EXHIBIT 10.16
EXECUTION COPY
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STOCKHOLDERS AGREEMENT
BY AND AMONG
TRW AUTOMOTIVE HOLDINGS CORP.
AND
THE OTHER PARTIES NAMED HEREIN
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DATED: FEBRUARY 28, 2003
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS.........................................................1
1.1 Definitions...............................................1
1.2 Other Defined Terms.......................................3
1.3 Rules of Construction.....................................4
ARTICLE II TRANSFER ..........................................................4
2.1 Limitation on Transfer....................................4
2.2 Permitted Transfers.......................................5
2.3 Transfers in Compliance with Law; Substitution of
Transferee..............................................5
ARTICLE III RIGHT OF FIRST REFUSAL; TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS.......5
3.1 Right of First Refusal....................................5
3.2 Tag-Along Rights..........................................8
3.3 Drag-Along Right..........................................9
ARTICLE IV STOCK CERTIFICATE LEGEND..........................................10
4.1 Stock Certificate Legend.................................10
ARTICLE V REGISTRATION RIGHTS................................................11
5.1 Demand Registration Rights...............................11
5.2 Incidental Registration..................................12
5.3 Registration Procedures..................................13
5.4 Expenses.................................................15
5.5 Indemnification..........................................15
5.6 Lock-up Agreement........................................17
ARTICLE VI GOVERNANCE........................................................17
6.1 Board of Directors.......................................17
6.2 Board Action.............................................19
6.3 Stockholder Approval.....................................19
ARTICLE VII COVENANTS........................................................19
7.1 Books and Records........................................19
7.2 Periodic Reporting.......................................19
7.3 Confidentiality..........................................20
7.4 Assumption of Liabilities................................20
7.5 Dissolution of AI LLC....................................20
ARTICLE VIII MISCELLANEOUS...................................................21
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8.1 After-Acquired Securities................................21
8.2 Recapitalization, Exchange, Etc..........................21
8.3 Notices..................................................21
8.4 Successors and Assigns; Third Party Beneficiaries........22
8.5 Amendment and Waiver.....................................23
8.6 Counterparts.............................................23
8.7 Specific Performance.....................................23
8.8 Headings.................................................23
8.9 Severability.............................................23
8.10 Entire Agreement.........................................23
8.11 Term of Agreement........................................24
8.12 Further Assurances.......................................24
8.13 Governing Law............................................24
8.14 Consent to Jurisdiction; No Jury Trial...................24
EXHIBITS
Exhibit A Form of Transfer Agreement
Exhibit B Form of Management Rights Letter Agreement
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "AGREEMENT"), dated as of February
28, 2003, is among TRW Automotive Holdings Corp., a Delaware corporation
(including any successor thereto, "PARENT"), Automotive Investors L.L.C., a
Delaware limited liability company (together with any successor thereto and any
Permitted Transferee thereof that becomes a party to this Agreement pursuant to
Section 2.3, "AI LLC"), and Northrop Grumman Corporation, a Delaware corporation
(together with any Permitted Transferee thereof that becomes a party to this
Agreement pursuant to Section 2.3, "NORTHROP GRUMMAN"). Unless otherwise
provided in this Agreement, capitalized terms used herein have the respective
meanings given to them in Section 1.1. Capitalized terms used herein and not
otherwise defined herein have the respective meanings given to them in the
Master Purchase Agreement referred to below.
WHEREAS, this Agreement is being delivered in connection with the
Master Purchase Agreement, dated as of November 18, 2002, between BCP
Acquisition Company L.L.C., a Delaware limited liability company ("BCP LLC"),
and Northrop Grumman, as amended by Amendment No. 1 thereto, dated as of
December 20, 2002, among BCP LLC, Northrop Grumman, TRW Inc. and TRW Automotive
Inc. (as the same may be further amended, supplemented or modified, the "MASTER
PURCHASE AGREEMENT");
WHEREAS, BCP LLC has assigned its rights and obligations under the
Master Purchase Agreement to AI LLC; and
WHEREAS, the parties hereto wish to restrict the transfer of the Shares
and to provide for, among other things, first refusal, tag-along and drag-along
rights, corporate governance rights and obligations and certain other rights
under certain conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"AFFILIATE" means with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person.
"AGREEMENT" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"BOARD OF DIRECTORS" means the Board of Directors of Parent.
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"COMMISSION" means the U.S. Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"COMMON STOCK" means the shares of common stock, par value $0.01 per
share, of Parent or any other capital stock of Parent into which such stock is
reclassified or reconstituted and any other common stock of Parent; provided
that, for the purposes of any computation of the number of shares of Common
Stock pursuant to Articles II and III, all outstanding Common Stock Equivalents
shall be deemed converted, exercised or exchanged, as applicable, and the shares
of Common Stock issuable upon such conversion, exercise or exchange shall be
deemed outstanding, whether or not such conversion, exercise or exchange has
actually been effected.
"COMMON STOCK EQUIVALENTS" means any security or obligation which is by
its terms convertible, exchangeable or exercisable into or for shares of Common
Stock, whether at the time of issuance or upon the passage of time or the
occurrence of some future event.
"INDEPENDENT DIRECTOR" means a natural person who is not an Affiliate
of Blackstone Family Investment Partnership IV L.P., a Delaware limited
partnership, Blackstone Capital Partners IV L.P., a Delaware limited
partnership, Blackstone Capital Partners IV-A L.P., a Delaware limited
partnership, or Blackstone Automotive Co-Invest Capital Partners L.P., a
Delaware limited partnership.
"INITIAL PUBLIC OFFERING" means the initial public offering of the
shares of Common Stock of Parent pursuant to an effective registration statement
filed under the Securities Act.
"IPO EFFECTIVENESS DATE" means the date upon which Parent closes its
Initial Public Offering.
"PUBLIC OFFERING" means any firm commitment underwritten public
offering of Common Stock pursuant to an effective registration statement under
the Securities Act, other than pursuant to a registration statement on Form S-4
or Form S-8 or other limited purpose form.
"REGISTERED SALE" means a sale of Shares effected pursuant to an
effective registration statement under the Securities Act in accordance with
Section 5.1 or 5.2 hereof.
"REGISTRABLE SHARES" means the Shares, provided that such Shares shall
cease to be Registrable Shares if and when (i) a registration statement with
respect to the disposition of such Shares shall have become effective under the
Securities Act and such Shares shall have been disposed of pursuant to such
effective registration statement, (ii) such Shares shall have been sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, (iii) such
Shares shall have been otherwise transferred, new certificates not bearing
restrictive legends shall have been delivered by Parent in lieu thereof and
further disposition thereof shall not require registration or qualification of
them under the
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Securities Act or any state securities or Blue Sky laws, (iv) such Shares may be
sold pursuant to Rule 144(k) under the Securities Act (unless such Shares are
held by a holder owning over 5% of all the then-outstanding shares of Common
Stock) or (v) such Shares shall have ceased to be outstanding.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.
"SHARES" means, with respect to each Stockholder, all shares, whether
now owned or hereafter acquired, of Common Stock, and any other Common Stock
Equivalents owned thereby; provided, however, for the purposes of any
computation of the number of Shares pursuant to Articles II and III, all
outstanding Common Stock Equivalents shall be deemed converted, exercised or
exchanged, as applicable, and the shares of Common Stock issuable upon such
conversion, exercise or exchange shall be deemed outstanding, whether or not
such conversion, exercise or exchange has actually been effected.
"STOCKHOLDERS" means each of AI LLC and Northrop Grumman and any
Permitted Transferee thereof to whom Shares are transferred in accordance with
Article II, and the term "Stockholder" shall mean any such Person. For purposes
of this Agreement, TRW Automotive U.K. Inc., a Delaware corporation and an
indirect, majority-owned Subsidiary of Northrop Grumman, shall be treated as a
Stockholder as if it had received Shares from Northrop Grumman as a Permitted
Transferee thereof pursuant to Section 2.2 hereof.
1.2 Other Defined Terms. The following capitalized terms are defined in
this Agreement in the Section indicated below:
DEFINED TERM SECTION
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Agreement Preamble
AI LLC Preamble
AI LLC Nominees 6.1(b)
BCP LLC Recitals
Blackstone Members 7.5
Contract Date 3.1(e)
Demand Date 5.1(a)
Drag-Along Notice 3.3(a)
Drag-Along Rightholders 3.3(a)
Drag-Along Sellers 3.3(a)
Excess Offered Securities 3.1(c)
Executive Nominee 6.1(b)
Initiating Stockholder 5.1(a)
Intermediate Holdco 6.1(c)
Lock-Up Period 2.1(a)
Master Purchase Agreement Recitals
Newco 6.1(c)
Northrop Grumman Preamble
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Northrop Grumman Nominee 6.1(b)
Offer 3.1(a)
Offered Securities 3.1(a)
Offering Notice 3.1(a)
Offeror 3.1(a)
Parent Preamble
Permitted Transferee 2.2
Purchase Agreement Recitals
Request 5.1(a)
Rightholder(s) 3.1(c)
Rightholder Option Period 3.1(c)
Rightholder Percentage 3.1(c)
Selling Stockholder 3.1(a)
Tag-Along Notice 3.2(a)
Tag-Along Price 3.2(a)
Tag-Along Purchaser 3.2(a)
Tag-Along Rightholder 3.2(a)
Tag-Along Securities 3.2(a)
transfer 2.1
Transfer Agreement Recitals
1.3 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
ARTICLE II
TRANSFER
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2.1 Limitation on Transfer. (a) Until the earlier of (i) the fifth
anniversary of the date hereof and (ii) six months after the IPO Effectiveness
Date (the "LOCK-UP PERIOD"), except as required by law, no Stockholder shall
sell, contract to sell, give, assign, hypothecate, pledge (other than a pledge
made in connection with a commercial loan), encumber, grant a security interest
in, offer, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of (whether by operation of law or otherwise but
not including a transaction (A) pursuant to Section 2.2 or (B) involving the
sale (including a sale by merger, consolidation or similar transaction) of all
the then-outstanding shares of Common Stock or all or substantially all of the
assets of Parent if such transaction is effected pursuant to the provisions of
Section 3.3 or approved by the Stockholders of Parent in accordance with Section
6.3) any Shares (including, without limitation, the entering into of any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such Shares) (each a
"TRANSFER") or any direct right, title or interest therein or thereto without
the prior written consent of the Stockholders owning at least a majority of the
then-outstanding Shares. AI LLC agrees that it will not unreasonably withhold
its consent to any such transfer requested by Northrop Grumman if the proposed
transferee or
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transferees are acceptable to AI LLC in its reasonable judgment and such
transfer would not adversely affect Parent and its subsidiaries or AI LLC in the
reasonable judgment of AI LLC. A transfer effected with the prior written
consent of the Stockholders owning at least a majority of the then-outstanding
Shares is hereafter referred to as a "Majority Transfer."
(b) After the Lock-Up Period, any Stockholder may transfer all or a
portion of its Shares in accordance with and subject to the provisions of this
Agreement, including, without limitation, Section 2.3 and Article III.
(c) Any attempt to transfer any Shares or any rights thereunder in
violation of this Section 2.1 shall be null and void ab initio. Parent shall not
record on its stock transfer books or otherwise any transfer of Shares in
violation of the terms and conditions set forth herein, including, but not
limited to, Article III.
2.2 Permitted Transfers. Notwithstanding anything to the contrary
contained in this Agreement, but subject to Section 2.3, at any time, each of
the Stockholders may transfer all or a portion of its Shares to any of its
Affiliates (each such transferee, a "PERMITTED TRANSFEREE"). A Permitted
Transferee of Shares pursuant to this Section 2.2 may transfer its Shares
pursuant to this Section 2.2 only to the transferor Stockholder or to a Person
that is a Permitted Transferee of such transferor Stockholder, and such
Permitted Transferee will transfer its Shares back to the transferor Stockholder
or such a Person prior to its ceasing to be an Affiliate of such transferor
Stockholder.
2.3 Transfers in Compliance with Law; Substitution of Transferee. No
transfer may be made pursuant to this Article II or Article III unless (a) the
transferee has agreed in writing to be bound by the terms and conditions of this
Agreement pursuant to an instrument substantially in the form attached hereto as
Exhibit A, (b) the transfer complies in all respects with the applicable
provisions of this Agreement and (c) the transfer complies in all respects with
applicable federal and state securities laws, including, without limitation, the
Securities Act. Upon becoming a party to this Agreement, the transferee of a
Stockholder shall be substituted for, and shall enjoy the same rights and be
subject to the same obligations as, a Stockholder hereunder with respect to the
Shares transferred to such transferee.
ARTICLE III
RIGHT OF FIRST REFUSAL;
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TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS
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3.1 Right of First Refusal. (a) At any time a Stockholder proposes to
make a transfer of Shares in accordance with Article II hereof (other than (i) a
transfer to a Permitted Transferee pursuant to Section 2.2, (ii) a Majority
Transfer or (iii) a Registered Sale), and such Stockholder (a "SELLING
STOCKHOLDER") has received a bona fide arm's length offer (the "OFFER") to
purchase all or any portion of its Shares (the "OFFERED SECURITIES") from any
Person (the "OFFEROR") which the Selling Stockholder
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wishes to accept, such Selling Stockholder shall cause the Offer to be reduced
to writing and shall notify Parent in writing of its wish to accept the Offer
(the "OFFERING NOTICE").
(b) Offering Notice. The Offering Notice shall contain an irrevocable
offer to sell the Shares to each Stockholder (other than the Selling Stockholder
and its Affiliates) at a price equal or equivalent (as determined in the manner
set forth in Section 3.1(c)(i) below) to the price contained in, and otherwise
on the same terms and conditions of, the Offer and shall be accompanied by a
copy of the Offer (which shall identify the Offeror). Parent shall promptly
deliver a copy of the Offering Notice to each of the Stockholders (other than
the Selling Stockholder and its Affiliates).
(c) Rightholder Option; Exercise.
(i) For a period of 15 Business Days after the date upon which
the Stockholders (other than the Selling Stockholder and its
Affiliates) shall have received the Offering Notice (the "RIGHTHOLDER
OPTION PERIOD"), each of the Stockholders (other than the Selling
Stockholder and its Affiliates) (each, a "RIGHTHOLDER" and,
collectively, the "RIGHTHOLDERS") shall have the right to elect to
purchase Offered Securities either (A) at the same price and on the
same terms and conditions as the Offer or (B) if the Offer includes any
consideration other than cash, then at the sole option of the
Rightholders, at the equivalent cash price, determined in good faith by
Parent's Board of Directors. Each such Rightholder shall have the right
to elect to purchase such number of Offered Securities that is not less
than that percentage (the "RIGHTHOLDER PERCENTAGE") of the Offered
Securities determined by dividing (1) the total number of Shares then
owned by such Rightholder by (2) the total number of Shares then owned
by all such Rightholders. If any Rightholder does not fully subscribe
for the number or amount of Offered Securities it is entitled to
purchase, then each other participating Rightholder shall be offered
the opportunity to purchase up to all of the Offered Securities not so
subscribed for (for the purposes of this Section 3.1(c), the "EXCESS
OFFERED SECURITIES") and each such participating Rightholder shall have
the right to purchase at least that percentage of the Excess Offered
Securities determined by dividing (x) the total number of Shares then
owned by such fully participating Rightholder by (y) the total number
of Shares then owned by all fully participating Rightholders who
elected to purchase Excess Offered Securities. The procedure described
in the preceding sentence shall be repeated until either (x) there are
no remaining Excess Offered Securities or (y) each Rightholder shall
have declined or waived the initial offer of Offered Securities or an
offer to subscribe for Excess Offered Securities. If the Rightholders
do not subscribe for all of the Offered Securities pursuant to this
Section 3.1(c), then the Selling Stockholder may, subject to Section
3.2, sell all of the Offered Securities to the Offeror in accordance
with Section 3.1(e).
(ii) The right of each Rightholder to purchase the Offered
Securities under Section 3.1(c)(i) shall be exercisable by delivering
written notice of the exercise thereof, prior to the expiration of the
Rightholder Option Period, to the Selling Stockholder with a copy to
Parent. Each such notice shall state (A) the
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number of Shares held by such Rightholder and (B) the number of Shares
that such Rightholder is willing to purchase pursuant to this Section
3.1(c) (which shall not exceed such Rightholder's Rightholder
Percentage of the Offered Securities for the initial offer of such
Offered Securities pursuant to the first two sentences of clause (i)
above). The failure of a Rightholder to respond within the Rightholder
Option Period to the Selling Stockholder shall be deemed to be a waiver
of such Rightholder's rights under Section 3.1(c)(i); provided that
each Rightholder may waive its rights under this Section 3.1(c)(ii)
prior to the expiration of the Rightholder Option Period by giving
written notice to the Selling Stockholder, with a copy to Parent.
(d) Closing. The closing of the purchases of Offered Securities
subscribed for by the Rightholders under Section 3.1(c) shall be held at the
executive office of Parent at 11:00 a.m., local time, on the 30th day after the
giving of the last of the Offering Notices pursuant to Section 3.1(b) or (c) or
at such other time and place as the parties to the transaction may agree. At
such closing, the Selling Stockholder shall deliver certificates representing
the Offered Securities, duly endorsed for transfer and accompanied by all
requisite transfer taxes, if any, and such Offered Securities shall be free and
clear of any Liens (other than those arising hereunder and those attributable to
actions by the purchasers thereof) and the Selling Stockholder shall so
represent and warrant, and shall further represent and warrant that it is the
sole beneficial and record owner of such Offered Securities. The Rightholder(s)
purchasing Offered Securities shall deliver at the closing payment in full in
immediately available funds for the Offered Securities purchased by it. At such
closing, all of the parties to the transaction shall execute such additional
documents as are otherwise necessary or appropriate. Notwithstanding the
foregoing, any closing pursuant to this Section 3.1(d) may be delayed (up to 60
days) in connection with any required HSR filing or similar filing in any
jurisdiction; provided that each filing Person shall be required to seek all
appropriate clearances in connection therewith as soon as possible, including
seeking early approval of the proposed purchase or termination of any applicable
waiting period, as applicable.
(e) Sale to the Offeror. Unless the Rightholders elect to purchase all
of the Offered Securities under Section 3.1(c), the Selling Stockholder may sell
all of the Offered Securities to the Offeror on terms and conditions no less
favorable to the Selling Stockholder than those set forth in the Offering
Notice; provided, however, that such sale is bona fide and made pursuant to a
contract entered into within 60 days after the earlier to occur of (i) the
waiver by the Rightholders of the last of their options to purchase the Offered
Securities and (ii) the expiration of the last of the Rightholder Option Periods
(the "CONTRACT DATE"); and provided, further, that such sale shall not be
consummated unless and until (A) such Offeror shall represent in writing to each
Rightholder that it is aware of the rights and obligations of the Stockholders
contained in this Agreement and (B) prior to the purchase by such Offeror of any
of such Offered Securities, such Offeror shall become a party to this Agreement
and shall agree to be bound by the terms and conditions hereof in accordance
with Section 2.3 hereof. If such sale is not consummated within 60 days after
the Contract Date for any reason, then the restrictions provided for herein
shall again become effective, and no transfer of such Offered Securities may be
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made thereafter by the Selling Stockholder without again offering the same to
the Rightholders in accordance with this Section 3.1.
(f) To the extent that Rightholders elect to purchase all of the
Offered Securities pursuant to their rights under this Section 3.1, such
election shall override any election of any other Stockholders exercising any
rights under Section 3.2 hereof with respect to the same proposed transfer of
Shares.
3.2 Tag-Along Rights.
(a) If, at any time, one or more Stockholder(s) propose to transfer any
Shares to any Person (other than a Permitted Transferee of such transferring
Stockholder and other than pursuant to a Registered Sale) (a "TAG-ALONG
PURCHASER") in accordance with the terms of this Agreement, then, unless such
transferring Stockholder(s) are entitled to give and do give a Drag-Along Notice
pursuant to Section 3.3 hereof, such transferring Stockholder(s) shall first
provide written notice to each of the other Stockholders (other than Affiliates
of the transferring Stockholder(s)), which notice (the "TAG-ALONG NOTICE") shall
state: (i) the maximum number of Shares proposed to be transferred (the
"TAG-ALONG SECURITIES"); (ii) the purchase price per Share for the Tag-Along
Securities (the "TAG-ALONG PRICE"); and (iii) all material terms and conditions
of such sale, including the proposed transfer date (which date may not be less
than 30 days after delivery of the Tag-Along Notice). Each of the Stockholders
(other than the transferring Stockholder(s) and its/their respective Affiliates)
that has been provided with the Tag-Along Notice (each, a "TAG-ALONG
RIGHTHOLDER") shall have the right to sell to such Tag-Along Purchaser, upon the
terms set forth in the Tag-Along Notice, that number of Shares held by such
Tag-Along Rightholder equal to that percentage of the Tag-Along Securities
determined by dividing (A) the total number of Shares then owned by such
Tag-Along Rightholder by (B) the sum of (1) the total number of Shares then
owned by all such Tag-Along Rightholders exercising their rights pursuant to
this Section 3.2 and (2) the total number of Shares then owned by the
transferring Stockholder(s). The transferring Stockholder(s) and the Tag-Along
Rightholder(s) exercising their rights pursuant to this Section 3.2 shall effect
the sale of the Tag-Along Securities, and such Tag-Along Rightholder(s) shall
sell the number of Tag-Along Securities required to be sold by such Tag-Along
Rightholder(s) pursuant to this Section 3.2(a), and the number of Tag-Along
Securities to be sold to such Tag-Along Purchaser by the transferring
Stockholder(s) shall be reduced accordingly.
(b) The transferring Stockholder(s) shall give a Tag-Along Notice to
each Tag-Along Rightholder of each proposed sale by it of Tag-Along Securities
which gives rise to the rights of the Tag-Along Rightholders set forth in this
Section 3.2, at least 30 days prior to the proposed consummation of such sale,
setting forth, in addition to the information described above in Section 3.2(a),
the name of such Stockholder, the name and address of the proposed Tag-Along
Purchaser, the proposed form of consideration and terms and conditions of
payment offered by such Tag-Along Purchaser, the percentage of Shares that such
Tag-Along Rightholder may sell to such Purchaser (determined in accordance with
Section 3.2(a) and assuming that all Tag-Along Rightholders exercise their
rights pursuant to Section 3.2), and a representation that such
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Tag-Along Purchaser has been informed of the "tag-along" rights provided for in
this Section 3.2 and has agreed to purchase Shares in accordance with the terms
hereof. The tag-along rights provided by this Section 3.2 must be exercised by
any Tag-Along Rightholder wishing to sell its Shares within 10 Business Days
following receipt of the notice required by the preceding sentence, by delivery
of a written notice to the transferring Stockholder(s) indicating such Tag-Along
Rightholder's wish to irrevocably exercise its rights and specifying the number
of Shares (up to the maximum number of Shares owned by such Tag-Along
Rightholder requested to be purchased by such Tag-Along Purchaser) it wishes to
sell; provided that any Tag-Along Rightholder may waive its rights under this
Section 3.2 prior to the expiration of such 10 Business Day period by giving
written notice to such transferring Stockholder(s), with a copy to Parent. The
failure of a Tag-Along Rightholder to respond within such 10 Business Day period
shall be deemed to be a waiver of such Tag-Along Rightholder's rights under this
Section 3.2. If a Tag-Along Purchaser fails to purchase the requisite number of
Shares from any Tag-Along Rightholder that has properly exercised its tag-along
rights pursuant to this Section 3.2(b), then the transferring Stockholder(s)
shall not be permitted to consummate the proposed sale of the Tag-Along
Securities, and any such attempted sale shall be null and void ab initio.
(c) In connection with any sale pursuant to this Section 3.2, the
Tag-Along Rightholder shall make to the Tag-Along Purchaser the same
representations, warranties, covenants, indemnities and agreements as the
transferring Stockholder(s) makes in connection with the proposed transfer
(except that in the case of representations, warranties, covenants, indemnities
and agreements pertaining specifically to the transferring Stockholder(s), a
Tag-Along Rightholder shall make the comparable representations, warranties,
covenants, indemnities and agreements pertaining specifically to itself);
provided that all representations, warranties and indemnities shall be made by
the transferring Stockholder(s) and such Tag-Along Rightholder severally and not
jointly and that the liability of the transferring Stockholder(s) and such
Tag-Along Rightholder thereunder shall be borne by each of them on a pro rata
basis. The Tag-Along Rightholders shall receive the same type and amount of
consideration (and rights) per Share for the corresponding class or series of
stock (on an as-converted basis, if applicable) and the same type and amount of
consideration (and rights) for each type of Common Stock Equivalent, in each
case, as is paid or delivered to the transferring Stockholder(s) in the sale
pursuant to Section 3.2(a).
3.3 Drag-Along Right.
(a) If at any time one or more Stockholder(s) propose to transfer
Shares representing over 50% of all then-outstanding shares of Common Stock to
any Person, and, such Stockholder(s) (the "DRAG-ALONG RIGHTHOLDERS") have
received a bona fide, arm's length offer from an Offeror to purchase (including
a purchase by merger, consolidation or similar transaction) all of the
outstanding Shares or all or substantially all of the assets of Parent, the
Drag-Along Rightholders may send written notice (the "DRAG-ALONG NOTICE") to
Parent and the other Stockholders (such other Stockholders, collectively, the
"DRAG-ALONG SELLERS") notifying them they will be required to sell all (but not
less than all) of their Shares in such sale. Upon receipt of a Drag-Along
Notice,
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each Drag-Along Seller receiving such notice shall be obligated to (i) sell all
of its Shares in the transaction (including a sale or merger, consolidation or
similar transaction) contemplated by the Drag-Along Notice on the same terms and
conditions as the Drag-Along Rightholders (including payment of its pro rata
share of all costs associated with such transaction) and (ii) otherwise take all
action (or refrain from taking certain actions) necessary to cause the
consummation of such transaction, including not exercising any appraisal rights
in connection therewith. Each Drag-Along Seller further agrees to take all
actions (including executing documents) in connection with the consummation of
the proposed transaction as may reasonably be requested of it by the Drag-Along
Rightholders.
(b) In connection with any sale pursuant to this Section 3.3(a), the
Drag-Along Seller shall make to the Offeror the same representations,
warranties, covenants, indemnities and agreements as the Drag-Along Rightholders
make in connection with the proposed transfer (except that in the case of
representations, warranties, covenants, indemnities and agreements pertaining
specifically to the Drag-Along Rightholders, a Drag-Along Seller shall make the
comparable representations, warranties, covenants, indemnities and agreements
pertaining specifically to itself); provided that all representations,
warranties and indemnities shall be made by the transferring Drag-Along
Rightholders and such Drag-Along Seller severally and not jointly and that the
liability of the transferring Drag-Along Rightholders and such Drag-Along Seller
thereunder shall be borne by each of them on a pro rata basis. The Drag-Along
Seller shall receive the same type and amount of consideration (and rights) per
Share for the corresponding class or series of stock (on an as converted basis,
if applicable) and the same type and amount of consideration (and rights) for
each type of Common Stock Equivalent, in each case, as is paid or delivered to
the Drag-Along Rightholders in the sale pursuant to Section 3.3(a).
ARTICLE IV
STOCK CERTIFICATE LEGEND
------------------------
4.1 Stock Certificate Legend. A copy of this Agreement shall be filed
with the Secretary of Parent and kept with the records of Parent. Any
certificate representing Shares now held or hereafter acquired by any
Stockholder shall, for as long as this Agreement is effective, bear legends
substantially in the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY
NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS.
11
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
STOCKHOLDERS AGREEMENT, DATED FEBRUARY 28, 2003, AMONG TRW AUTOMOTIVE
HOLDINGS CORP. (THE "COMPANY") AND THE STOCKHOLDERS NAMED THEREIN, A
COPY OF WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE. THE
COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS
OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN
COMPLIANCE WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT.
ARTICLE V
REGISTRATION RIGHTS
-------------------
5.1 Demand Registration Rights.
(a) If (x) at any time prior to the later of the fifth anniversary of
the date hereof or the 180th day following the consummation of the Initial
Public Offering (such date, the "DEMAND DATE"), Parent shall receive a written
request (a "REQUEST") from one or more Stockholder(s) holding Shares
representing at least a majority of all the then-outstanding shares of Common
Stock of Parent or (y) at any time after the Demand Date, Parent shall receive a
Request from one or more Stockholders holding Shares representing over 18% of
all the then-outstanding shares of Common Stock of Parent, in either case to
register Registrable Shares owned by such Stockholder(s) totaling at least 5% of
the then-outstanding shares of Common Stock, which request shall specify the
intended method of disposition thereof, Parent shall promptly give notice of
such request to the other Stockholders and thereupon shall (i) prepare and file
a registration statement under the Securities Act covering (A) the number of the
Registrable Shares which are the subject of such request, (B) all unissued
shares of Common Stock which Parent has elected to register for itself and (C)
all other Registrable Shares which the Stockholders shall have requested Parent
to register pursuant to Section 5.2 and (ii) use its commercially reasonable
efforts to cause such registration statement to become effective. The managing
underwriter of an offering pursuant to this subparagraph (a) shall be selected
by Parent and shall be reasonably acceptable to the Stockholders initiating the
Request (the "INITIATING STOCKHOLDERS").
(b) A registration requested pursuant to this Section 5.1 shall not be
deemed to have been effected for purposes of Section 5.1(d): (i) if it has
become effective and remains effective in compliance with the provisions of the
Securities Act but less than 50% of all Registrable Shares listed in the Request
to be included in such registration statement have been disposed of in
accordance with the intended methods of disposition thereof set forth in such
registration statement (other than primarily as a result of acts or omissions of
the Initiating Stockholders or any authorized agent thereof); (ii) if,
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before the registration statement has been declared effective by the Commission,
such registration statement has theretofore been filed with the Commission, and
is withdrawn at the request of the Initiating Stockholder(s), and the Initiating
Stockholder(s) elect to bear their own expenses and reimburse Parent for all
out-of-pocket expenses incurred by it attributable to the attempted registration
of such Registrable Shares; or (iii) if, after it has become effective, the
offering of the Registrable Share pursuant to such registration is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other Governmental Body (for any reason not attributable to Parent
or any of its Affiliates). If a registration statement filed by Parent at the
request of the Initiating Stockholder(s) pursuant to this Section 5.1 is
withdrawn at the initiative of Parent, then the Initiating Stockholder(s) shall
not be deemed to have exercised a right to require Parent to register
Registrable Shares pursuant to this Section 5.1.
(c) If a demand registration pursuant to this Section 5.1 involves an
underwritten offering and the managing underwriter advises Parent in writing
that, in its opinion, the number of securities requested to be included in such
registration (including securities of Parent which are not Registrable Shares)
exceeds the maximum number of securities which can be sold in such offering
without having an adverse effect on the offering of securities (including the
price at which such securities could be offered), Parent will include in such
registration shares of Common Stock as follows: (i) first, the number of
Registrable Shares requested to be registered by the Initiating Stockholder(s),
pro rata in accordance with the number of shares so requested to be registered;
(ii) second, the number of Registrable Shares requested to be registered by
Stockholders other than the Initiating Stockholder(s), and any other holders of
Capital Stock having equivalent rights under similar agreements, pro rata in
accordance with the number of shares so requested to be registered; and (iii)
third, the number of shares proposed to be sold by Parent.
(d) Subject to subparagraph (b) of this Section 5.1, the obligation of
Parent under this Section 5.1 shall be limited to four registration statements
for any Initiating Stockholder and its Affiliates. Subject to the election of
Parent to pay certain expenses pursuant to Section 5.1(b), Parent shall pay the
expenses described in Section 5.4 in connection with any registration statement
filed pursuant to this Section 5.1.
(e) Notwithstanding the foregoing provisions of this Section 5.1, if
the managing underwriter, the Commission, the Securities Act or the form on
which the registration statement is to be filed with respect to a requested
registration would require the conduct of an audit other than the regular audit
conducted by Parent at the end of its fiscal year, the filing of the
registration statement requested pursuant to this Section may be delayed until
the completion of such regular audit.
5.2 Incidental Registration.
(a) If, at any time after the Demand Date, Parent, for its own account
or upon the request of any Initiating Stockholder(s), determines to proceed with
the preparation and filing of a registration statement under the Securities Act
in connection with the proposed offer and sale of Common Stock (other than a
registration statement on
13
Form X-0, X-0, or other limited purpose form), Parent will give written notice
of such determination to the Stockholders. Upon written request of any
Stockholder given within 10 Business Days after receipt of any such notice from
Parent, Parent will, except as herein provided, cause all Registrable Shares
held by such Stockholder which have been requested to be included in the
registration to be included in such registration statement; provided, however,
that nothing herein shall prevent Parent from, at any time, abandoning or
delaying any registration.
(b) If any Public Offering pursuant to this Section 5.2 shall be
underwritten on a firm commitment basis, in whole or in part, Parent may require
that the Common Stock requested for inclusion pursuant to this Section 5.2 be
included in such Public Offering on the same terms and conditions as the
securities otherwise being sold through the underwriters. If, upon the written
advice of the managing underwriter of such Public Offering, the number of
securities requested to be included in such registration (including securities
of Parent which are not Registrable Shares) exceeds the maximum number of
securities which can be sold in such offering without having an adverse effect
on the offering of securities (including the price at which such securities
could be offered), Parent will include in such registration such maximum number
of shares of Common Stock as follows: (A) if such registration has been
initiated by one or more Initiating Stockholders, in the manner provided in
Section 5.1(c); or (B) if such registration has been initiated by Parent, then
(i) first, the shares of Common Stock Parent proposes to sell for its own
account and (ii) second, the number of Registrable Shares requested to be
included in such registration by the Stockholders and any other holders of
Capital Stock having equivalent rights under similar agreements, pro rata in
accordance with the number of shares requested to be registered by such
Stockholders and other Persons.
5.3 Registration Procedures. If and whenever Parent is required by the
provisions of Section 5.1 or 5.2 to effect the registration of Registrable
Shares under the Securities Act, Parent will:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Shares, and use its commercially reasonable efforts
to cause such registration statement to become and remain effective for such
period as may be reasonably necessary to effect the sale of such Registrable
Shares, not to exceed 180 days; provided, however, that Parent may discontinue
any registration of its securities that is being effected pursuant to Section
5.2 at any time;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
as may be reasonably necessary to effect the sale of such Registrable Shares,
not to exceed 180 days; provided, however, that Parent may discontinue any
registration of its securities that is being effected pursuant to Section 5.2 at
any time;
(c) furnish to the Stockholders participating in such registration and
to the underwriters of the securities being registered such reasonable number of
copies of
14
the registration statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such Registrable Shares;
(d) use its commercially reasonable efforts to register or qualify the
securities covered by such registration statement under such state securities or
Blue Sky laws of such jurisdictions as such participating Stockholders may
reasonably request within 20 days following the original filing of such
registration statement, except that Parent shall not for any purpose be required
to execute a general consent to service of process or to qualify to do business
as a foreign corporation in any jurisdiction wherein it is not so qualified;
(e) notify such participating Stockholders, promptly after it shall
receive notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed;
(f) notify the participating Stockholders in the event that Parent
becomes aware that any prospectus required to be delivered by Stockholders
pursuant to the Securities Act contains an untrue statement of a material fact
or fails to state a material fact necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading and, at
the request of any such Stockholder, prepare, promptly file with the Commission
and deliver to such Stockholder such amendments or supplements to the prospectus
as may be necessary so that the prospectus, as so amended or supplemented, shall
not contain an untrue statement of a material fact or fail to state a material
fact necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading;
(g) advise such Stockholders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal, if such
stop order should be issued; and
(h) if such registration statement includes an underwritten public
offering, enter into a customary underwriting agreement and, at the closing
provided for in such underwriting agreement provide such of the following
documents as are required thereunder: (i) an opinion or opinions of counsel to
Parent; and (ii) a cold comfort letter or letters from the independent certified
public accountants of Parent covering such matters as are customarily covered by
such letters.
It shall be a condition precedent to the obligation of Parent to take
any action pursuant to this Agreement in respect of the Registrable Shares which
are to be registered at the request of any Stockholder that such Stockholder
shall furnish to Parent such information regarding the Registrable Shares held
by such Stockholder and the
15
intended method of disposition thereof as Parent shall reasonably request in
connection with such registration.
Each Stockholder agrees that, upon receipt of any notice from Parent of
the happening of any event of the kind described in Section 5.3(f), such
Stockholder will forthwith discontinue disposition of Registrable Shares
pursuant to the registration statement covering such Registrable Shares until
such Stockholder receives the copies of the prospectus supplement or amendment
contemplated by Section 5.3(f), and, if so directed by Parent, such Stockholder
will deliver to Parent all copies, other than permanent file copies, then in
such Stockholder's possession, of the prospectus covering such Registrable
Shares current at the time of receipt of such notice. In the event Parent shall
give any such notice, the period mentioned in Section 5.3(b) shall be extended
by the greater of (i) 30 days or (ii) the number of days during the period from
and including the date of the giving of such notice pursuant to Section 5.3(f)
to and including the date when such Stockholder shall have received the copies
of the prospectus supplement or amendment contemplated by Section 5.3(f).
5.4 Expenses. With respect to a registration requested pursuant to
Section 5.1 (except as otherwise provided in such Section with respect to
registrations voluntarily terminated at the request of the Stockholders that
elect to pay certain expenses) and with respect to each inclusion of Registrable
Shares in a registration statement pursuant to Section 5.2, Parent shall bear
the following fees, costs and expenses: all registration, filing and listing
fees, printing expenses, fees and disbursements of counsel for Parent, fees and
disbursements of accountants for Parent, and all legal fees and disbursements
and other expenses of complying with state securities or Blue Sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. Fees and disbursements of counsel for the transferring Stockholders,
fees and disbursements of accountants for the Stockholders, underwriting
discounts and commissions, transfer taxes and any other expenses incurred by the
Stockholders not expressly included above shall be borne by the applicable
Stockholders.
5.5 Indemnification.
(a) Parent will indemnify and hold harmless each Stockholder whose
Registrable Shares are included in a registration statement pursuant to the
provisions of Section 5.1 or 5.2, each officer, director and Affiliate of each
such Stockholder, any underwriter (as defined in the Securities Act) for such
Stockholder and each Person, if any, who controls such Stockholder or such
underwriter within the meaning of the Securities Act, from and against any and
all loss, damage, liability, cost and expense to which such Stockholder,
director, officer, Affiliate, underwriter or controlling Person may become
subject under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any final prospectus relating thereto or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that Parent will not be liable
16
in any such case to the extent that any such loss, damage, liability, cost or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in reliance upon and in strict
conformity with written information furnished by such Stockholder, such
underwriter or such controlling person in writing specifically for use in the
preparation thereof.
(b) Each Stockholder whose Shares are included in a registration
pursuant to Section 5.1 or 5.2 will indemnify and hold harmless Parent, any
director or officer thereof, any underwriter and any controlling Person (within
the meaning of the Securities Act) of Parent or any such underwriter from and
against any and all loss, damage, liability, cost or expense to which Parent or
such director, officer, underwriter or controlling Person may become subject
under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in such registration statement, any
final prospectus relating thereto or any amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was so
made in reliance upon and in strict conformity with written information
furnished by such Stockholder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of subparagraph (a) or (b) of this Section 5.5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
subparagraphs (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under this Section 5.5, except to the extent the indemnifying party was
prejudiced by such omission. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that if the defendants in any action
include both the indemnified party and the indemnifying party and there is a
conflict of interest which would prevent counsel for the indemnifying party from
also representing the indemnified party, the indemnified party or parties shall
have the right to select one firm of separate counsel satisfactory to the
indemnifying party to participate in the defense of such action on behalf of all
indemnified parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said subparagraphs (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the proviso of
the preceding sentence, in which case only the reasonable fees and expenses of
such single
17
firm shall be indemnifiable; (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action; or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
(d) The obligations of the parties under this Section 5.5 shall be in
addition to any liability, which any party may otherwise have to any other
party.
(e) The indemnification required by this Section 5.5 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or loss, damage, liability, cost or
expense is incurred.
5.6 Lock-up Agreement. If any registration of Registrable Shares shall
be in connection with an underwritten public offering, each Stockholder agrees
not to, and shall use its best efforts to cause its Affiliates not to, effect
any sale or distribution (except as a participant in such underwritten public
offering), including any sale pursuant to Rule 144 under the Securities Act, of
any equity securities of Parent, or of any security convertible into or
exchangeable or exercisable for any equity security of Parent (in each case,
except as a participant in such underwritten public offering), during the seven
days prior to, and during the 180-day period (or such shorter period as the
managing underwriters may require or permit) beginning on, the effective date of
such registration, and Parent hereby also so agrees and agrees to use reasonable
efforts to cause each other holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of
Parent purchased from Parent (at any time other than in a public offering) to so
agree.
ARTICLE VI
GOVERNANCE
----------
6.1 Board of Directors. AI LLC and Northrop Grumman agree as follows:
(a) The Board of Directors shall initially consist of six members,
which may be increased, at the sole discretion of the Board of Directors from
time to time, to not more than nine members.
(b) AI LLC shall be entitled, but not required, to designate all
nominees for election to the Board of Directors other than any Northrop Grumman
Nominee and the Executive Nominee referred to below (such nominees, together
with any replacements pursuant to subparagraph (e) below, the "AI LLC
NOMINEES"), provided that the sixth or seventh such AI LLC Nominees, if any, to
serve on the Board of Directors at any one time shall be Independent Directors.
Until such time as Northrop Grumman owns less than 5% of all then-outstanding
shares of Common Stock, Northrop Grumman shall be entitled, but not required, to
designate one nominee for election to the
18
Board of Directors (such nominee, and including any replacements pursuant to
subparagraph (e) below, the "NORTHROP GRUMMAN NOMINEE"). In addition, the Board
of Directors shall also include the Chief Executive Officer or, if and for so
long as Parent shall not have a Chief Executive Officer, another executive
officer selected by AI LLC (the "EXECUTIVE NOMINEE"). As soon as practicable
after the date hereof, each Stockholder shall vote at a meeting or by written
consent all of the Shares owned by them so that the AI LLC Nominees, any
Northrop Grumman Nominee and the Executive Nominee shall be elected to the Board
of Directors. Each Stockholder shall vote all of the Shares owned by them at any
subsequent regular or special meeting of the stockholders of Parent at which
action is to be taken with respect to the election of directors, or in any
written consent in lieu of such a meeting of stockholders, in favor of the
election of the AI LLC Nominees, the Northrop Grumman Nominee and the Executive
Nominee, and shall take all other actions necessary to ensure the continued
election to the Board of Directors of such nominees and shall not take any
actions which are inconsistent with the intent and purpose of the foregoing;
provided that, with respect to any Northrop Grumman Nominee, such undertakings
shall apply only if, at such time, Northrop Grumman owns at least 5% of all
then-outstanding shares of Common Stock.
(c) Each Stockholder shall take all actions necessary to cause each of
the members of the Board of Directors so elected, acting as directors of the
sole stockholder of TRW Automotive Intermediate Holdings Corp., a Delaware
corporation ("INTERMEDIATE HOLDCO"), to (i) take all action necessary such that
the board of directors of Intermediate Holdco shall at all times comprise the
same individuals as the Board of Directors (unless Northrop Grumman elects not
to be represented on such board of directors of Intermediate Holdco) and (ii)
take all action necessary to cause the board of directors of Intermediate
Holdco, acting as directors of the sole stockholder of TRW Automotive
Acquisition Corp., a Delaware corporation ("NEWCO"), to take all action
necessary such that the board of directors of Newco shall at all times comprise
the same individuals as the Board of Directors (unless Northrop Grumman elects
not to be represented on such board of directors of Newco). To the extent that
other holding companies are interposed beneath Parent and above Newco, each
Stockholder shall take all actions necessary to effectuate the intent evidenced
by the provisions of this subparagraph (c).
(d) Neither this Agreement nor any provisions hereof nor any action
taken or omitted to be taken hereunder shall be deemed to create or confer on
any particular member of the Board of Directors any right to be retained in such
capacity with Parent or any of its Affiliates.
(e) Each Stockholder hereby agrees to use its reasonable best efforts
to call, or cause the appropriate officers and directors of Parent to call, a
special meeting of stockholders of Parent and vote all of the Shares owned or
held of record by it for, or to take all actions by written consent in lieu of
any such meeting necessary to cause, the removal (with or without cause) of any
AI LLC Nominee or Northrop Grumman Nominee if AI LLC or Northrop Grumman, as the
case may be, requests his or her removal for any reason. AI LLC or Northrop
Grumman, as the case may be, shall have the right to designate a new nominee if
an AI LLC Nominee or a Northrop Grumman
19
Nominee, as the case may be, shall vacate his or her directorship for any reason
(including any removal from such directorship as provided above), and each of AI
LLC and Northrop Grumman hereby agrees to take such actions as may be necessary
to cause such vacancy to be filled by such new AI LLC Nominee or Northrop
Grumman Nominee, as the case may be; provided that, with respect to any Northrop
Grumman Nominee, such undertakings shall apply only if, at such time, Northrop
Grumman owns at least 5% of all then-outstanding shares of Common Stock.
(f) In connection with an Initial Public Offering or as otherwise
required by applicable federal and state securities laws, the Board of Directors
shall be expanded to include such additional independent directors as may be
required by the rules of any stock exchange on which the Shares are traded, with
such independent directors to be selected by the Board of Directors.
6.2 Board Action. A quorum for any meeting of the Board of Directors
shall require the presence of directors constituting at least a majority of the
entire Board of Directors. Any committee of the Board of Directors shall have a
minimum number of three directors as members. AI LLC and Northrop Grumman shall
be entitled to have representation on committees of the Board of Directors
proportionate to their respective representation on the Board of Directors;
provided, however, that, until such time as Northrop Grumman owns less than 5%
of all then-outstanding shares of Common Stock, Northrop Grumman shall be
entitled to have at least one representative on each such committee (except as
otherwise prohibited by law or regulation). For all matters requiring the
approval of the Board of Directors, the affirmative vote of a majority of the
entire Board of Directors will be required.
6.3 Stockholder Approval. The affirmative vote or written consent of
the Stockholders owning at least a majority of the outstanding Shares will be
required for all matters requiring stockholder approval under the Delaware
General Corporations Law.
ARTICLE VII
COVENANTS
---------
7.1 Books and Records. Parent shall, and shall cause its Subsidiaries
to, keep proper books or records and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
Parent and each of its Subsidiaries in accordance with generally accepted
accounting principles.
7.2 Periodic Reporting.
(a) Parent shall deliver to each Stockholder:
(i) as soon as available, but not later than 90 days after the
end of each fiscal year of Parent, a copy of the audited consolidated
balance sheet of Parent and its Subsidiaries as of the end of such
fiscal year and the related
20
statements of operations and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous
year, all in reasonable detail;
(ii) commencing with the fiscal period ending on March 31,
2003, as soon as available, but in any event not later than 45 days
after the end of each of the first three fiscal quarters of each fiscal
year, the unaudited consolidated balance sheet of Parent and its
subsidiaries, and the related statements of operations and cash flows
for such quarter and for the period commencing on the first day of the
fiscal year and ending on the last day of such quarter; and
(b) Parent shall deliver to each Stockholder that, together with its
Affiliates, owns at least 18% of the then-outstanding Shares of Common Stock
such other reports and information as may be reasonably requested by such
Stockholder.
7.3 Confidentiality. Except as required by law or other legal
proceeding, each party hereto will, and will cause each of their respective
Subsidiaries, Affiliates and representatives to, maintain in confidence, any
nonpublic or confidential proprietary information furnished to them by or on
behalf of any other party or its representatives in connection with this
Agreement or the transactions contemplated hereby. All information provided
under this Agreement shall be deemed confidential; provided, however, that
information shall not be deemed confidential if (a) at the time of disclosure,
such information is generally available to and known by the public (other than
as a result of a disclosure directly by the recipient or any of its
representatives), (b) such information was available to the recipient on a
non-confidential basis from a source that is not and was not prohibited from
disclosing such information to the recipient by a contractual, legal or
fiduciary obligation or (c) such information is known to the recipient prior to
or independently of its relationship with the party providing such information.
7.4 Assumption of Liabilities. Parent hereby agrees to assume on behalf
of BCP LLC (and any of its assignees, including AI LLC) and Northrop Grumman all
liabilities and obligations specifically attributable to Parent under the second
and third sentences of Section 3.2(g) (purchase price adjustment), Section 7.11
(guarantees and letters of credit) and Section 10.1(b) (general indemnity) of
the Master Purchase Agreement and the liabilities and obligations specifically
attributable to Parent within the provisions of Article XI (tax indemnity) of
the Master Purchase Agreement; provided, however, that, for the avoidance of
doubt, nothing under this Section 7.4 shall release Northrop Grumman from any of
its other obligations under the Master Purchase Agreement, including, without
limitation, its obligations under all other provisions of Section 3.2(g),
Section 10.1 and Article XI thereof.
7.5 Dissolution of AI LLC. In the event of a dissolution of AI LLC,
each of Parent and the Stockholders agrees (a) for the benefit of the members of
AI LLC which are Affiliates of Blackstone Management Associates IV L.L.C. (the
"BLACKSTONE MEMBERS") that it will enter into agreements with the Blackstone
Members with respect to the Shares which are designed to reflect the rights and
obligations of the parties under this Agreement and the Amended and Restated
Limited Liability Company Agreement,
21
dated as of the date hereof (as the same may be amended, supplemented or
modified), including, without limitation, the right of AI LLC to appoint
directors of Parent and (b) that Parent shall enter into a management rights
letter agreement, in the form of Exhibit B hereto, with each member of AI LLC
which becomes a stockholder of Parent as a result of such dissolution and which
is intended to qualify as a venture capital operating company (as defined in
Department of Labor Regulation 29 C.F.R. Section 2510.3-101(d)(3)(i).
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 After-Acquired Securities. All of the provisions of this Agreement
shall apply to all of the Shares and Common Stock Equivalents now owned or which
may be issued or transferred hereafter to a Stockholder in consequence of any
additional issuance, purchase, exchange or reclassification of any of such
Shares or Common Stock Equivalents, corporate reorganization, or any other form
of recapitalization, consolidation, merger, share split or share dividend, or
which are acquired by a Stockholder in any other manner.
8.2 Recapitalization, Exchange, Etc. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to the Shares and
the Common Stock Equivalents, to any and all shares of capital stock of Parent,
Common Stock Equivalents or other securities of Parent that may be issued in
respect of, in exchange for, or in substitution of the Shares or Common Stock
Equivalents, and shall be appropriately adjusted for any stock dividends,
splits, reverse splits, combinations, reclassifications, recapitalizations and
the like occurring after the date of this Agreement. If, and as often as, there
are any changes in the Shares or the Common Stock Equivalents, by way of any
stock dividends, splits, reverse splits, combinations, or reclassifications, or
through merger, consolidation, reorganization or recapitalization or by any
other means occurring after the date of this Agreement, appropriate adjustment
shall be made to the provisions of this Agreement, as may be required, so that
the rights, privileges, duties and obligations hereunder shall continue with
respect to the Shares and Common Stock Equivalents as so changed.
8.3 Notices. All notices, demands or other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first class mail, return receipt requested, telecopier, courier
service, or personal delivery:
(a) if to Parent or AI LLC:
c/o The Blackstone Group L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
22
-and-
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
(b) if to Northrop Grumman:
Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
with a required copy (which shall not constitute notice) to:
Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: General Counsel
-and-
Xxxxxx Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxx
(c) if to any Permitted Transferee, at its address as it appears on the
record books of Parent.
All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; five Business Days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
mechanically acknowledged, if telecopied. Any party may by notice given in
accordance with this Section 8.3 designate another address or Person for
receipts of notices hereunder.
8.4 Successors and Assigns; Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon successors and permitted
assigns of the parties hereto. This Agreement is not assignable except in
connection with a transfer of Shares in accordance with this Agreement;
provided, however, that AI LLC may assign its rights and obligations under this
Agreement to a group consisting of the
23
members of AI LLC. Except as provided in Section 7.5, no Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of this Agreement.
8.5 Amendment and Waiver.
(a) No failure or delay on the part of any party hereto in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the parties hereto at law, in equity or
otherwise.
(b) Any amendment, supplement or modification of or to any provision of
this Agreement shall be effective only if it is made or given in writing and
signed by each of Parent, AI LLC and Northrop Grumman. Any waiver of any
provision of this Agreement and any consent to any departure by any party from
the terms of any provision of this Agreement shall be effective only if it is in
writing and signed by the party waiving its right or consenting to such
departure. Any such amendment, supplement, modification, waiver or consent shall
be binding upon Parent and all of the Stockholders.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement. Any
counterpart or other signature hereupon delivered by facsimile shall be deemed
for all purposes as constituting good and valid execution and delivery of this
Agreement by such party.
8.7 Specific Performance. The parties hereto intend that each of the
parties have the right to seek damages or specific performance in the event that
any other party hereto fails to perform such party's obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the plaintiff party has an
adequate remedy at law.
8.8 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
8.9 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
8.10 Entire Agreement. This Agreement, together with the exhibits
hereto, is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties
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hereto in respect of the subject matter contained herein and therein. There are
no restrictions, promises, representations, warranties or undertakings, other
than those set forth or referred to herein or therein. This Agreement, together
with the exhibits hereto, supersedes all prior agreements and understandings
among the parties with respect to such subject matter.
8.11 Term of Agreement. This Agreement shall become effective upon the
execution hereof and shall terminate upon the earlier of:
(a) the tenth anniversary of the date of this Agreement;
(b) the consummation of any sale of all or substantially all of the
assets of Parent in which the proceeds (whether in cash or securities) of such
sale are distributed to (or received by) the Stockholders pro rata (based on the
number of Shares and Common Stock Equivalents then owned by the Stockholders and
the numbers of Shares and Common Stock Equivalents then owned by all
stockholders of Parent);
(c) the ownership of the Common Stock by only one Stockholder who is a
party to this Agreement; or
(d) the written agreement of each of the parties hereto.
8.12 Further Assurances. Each of the parties shall, and shall cause
their respective Affiliates to, execute such documents and perform such further
acts as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.
8.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to its
conflict of laws principles.
8.14 Consent to Jurisdiction; No Jury Trial. Any legal action, suit or
proceeding arising out of or relating to this Agreement may be instituted in any
federal court in the Southern District of New York, or in any state court in
which venue would otherwise be properly located in the Southern District of New
York, and each party waives any objection which such party may now or hereafter
have to the laying of the venue of any such action, suit or proceeding, and
irrevocably submits to the jurisdiction of any such court. Any and all service
of process and any other notice in any such action, suit or proceeding will be
effective against any party if given as provided herein. Nothing herein
contained will be deemed to affect the right of any party to serve process in
any manner permitted by law or to commence legal proceedings or otherwise
proceed against any other party in any jurisdiction other than New York. THE
PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER IN ANY MATTERS ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Stockholders Agreement on the date first written above.
TRW AUTOMOTIVE HOLDINGS CORP.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
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AUTOMOTIVE INVESTORS L.L.C.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Manager
27
NORTHROP GRUMMAN CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: President, Chief Executive
Officer, Chief Financial Officer,
Treasurer
EXHIBIT A
---------
ACKNOWLEDGMENT AND AGREEMENT
The undersigned wishes to receive from [___________] ("Transferor")
[certain shares or certain options, warrants or other rights to purchase]
[___________] shares, par value $0.01 per share, of Common Stock (the "Shares")
of TRW Automotive Holdings Corp., a Delaware corporation ("Parent").
The Shares are subject to the Stockholders Agreement, dated February
28, 2003 (the "Agreement"), among Parent and the other parties listed on the
signature pages thereto. The undersigned has been given a copy of the Agreement
and afforded ample opportunity to read and to have counsel review it, and the
undersigned is thoroughly familiar with its terms.
Pursuant to the terms of the Agreement, the transferor is prohibited
from transferring such Shares and Parent is prohibited from registering the
transfer of the Shares unless and until a transfer is made in accordance with
the terms and conditions of the Agreement and the recipient of such Shares
acknowledges the terms and conditions of the Agreement and agrees to be bound
thereby.
The undersigned wishes to receive such Shares and have Parent register
the transfer of such Shares.
In consideration of the mutual promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the transferor to transfer such Shares to the
undersigned and Parent to register such transfer, the undersigned does hereby
acknowledge and agree that (i) he/she has been given a copy of the Agreement and
afforded ample opportunity to read and to have counsel review it, and the
undersigned is thoroughly familiar with its terms, (ii) the Shares are subject
to the terms and conditions set forth in the Agreement, and (iii) the
undersigned does hereby agree fully to be bound thereby as a "Stockholder".
This ________ day of ________, 200_.
EXHIBIT B
---------
FORM OF
MANAGEMENT RIGHTS LETTER AGREEMENT
TRW AUTOMOTIVE HOLDINGS CORP.
____________ __, 200_(1)
[List each VCOC investor in AI LLC which becomes a shareholder in TRW Automotive
Holdings Corp. upon the dissolution of AI LLC]
Attention:
Dear Sir/Madam:
Reference is made to the Stockholders Agreement by and among TRW
Automotive Holdings Corp. (the "Parent") and the other parties named therein
dated as of February ___, 2003 (the "Stockholders Agreement"). Capitalized terms
used herein without definition have the meanings specified in the Stockholders
Agreement.
The Parent hereby agrees that until, with respect to any of the
addressees of this letter (each, a "VCOC Investor"), such time as such VCOC
Investor (together with its affiliates) ceases to own a number of Shares equal
to or in excess of 50% of the number of Shares for which such VCOC Investor's
initial membership interest in AI LLC as of February __, 2003 would have been
converted or exchanged upon the dissolution of AI LLC (or the securities into
which such Shares may have been converted or for which they may have been
exchanged) (as equitably adjusted to reflect any stock splits, reverse stock
splits or other corporate reorganizations), without limitation or prejudice of
any the rights provided to the VCOC Investors under the Stockholders Agreement,
the Parent shall:
o Provide each VCOC Investor or its designated representative with:
(i) the right to visit and inspect any of the offices and
properties of the Parent and its subsidiaries and inspect and copy the
books and records of the Parent and its subsidiaries, at such times as
the VCOC Investor shall reasonably request;
(ii) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of the Parent, consolidated balance sheets of the Parent and its
subsidiaries as of the end of such period, and consolidated statements
of income and cash flows of the Parent and its subsidiaries for the
period then ended
--------
(1) To be dated the date of the dissolution of Automotive Investors L.L.C.
30
prepared in conformity with generally accepted accounting principles in
the United States applied on a consistent basis, except as otherwise
noted therein, and subject to the absence of footnotes and to year-end
adjustments;
(iii) as soon as available and in any event within 120 days
after the end of each fiscal year of the Parent, a consolidated balance
sheet of the Parent and its subsidiaries as of the end of such year,
and consolidated statements of income and cash flows of the Parent and
its subsidiaries for the year then ended prepared in conformity with
generally accepted accounting principles in the United States applied
on a consistent basis, except as otherwise noted therein, together with
an auditor's report thereon of a firm of established national
reputation; and
(iv) to the extent the Parent is required by law or pursuant
to the terms of any outstanding indebtedness of the Parent to prepare
such reports, any annual reports, quarterly reports and other periodic
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, actually prepared by the Parent as soon as available.
o Make appropriate officers and/or directors of the Parent available
periodically and at such times as reasonably requested by the VCOC
Investor for consultation with the VCOC Investor or its designated
representative with respect to matters relating to the business and
affairs of the Parent and its subsidiaries, including, without
limitation, significant changes in management personnel and
compensation of employees, introduction of new products or new lines of
business, important acquisitions or dispositions of plants and
equipment, significant research and development programs, the
purchasing or selling of important trademarks, licenses or concessions
or the proposed commencement or compromise of significant litigation;
o Inform the VCOC Investor or its designated representative in advance
with respect to any significant corporate actions, including, without
limitation, extraordinary dividends, mergers, acquisitions or
dispositions of assets, issuances of significant amounts of debt or
equity and material amendments to the certificate of incorporation or
by laws of the Parent, and to provide the VCOC Investor or its
designated representative with the right to consult with the Company
with respect to such actions; and
o Provide the VCOC Investor or its designated representative with such
other rights of consultation, if any, as may reasonably be mutually
agreed by the VCOC Investor and the Parent as a result of change in law
or issuance of additional interpretive guidance by the Department of
Labor after the date hereof to be necessary to qualify its investment
in the Parent as a "venture capital investment" for purposes of the
United States Department of Labor Regulation published at 29 C.F.R.
Section 2510.3-101(d)(3)(i) (the "Plan Asset Regulation").
The Parent agrees to consider, in good faith, the recommendations of
the VCOC Investor or its designated representative in connection with the
matters on which it is consulted as described above, recognizing that the
ultimate discretion with respect to all such matters shall be retained by the
Parent.
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In the event the VCOC Investor transfers all or any portion of their
investment in the Parent to an affiliated entity that is intended to qualify as
a venture capital operating company under the Plan Asset Regulation, such
transferee shall be afforded the same rights with respect to the Parent afforded
to the VCOC Investor hereunder and shall be treated, for such purposes, as a
third party beneficiary hereunder.
This letter agreement and the rights and the duties of the parties
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York and may be executed in counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
TRW AUTOMOTIVE HOLDINGS CORP.
By:________________________________
Name:
Title:
Agreed and acknowledged as of the
date first above written:
[VCOC FUND]
By:____________________________
Name:
Title:
[VCOC FUND]
By:____________________________
Name:
Title:
[VCOC FUND]
By:____________________________
Name:
Title:
