relating to project performance but not to exceed Five Hundred Thousand
Dollars ($500,000) per annum in the aggregate of special incentives;
(g) commence, enter into or alter any pension, profit-sharing, employee
stock option or stock purchase, bonus, incentive compensation plans,
life insurance or health insurance plans applicable to any of the
employees of the Business;
(h) make any single new commitment or increase any single previous
commitment for capital expenditures which will be an Assumed Liability
in an amount exceeding Five Hundred Thousand Dollars ($500,000) or One
Million Dollars ($1,000,000) per annum in the aggregate;
(i) accelerate or delay the delivery or sale of products or services,
the incurrence of capital expenditures, the satisfaction of payables or
other liabilities or the collection of receivables of the Business
except in the Ordinary Course of Business;
(j) waive any right of substantial value, cancel any debt or claim
except in the Ordinary Course of Business or voluntarily suffer any
extraordinary loss;
(k) sell, assign, transfer, license or convey any of the Intellectual
Property to be included as part of the Acquired Assets, except in the
Ordinary Course of Business; or
(l) make any investment in international operations or enter into any
agreement to make any such investment, except for investments in
existing international operations in the Ordinary Course of Business but
not to exceed Five Hundred Thousand Dollars ($500,000) in the aggregate
per annum.
Representatives of TRW, the Partnership and Purchaser will meet periodically to
discuss the matters listed in this Section 4.3 that may occur within the
following sixty-day period, with the objective of TRW and the Partnership
obtaining preapproval from Purchaser of as many matters as may be reasonably
possible. For items not preapproved as set forth above, Purchaser will provide a
response within 72 hours.
4.4 OTHER AGREEMENTS: Between the date of this Agreement and the Closing,
the parties will negotiate, in good faith, such other and further agreements as
they may deem appropriate for the consummation of the Recapitalization. In
addition, at the Closing, the parties will execute and deliver the
Noncompetition Agreement, the Transition Agreement, the Trademark Agreement and
the Shared Liabilities Agreement in substantially the form set forth in
Appendices H, I, J and L, respectively, hereto and the shareholders' agreement
with the terms set forth in Annex P hereto; provided, however, that at the
request of the Purchaser made prior to the Closing, TRW agrees to negotiate in
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good faith to make such modifications to such form of Transition Agreement as
may be required to provide for the provision by TRW, at a cost equal to TRW's
internal cost, of such additional services currently provided to the Business as
the parties may agree for such reasonable period as the parties may mutually
agree upon.
4.5 CONSENTS TO ASSIGNMENT: Between the date of this Agreement and the
Closing, TRW will use all reasonable efforts to obtain, and will cause each
member of the TRW Group to use all reasonable efforts to obtain, the consents or
approvals (or effective waivers thereof) of assignment from those persons whose
consents or approvals are required for the assignment of TRW's rights under
those contracts, leases, licenses, permits, approvals and other items included
in the Acquired Assets identified on Appendix G hereto. TRW further covenants to
Purchaser that, between the date of this Agreement and the Closing, TRW will use
all reasonable efforts to obtain, and will cause each member of the TRW Group to
use all reasonable efforts to obtain, the consents or approvals (or effective
waivers thereof) of other persons whose consents or approvals are required for
the assignment of TRW's rights under other contracts, leases, licenses, permits,
approvals and other similar items constituting part of the Acquired Assets.
Failure of the TRW Group to obtain, after a good faith attempt and use of all
reasonable efforts, the consents or approvals described in this Section 4.5 will
not give rise to monetary damages against TRW.
4.6 GOVERNMENT APPROVALS: Purchaser and the members of the TRW Group will
make all necessary filings, as promptly as practicable, including, without
limitation, those required under the HSR Act, in order to facilitate prompt
consummation of the transactions contemplated hereby and by the Other
Agreements. In addition, each of Purchaser and the members of the TRW Group will
use its best efforts (including, without limitation, payment of any required
fees) and will cooperate fully with each other to (i) comply as promptly as
practicable with all governmental requirements applicable to the transactions
contemplated by this Agreement and the Other Agreements and (ii) obtain promptly
all approvals, permits, orders or other consents of any applicable governmental
authorities necessary for the consummation of the transactions contemplated by
this Agreement and the Other Agreements. Each of the parties hereto will furnish
to the other party such necessary information and reasonable assistance as such
other party may reasonably request in connection with the foregoing. Purchaser
will pay the statutory HSR fee in its entirety. Subject to the Confidentiality
Agreement, each member of the TRW Group and Purchaser will coordinate and
cooperate fully with each other in exchanging such information and providing
such assistance as the other may reasonably request in connection with the
foregoing and in seeking early termination of any applicable waiting periods
under the HSR Act or in connection with other regulatory approvals and consents.
Each of TRW and Purchaser agrees to respond promptly to and comply fully with
any request for additional information or documents under the HSR Act. Subject
to the Confidentiality Agreement, each member of the TRW Group will provide
Purchaser and Purchaser will provide TRW with copies of all correspondence,
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filings or communications (or memoranda setting forth the substance thereof)
between such party or any of its representatives, on the one hand, and any
governmental agency or authority or members of their respective staffs, on the
other hand, with respect to this Agreement and the transactions contemplated
hereby.
4.7 CONSENT ORDERS AND ASSURANCES OF DISCONTINUANCE: Between the date of
this Agreement and the Closing, the parties will cooperate fully with each other
in obtaining a release of TRW effective as of the Closing Date from the Consent
Orders and the Assurances of Discontinuance and the substitution of Holdings or
Operating Company (as the case may be) as the affected party thereunder.
4.8 PUBLIC ANNOUNCEMENTS: Except as the parties will mutually agree, no
party will issue any report, statement or press release or otherwise make any
public statements with respect to this Agreement or the Other Agreements and the
transactions contemplated hereby and thereby, except as in the reasonable
judgment of the party may be required by law or in connection with the
obligations of a publicly-held, exchange-listed company, in which case the
language of any such report, statement or press release will, to the extent
practicable, be mutually agreed to by the parties, which agreement will not be
unreasonably withheld.
4.9 EXCLUSIVITY: During the term of this Agreement, TRW will not, and will
cause each member of the TRW Group and their respective affiliates, directors,
officers, employees, representatives and agents (including, without limitation,
Bear, Xxxxxxx & Co. Inc.) not to, directly or indirectly, solicit or initiate or
enter into discussions or transactions with, or encourage, or provide any
information to, any corporation, partnership or other entity or group (other
than Purchaser and its designees) concerning any sale of stock or partnership
interests of, or any merger or sale of securities or substantial assets of, or
any similar transaction involving, the Business or any of its component
corporations or partnerships. TRW represents that neither it nor any of its
affiliated entities is a party to or bound by any agreement with respect to any
such transaction other than as contemplated by this Agreement.
4.10 TERMINATION OF INTERCOMPANY OBLIGATIONS: Prior to the Closing, TRW and
its subsidiaries will have terminated all arrangements, contracts, obligations,
liabilities and understandings with each of the Transaction Companies other than
this Agreement and the Other Agreements.
4.11 NAME CHANGES: Between the date hereof and the Closing, Purchaser will
advise TRW of new corporate names chosen by Purchaser for each of Holdings,
Operating Company and TRW Hotel, such names to contain no reference to TRW or
any of its subsidiaries or affiliates, and TRW will take appropriate action to
cause such entities to amend their respective articles of incorporation to
change their names to the
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names so designated by Purchaser as of or prior to the Closing.
ARTICLE V
CONDITIONS
5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS: The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions at or before the Closing, any one or
more of which may be waived in writing, in whole or in part, by Purchaser:
(a) The representations and warranties made by TRW in Sections 3.1
and 3.2 of this Agreement will be true, accurate and complete as
of the Closing as if such representations and warranties had been
made anew as of the Closing, except with respect to the effect of
the Recapitalization described in Section 2.1 or transactions
permitted by this Agreement, provided, however, that such
transactions will not affect those representations and warranties
in Section 3.2(t) and in no event will the effect of such
transactions limit the provisions of Sections 4.5 or 7.2 hereof;
(b) Each member of the TRW Group will have performed and complied
with all covenants and conditions required by this Agreement and
the Other Agreements to be performed or satisfied by the members
of the TRW Group, and each member of the TRW Group will have
delivered to Purchaser all documents, certificates and instruments
required to be delivered by members of the TRW Group under the
terms of this Agreement, including, without limitation, the
documents referred to on Appendix M hereto;
(c) Each member of the TRW Group will have taken all corporate
actions and other proceedings to be taken by it in connection with
the transactions contemplated by this Agreement, and all documents
incidental thereto will be reasonably satisfactory in form and
substance to Purchaser;
(d) All requisite governmental approvals and authorizations
necessary for consummation of the transactions contemplated hereby
will have been duly issued or granted, and the waiting period as
prescribed by the HSR Act and the rules of the Federal Trade
Commission thereunder will have expired;
(e) There will not have been issued and in effect any injunction
or similar legal order prohibiting or restraining consummation of
any of the transactions herein contemplated and no legal action or
governmental investigation which might reasonably be expected to
result in any such injunction or order will be pending;
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(f) Purchaser will have received adequate assurances to its
reasonable satisfaction that Operating Company will receive the
funds contemplated by the financings described in (i) the Senior
Subordinated Notes Forward Underwriting Commitment Letter dated
February 7, 1996 from Chemical Securities, Inc. and BT Securities
Corporation to Purchaser and (ii) the Senior Secured Credit
Facilities Commitment Letter dated February 7, 1996 from Chemical
Bank, Chemical Securities, Inc., Bankers Trust Company and BT
Securities Corporation to Purchaser;
(g) TRW will have Activated the Copernicus system and will have
reasonably and in good faith determined that such system will
permit continuity of normal business operations, will implement
the new relational database architecture and will provide overall
performance and overall functionality no worse than the
predecessor legacy system, and TRW will share with Purchaser the
basis for its determination;
(h) The Partnership will have assigned the REDI Trademark to
Operating Company;
(i) Subject to the provisions of Section 7.2(b) hereof, TRW, IS&S
International and Microwave will have obtained all of the consents
and approvals listed in Appendix G or effective waivers thereof;
(j) TRW and TRW Hotel will have delivered to Holdings a
FIRPTA Certificate as provided in Treasury Regulation
section 1.1445-2(b)(2); and
(k) Since December 31, 1995, there will have been no material
adverse change in the business, assets, results of operations or
condition (financial or otherwise) of the Business taken as a
whole and the Purchaser will have received a certificate to this
effect signed by the chief executive officer of Operating Company
on behalf of TRW.
5.2 CONDITIONS TO TRW'S OBLIGATIONS: The obligation of the members of the
TRW Group to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions at or before the
Closing, any one or more of which may be waived in writing, in whole or in part,
by the members of the TRW Group:
(a) The representations and warranties made by Purchaser in
Section 3.3 of this Agreement will be true, accurate and complete
as of the Closing as if such representations and warranties had
been made anew as of the Closing, except with respect to the
effect of transactions contemplated or permitted by this
Agreement;
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(b) Purchaser will have performed and complied with all covenants
and conditions required by this Agreement to be performed or
satisfied by Purchaser, and Purchaser will have delivered all
documents, certificates and instruments required to be delivered
by Purchaser under the terms of this Agreement, including, without
limitation, the documents referred to on Appendix N hereto;
(c) Purchaser will have taken all corporate actions and other
proceedings to be taken by it in connection with the transactions
contemplated by this Agreement, and all documents incidental
thereto will be reasonably satisfactory in form and substance to
TRW;
(d) All requisite governmental approvals and authorizations
necessary for consummation of the transactions contemplated hereby
will have been duly issued or granted, and the waiting period as
prescribed by the HSR Act and the rules of the Federal Trade
Commission thereunder will have expired;
(e) There will not have been issued and in effect any injunction
or similar legal order prohibiting or restraining consummation of
any of the transactions herein contemplated and no legal action or
governmental investigation which might reasonably be expected to
result in any such injunction or order will be pending;
(f) The Equity Investors will have made capital contributions to
Purchaser in an aggregate cash amount of not less than Two Hundred
Fifty-Five Million Dollars ($255,000,000), unless the failure to
make such capital contributions is caused by a breach by any
member of the TRW Group of any provision hereof or duty in
connection herewith;
(g) TRW will have received adequate assurances to its reasonable
satisfaction that Operating Company will obtain debt financing in
an aggregate amount of not less than Eight Hundred Five Million
Dollars ($805,000,000), unless the failure to obtain such debt
financing is caused by a breach by any member of the TRW Group of
any provision hereof or duty in connection herewith;
(h) The Holdings shareholders agreement will contain the terms set
forth in Appendix P hereof, and any other provisions in such
agreement materially affecting TRW's rights thereunder will be
reasonably satisfactory to TRW;
(i) The terms of the Senior Convertible Preferred Stock of
Holdings will contain the terms set forth in Appendix Q hereof,
and the other terms, if any,
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of the Senior Convertible Preferred Stock of Holdings will be
reasonably satisfactory to TRW;
(j) Purchaser (x) will have disclosed to investors (including
bank, institutional or other investors), in a manner reasonably
satisfactory to TRW, in any financing of all or a portion of the
Purchase Price that TRW will have no obligations with respect to
the placement of bank debt or debt securities and (y) will have
included provisions to that effect in any terms of any such debt
placement; and
(k) Purchaser, Holdings, Operating Company and TRW will have
entered into an agreement reasonably satisfactory to TRW pursuant
to which Holdings and Operating Company will indemnify, defend and
hold harmless TRW and its subsidiaries and affiliates, and their
respective officers, directors, employees, representatives,
controlling persons and agents from and against any and all
liabilities, damages, losses, claims, costs and expenses
(including attorneys' fees) arising out of or resulting from any
offer or sale of securities in connection with the financing of
all or any portion of the Purchase Price; provided, however, that
Holdings and Operating Company will not have any liability with
respect to any diminution in the value of shares of capital stock
in Holdings.
ARTICLE VI
TAX MATTERS
6.1 CHARACTERIZATION OF TRANSACTION AND REPORTING OF PURCHASE PRICE: The
parties hereto recognize that the transactions that are contemplated by this
Agreement constitute a fully taxable sale for all Tax purposes of all of the
assets of the Business. The parties hereto agree to allocate the Purchase Price
(and all other capitalized costs) plus liabilities assumed to the Acquired
Assets, for all Tax purposes based upon the relative fair market value of such
assets as determined by an independent appraisal to be obtained by Purchaser at
its expense; provided, however, that the parties hereto agree that the Trademark
License will be valued at $26 million and the tangible assets in California will
be valued at their net book value as detailed on Schedule 6.1 hereto and no
value is assigned to the covenant not to compete. Except as provided below in
this Section 6.1, it is the intention of the parties that TRW will accept
liability for and pay any and all Taxes of the TRW Group due for or attributable
to Tax periods ending on or before the Closing Date and that portion related to
the operation of the Business on or prior to the Closing Date for any Tax period
ending after the Closing Date. It is the intention of the parties that the TRW
affiliated group (other than the Transaction Companies) will accept liability
for and pay any and all Taxes attributable to the transfer of Acquired Assets by
TRW and Microwave to Operating Company. It is the intention of the parties that
the
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TRW affiliated group (other than the Transaction Companies) will accept
liability for and pay all Taxes for any Transaction Companies attributable to
the deemed sale of assets pursuant to the Section 338(h)(10) Election; provided,
however, for those state jurisdictions which do not respect or allow the
Section 338(h)(10) Election, the TRW affiliated group (other than the
Transaction Companies) will pay Taxes on the sale of stock, but its obligations
to pay Taxes on the deemed asset sale under the Section 338(h)(10) Election will
be reduced correspondingly. Thus, it is the intention of the parties that the
TRW affiliated group's gain from the transactions contemplated in this Agreement
will be subject to Tax only once for any state or local purposes. The following
provisions are intended to effectuate these principles and will be interpreted
by the parties in a manner consistent with these principles.
6.2 TAX RETURNS:
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(a) TRW will file with the appropriate taxing authorities all Tax
Returns required to be filed on its behalf and on behalf of the
Partnership and the Transaction Companies for any taxable period
ending on or before the Closing Date, and TRW will include the
taxable income of the Partnership and the Transaction Companies
(to the extent permitted by law) for each such period in its
consolidated federal income Tax Return and in any consolidated,
combined or unitary Tax Return (including Tax Returns based on or
measured by net income) filed by TRW or any affiliate thereof in
which such income can be included under applicable state or local
law. Each Transaction Company will furnish Tax information to TRW
for inclusion in such consolidated, combined or unitary Tax
Returns filed by TRW or an affiliate thereof for the period which
includes the Closing Date in accordance with such corporation's
past custom and practice and TRW will make a reasonable effort to
notify the Transaction Company if it utilizes the Tax information
in a manner inconsistent with the manner in which it is provided.
TRW and its affiliates will take no position on such Tax Returns
that relate to any Transaction Company or any of its subsidiaries
that is inconsistent with each of such entity's past custom and
practice. TRW and its affiliates agree that they will take all
actions necessary to treat the transactions contemplated by this
Agreement as being a fully taxable sale of all of the assets of
the Business pursuant to Section 338(h)(10) of the Code or
otherwise and not subject to the anti-churning rules of Code
Section 197(f)(9). TRW and its affiliates further agree that they
will not take, or cause to be taken, any action which would be
inconsistent with or prejudicial to the immediately preceding
sentence.
(b) Holdings will cause the Transaction Companies to file with the
appropriate taxing authorities all Tax Returns required to be
filed by them for any taxable period ending after the Closing Date
and will remit any Taxes due in respect of such Tax Returns. TRW
will pay to Holdings the Taxes for
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which TRW is liable pursuant to Sections 6.1 and 6.3 hereof, but
which are payable in respect of Tax Returns to be filed by
Holdings pursuant to this Section 6.2(b) within 10 business days
prior to the due date (taking account of any extensions of time
for filing) for the filing of such Tax Returns but no earlier
than 20 business days after such Tax Returns and the tax
allocation calculations have been submitted to TRW for review and
approval.
(c) TRW will not be obligated or responsible for filing any
returns or amended returns to reflect any carrybacks of
post-Closing net operating losses of the Transaction Companies.
6.3 LIABILITY FOR PRE-CLOSING TAXES: TRW will be liable for and will pay,
and hereby indemnifies, each Transaction Company for all Taxes, including, but
not limited to, Taxes resulting from the Transaction Companies except Xxxx
ceasing to be members of the affiliated group (as defined in Section 1504(a) of
the Code without regard to the limitations contained in Section 1504(d) of the
Code) that includes TRW or any predecessors; Taxes imposed on any person for any
taxable year (a) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local or foreign law), (b) as a transferee or successor, or (c) by
contract in or otherwise; amounts pursuant to any guaranty, indemnification, tax
sharing, or similar agreement made on or before the Closing Date relating to the
sharing of liability for payment of Taxes; Taxes resulting from the breach of
any representation or warranty in Section 3.2(n) hereof imposed on TRW, the
Partnership or any Transaction Company, or for which any of TRW, the
Partnership, and the Transaction Companies may otherwise be liable; Taxes
imposed by reason of, attributable to, or resulting from the Section 338(h)(10)
Election as set forth in Sections 6.1 and 6.5 hereof; and Taxes resulting from
transactions described in Sections 2.1(a) through 2.1(i) hereof, for any taxable
year ending on or prior to the Closing Date and for the portions of such taxable
year or period ending on or prior to the Closing Date (or, in the case of
consolidated, combined or unitary Tax Returns, including TRW, any period
including the Closing Date) and any costs and expenses (including, without
limitation, costs of collection and attorneys' fees) arising out of or resulting
from TRW's liability and indemnity for Taxes hereunder. TRW will be entitled to
retain any refund of Taxes with respect to the Partnership and the Transaction
Companies relating to any such periods. In order appropriately to apportion any
income Taxes relating to any taxable year or period that begins before and ends
after the Closing Date, the parties hereto will, to the extent permitted by
applicable law, elect with the relevant taxing authority to terminate the
taxable year as of the Closing Date (provided, however, that any Taxes related
to the Section 338(h)(10) Election will be determined as provided in Section 6.1
and 6.5 hereof). In any case where applicable law does not permit any company to
treat the Closing Date as the end of a taxable year of such corporation, then
whenever it is necessary to calculate the liability for income or franchise
Taxes of such company for a portion of a taxable year, such determination will
(unless otherwise agreed to in writing by Holdings and TRW) be determined by a
closing of such corporation's
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books at the end of the Closing Date (provided, however, that any Taxes related
to the Section 338(h)(10) Election will be determined as provided in Section 6.1
and 6.5 hereof), except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation, will be
apportioned on a daily basis. In order appropriately to apportion any Taxes,
other than income or franchise Taxes, relating to any taxable year or period
that begins before and ends after the Closing Date, (i) ad valorem Taxes
(including, without limitation, real and personal property Taxes) will be
accrued on a monthly basis over the period for which the Taxes are levied, or if
it cannot be determined over what period the Taxes are being levied, over the
fiscal period of the relevant taxing authority, in each case irrespective of the
lien or assessment date of such Taxes, and (ii) franchise and other privilege
Taxes not measured by income will be accrued on a monthly basis over the period
to which the privilege relates.
6.4. TAX AUDITS RELATING TO THE BUSINESS:
(a) TRW will give notice to Holdings of any audits of or
administrative or court proceedings relating to TRW's or any
affiliate's consolidated, combined or unitary Tax Returns related
to the operations of the Business for periods ending prior to the
Closing Date, and will keep Holdings and its counsel informed of
the progress of, and issues involved in, the same, all to the
extent that such returns relate to the Partnership or the
Transaction Companies. TRW will be entitled to control the defense
of any such audits or proceedings.
(b) Holdings will give notice to TRW of any Tax claim relating to
any taxable year or period that includes the Closing Date, and
will keep TRW and its counsel informed of the progress of, and the
issues involved in, the same, in each case which may be the
subject of indemnification by TRW pursuant to this Agreement.
Holdings will be entitled to control the defense and resolutions
of any such audits or proceedings; provided, however, that if any
Transaction Company settles any Tax claim for the portion of a
taxable year or period ending on or prior to or after the Closing
Date or including the Closing Date which may be the subject of
indemnification by TRW pursuant to this Agreement without the
prior written consent of TRW, which consent will not be
unreasonably withheld, TRW will be released from any
indemnification obligations hereunder.
6.5. CODE SECTION 338(H)(10) ELECTION AND CODE SECTION 197(F)(9)(B): TRW
agrees to join with Holdings in making an election under Section 338(h)(10) of
the Code (and any corresponding elections under state, local, or foreign tax
law) (collectively, a "Section 338(h)(10) Election") with respect to the actual
or deemed purchase and sale of the stock of Operating Company, TRW Hotel and
Xxxx. TRW will pay any Tax, including any federal, foreign, state and local
Taxes, whether determined on a consolidated, combined, unitary, separate or
other return basis, attributable to, arising out
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of or resulting from the making of the Section 338(h)(10) Election in accordance
with Section 6.1 hereof and will indemnify the Partnership and the Transaction
Companies against any Taxes arising out of any failure to pay such Tax. TRW will
also pay any state, local, or foreign Tax (and indemnify the Partnership and the
Transaction Companies against any Taxes arising out of any failure to pay such
Tax) attributable to an election under state, local or foreign law similar to
the election available under Section 338(g) of the Code (or which results from
the actual or deemed making of an election under Section 338(g) of the Code)
with respect to the actual or deemed purchase and sale of the stock of the
Transaction Companies hereunder where the state, local, or foreign tax
jurisdiction does not provide or recognize a Code Section 338(h)(10) Election.
Notwithstanding the above, TRW's obligations hereunder will be reduced with
respect to the state Taxes on the deemed sale of assets under Section 338(h)(10)
Election in any state, where both (i) TRW or Microwave actually recognizes gain
on the sale of Operating Company stock to Holdings that is taxed in that state
and (ii) such state does not recognize the Section 338(h)(10) Election, by the
amount of Taxes paid with respect to the sale of stock in Operating Company in
that particular state. In addition, TRW will pay that portion of any income or
similar Tax for the Transaction Companies (including Taxes in Texas and Ohio)
due for a Tax period ending after the Closing Date to the extent such Tax is
measured by gain or income recognized on account of the Section 338(h)(10)
Election or the transfer of Acquired Assets. TRW and its affiliates will comply
fully with all filing and other requirements necessary to effect the
Section 338(h)(10) Election. In addition, at the request of Holdings), TRW and
its affiliates will make an election under Code Section 197(f)(9)(B) in
connection with the transactions contemplated by this Agreement.
6.6. COOPERATION REGARDING TAX MATTERS: The parties hereto will provide
such necessary information as any other party hereto may reasonably request in
connection with the preparation of such party's Tax Returns, or to respond to or
contest any audit, prosecute any claim for refund or credit or otherwise satisfy
any legal requirement relating to Taxes of each party hereto or their respective
affiliates.
6.7. TAX SHARING AGREEMENTS: All Tax sharing agreements, policies,
arrangements and practices between TRW or any of its affiliates and the
Partnership or the Transaction Companies will terminate as of the Closing Date
and will have no further effect for any taxable year (whether the current year,
a future year, or a past year). TRW and its affiliates on the one hand and the
Partnership and each of the Transaction Companies on the other will cancel any
intercompany accounts in respect of Taxes with each other as of the Closing Date
as provided in Section 4.10 hereof. Any powers of attorney with respect to Taxes
of the Partnership or the Transaction Companies currently in force will be
terminated effective as of the Closing.
6.8. PAYMENT OF TRANSFER TAXES AND OTHER CHARGES: TRW will pay all transfer
Taxes, if any, including, but not limited to, sales, use, and value added Taxes
due
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on account of the Recapitalization transactions described in this Agreement.
Purchaser and the Transaction Companies assume responsibility for and will pay
any and all Taxes, fees and assessments due to or attributable to actions
following the Recapitalization transactions including, but not limited to,
filing fees, franchise Taxes, license fees or other costs for qualification or
registration of, or for registration of shares of, TRW Hotel, Holdings,
Operating Company, Comcred, S.A. de C.V., Servicred, S.A. de C.V., Xxxx and CCB
in any state or local jurisdiction, or any foreign jurisdiction including,
without limitation, costs or fees, if any, to register or file articles or
certificates or amended articles of incorporation with or to qualify to do
business in any state or local jurisdiction.
6.9. SURVIVAL OF OBLIGATIONS, ETC.: The obligations of the parties set
forth in this Article VI relating to Taxes will, except as otherwise agreed in
writing, be unconditional and absolute and will remain in effect without
limitation as to time or amount of recovery by any party hereto until thirty
(30) days after the expiration of the applicable statute of limitations
governing the Tax to which such obligations relate (after giving effect to any
agreement extending or tolling such statute of limitations).
6.10 OTHER: Any indemnification payments or Adjustment to the Purchase
Price made under this Agreement will be treated for Tax purposes as an
adjustment to the Demand Note portion of the Purchase Price paid to Microwave by
Operating Company.
ARTICLE VII
ACTIONS AFTER CLOSING
7.1 FURTHER CONVEYANCES: After the Closing and without further cost or
expense to the Transaction Companies, TRW will execute and deliver to the
Transaction Companies such additional instruments of conveyance and take such
other and further actions as Operating Company may reasonably request, and as
are ordinarily provided by a seller, more completely to sell, transfer and
assign to Operating Company and vest Ownership in the appropriate Transaction
Company to the Acquired Assets and to consummate the transactions contemplated
hereby.
7.2 FURTHER CONSENTS TO ASSIGNMENT: As and to the extent any member of the
TRW Group will have failed to obtain prior to Closing the consent or approval
(or an effective waiver thereof) of any person or persons in respect of any item
described in Section 4.5 hereof:
(a) the parties will fully cooperate with each other to obtain
from such person or persons the consents or approvals (or
effective waivers thereof);
(b) if the consent or approval is listed in Appendix G and is not
obtained prior to the Closing, then (1) the members of the TRW
Group will (x) use
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reasonable efforts to provide the Transaction Companies with an alternative
arrangement providing the benefit of all the rights of the members of the
TRW Group under such contract, lease, license, permit, approval or similar
item including, without limitation, enforcement (at TRW's expense) of any
and all rights of the members of the TRW Group against such person as the
Transaction Companies may reasonably request and (y) indemnify and hold
harmless the Transaction Companies from and against any and all
liabilities, damages, losses, claims, costs and expenses (including,
without limitation, attorneys' fees and expenses) arising out of or related
to the failure to obtain such consent, approval or waiver; (2) Purchaser,
in its good faith reasonable judgment, may elect to accept or reject such
proposed alternative arrangement; and (3) if Purchaser elects to reject
such proposed alternative (or if an alternative is not proposed), such
election (or failure to propose an alternative) will be deemed to
constitute, pursuant to Section 5.1 hereof, a failure to satisfy a
condition to Purchaser's obligation to consummate the transactions
contemplated by this Agreement, but will not constitute a breach of
covenant or a breach of warranty by any member of the TRW Group; and
(c) if the parties are unable to obtain any consent or approval (or
effective waiver thereof) under any of the contracts, leases, licenses,
permits, approvals or other similar items constituting part of the Acquired
Assets that are not listed in Appendix G, then after the Closing (1) this
Agreement will not constitute or be deemed to be a contract to assign the
same if an attempted assignment without such consent, approval or waiver
would constitute a breach of such item or create in the issuer or any party
thereto the right or power to cancel or terminate such item and, in such
case, the consummation of the transactions contemplated hereby will not be
deemed to constitute such an assignment and (2) TRW, IS&S International and
Microwave will use reasonable efforts to cooperate with the Transaction
Companies in any reasonable arrangement designed to provide the Transaction
Companies with the benefit of all the rights of the members of the TRW
Group under such contract, lease, license, permit, approval or similar
item, including, without limitation, enforcement (at TRW's expense) of any
and all rights of the members of the TRW Group against such person as the
Transaction Companies may reasonably request.
7.3 ACCESS TO FORMER BUSINESS RECORDS: For a period of ten (10) years
following the Closing, or until any audits of the Tax Returns of the TRW Group
relating to periods prior to the Closing are completed, whichever occurs later,
Operating Company will retain all business records of the Business other than
those records destroyed in accordance with normal record retention procedures.
During such period, Operating Company will afford duly authorized
representatives of TRW or an appropriate tax auditor displaying appropriate
credentials free and full access to all of
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such records and will permit such representatives, at TRW's expense, to make
abstracts from, or to take copies of any of such records or to obtain temporary
possession of any thereof as may be reasonably required by TRW. During such
period, Operating Company will cooperate with TRW or an appropriate tax auditor,
and cause employees of the Business to cooperate with TRW or an appropriate tax
auditor, at TRW's expense, in furnishing information, evidence, testimony and
other assistance in connection with any action, proceeding or investigation
relating to TRW's conduct of the Business prior to the Closing. If Operating
Company desires to dispose of any such records prior to the expiration of such
period other than in accordance with normal record retention procedures,
Operating Company will, prior to such disposition, give TRW the opportunity, at
TRW's expense, to segregate and remove such records as TRW may select.
7.4 ACCESS TO FORMER EMPLOYEES: After the Closing, Operating Company will
make available to TRW any employees of Operating Company whom TRW may reasonably
need in order to defend or prosecute any legal or administrative action to which
TRW is a party and which relates to the conduct of the Business prior to the
Closing. TRW will pay or reimburse Operating Company for all reasonable expenses
which may be incurred by such employees in connection therewith, including,
without limitation, all travel, lodging and meal expenses, and TRW will
compensate Operating Company for the number of whole business days spent by each
such employee in providing such services at the rate of one hundred thirty
percent (130%) of the average daily gross pay per business day (excluding the
value of employee benefits) of such employee during the calendar month in which
such services are performed.
7.5 USE OF TRW TRADEMARK: The Transaction Companies will not use the TRW
name or Trademark, except as authorized in accordance with the Trademark
Agreement.
7.6 NONDISCLOSURE:
(a) For a period of five (5) years after the Closing, TRW will
not, and will cause each of its affiliates, and their respective
successors and assigns not to, (i) use any Confidential
Information (as hereinafter defined) for its own benefit or the
benefit of any person, firm or corporation other than the
Transaction Companies and their respective successors and assigns,
or (ii) disclose any Confidential Information to any person, firm
or corporation, other than to (x) the Transaction Companies and
their respective successors and assigns or (y) entities controlled
by TRW. The term "Confidential Information" will mean any trade
secrets, any confidential or proprietary information and any
tangible items which record such trade secrets or confidential or
proprietary information that TRW or any of its affiliates has in
its possession on or before the Closing Date concerning
operations, inventions, developments, products, services,
processes, discoveries or other matters relating to the Business,
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except for any information which (x) is or becomes publicly known
or within the public domain other than as a result of disclosure
by TRW or any of its affiliates in violation of the terms of this
Agreement or (y) becomes available subsequent to the Closing to
TRW or any of its affiliates on a non-confidential basis from a
source other than the Transaction Companies, provided that such
source is not prohibited from disclosing such information to TRW
or any of its affiliates by a contractual, legal or fiduciary
obligation to the Transaction Companies. The covenant set forth in
this Section 7.6 will not be applicable to TRW's use of any
information concerning the Business in connection with (i) the
payment or contesting of any Excluded Liability or (ii) the
preparation and publication of TRW's financial statements and all
reports and disclosures provided for in the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as
amended, and the respective regulations thereunder.
(b) In the event that TRW or any of its affiliates receives a
request or is required (by deposition, interrogatory, request for
documents, subpoena, civil investigation or similar process) to
disclose any or all of the Confidential Information, TRW agrees to
(i) provide Operating Company with prompt notice of the existence,
terms and circumstances surrounding such a request, (ii) consult
with Operating Company on the advisability of taking legally
available steps to resist or narrow such request, and
(iii) provide reasonable assistance to Operating Company, at
Operating Company's expense, in seeking a protective order or
other appropriate remedy. In the event that a protective order or
other remedy is not obtained or that Operating Company waives
compliance with the provisions hereof, (i) the entity which
received such a request may disclose only that portion of the
Confidential Information which it is advised by opinion of its
counsel is legally required to be disclosed and will cooperate
with Operating Company in seeking to obtain reasonable assurance
confidential treatment will be accorded to such portion of the
Confidential Information, and (ii) such entity will not be liable
for such disclosure unless such disclosure to any such tribunal
was caused by or resulted from a previous disclosure by TRW or any
of its affiliates not permitted by this Section 7.6.
(c) The parties further agree that damages at law for violation of
the foregoing covenant would not be an adequate or proper remedy
and that, if TRW or any of its affiliates violates or threatens to
violate the foregoing covenant, the Transaction Companies and
their respective successors and assigns will be entitled, upon
application to a court of competent jurisdiction and notice to
TRW, to obtain a temporary or permanent injunction, without the
posting of any bond, against TRW or any of its affiliates
prohibiting any threatened or further violation of this covenant,
and also to seek damages, compensatory, exemplary or otherwise,
for such violation. Such remedies will not be deemed
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to be the exclusive remedies for a breach of this Section 7.6
available to the Transaction Companies and their respective
successors and assigns, but will be in addition to any and all
other remedies available at law or in equity.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 EMPLOYMENT OF INITIAL EMPLOYEES: Reasonably in advance of the
Closing, Purchaser will offer to substantially all TRW Employees and all
Partnership Employees employment with Operating Company effective as of the
Closing, with initial job responsibilities and cash compensation comparable in
the aggregate to those extended to such employees by TRW or the Partnership, as
the case may be. TRW will use all reasonable efforts to assist Purchaser in
making arrangements for Operating Company to hire the TRW Employees and the
Partnership Employees (other than those who elect to retire) as of the Closing.
Effective as of the Closing, all TRW Employees and all Partnership Employees who
accept Purchaser's offer of employment will become employees of Operating
Company ("Hired Employees"). Purchaser may identify up to ten (10) individuals
who will not become Hired Employees as of the Closing but who will remain
employees of TRW and provide services to Operating Company on such terms and
conditions (not less favorable to such individuals than the terms and conditions
of their current employment) as Purchaser and TRW may agree. TRW and its
subsidiaries will neither employ nor offer employment to any Hired Employee
during the twelve (12) month period following the Closing without the prior
written consent of Operating Company. During such period, Holdings and its
subsidiaries will not, without the prior written consent of TRW, employ or offer
employment to any former employee of the Business within six months of such
person's retirement under any applicable TRW pension plan.
8.2 SUBSEQUENT TERMINATIONS OR LAYOFFS: In any termination or layoff by
Operating Company of any Hired Employee after the Closing, Operating Company
will comply fully (where applicable) with the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN") and all other applicable Federal, state and
local laws, including those prohibiting discrimination and requiring notice. The
Operating Company will be solely responsible for any severance expenses due a
Hired Employee as a result of any such termination or layoff and will bear the
cost of compliance with (or failure to comply with) any such laws. For six
months after the Closing, Operating Company will maintain severance benefits
comparable to severance benefits in effect, immediately prior to the Closing,
for TRW Employees or Partnership Employees as the case may be.
8.3 EMPLOYEE BENEFITS: The Transaction Companies are not assuming and
will not have any responsibility for the continuation of any Plan maintained by
TRW for the Business, and no Plan adopted or maintained by Operating Company
with respect to
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the Business will be deemed a Successor Plan of TRW. The Operating Company will
assume and maintain for the Partnership Employees for a reasonable period of
time (not less than three months) after the Closing all employee benefit plans
(which will include all employee pension benefit plans and employee welfare
benefit plans) in effect as of the Closing which covered Partnership Employees,
and Operating Company will be deemed a successor employer to all such plans.
Without limiting the foregoing, TRW will be responsible for any claims incurred
prior to the Closing under any group health, disability, life insurance or
similar plan maintained by TRW. For purposes of this Section 8.3, a claim will
be incurred upon (a) the rendering of a covered service or the commencement of
hospitalization or confinement, in the case of a group health plan, (b) the
disabling event, in the case of a disability plan, and (c) death, in the case of
a life insurance plan.
8.4 PENSION PLAN: TRW will retain all assets and liabilities in the TRW
Salaried Pension Plan (the "Pension Plan") allocable to the TRW Employees,
including all Hired Employees. All benefit service and vesting service accruals
for the TRW Employees, including the Hired Employees, under the Pension Plan
will cease as of the Closing. TRW will amend the Pension Plan to provide those
Hired Employees who (i) are covered under the Pension Plan at the Closing,
(ii) have five or more years of vesting service under the Pension Plan at the
Closing and (iii) are employed by Operating Company for at least one year from
the Closing with a supplemental benefit. The supplemental benefit will be based
upon the formula of 2.5% times pensionable earnings times years of benefit
service where "benefit service" means the benefit service credited to such Hired
Employee under the Pension Plan at the Closing and "pensionable earnings" (as
defined in the Pension Plan but limited to 1995 earnings only) means the 1995
pensionable earnings of such Hired Employee. The parties may agree to allocate
among such Hired Employees the aggregate amount of the supplemental benefit
determined under such formula on a basis weighted for age or benefit service.
The supplemental benefit will be paid as a single sum payment upon receipt of a
deferred vested benefit or retirement benefit from the Pension Plan. Both the
vested Pension Plan benefit and the supplemental benefit described herein will
not be payable to the Hired Employee until such employee has (i) attained at
least age 55, (ii) terminated employment from Operating Company (or any
successor of Operating Company or purchaser of substantially all of the
Business) and (iii) filed a written application therefore with the Pension
Plan's Board of Administration. (Hired Employees still employed with Operating
Company (or successor) after attainment of age 65 may file a written application
for receipt of benefits from the Pension Plan.)
8.5 MEDICAL, DENTAL AND VISION BENEFITS: As of the Closing and without
any waiting period, Operating Company will provide all Hired Employees (and
their dependents) with medical, dental and vision benefit coverage under group
health plans maintained by Operating Company, which may include the medical,
dental and vision plans which cover Partnership Employees as of the Closing and
which are being assumed
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by Operating Company. The Operating Company will waive any pre-existing
condition exclusions or limitations applicable to such persons under such
medical, dental and vision plans.
8.6 LIFE INSURANCE: As of the Closing, Operating Company will provide
all Hired Employees with coverage under life insurance benefit plans maintained
by Operating Company, which may include the life insurance benefit plans which
cover Partnership Employees as of the Closing and which are being assumed by
Operating Company.
8.7 VACATION: As of the Closing, Operating Company will assume all
obligations of TRW and the Partnership to Hired Employees for any accrued but
unused vacation days in accordance with the Supplemental Accounting Principles
set forth on Appendix E-1. TRW will have no obligation to make any payment to
Hired Employees after the Closing with respect to any such vacation days.
8.8 401(K) PLANS: TRW currently maintains the TRW Employee Stock
Ownership and Stock Savings Plan ("SSP") and the Partnership currently maintains
the TRW REDI Employee Savings Plan ("Partnership Plan"), both plans being
qualified under Sections 401(a) and 401(k) of the Code. All contributions to
the SSP by TRW Employees and matching contributions by TRW will cease as of the
Closing. The Operating Company will assume and maintain the Partnership Plan
with an employer matching contribution no less than that in effect under the
Partnership Plan at the Closing. The Operating Company agrees to either
(i) cover all Hired Employees under the Partnership Plan being assumed by
Operating Company as of the Closing or (ii) establish, effective as of the
Closing, a 401(k) plan which will provide an employer matching contribution at
least equal to the employer matching contribution in effect under the SSP at the
Closing (the "Purchaser 401(k) Plan"). The Purchaser 401(k) Plan will recognize
service of Hired Employees rendered to TRW and recognized by the TRW 401(k) Plan
for all purposes for which service counts under the Purchaser 401(k) Plan. As
soon as practicable thereafter, TRW and Purchaser will agree in good faith on a
valuation date ("Valuation Date"). On a date as further agreed upon by the
Purchaser and TRW after the Valuation Date, TRW will (i) cause the interests of
each TRW Employee in the Insured Return, Equity, Bond Index and Small Company
Equity Funds maintained pursuant to the SSP to be liquidated into an amount of
cash equal to the value of each such person's interest in such fund as of the
close of business on the Valuation Date; (ii) cause the interests of each TRW
Employee in the TRW Stock Fund maintained pursuant to the SSP to be converted
into shares of TRW Common Stock; and (iii) cause the cash amounts and shares of
TRW Common Stock as so determined to be spun off and transferred to the
Purchaser 401(k) Plan, once satisfactory evidence of intended IRS qualification
of the Purchaser 401(k) Plan has been provided to TRW.
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8.9 WORKERS' COMPENSATION: TRW will bear the entire cost and expense of
all workers' compensation claims arising out of injuries identifiably sustained
by Hired Employees before the Closing. Operating Company will bear the entire
cost and expense of all workers' compensation claims arising out of injuries and
illnesses identifiably sustained by Hired Employees after the Closing. TRW will
bear the entire cost and expense of all workers' compensation claims arising out
of injuries without an identifiable date of occurrence and which are alleged to
have arisen before the Closing and which are filed before the Closing.
Notwithstanding any state law to the contrary, Operating Company will bear the
entire cost and expense of all workers' compensation claims arising out of
injuries and illnesses sustained by Hired Employees without an identifiable date
of occurrence and which are alleged to have arisen before or after the Closing
which are filed after the Closing. From and after the Closing, Operating Company
will use its good faith efforts to facilitate the return to work in the
employment of Operating Company of any Hired Employee who is on disability leave
on the Closing as a result of a work-related injury or illness.
8.10 NO RIGHTS: No former, present or future employees of either party
(or any dependents of such employees) will be treated as third party
beneficiaries in or under this Agreement. Except as provided in Section 8.2
hereof, nothing herein is to be construed to require the Transaction Companies
to maintain any benefit or condition of employment for a period longer than
three (3) months following the Closing.
8.11 FAMILY AND MEDICAL LEAVE ACT: Purchaser acknowledges that
effective as of the Closing, Operating Company is a successor employer of the
Hired Employees for purposes of compliance with the Family and Medical Leave
Act.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION OF TRW: Subject to the limitations set forth in
Section 9.5 hereof, each of the Transaction Companies hereby agrees and
covenants that after the Closing each will jointly and severally indemnify,
defend and hold TRW and its subsidiaries harmless from and against any and all
liabilities, damages, losses, claims, costs and expenses (including, without
limitation, costs of collection and reasonable attorneys' fees) arising out of
or resulting from (a) either (i) any misrepresentation or breach of warranty by
Purchaser for which notice is given by TRW within the applicable periods
specified in Section 3.5 hereof or (ii) any claim by a person other than TRW and
its subsidiaries, which claim is based upon one or more allegations that, if
true, would give rise to a right of indemnification under clause (a)(i) of this
sentence and for which notice is given by TRW within the applicable periods
specified in Section 3.5 hereof; (b) any failure to pay or satisfy or cause to
be paid or satisfied any of the Assumed Liabilities when due and payable;
(c) nonperformance by Purchaser of any obligation to be
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performed on the part of the Purchaser under this Agreement prior to the Closing
and the non-performance by any of the Transaction Companies of any obligation to
be performed on their respective parts under this Agreement after the Closing
including, without limitation, the obligations of each of the Transaction
Companies under Article VIII hereof; or (d) any claim by a third party relating
to the use after the Closing of the Trademark by Licensee (each as defined in
the Trademark Agreement), including, without limitation, product liability;
provided, however, that (a) there shall be no right of indemnification under
this clause (d) in respect to (i) claims by any of the Transaction Companies
under this Agreement or (ii) claims that the use of the Trademark (as defined in
the Trademark Agreement) after the Closing (as distinct from the use of a xxxx
or component of a xxxx not including TRW) infringes any third party's rights,
and (b) the Transaction Companies shall not have any liability under this
clause (d) with respect to any diminution in the value of shares of capital
stock in Holdings.
9.2 INDEMNIFICATION OF TRANSACTION COMPANIES: Subject to the
limitations set forth in Section 9.4 hereof, TRW hereby agrees and covenants
that after the Closing it will indemnify, defend and hold each of the
Transaction Companies and their subsidiaries harmless from and against any and
all liabilities, damages, losses, claims, costs and expenses (including, without
limitation, costs of collection and reasonable attorneys' fees) arising out of
or resulting from (a) either (i) any misrepresentation or breach of warranty by
TRW for which notice is given by such Transaction Company within the applicable
periods specified in Section 3.5 hereof or (ii) any claim by a person other than
the Transaction Companies and their subsidiaries, which claim is based upon one
or more allegations that, if true, would give rise to a right of indemnification
under clause (a)(i) of this sentence and for which notice is given by
Transaction Companies within the applicable periods specified in Section 3.5
hereof; (b) any failure fully to pay or satisfy or cause to be paid or satisfied
any of the Excluded Liabilities when due and payable; (c) nonperformance by any
member of the TRW Group of any obligation to be performed on the part of any
member of the TRW Group under this Agreement prior to the Closing and the
nonperformance by TRW, Microwave or IS&S International of any obligation to be
performed on their respective parts after the Closing, including, without
limitation, the obligations of TRW under Article VIII hereof; or (d) any claim
that the use of the Trademark (as defined in the Trademark Agreement) after the
Closing in accordance with the terms of the Trademark Agreement infringes any
trademark, service xxxx, trade name or other proprietary right of any third
party. Any payments made by TRW pursuant to this Article IX will be made to
Operating Company.
9.3 CLAIMS: If Section 6.4 hereof applies, the following provisions of this
Section 9.3 do not apply. If an indemnified person (a "Claimant") desires to
make a claim under Section 9.1 or Section 9.2 hereof against an indemnifying
person (the "Indemnitor") which does not involve a claim by any person other
than the parties and their subsidiaries, then such Claimant will make such claim
by promptly delivering written notice to the other; provided, however, that,
subject to Section 3.5 hereof, the failure to
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give such notice will not relieve any Indemnitor from any obligation hereunder
except where, and then solely to the extent that, such failure actually and
materially prejudices the rights of such Indemnitor. If a Claimant desires to
make a claim against an Indemnitor under Section 9.1 or Section 9.2 hereof, as
the case may be, which involves a claim by a person other than the parties and
their subsidiaries, then such claim will be made in the following manner and be
subject to the following terms and conditions:
(a) NOTICE: The Claimant will give prompt written notice to the
Indemnitor of any demand, claim or threat of litigation or the
actual institution of any action, suit or proceeding
(collectively, a "Claim") served on or instituted against the
Claimant with respect to which the Claimant believes it would have
a right of indemnification under Section 9.1 or Section 9.2
hereof. In providing such notice, the Claimant will only state the
existence of such Claim and need not admit or deny the validity of
the facts or circumstances out of which such Claim arose. The
failure to give such notice will not relieve an Indemnitor from
any obligation hereunder except where, and then solely to the
extent that, such failure actually and materially prejudices the
rights of such Indemnitor.
(b) RESPONSIBILITY FOR DEFENSE: Within thirty (30) days after
receipt of any such notice, but not less than five (5) working
days prior to the time the Claimant is required to respond to a
Claim, the Indemnitor may, by giving written notice to the
Claimant, and provided that in such notice the Indemnitor also
agrees that it has responsibility hereunder to indemnify the
Claimant with respect to such Claim, assume responsibility for the
defense of the Claim (thereby becoming the "Defending Party") in
the name of the Claimant or otherwise as the Indemnitor may elect.
The Claimant will assume responsibility for the defense of such
Claim as the Defending Party if the Indemnitor does not elect to
assume responsibility for the defense of such Claim as provided in
the previous sentence, in which event the Indemnitor will
reimburse the Claimant for the costs of defending against such
Claim, including reasonable attorneys' fees and expenses, and will
be responsible for any Losses (as defined in Section 9(c) hereof)
the Claimant may suffer as a result of such Claim, if, but only to
the extent that, the Claimant is in fact entitled to
indemnification under this Agreement with respect to such Claim.
Subject to the provisions of Sections 9.3(c) and 9.3(d) hereof,
the Defending Party will have full authority to defend, cure,
adjust, compromise or settle such Claim or appeal any judgment or
ruling of a court or other tribunal in connection with such Claim
in its own name and/or in the name of the other party.
(c) RIGHT TO PARTICIPATE/RIGHT TO ASSUME RESPONSIBILITY FOR
DEFENSE OF A CLAIM: Notwithstanding a Defending Party's
responsibility for the defense of a Claim, the other party will
have the right to participate, at its own expense and with its own
counsel, in the defense of a Claim and, upon
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receiving a written request from the other party, the Defending
Party will consult with the other party from time to time on
matters relating to the defense of such Claim and provide the
other party with copies of all pleadings and material
correspondence relating to such Claim. In the event that a Claim
seeks equitable or injunctive relief, the Claimant may, at its
option, and notwithstanding anything to the contrary in
Section 9.3(b) hereof, assume responsibility for the defense of
such portion of the Claim seeking equitable or injunctive relief.
In the event that pursuant to the preceding sentence the Claimant
has assumed responsibility for the defense of such portion of the
Claim as seeks equitable or injunctive relief, the Indemnitor
will reimburse Claimant for the costs of defending the Claim
including reasonable attorneys' fees and expenses, and the
Indemnitor will remain monetarily responsible for any and all
liabilities, damages, losses, claims, costs and expenses
(including, without limitation, costs of collection and
reasonable attorneys' fees) (collectively "Losses") the Claimant
may suffer as a result of such Claim, if, but only to the extent
that, such defense costs and such Losses are otherwise subject to
indemnification pursuant to this Agreement.
(d) SETTLEMENT: A Defending Party will provide the other party
with timely written notice of any proposed adjustment, compromise
or other settlement, including equitable or injunctive relief, of
a Claim which the Defending Party intends to propose or accept,
in which event the other party will within five business days
after receipt thereof provide the Defending Party with a written
notice (a "Response Notice") to the effect that (i) the other
party consents to the settlement or (ii) the other party objects
to the settlement, and in which event the following additional
provisions will apply.
(A) In the event that the other party (i) consents to the
settlement in a timely Response Notice, or (ii) fails to
provide the Defending Party with a timely Response Notice,
the Defending Party will have the right to propose or
accept, as the case may be, such settlement and to enter
into any agreement, in its own name and/or in the name of
the other party, giving legal effect to all aspects of such
settlement.
(B) When the Defending Party is also the Indemnitor, and the
Claimant objects to the settlement by means of a timely
Response Notice, then the Defending Party may, if it so
elects, and provided that the settlement in question is
purely monetary in nature and provides for a complete
release of the Claim, tender the defense of the Claim to the
Claimant by tendering the Claimant the amount of money
proposed to be paid in settlement of the Claim (the
"Tendered Amount"), in which case the Defending Party will
have no further liability to the Claimant hereunder with
respect to such Claim, and in which case the Claimant will
have
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full responsibility for any and all defense costs and Losses
thereafter resulting from such Claim (the "Claimant's
Costs") and, in addition, once the Claimant's Costs have
been fully and finally determined, will reimburse the
Defending Party for the amount (if any) by which the
Tendered Amount exceeds the Claimant's Costs.
(C) When the Defending Party is the Claimant, the Claim in
question is not one that the Claimant assumed responsibility
of pursuant to the second sentence of Section 9.3(c) hereof,
and the Indemnitor objects to the settlement by means of a
timely Response Notice, the Indemnitor will have the right
to assume responsibility for the defense of the Claim by
delivering with the Response Notice a notice in the form
contemplated by the first sentence of Section 9.3(b) hereof.
If the Indemnitor fails to exercise such right, and if the
settlement in question would impose purely monetary
obligations on the Indemnitor, the Defending Party will have
the right to propose or accept, as the case may be, such
settlement and to enter into any agreement, in its own name
and/or in the name of the Indemnitor, giving legal effect to
all aspects of such settlement, whereupon, if, but only to
the extent that, the Defending Party is entitled to
indemnification from the Indemnitor in respect to the Claim,
and further subject to Sections 9.4 and 9.5 hereof, the
amount paid under the terms of such settlement will be
deemed to be Losses subject to indemnification to the
extent, and only to the extent, such settlement is
reasonable under all the facts and circumstances at the time
of the settlement. Otherwise, Losses subject to
indemnification will be deemed to be that portion of the
amount paid under the terms of such settlement that would
have been reasonable to pay under the terms of such
settlement under all of the facts and circumstances at the
time of such settlement.
(D) Except as provided in Section 9.3(d)(C) hereof, the
Defending Party will have no authority to enter into any
proposed settlement that the other party has objected to by
means of a timely Response Notice. If the other party has
acted unreasonably in objecting to a proposed settlement by
means of a timely Response Notice, and the Defending Party
did not have either the right to tender the defense of the
Claim in question to the other party pursuant to
Section 9.3(d)(B) hereof or the right to enter into the
proposed settlement of the Claim pursuant to Section
9.3(d)(C) hereof, then the other party will indemnify the
Defending Party against any and all Losses that the
Defending Party may suffer as a result of such unreasonable
objection.
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9.4 LIMITATION ON TRW INDEMNIFICATION: Notwithstanding the provisions of
Section 9.2(a) hereof, TRW will be obligated to indemnify, defend, and hold the
Transaction Companies and their subsidiaries harmless from or against any Losses
arising out of a misrepresentation or breach of warranty by TRW only if, and
then to the extent, the aggregate amount of all timely claims exceeds Five
Million Dollars ($5,000,000). In no event will TRW's total obligation to the
Transaction Companies and their subsidiaries under Section 9.2(a) hereof exceed,
in the aggregate, Fifty Million Dollars ($50,000,000). The foregoing $5,000,000
and $50,000,000 limitations will not apply to claims based upon (i) knowing,
intentional conduct that constitutes common law fraud or (ii) any
misrepresentation or breach of warranty with respect to the following
representations: Section 3.2(n) (captioned "Taxes") and Section 3.2(k)
(captioned "Employee Benefits").
9.5 LIMITATION ON TRANSACTION COMPANIES INDEMNIFICATION. Notwithstanding
the provisions of Section 9.1(a) hereof, the Transaction Companies will be
obligated to indemnify, defend, and hold TRW and its subsidiaries harmless from
or against any Losses arising out of a misrepresentation or breach of warranty
by the Purchaser only if, and then to the extent, the aggregate amount of all
timely claims exceed Two Million Dollars ($2,000,000). In no event will the
Transaction Companies' total obligation to TRW and its subsidiaries under
Section 9.1(a) hereof exceed, in the aggregate, Seventy Million Dollars
($70,000,000).
9.6. MISCELLANEOUS:
(a) CERTAIN MATTERS OF CONSTRUCTION: References in this Article IX
to representations or warranties set forth in a particular Section
will be deemed to include without limitation (i) all
representations and warranties in Parts specifically referred to
in such Section and (ii) such representations and warranties as
confirmed by the certificates referred to in Sections 5.1(a),
5.1(k) and 5.2(a) hereof.
(b) WAIVER OF SUBROGATION: Each of the parties hereby waive any
insurer's right of subrogation under this Agreement except solely
to the extent such waiver would result in a limitation or
termination of coverage under any policy.
ARTICLE X
AMENDMENT, WAIVER, AND TERMINATION
10.1 AMENDMENT: This Agreement may be amended at any time, but only by
written instrument executed by all the parties hereto.
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10.2 WAIVER: Waiver of compliance by any party with any covenants or
conditions contained in this Agreement may only be by written instrument
executed by the party waiving such compliance. No such waiver, however, will be
deemed to constitute the waiver of any such covenant or condition in any other
circumstance or the waiver of any other covenant or condition.
10.3 TERMINATION: This Agreement may be terminated and the transactions
contemplated hereby may be abandoned:
(a) at any time, by mutual written consent of TRW and Purchaser; or
(b) by either TRW or Purchaser if the other party will be in material
breach of one or more of the provisions of this Agreement and has not
cured such breach within 30 days following notice of such breach; or
(c) by either TRW or Purchaser if, through no fault of the party
seeking termination, the Closing has not occurred on or prior to
December 3, 1996.
10.4 PROCEDURE AND EFFECT OF TERMINATION: In the event of the termination
of this Agreement and the abandonment of the transactions contemplated hereby
pursuant to Section 10.3 hereof, written notice thereof will forthwith be given
by the party so terminating to the other party and this Agreement will terminate
and the transaction contemplated hereby will be abandoned, without further
action. If this Agreement is terminated pursuant to Section 10.3 hereof:
(a) each party will redeliver all documents, work papers and other
materials of the other parties relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to the party furnishing the same, and all confidential
information received by any party hereto with respect to the other
party will be treated in accordance with Section 11.2 hereof;
(b) all filings, applications and other submissions made pursuant
hereto will, at the option of TRW or Purchaser and to the extent
practicable, be withdrawn from the agency or other person to which
made;
(c) there will be no liability or obligation hereunder on the part of
TRW or Purchaser or any of their respective directors, officers,
employees, affiliates, controlling persons, agents or representatives,
except that any liability or obligation of TRW or Purchaser (the
"Responsible Party"), as the case may be, arising from a material
breach by the Responsible Party of one or more of the provisions of
this Agreement will survive such termination; and
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(d) the obligations provided for in this Section 10.4 and the
obligation to treat information in a confidential manner as set forth
in Section 11.2 hereof will survive any such termination.
ARTICLE XI
MISCELLANEOUS
11.1 COOPERATION: Each of the parties will cooperate with the other
parties, at the request and expense of the requesting party, in furnishing
information, testimony and other assistance in connection with any actions,
proceedings, arrangements and disputes with other persons or governmental
inquiries or investigations involving the conduct of the Business by the TRW
Group or the transactions contemplated hereby.
11.2 CONFIDENTIALITY: Reference is made to the Confidentiality Agreement
(the "Confidentiality Agreement") dated January 19, 1996 between Purchaser and
TRW. Both parties will continue to be bound by and will continue to abide by the
terms and conditions of the Confidentiality Agreement. TRW agrees to cooperate
with Purchaser, after the Closing, to obtain the return of all documents and
information supplied to other prospective purchasers of the Business or part
thereof pursuant to Confidentiality Agreements executed by such prospective
purchasers. TRW will seek, and Purchaser agrees to accept, assignments of
Confidentiality Agreements that TRW entered into with other prospective
purchasers of the Business.
11.3 SEVERABILITY: If any provision of this Agreement will finally be
determined to be unlawful, then such provision will be deemed to be severed from
this Agreement and every other provision of this Agreement will remain in full
force and effect to the extent that such provisions can be given reasonable
effect in accordance with the intentions of the parties.
11.4 EXPENSES: Except as otherwise provided in this Agreement, each party
will bear its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, whether or not such transactions will be
consummated. For purposes of the preceding sentence, all expenses of TRW and its
subsidiaries (including, without limitation, expenses of the Business) in
connection with this transaction and the transactions contemplated hereby,
including, without limitation, all legal, accounting and other advisory costs
and expenses, broker's or finder's fees and expenses, investment banking fees
and expenses, corporate staff expenses and all retention or deal bonuses, if
any, will be paid by TRW and will not be charged by TRW to the Business;
provided, however, that the Business may pay or be charged for the salaries and
benefits (excluding retention or deal bonuses) of employees who are full time
employees of the Business or whose salaries and benefits are allocated to the
Business in the Ordinary Course of Business.
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11.5 BULK SALES: The parties waive compliance with the provisions of any
so-called bulk sales law of any state.
11.6 NOTICES: All notices, requests and other communications hereunder will
be in writing and will be deemed to have been duly given at the time of receipt
if delivered by hand or communicated by electronic transmission, or, if mailed,
three (3) days after mailing registered or certified air mail, return receipt
requested, with postage prepaid:
If to Purchaser, to: IS&S Acquisition Corp.
c/o both of:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Telefax: (000) 000-0000
Attention: X. Xxxxxxxx Malt
and
Xxxxxxxx, Xxxxxxx & Xxxxxxx
A Professional Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telefax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
If to TRW, to: TRW Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telefax: (000) 000-0000
Attention: Secretary
provided, however, that if either party will have designated a different address
by notice to the other given as provided above, then to the last address so
designated.
11.7 DISPUTE RESOLUTION: Except as provided in Section 2.8 hereof
concerning the Adjustment, if, after the Closing, the parties should have any
dispute among each other arising out of or relating to this Agreement or the
parties' respective rights and duties hereunder, then the parties will attempt
to resolve such dispute in the following manner:
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(a) NOTICE: Either party may at any time deliver to the other a
written dispute notice setting forth a brief description of the
issue for which such notice initiates the dispute resolution
mechanism contemplated by this Section 11.7.
(b) NEGOTIATION: During the ninety (90) day period following the
delivery of the notice described in Section 11.7(a) above,
appropriate representatives of the parties will meet and seek to
resolve the disputed issue through negotiation.
(c) REFERRAL: If representatives of the parties are unable to
resolve the disputed issue through negotiation within the first
sixty (60) days of the period described in Section 11.7(b) hereof,
the parties will refer the issue to an officer or executive
officer of each party or a neutral person or persons satisfactory
to both parties ("Referral Committee"). The procedures to be
followed for presentation of each party's position with respect to
the disputed issue and the method by which the Referral Committee
will consider the issue and attempt to reach a decision will be
determined by agreement of the parties at the time the matter is
referred. Unless the parties have otherwise agreed in advance in
writing, a decision of the Referral Committee pursuant to this
Section 11.7 will not be binding upon the parties.
(d) STAY: No party will bring any action against another with
respect to such dispute until expiration of such ninety (90) day
period, unless the party bringing an action determines, based upon
written advice of legal counsel, that an applicable statute of
limitation may expire prior to the expiration of such ninety (90)
day period. Nothing in this Section 11.7 will preclude any party
from taking interim measures of protection in the form of seeking
preliminary or temporary equitable relief.
11.8 EXCLUSIVE REMEDY: The parties agree, to the fullest extent permitted
by law, that after the Closing none of them or any of their directors, officers,
employees, affiliates, controlling persons, agents, successors, permitted
assigns, or representatives will have any liability or responsibility whatsoever
to the other or such other's directors, officers, employees, affiliates,
controlling persons, agents, successors, permitted assigns, or representatives
on any basis (including, without limitation, in contract or tort, under federal
or state securities laws or otherwise) based upon any information provided or
made available, or statements made, to Purchaser or the members of the TRW Group
or their respective directors, officers, employees, affiliates, controlling
persons, agents, successors, permitted assigns, or representatives (or any
omissions therefrom), including, without limitation, information provided or
statements made in the specific representations and warranties set forth in this
Agreement, except as and only to the extent expressly set forth herein with
respect to such representations and warranties,
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covenants and rights to indemnification and subject to the limitations and
restrictions contained herein or to the extent any such liability or
responsibility is based upon a fraudulent representation or claim.
11.9 ASSIGNMENT: This Agreement will be binding upon and inure to the
benefit of the successors of each of the parties hereto, but will not be
assignable by either party without the prior written consent of the other;
provided, however, that Purchaser may (i) assign its rights and delegate its
duties hereunder, in whole or in part, to Holdings pursuant to the Merger,
(ii) assign its rights and delegate its duties hereunder, in whole or in part,
to one or more of its subsidiaries, provided that Purchaser gives TRW prior
written notice of such assignment and unconditionally guarantees performance by
Purchaser's assignee, (iii) assign its rights hereunder, but subject to all
limitations contained hereunder including, without limitation, the provisions of
Article IX and Section 11.8 hereof, to one or more lenders of Operating Company
to secure obligations to such lender or lenders, or (iv) assign its rights and
delegate its duties hereunder, but subject to all limitations contained
hereunder including, without limitation, the provisions of Article IX and
Section 11.8 hereof, to the purchaser or purchasers of all or substantially all
of the Business (whether through a sale of assets or stock, merger or
otherwise).
11.10 NO THIRD PARTIES: Neither this Agreement nor any provision set forth
herein is intended to, or will, create any rights in or confer any benefit upon
any person other than Xxxx and the parties hereto and their successors and
permitted assigns.
11.11 INCORPORATION BY REFERENCE: The Appendices to this Agreement
constitute integral parts of this Agreement and are hereby incorporated into
this Agreement by this reference.
11.12 GOVERNING LAW: This Agreement will be governed by and construed in
accordance with the internal substantive laws of the State of New York, except
where the substantive laws of another jurisdiction mandatorily apply.
11.13 COUNTERPARTS: More than one counterpart of this Agreement may be
executed by the parties hereto, and each fully executed counterpart will be
deemed an original without production of the others.
11.14 COMPLETE AGREEMENT: This sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior letters of intent, agreements, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of either party relating thereto.
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11.15 CONSENT TO JURISDICTION: Each of the parties agrees that all actions,
suits or proceedings arising out of or based upon this Agreement or the Other
Agreements or the subject matter hereof or thereof will be brought and
maintained exclusively in the United States District Court for the Southern
District of New York or the Supreme Court of the State of New York, county of
New York. Each of the parties hereto by execution hereof (i) hereby irrevocably
submits to the United States District Court for the Southern District of New
York or the Supreme Court of the State of New York, county of New York for the
purpose of any action, suit or proceeding arising out of or based upon this
Agreement or the Other Agreements or the subject matter hereof or thereof and
(ii) hereby waives, as a defense or otherwise, in any such action, suit or
proceeding, any claim that he or it is not subject personally to the
jurisdiction of the above-named courts, that he or it is immune from
extraterritorial injunctive relief or other injunctive relief, that his or its
property is exempt or immune from attachment or execution, that any such action,
suit or proceeding may not be brought or maintained in one of the above-named
courts, that any such action, suit or proceeding brought or maintained in one of
the above-named courts should be dismissed on grounds of FORUM NON CONVENIENS,
should be transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action, suit or
proceeding in any court other than one of the above-named courts, or that this
Agreement, the Other Agreements or the subject matter hereof or thereof may not
be enforced in or by any of the above-named courts. Each of the parties hereto
hereby consents to service of process in any such suit, action or proceeding in
any manner permitted by the Federal Rules of Civil Procedure or the Civil
Practice Laws and Rules of New York, agrees that service of process by
registered or certified mail, return receipt requested, at the address specified
in or pursuant to Section 11.6 is reasonably calculated to give actual notice
and waives and agrees not to assert by way of motion, as a defense or otherwise,
in any such action, suit or proceeding any claim that service of process made in
accordance with Section 11.6 hereof does not constitute good and sufficient
service of process. The provisions of this Section 11.15 will not restrict the
ability of any party to enforce in any court any judgment obtained in the United
States District Court for the Southern District of New York or the Supreme Court
of the State of New York, county of New York.
11.16 WAIVER OF JURY TRIAL: To the extent not prohibited by applicable law
which cannot be waived, each of the parties hereto hereby waives, and covenants
that he or it will not assert (whether as plaintiff, defendant, or otherwise),
any right to trial by jury in any forum in respect of any issue, claim, demand,
cause of action, action, suit or proceeding arising out of or based upon this
Agreement, the Other Agreements or the subject matter hereof or thereof, in each
case whether now existing or hereafter arising and whether in contract to tort
or otherwise. Any of the parties hereto may file an original counterpart or a
copy of this Section 11.15 with any court as written evidence of the consent of
each of the parties hereto to the waiver of his or its right to trial by jury.
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IN WITNESS WHEREOF, the parties have each caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
IS&S ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Authorized Officer
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Authorized Officer
ATTEST: TRW INC.
Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------- --------------------------------
Authorized Officer
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------------
Authorized Officer
TRW IS&S INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Authorized Officer
TRW MICROWAVE INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Authorized Officer
TARGET MARKETING SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Authorized Officer
TRW ENVIRONMENTAL MANAGEMENT
COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Authorized Officer
TRW HOTEL COMPANY INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Authorized Officer
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APPENDIX A
CERTAIN DEFINITIONS
The following terms have the meanings set forth below where used in the
Agreement and identified with initial capital letters:
Acquired Assets As defined in Section 2.2 of the Agreement.
Activated Activated means that he Copernicus System
has been placed in service and produces
substantially all consumer credit reports sold
by the Business.
Additional Excluded Assets As defined in Appendix C.
Additional Excluded Liabilities As defined in Appendix C.
Adjustment As determined under Section 2.8 of the Agreement.
Agreement As defined in the Preamble to the Agreement.
Approved Investments As defined in Section 2.8(a) of the Agreement.
Assumed Liabilities As defined in Section 2.4 of the Agreement.
Assurances of Discontinuance State of Vermont, Washington County Superior Court,
Docket No. S-790-92 Assurance of Discontinuance dated
December 16, 0000 xxxxxxx XXX xxx xxx Xxxxx xx Xxxxxxx;
and State of Vermont, Washington County Superior Court,
Docket No.__________________, Assurance of
Discontinuance dated September 14, 1995 between TRW and
the State of Vermont.
Auditors As defined in Section 2.8(c) of the Agreement.
Auditors' Report As defined in Section 2.8(c) of the Agreement.
Business As defined in Recital A of the Agreement.
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Business Facility As defined in Section 3.2(e) of the Agreement.
CCB Shares The 10,000 shares of Consumer Credit Bureau
(Japan) Common Stock owned by TRW.
Certificate of Merger As defined in Section 2.6(d) of the Agreement.
Claim As defined in Section 9.3(a) of the Agreement.
Claimant As defined in Section 9.3 of the Agreement.
Closing As defined in Section 2.6(b) of the Agreement.
Closing Date As defined in Section 2.6(c) of the Agreement.
Closing Date Net Working Capital Deficiency As defined in Section 2.8(b) of the Agreement.
Closing Date Net Working Capital Excess As defined in Section 2.8(b) of the Agreement.
Code As defined in Recital D of the Agreement.
Confidential Information As defined in Section 7.6(a) of the Agreement.
Confidentiality Agreement As defined in Section 11.2 of the Agreement.
Consent Orders The Consent Order dated December 10, 1991 in the case of
Federal Trade Commission v. TRW INC. U.S. District Court
for the Northern District of Texas, Civil Action
No. 3-91CV2661-H, as amended by Agreed Order Amending
Consent Order dated January 14, 1993; and the Consent
Order dated December 10, 1991 in the case of TRW INC. v.
Xxx Xxxxxxx, Attorney General of the State of Texas, et
al, U.S. District Court for the Northern District of
Texas, Civil Action No. 3-91-1340-H.
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Contractual Obligations As to any person, any written contract, agreement, deed,
mortgage, lease, license, commitment, undertaking or
arrangement, including, without limitation, any document
or instrument evidencing or otherwise relating to any
indebtedness to which or by which such person is subject
or bound or, to the knowledge of such person, to which or
by which any property or right of such person is subject
or bound, specifically excluding, however, all leases of
real or personal property.
Databases Any and all proprietary and original compilation of data.
Default An occurrence which constitutes a breach or default under a
contract, order, or other commitment, after the expiration
of any grace period provided, without cure.
Defending Party As defined in Section 9.3(b) of the Agreement.
Demand Note As defined in Recital D of the Agreement.
Disclosure Package As defined in Section 3.2 of the Agreement.
Effective Time As defined in Section 2.6(e) of the Agreement.
Elsevier As defined in Recital D of the Agreement.
Elsevier Partnership Interest As defined in Section 3.2(o) of the Agreement.
Employee Pension Benefit Plan As defined in Section 3.2(k) of the Agreement.
Employee Welfare Benefit Plan As defined in Section 3.2(k) of the Agreement.
Encumbrance Any encumbrance or lien, including, without limitation,
any mortgage, judgment lien, materialman's lien, mechanic's
lien, security interest, encroachment, easement, or other
restriction, in each case having a material adverse effect
on the thing or right so encumbered.
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Environmental Claim Any claim, written notice or written request for
information by a governmental body or agency or by any
other third party, whether based upon violation of statute
or regulation, strict liability, tort or otherwise, with
respect to an Environmental Condition.
Environmental Condition Any condition affecting the environment or natural
resources arising out of the conduct of the Business or
the use of the Acquired Assets based upon the generation,
management, handling, transportation, treatment, storage,
disposal, delivery, discharge, release or emission of any
waste, pollutant, toxic or other hazardous substance;
provided, however, for the purposes of Section 2.5(a) of
the Agreement "Environmental Condition" means any
condition affecting the environment or natural resources
based upon the generation, management, handling,
transportation, treatment, storage, disposal, delivery,
discharge, release or emission of any waste, pollutant,
toxic or other hazardous substance.
Equity Investors As defined in Recital D of the Agreement.
ERISA Employee Retirement Income Security Act of 1974, as amended.
Exceptions As defined in Section 2.12(a) of the Agreement.
Excluded Assets As defined in Section 2.3 of the Agreement.
Excluded Liabilities As defined in Section 2.5 of the Agreement.
FCRA Fair Credit Reporting Act, as amended, 00 Xxxxxx Xxxxxx
Code Sections 1681 et seq.
Hired Employees As defined in Section 8.1 of the Agreement.
Holdings As defined in the Preamble to the Agreement.
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Holdings Shares All issued and outstanding shares of common stock in Holdings.
HSR Act The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
Indemnitor As defined in Section 9.3 of the Agreement.
Intellectual Property All rights with respect to patents, trademarks, service
marks, trade names, copyrights (and applications for
registration of any of the foregoing), computer software,
computerized data and information (including without
limitation databases), trade secrets, know-how,
inventions, product designs, processes and techniques,
testing and quality control processes and techniques,
drawings and customer lists.
IS&S Intellectual Property All rights with respect to the Proprietary Software,
Non-Proprietary Software and other Intellectual Property
held or used by the TRW Group in the conduct of the
Business as currently conducted or as proposed to be
conducted in connection with present plans for the
Copernicus/File One system under development as such
Intellectual Property may exist as of Closing, as well as
all claims against other persons arising out of such
rights.
IS&S International As defined in the Preamble of the Agreement.
IS&S Significant Intellectual Property All IS&S Intellectual Property, the absence of which or
inability to use, individually or in the aggregate, is likely
to have a Material Adverse Effect.
Losses As defined in Section 9.3(c) of the Agreement.
Xxxx Xxxx - TRW REDI, Inc., a District of Columbia corporation.
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Material Adverse Effect An event which has, or is likely to have, a material adverse
effect on the business, assets, results of operations,
condition (financial or otherwise) of the Business taken as
a whole as the same is currently conducted by TRW and the
Partnership.
Material Event Any event, condition, circumstance or occurrence which has
had a Material Adverse Effect on the Business.
Merger As defined in Recital D of the Agreement.
Merger Consideration As defined in Section 2.6(e) of the Agreement.
Mexican Investments All of IS&S International's equity interests in Comcred,
S.A. de C.V., a corporation organized under the laws of
Mexico, and Servicred, S.A. de C.V., a corporation
organized under the laws of Mexico, and all of IS&S
International's rights, title and interests under the
agreements and instruments set forth in Part B-1-3 and
Part B-1-4 of Appendix F to the Agreement, including,
without limitation, the promissory notes set forth
therein.
Microwave As defined in the Preamble to the Agreement.
Net Working Capital As defined in Section 2.8(b) of the Agreement.
Non-Proprietary Software All computer software and programs licensed or leased
from third parties including, without limitation, all
existing versions, drafts and component modules of source
code or object code or natural language code currently
provided under license, whether recorded on paper, magnetic
media or other electronic device, all existing descriptions,
flow-charts and such other writings currently provided under
license, including without limitation, documentation, manuals,
catalogs, leaflets and training materials relating to the
foregoing.
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Noncompetition Agreement An agreement to be dated the Closing Date between
Holdings, Operating Company and TRW relating to TRW's
post-Closing participation in activities competitive with
the Business, such agreement to be substantially in the
form of Appendix H to the Agreement.
Operating Company As defined in the Preamble to the Agreement.
Ordinary Course of Business The ordinary course of business consistent with past custom
and practice (including, without limitation, with respect to
quantity, timing and frequency).
Other Agreements Collectively, the Transition Agreement, the
Noncompetition Agreement, the Trademark Agreement, the
Shared Liabilities Agreement, and such other agreements
relating to the transactions contemplated hereby as the
parties may hereafter execute and deliver.
Ownership Such ownership as confers upon a person having it, good and
marketable title to and control over the thing or right
owned, free and clear of any and all Encumbrances except
permitted encumbrances.
Partnership As defined in Recital B of the Agreement.
Partnership Employees All persons actively employed by the Partnership who are
(i) on the payroll of the Partnership as active employees
immediately prior to the Closing or (ii) on leave for
medical or other reasons as of the Closing at such time
as such person is released to return to work, but
excluding those persons who are listed on Appendix M.
Partnership Interests As defined in Section 3.2(o) of the Agreement.
Partnership Plan As defined in Section 8.8 of the Agreement.
Pension Plan As defined in Section 8.4 of the Agreement.
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Plan An employee benefit plan within the meaning of
Section 3.3 of ERISA.
Prime Rate The rate of interest publicly announced by National
City Bank (Cleveland) from time to time as its prime or
base rate for U.S. Dollar loans.
Proprietary Software Any and all software other than Non-Proprietary Software
owned as developed, expanded, or otherwise modified from
time to time including, without limitation, all existing
versions and component modules of source code or object
code or natural language code therefor, whether recorded
on paper, magnetic media or other electronic device, all
existing descriptions, flow-charts and such other
writings currently used to develop such software and all
existing documentation, including, without limitation,
manuals, catalogs, leaflets and training materials
relating to the foregoing.
Purchase Price As defined in Section 2.7 of the Agreement.
Purchaser As defined in the Preamble to the Agreement, including any
successor thereto by reason of merger or otherwise.
Purchaser 401(k) Plan As defined in Section 8.8 of the Agreement.
Recapitalization As defined in Recital D of the Agreement.
Referral Committee As defined in Section 11.7(c) of the Agreement.
REDI Trademark All of the right, title and interest of Elsevier
in the Trademark and U.S. Trademark Registrations licensed
to the Partnership under the trademark license agreement
between Elsevier and the Partnership dated August 31, 1991.
Responsible Party As defined in Section 10.4(c) of the Agreement.
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Retained Holdings Shares That number of Holdings Shares which will result in
Microwave owning an aggregate of 5.56% of the issued and
outstanding shares of common equity in Holdings
immediately following the Closing.
Review Period As defined in Section 2.8(d) of the Agreement.
Section 338(h)(10) Election As defined in Section 6.5 of the Agreement.
Shared Liabilities Agreement An Agreement to be dated the Closing Date between Holdings,
Operating Company and TRW relating to the sharing of certain
liabilities, such Agreement to be substantially in the form
of Appendix L to the Agreement.
Shares As defined in Section 3.2(c) of the Agreement.
SSP As defined in Section 8.8 of the Agreement.
Successor Plan A continuation of a predecessor Plan, as defined in
Section 4021(a) of the ERISA.
Tax Return Any federal, state, local and foreign return,
declaration, report, claim for refund, amended return,
declarations of estimated Tax or information return or
statement relating to Taxes, and any schedule or
attachment thereto, filed or maintained, or required to
be filed or maintained in connection with the
calculation, determination, assessment or collection of
any Tax, and including any amendment thereof.
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Tax, Taxes, Taxable All federal, state and local and foreign taxes, levies,
deficiencies or other assessments and other charges of
whatever nature (including, without limitation, all net
income, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment,
excise, estimated, occupation, or property taxes) imposed
by any taxing authority as well as any obligation to
contribute to the payment of Taxes determined on a
consolidated, combined or unitary basis with respect to
TRW or any affiliate, together with any interest and any
penalties, additions to tax or additional amounts
relating thereto.
Title Company As defined in Section 2.12(a) of the Agreement.
Trademark Agreement An agreement to be dated the Closing Date between
Operating Company and TRW relating to Operating Company's
post-closing use of the TRW Trademark, such agreement to be
substantially in the form of Appendix J to the Agreement.
Transition Agreement An agreement to be dated the Closing Date between
Holdings, Operating Company and TRW pursuant to which the
parties will establish certain procedures for the orderly
transfer of the Business, such agreement to be in the
form of Appendix I to the Agreement, as modified by the
provisions of Section 4.4 of the Agreement.
Transaction Companies Holdings, Operating Company, TRW Hotel and Xxxx.
TRW As defined in the Preamble to the Agreement.
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TRW Employees All persons actively employed by TRW in TRW's conduct of
the Business who are (i) on the payroll of the Business
as active employees as of the Closing or (ii) on leave
for medical or other reasons as of the Closing at such
time as such person is released to return to work, but
excluding those persons who are listed on Appendix M and
any person who has qualified for benefits under TRW's
Long Term Disability Plan as of the Closing.
TRW Group TRW, IS&S International, Microwave, the Transaction
Companies and the Partnership.
TRW Hotel As defined in the Preamble to the Agreement.
TRW Hotel Shares All issued and outstanding shares of capital stock of TRW
Hotel.
TRW Partnership Interest As defined in Section 3.2(o) of the Agreement.
TRW's knowledge As defined in Section 1.3 of the Agreement.
TRW Signatories TRW, Microwave, IS&S International, Holdings, Operating
Company and TRW Hotel.
WARN Worker Adjustment and Retaining Act of 1988, as amended.
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