EXHIBIT 2(B)
EXECUTION COPY
MASTER AGREEMENT OF PURCHASE AND SALE
between
XXXXXXXX CORPORATION
and
TRW INC.
Dated as of June 18, 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
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Section 1.1 Definitions.....................................................................................1
ARTICLE II PRELIMINARY TRANSFERS; SALE AND PURCHASE OF ASSETS
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Section 2.1 Preliminary Transactions.......................................................................14
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Section 2.2 Sale of Equity Interests.......................................................................14
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Section 2.3 Transfer of Assets; Retained Assets............................................................15
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Section 2.4 Assumption of Liabilities; Excluded Liabilities................................................18
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Section 2.5 The Purchase Price.............................................................................23
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Section 2.6 Purchase Price Adjustment......................................................................23
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Section 2.7 Allocation of Consideration....................................................................25
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Section 2.8 Proration......................................................................................27
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ARTICLE III CLOSING
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Section 3.1 Closing........................................................................................28
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Section 3.2 Deliveries at Closing..........................................................................28
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TRW
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Section 4.1 Organization and Existence.....................................................................28
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Section 4.2 Power and Authority............................................................................29
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Section 4.3 Authorization..................................................................................29
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Section 4.4 Binding Effect.................................................................................29
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Section 4.5 Interest in Subsidiaries and Affiliates........................................................29
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Section 4.6 No Defaults; Consents..........................................................................30
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Section 4.7 Financial Statements...........................................................................31
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Section 4.8 No Undisclosed Liabilities.....................................................................32
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Section 4.9 Absence of Certain Changes.....................................................................32
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Section 4.10 Litigation.....................................................................................32
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Section 4.11 Compliance with Applicable Law.................................................................32
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Section 4.12 Taxes..........................................................................................33
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Section 4.13 Employee Benefit Plans.........................................................................34
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Section 4.14 Intellectual Property..........................................................................39
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Section 4.15 Labor Relations; Employees.....................................................................40
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Section 4.16 Environmental Matters..........................................................................41
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Section 4.17 Real Property..................................................................................42
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Section 4.18 Material Contracts.............................................................................43
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Section 4.19 Title to Assets................................................................................45
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Section 4.20 Affiliated Transactions........................................................................45
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Section 4.21 Product Liability; Airworthiness...............................................................45
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Section 4.22 Insurance......................................................................................45
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Section 4.23 Inappropriate Payments.........................................................................46
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Section 4.24 Entire Business; Sufficiency of Assets.........................................................46
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Section 4.25 Brokers and Finders............................................................................46
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Section 4.26 No Other Representations and Warranties........................................................46
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER
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Section 5.1 Organization and Existence.....................................................................47
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Section 5.2 Power and Authority............................................................................47
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Section 5.3 Authorization..................................................................................47
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Section 5.4 Binding Effect.................................................................................47
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Section 5.5 No Defaults; Consents..........................................................................48
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Section 5.6 Litigation.....................................................................................48
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Section 5.7 Financing......................................................................................48
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Section 5.8 Brokers or Finders.............................................................................49
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Section 5.9 Investment Representations.....................................................................49
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Section 5.10 No Other Representations and Warranties........................................................49
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Section 5.11 Certain Transactions...........................................................................50
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ARTICLE VI COVENANTS
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Section 6.1 Conduct of the Business........................................................................50
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Section 6.2 Access to Information..........................................................................53
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Section 6.3 Reasonable Best Efforts........................................................................54
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Section 6.4 Consents and Approvals.........................................................................55
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Section 6.5 Further Assurances.............................................................................57
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Section 6.6 Property Transfer Taxes; Other Expenses; Bulk Transfer Laws....................................57
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Section 6.7 Publicity......................................................................................58
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Section 6.8 Employees and Employee Benefit Plans...........................................................59
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Section 6.9 Novation of Government Contracts; Hedging Contracts............................................84
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Section 6.10 Tax Matters....................................................................................84
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Section 6.11 Transition and Ancillary Agreements............................................................86
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Section 6.12 Waiver of Bulk Sales Requirement...............................................................87
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Section 6.13 Post-Closing Access to Records and Employees...................................................87
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Section 6.14 Intellectual Property Licenses; Related Matters................................................88
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Section 6.15 Non-Competition Agreement......................................................................89
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Section 6.16 No Hire and Non-Solicitation of Employees......................................................90
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Section 6.17 No Shop........................................................................................91
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Section 6.18 Certain Transactions...........................................................................91
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Section 6.19 Environmental Matters..........................................................................92
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Section 6.20 Insurance Matters..............................................................................92
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Section 6.21 Communications with Customers..................................................................93
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Section 6.22 Claim Management...............................................................................93
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ARTICLE VII CONDITIONS
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Section 7.1 Conditions to Each Party's Obligations.........................................................94
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Section 7.2 Conditions to Obligations of Buyer.............................................................95
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Section 7.3 Conditions to Obligations of TRW...............................................................95
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ARTICLE VIII TERMINATION
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Section 8.1 Termination....................................................................................96
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Section 8.2 Effect of Termination..........................................................................97
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Section 8.3 Extension; Waiver..............................................................................97
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ARTICLE IX SURVIVAL; INDEMNIFICATION
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Section 9.1 Survival Periods...............................................................................98
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Section 9.2 Indemnification................................................................................98
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Section 9.3 Claims........................................................................................100
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Section 9.4 Limitation of Liability.......................................................................100
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Section 9.5 Nature of Remedies............................................................................101
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ARTICLE X MISCELLANEOUS
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Section 10.1 Notices.......................................................................................101
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Section 10.2 Amendments and Waivers........................................................................102
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Section 10.3 Headings......................................................................................102
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Section 10.4 Counterparts..................................................................................102
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Section 10.5 Entire Agreement..............................................................................102
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Section 10.6 Governing Law.................................................................................103
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Section 10.7 Resolution of Disputes........................................................................103
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Section 10.8 Waiver of Jury Trial..........................................................................104
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Section 10.9 Assignment....................................................................................104
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Section 10.10 Fees and Expenses.............................................................................104
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Section 10.11 Binding Nature; Third-Party Beneficiaries.....................................................104
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Section 10.12 Severability..................................................................................104
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Section 10.13 No Right of Setoff............................................................................105
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Section 10.14 Currency......................................................................................105
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Section 10.15 Specific Performance..........................................................................105
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Section 10.16 Construction..................................................................................105
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List of Schedules
1.1(a) "Knowledge of TRW"
1.1(b) "Knowledge of Buyer"
1.1(c) Reference Balance Sheet
2.1 Preliminary Transfers
2.2 List of Aerospace Subsidiaries, Aerospace Affiliates, and
Equity Interests
2.3(a) List of Asset Selling Subsidiaries
2.3(a)(xiv) Assumed Hedging Contracts
2.3(b) Other Retained Assets
2.3(b)(x) Retained Real Property
2.4(a)(iv) Pre-Closing Customer Contract Claims
2.4(a)(vii) Assumed Guarantees
2.4(b)(v) Procedures Governing Certain Claims
2.4(b)(xiv) Retained Liabilities
2.7 Purchase Price Allocation
3.2(a) TRW's Closing Deliverables
3.2(b) Buyer's Closing Deliverables
5.7 Commitment Letter
6.1(a) Permitted Pre-Closing Actions
6.1(a)(xv) 2002 Capital Expenditure Plan
6.8(b) Excluded Employees
6.8(d)(iii) Certain Collective Bargaining Agreements
6.8(d)(iii)(C) Retiree Medical Plans
6.8(e) UK Transferred Employees
6.8(e)(ii) Provisions with Respect to TRW UK Pension Scheme
6.8(h) Assumed Employment Agreements
6.8(k) Severance Policies
6.14(a) Form of License with Respect to the Licensed-Back
Intellectual Property
6.14(b) Form of License with Respect to the Licensed Intellectual
Property
6.14(c) Licensed Trademarks
6.14(e) Licensed Domain Names
6.20 Terms and Conditions of Insurance Agreement
7.1(a) Required Consents
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MASTER AGREEMENT OF PURCHASE AND SALE
This MASTER AGREEMENT OF PURCHASE AND SALE (this "Agreement") is
dated as of June 18, 2002, and is between Xxxxxxxx Corporation ("Buyer"), a
corporation organized under the laws of New York, and TRW INC. ("TRW"), an Ohio
corporation.
RECITALS
TRW, acting directly and through certain Subsidiaries, and by
virtue of its equity interests in certain Affiliates and non-controlled
entities, is engaged worldwide in the aeronautical systems business, including
developing and manufacturing of products and providing services related to
flight control systems, cargo systems, hoists & winches, power systems, engine
systems and missile actuation systems (the "Business").
Buyer desires to purchase from TRW and its Subsidiaries, and TRW
desires to sell to Buyer, certain assets and certain liabilities of the
Business, on and subject to the terms and conditions stated in this Agreement.
TERMS AND CONDITIONS
In consideration of the premises and of other good and valuable
consideration, and intending to be legally bound hereby, Buyer, on behalf of
itself, and TRW, on behalf of itself and the other TRW Selling Shareholders and
the Asset Selling Subsidiaries, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. (a) As used in this Agreement, the
following terms shall have the following meanings:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any applicable state
or local statute, law, rule or regulation, governing aboveground storage tanks.
"Aerospace Affiliates" shall mean the entities engaged in the
Business in which TRW directly or indirectly holds an equity interest (but less
than a 100% interest), such entities being those listed on Schedule 2.2 hereof.
"Aerospace Subsidiaries" shall mean the entities engaged in the
Business, in which TRW directly or indirectly holds all of the equity interest,
such entities being those listed on Schedule 2.2 hereof.
"Affiliate" shall mean, with respect to any Person, any Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person.
"Asset Selling Subsidiaries" shall mean certain direct and
indirect Subsidiaries of TRW engaged in the Business, each of which is
identified on Schedule 2.3(a) hereof, and which will be selling certain assets
and transferring certain liabilities to Buyer in connection with the
transactions contemplated by this Agreement.
"Assets" shall mean, collectively, the Acquired Assets and the
Equity Interests.
"Business Day" shall mean any day that is not a Saturday, Sunday
or other day on which banks are required or authorized by law to be closed in
the City of New York.
"Business Intellectual Property" shall mean, collectively, (i)
Equity Intellectual Property, (ii) Transferred Intellectual Property, (iii)
Licensed Trademarks and (iv) Licensed Intellectual Property.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated April 19, 2002, between Buyer and TRW.
"Contracts" shall mean all agreements, legally binding
commitments, contracts, leases (including leases and subleases of real
property), indentures, collective bargaining agreements, licenses, undertakings
and other arrangements, written and oral.
"Control" as applied to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management of that Person, whether through ownership of voting securities or
otherwise; provided that with respect to Aerospace Affiliates, the ownership of
a majority of the voting stock in an Aerospace Affiliate or the right, whether
by contract or otherwise, to elect at least a majority of the board or similar
governing body of an Aerospace Affiliate shall be deemed "control."
"Copyrights" shall mean all copyrights, mask works, copyright
and mask work registrations and applications therefor, and all other rights
corresponding thereto throughout the world.
"Default" shall mean 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.
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"Domain Names" shall mean all domain names, uniform resource
locators ("URLs") and other names and locators associated with the Internet, and
all domain name registration documentation and content associated therewith.
"Environment" means soils, land surface or subsurface strata,
surface water, sediments, groundwater or outdoor atmosphere.
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or written
notice of alleged noncompliance, violation, or liability, by any Person
asserting an Environmental Liability.
"Environmental Condition" means the presence of Hazardous
Substances above regulatory standards in the Environment or building materials,
or the Release of Hazardous Substances to the Environment above regulatory
standards or from building materials, including, but not limited to, the
migration or movement of Hazardous Substances in or through the Environment.
"Environmental Laws" shall mean all federal, state, regional,
local or foreign statutes, laws, rules, regulations in existence as of the
Closing Date, where the Business is conducted, currently in existence, any of
which govern (or purport to govern) or relate to pollution, protection of the
Environment, Releases or threatened Releases of Hazardous Substances, solid or
hazardous waste, as any of these terms are or may be defined in such statutes,
laws, rules, regulations, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or handling of
Hazardous Substances and all laws and regulations with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances, including the following U.S. laws and any similar foreign laws: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C.,
et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and subsequent Hazardous and Solid Waste Amendments of
1984, 42 U.S.C. et seq. (collectively "RCRA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C., et seq.; the Clean Water Act, as
amended, 33 U.S.C., et seq.; the Clear Air Act, as amended (42 U.S.C.-7642); the
Toxic Substances Control Act, as amended, 15 U.S.C. et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C.-136y; the
Emergency Planning and Community Right-to-Know Act of 1986, as amended, 42
U.S.C., et seq. (Title III of XXXX).
"Environmental Liability" shall mean all liabilities and
obligations with respect to all actions, grievances, claims, arbitrations,
suits, proceedings, investigations, or requirements, arising under, from or
related to Environmental Laws or Hazardous Substances with respect to the
operations or ownership of the Assets or the Business on or prior to the Closing
Date, including without limitation: (A) any violation or alleged violation of or
non-compliance with Environmental Laws, with respect to the ownership, lease,
maintenance or operation of the Assets or the Business on or prior to the
Closing Date, including, but not limited to, any fines or penalties and the
costs associated with
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correcting any such violations or non-compliance; (B) loss of life or injury to
persons or property (whether or not such loss, injury or damage arose or was
made manifest before the Closing Date or arises or becomes manifest on or after
the Closing Date) caused (or allegedly caused) by any Environmental Condition
at, on, in, under, migrating or discharged from or in the vicinity of the
Assets, to the extent such Environmental Condition resulted from actions or
inactions on or prior to the Closing Date; (C) any Remediation (whether or not
such Remediation commenced before the Closing Date or commences on or after the
Closing Date) of any Environmental Condition at, on, in, under, migrating or
discharged from or in the vicinity of the Assets, to the extent such
Environmental Condition resulted from actions or inactions on or prior to the
Closing Date; (D) any loss of life or injury to persons or property (whether or
not such loss, injury or damage arose or was made manifest before the Closing
Date or arises or becomes manifest on or after the Closing Date) caused (or
allegedly caused) by Hazardous Substances to the extent that such Hazardous
Substances have been generated in connection with the Business and transported
to any Off-Site Location or the arrangement for such activities on or prior to
the Closing Date; and (E) the Remediation (whether or not such Remediation
commenced before the Closing Date or commences on or after the Closing Date) of
Environmental Conditions related to Hazardous Substances to the extent that such
Hazardous Substances have been generated in connection with the Business and
transported to any Off-Site Location, or the arrangement for such activities on
or prior to the Closing Date.
"Environmental Permit" shall mean any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
"Equipment" shall mean all equipment and tangible personal
property used or held for use primarily in the Business by TRW Participants
(whether as owner, lessor, lessee or otherwise).
"Equity Intellectual Property" shall mean all Intellectual
Property owned by, subject to ownership by, licensed to, or subject to license
to the Aerospace Affiliates, Aerospace Subsidiaries and Subsidiaries thereof.
"Excluded Intellectual Property" shall mean all Intellectual
Property other than the Transferred Intellectual Property.
"Final Determination" shall mean (i) any final determination of
liability in respect of a Tax that, under applicable law, is not subject to
further appeal, review or modification through proceedings or otherwise
(including the expiration of a statute of limitations or a period for the filing
of claims for refunds, amended returns or appeals from adverse determinations),
including a "determination" as defined in Section 1313(a) of the Code or
execution of an Internal Revenue Service Form 870AD or (ii) the payment of Tax
by Buyer, TRW or any of their Affiliates, whichever is responsible for payment
of such Tax under applicable law, with respect to any item disallowed or
adjusted by a Taxing Authority, provided that such responsible party determines
that no action should be taken to recoup such payment and the other party
consents, which consent shall not be unreasonably withheld.
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"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date hereof.
"Governmental Entity" shall mean any federal, state, provincial,
county, municipal or local government in the United States, or any political
subdivision of any of the foregoing, or any non-U.S. entity of a type similar to
the foregoing, or any entity, authority, agency, ministry, commission, tribunal,
arbitral body, court or other similar body exercising executive, legislative,
judicial, regulatory or administrative authority or functions of or pertaining
to government, including any authority or quasi-governmental entity established
to perform any of these functions.
"Hazardous Substances" means any chemicals, materials or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "hazardous constituents", "restricted
hazardous materials", "extremely hazardous substances", "toxic substances",
"contaminants", "pollutants", "toxic pollutants", or words of similar meaning
and regulatory effect under any applicable Environmental Law including, without
limitation, petroleum or petroleum products and asbestos or asbestos-containing
materials, polychlorinated biphenyls, or any other chemicals, materials or
substances defined or regulated as toxic, or hazardous or as a pollutant or
contaminant under any applicable Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Income Taxes" shall mean U.S. federal, state, local or foreign
net income or capital gain Taxes (but not any gross income Taxes and not any
withholding Taxes).
"Insurance Agreement" shall mean the agreement relating to the
allocation of insurance proceeds, which shall be entered into pursuant to
Section 6.20 hereto.
"Intellectual Property" shall mean all (i) Patents; (ii) Trade
Secrets; (iii) Copyrights; (iv) Domain Names; (v) Software and (vi) Trademarks.
"Inventories" shall mean all inventory, work in process,
finished goods, assemblies, sub-assemblies, components, raw materials, and other
personal property used or held for use primarily in the Business and held for
sale (or for use in products to be held for sale) by any of the TRW
Participants.
"knowledge of Buyer" means the actual knowledge, after
reasonable inquiry, of the persons specified on Schedule 1.1(b) hereto.
"knowledge of TRW" means the actual knowledge, after reasonable
inquiry, of the persons specified on Schedule 1.1(a) hereto.
"Leased Real Property" means the real property (other than the
real property listed on Schedule 2.3(b)(x)) leased by or for any of the TRW
Participants that is used or held for use primarily in the Business, as tenant,
together with, to the extent leased by any of the TRW Participants, all
buildings and other structures, facilities or
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improvements currently located thereon, all fixtures thereto, and all easements,
licenses, rights and other appurtenances relating to the foregoing.
"Licensed Intellectual Property" shall mean all Intellectual
Property (other than Transferred Intellectual Property) owned by or licensed to
TRW and the Asset Selling Subsidiaries that is used or held for use in the
Business, as currently conducted, as well as other businesses currently owned by
TRW and to which TRW will grant Buyer a license pursuant to Section 6.14(b),
6.14(c), 6.14(d) or 6.14(e) hereto. The Licensed Intellectual Property does not
constitute Transferred Intellectual Property.
"Licensed Trademarks" shall mean the Trademarks set forth in
Schedule 6.14(c) that will be licensed by TRW or an Asset Selling Subsidiary to
Buyer.
"Licensed-Back Intellectual Property" shall mean the
Intellectual Property included in the Transferred Intellectual Property and
Equity Intellectual Property that is used or held for use in the other
businesses currently owned by TRW, as currently conducted, and to which Buyer
will grant TRW a license pursuant to Section 6.14(a) hereto.
"Lien" shall mean any mortgage, pledge, lien (statutory or
otherwise and including, without limitation, environmental and tax liens),
security interest, easement, right of way, limitation, encroachment, covenant,
claim, restriction, right, option, conditional sale or other title retention
agreement, charge or encumbrance of any kind or nature.
"Local Standard Practice Instructions" shall mean the document
included in Section 4.7 of the TRW Disclosure Letter.
"Material Adverse Effect" shall mean any circumstance of, change
in, or effect on, the Business that has a material adverse effect on (a) the
business, results of operations, condition (financial or otherwise), or assets
of the Business, or the condition of the Assets, taken as a whole or (b) the
ability of TRW to consummate the transactions contemplated herein; provided,
however, that "Material Adverse Effect" shall not include any adverse effect to
the extent resulting from (i) the Preliminary Transfers, (ii) announcement of
the execution of this Agreement and the transactions contemplated hereby, (iii)
any action taken by TRW or Buyer or any of their respective representatives or
other action required by the terms of this Agreement or necessary to consummate
the transactions contemplated by this Agreement or (iv) general economic
conditions or other conditions affecting the industry in which the Business
generally operates, except to the extent the Business is affected in a
disproportionate manner as compared to other companies in the same industry. For
the avoidance of doubt, neither TRW's planned spin-off of its automotive
operations nor a business combination transaction involving all or substantially
all of the assets or capital stock of TRW alone will constitute a Material
Adverse Effect unless such spin-off or transaction results in a material adverse
effect on the business, results of operations, condition (financial or
otherwise), or assets of the Business, or the condition of the Assets, taken as
a whole or the ability of TRW to consummate the transactions contemplated
herein.
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"Net Asset Value" shall have the meaning and be calculated in
the manner set forth on the Reference Balance Sheet, including the notes
thereto, attached hereto as Schedule 1.1(c).
"Off-Site Location" means any real property other than the Real
Property.
"Owned Real Property" means the real property (excluding the
real property listed on Schedule 2.3(b)(x)) owned by any of the TRW Participants
that is used or held for use primarily in the Business together with all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures thereto, and all easements, licenses,
rights and other appurtenances relating to the foregoing.
"Patents" shall mean all United States, international and
foreign patents and applications therefor and all reexaminations, reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof.
"Permits" shall mean permits, licenses, variances, exemptions,
orders, approvals, authorizations, certificates, filings, franchises,
qualifications, notices and rights.
"Permitted Encumbrances" shall mean with respect to each parcel
of Real Property: (a) zoning, planning and building codes and other applicable
laws regulating the use, development and occupancy of the Real Property and
permits, consents and rules under such laws; (b) encumbrances, easements,
rights-of-way, covenants, conditions, restrictions and other matters affecting
title to such Real Property which do not materially detract from the value of
such Real Property or materially restrict the use of such Real Property; (c)
other encumbrances, easements, rights-of-way, covenants, conditions,
restrictions and other matters affecting title to such Real Property set forth
in Section 4.17 of the TRW Disclosure Letter; (d) leases and subleases of Real
Property set forth in Section 4.17 of the TRW Disclosure Letter; and (e) all
easements, encumbrances or other matters which are necessary for utilities and
other similar services on the Real Property.
"Permitted Liens" shall mean: (i) Liens identified in the TRW
Disclosure Letter, or reflected or referred to in the Financial Statements
(including the notes thereto), (ii) Liens for Taxes and other governmental
levies not yet due and payable or, if due, (A) not delinquent or (B) being
contested in good faith by appropriate proceedings during which collection or
enforcement against the property is stayed and with respect to which adequate
reserves have been established and are being maintained to the extent required
by GAAP, (iii) mechanics', workmen's, repairmen's, warehousemen's, carriers' or
other Liens, including all statutory Liens, arising or incurred in the ordinary
course of business that do not materially interfere with or materially affect
the value or use of the respective underlying asset to which such Liens relate,
(iv) original purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business and (v) Liens
that do not materially interfere with or materially affect the value or use of
the respective underlying asset to which such Liens relate.
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"Person" shall mean any individual, corporation, general
partnership, limited partnership, limited liability partnership, limited
liability company, joint stock company, unincorporated organization or
association, trust, joint venture or other organization or entity (including,
without limitation, any Governmental Entity) as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
"Post-Closing Tax Period" shall mean any Tax period that begins
after the Closing Date.
"Pre-Closing Tax Period" shall mean any Tax period that ends on
or before the Closing Date.
"Real Property" shall mean the Owned Real Property and the
Leased Real Property.
"Receivables" means any and all accounts receivable, notes and
other amounts receivable in respect of the Business.
"Reference Balance Sheet" shall mean the Balance Sheet of the
Business as of May 31, 2002, as adjusted pursuant to the Supplemental Accounting
Principles and as attached hereto as Schedule 1.1(c).
"Release" shall mean any spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, release,
presence or migration of Hazardous Substances in or into the Environment above
regulatory standards or into or out of any property, including the movement of
Hazardous Substances through or in the Environment or property.
"Remediation" means an action of any kind to address an
Environmental Condition, including the following activities: (a) monitoring,
investigation, assessment, treatment, cleanup, containment, encapsulation,
removal, mitigation, response or restoration work; (b) obtaining any permits,
consents, approvals or authorizations of any Governmental Entity necessary to
conduct any such activity; (c) preparing and implementing any plans or studies
for any such activity; (d) obtaining a written notice from a Governmental Entity
with jurisdiction over the Real Property or an Off-Site Location under
Environmental Laws that no material additional work is required by such
Governmental Entity; (e) the use, implementation, application, installation,
operation or maintenance of removal actions on the Real Property or an Off-Site
Location, remedial technologies applied to the surface or subsurface soils,
excavation and treatment or disposal of soils at an Off-Site Location, systems
for long-term treatment of surface water or groundwater, engineering controls or
institutional controls; and (f) any other activities reasonably determined to be
necessary or appropriate or required under Environmental Laws to address an
Environmental Condition.
"Restructuring Taxes" shall mean any and all Taxes, including
stamp duty and stamp taxes with respect to any transaction entered into in
connection with the transfer, by or at the direction of TRW, of the Retained
Assets or any other assets that are
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not being sold to Buyer pursuant to this Agreement whether such transfer or
transaction occurs before or after the Closing.
"Software" shall mean all computer software, including all
source code, object code, and firmware.
"Spanish Affiliate" shall mean Compania Espanola de Sistemas
Aeronauticos SA.
"Standard Practice Instructions" shall mean the TRW Standard
Practice Instructions, a copy of which has been provided to Buyer under separate
cover, which sets forth the written policies and requirements for financial
reporting of TRW's operating units.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, joint venture or other business entity in which such
Person directly or indirectly owns, in the aggregate, a majority of the equity
interest.
"Supplemental Accounting Principles" shall mean those accounting
principles included as part of Section 4.7 of the TRW Disclosure Letter.
"Tax" or "Taxes" shall mean all federal, state, local and
foreign taxes of any kind whatsoever, including income, gross receipts, license,
premium, windfall profits, environmental (including under Section 59A of the
Code), fees, levies, duties, tariffs, income, profits, transfer, gains, excise,
inventory, property (real, personal or intangible), custom, sales, use, license,
registration, withholding, payroll, employment, social security, workers'
compensation, alternative or add-on minimum, unemployment compensation, net
worth, capital stock, ad valorem, stamp, documentary, value added and franchise
taxes and similar charges whether computed on a unitary, combined or any other
basis, including any interest, penalty or addition thereto, whether disputed or
not, in each case, whether disputed or not, and including any tax liability that
results from Treasury Regulation Section 1.1502-6 or any similar provision of
state, local or foreign law, by contract or otherwise. "Tax Authority" shall
mean any U.S., non-U.S., federal, national, state, provincial, county or
municipal or other local government, and any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any taxing
authority or any other authority exercising Tax regulatory authority.
"Tax Returns" shall mean any and all reports, returns,
information returns, statements, declaration, elections, claims for refund,
estimates or other documents (including any related or supporting documentation)
filed or required to be filed with any Tax Authority in connection with any
determination, assessment, payment or collection of any Tax.
"Trade Secrets" shall mean all inventions (whether patentable or
not), invention disclosures, trade secrets, proprietary information, know how,
discoveries, improvements, Software, shop rights, developments, research data,
designs, technology,
9
test procedures, processes, research data, computer data bases, product
development information, blueprints, drawings, sketches, proposal files,
designs, design libraries, design data, plans, specifications, procedures,
models and prototypes, samples, engineering and R&D notebooks, reports,
analyses, assembly instructions, quality control documentation, installation and
operation manuals, manufacturing techniques and processes, product literature,
business methods and processes, business data, customer lists and contacts,
business plans, confidential price lists, marketing plans, financial
information, cost and pricing data, documents, business reports, and all other
confidential or proprietary information that has commercial value.
"Trademarks" shall mean all trade names, logos, common law
trademarks and service marks, trademark and service xxxx registrations and
applications therefor throughout the world.
"Transferred Intellectual Property" shall mean all of TRW and
the Asset Selling Subsidiaries' right, title and interest in the Intellectual
Property that is used primarily in the Business, including, without limitation,
the Intellectual Property listed as "Transferred Intellectual Property" in
Section 4.14(a) of the TRW Disclosure Letter.
"Treasury Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as amended.
"TRW Entities" shall mean, collectively, the TRW Participants
and the TRW Selling Shareholders.
"TRW Participants" shall mean, collectively, TRW, the Asset
Selling Subsidiaries, the Aerospace Subsidiaries their Subsidiaries, the
Aerospace Affiliates controlled by TRW and their Subsidiaries and the UK Holdco
described in Section 2 of Schedule 2.1.
"TRW Selling Shareholders" shall mean TRW and direct and
indirect Subsidiaries of TRW that hold equity interests in the Aerospace
Subsidiaries and Aerospace Affiliates, each of which is identified on Schedule
2.2 hereof.
"UK Items" shall mean the following items set forth on Schedule
2.7: (i) UK Holdco Class A and Class B - Shares, (ii) TRW Aeronautical Systems
Ltd. - Assets, (iii) Xxxxx Aerospace Ltd. - Assets and (iv) Xxxxx Industries
Ltd. - Assets.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any applicable state
or local statute, law, ordinance, code, rule, regulation, order ruling, or
decree governing underground storage tanks.
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act or similar local, state or foreign law.
(b) Each of the following terms has the meaning set forth in
the Section set forth opposite each term:
10
Term Section
---- -------
2002 Financial Statements 4.7(a)
Accounting Arbitrator 2.6(c)
Actions 4.10
Acquired Assets 2.3(a)
Adjustment Amount 2.6(a)
Actuarial Review Principles 6.8(u)
Actuary's Letter 6.8(u)
Aerospace Employees 6.8(a)
Affected Employees 6.8(a)
Agreement Preamble
Ancillary Agreements 6.11
Assumed Contracts 2.3(a)(viii)
Assumed Liabilities 2.4(a)
Assumed Plan 4.13(a)
Australian Transferred Employees 6.8(o)
Business Recitals
Business Plan 4.13(a)
Buyer Preamble
Buyer PBO 6.8(u)
Buyer's Allocation 2.7(a)
Buyer's Appraisal 2.7(a)
Buyer's Appraiser 2.7(a)
Buyer's Canadian Pension Plan 6.8(f)
Buyer's Canadian Salaried Pension Plan 6.8(f)
Buyer U.S. Pension Plan 6.8(d)
Canadian Hourly Fund 6.8(f)
Canadian Hourly Pension Plan 6.8(f)(iii)
Canadian Retiree Medical Plan 6.8(f)
Canadian Salaried Affected Employee Liabilities 6.8(f)
Canadian Transferred Employees 6.8(f)
Cap 9.4(a)
Closing 3.1
Closing Balance Sheet 2.6(a)
Closing Date 3.1
Closing Price 2.7(a)
Commitment Letter 5.7
Consenting Members 6.8(u)
Currency Averaged Pension Deficit 6.8(u)
Damages 9.2(a)
Dispute 10.7
EA Affected Employees 6.8(p)
Employment Act 6.8(p)
Equity Interests 2.2
ERISA 4.13(a)
11
ERISA Affiliate 4.13(a)
Estimated Full Funding Amount 6.8(u)
EU Merger Regulation 4.6(b)
Excluded Liabilities 2.4(b)
Excluded Taxes 6.10(b)(i)
FAS 4.13(f)
FAS 87 4.13(m)(i)
Final Allocation 2.7(a)
Financing 5.7
Final Transfer Amount 6.8(f)
French Pension Plan 6.8(r)
French Transferred Employees 6.8(r)
Full Funding Amount 6.8(u)
Funds 6.8(o)
German Pension Plan 6.8(b)
German Transferred Employees 6.8(q)
Governmental Antitrust Consents 7.1(c)
Governmental Antitrust Entity 6.4(a)
Historical Financial Statements 4.7(c)
Hourly Defined Benefit Plans 6.8(d)(iii)
Hourly Retiree Medical Plans 6.8(d)
Indemnified Party 9.2(c)
Indemnifying Party 9.3
Initial Allocation 2.7(a)
IRS 4.13(c)
Lay-off Payments 6.8(g)
Local Transfer Agreements 6.11(b)
Losses 6.10(b)
Majority Voting Power 6.18(a)
Master Trust 6.8(d)(iii)(B)
Material Contracts 4.18(a)
Measurement Date 6.8(s)
Medical Plans 6.8(d)(ii)(C)
Members 6.8(u)
Minimum Claim Amount 9.4(a)
Multiemployer Plan 4.13(i)
Multiple Employer Plan 4.13(i)
Net UK Appraiser Adjustment 2.7(a)
Non-Represented Employees 6.8(d)(ii)
Non-U.S. Benefit Plan 4.13(m)
Offer Employee 6.8(b)
PBO 4.13(f)
Pension Deficit 6.8(u)
Pension Plan 4.13(c)
Pension Surplus 6.8(u)
Plans 4.13(a)
12
PLU Gmb 6.8(q)
Pre-Closing Customer Contract Claims 2.4(a)(iv)
Pre-Closing Campaign Claims 2.4(a)(iii)
Preliminary Transfers 2.1(a)
Product Liability Claims 2.4(a)(viii)
Purchase Price 2.5(a)
RCRA 1.1
Regulations 6.8(a)(ii)
Regulatory Amount 6.8(f)
Represented Employees 6.8(d)(iii)
Residual Purchase Price 2.7(a)
Retained Assets 2.3(b)
Retiree Plan 4.13
Revised Allocation 2.7(a)
Shared Campaign Claims 2.4(a)(iii)
Singapore Transferred Employees 6.8(p)
SGA 6.8(o)
Stock Savings Plan 6.8(d)(ii)(B)
Superannuation 6.8(o)
Superannuation Commitment 6.8(o)
Tax Act 6.8(o)
Threshold 9.4(a)
Towers Report 6.8(u)
Transfer Amount 6.8(u)
Transfer Consents 6.8(u)
Transfer Consent Period 6.8(u)
TRW Preamble
TRW Canadian Salaried Pension Plan 6.8(f)
TRW Disclosure Letter Article IV
TRW PBO 6.8(u)
TRW U.S. Salaried Pension Plan 6.8(d)
TRW's Allocation 2.7(a)
TRW's Appraisal 2.7(a)
TRW's Appraiser 2.7(a)
Transfer Amount 6.8(f)
Transfer Date 6.8(f)
Transfer Taxes 6.6(a)(i)
Transferred Employee 6.8(b)
Transition Agreement 6.11(a)
UK Affected Employees 6.8(a)
UK Transferred Employees 6.8(e)
unadjusted Transfer Amount 6.8(u)
URL 1.1
US Transferred Employees 6.8(d)
Union 401(k) Plan 6.8(d)(iii)
Welfare Benefits 6.8(c)
13
ARTICLE II
PRELIMINARY TRANSFERS; SALE AND PURCHASE OF ASSETS
Section 2.1 Preliminary Transactions.
(a) Prior to the transfers and conveyance of Assets pursuant
to the terms of this Article II, TRW shall complete the internal restructuring
transactions and transfers set forth on Schedule 2.1 after receiving all
necessary clearances from the UK Inland Revenue (collectively, the "Preliminary
Transfers").
(b) In completing the Preliminary Transfers, TRW will not be
permitted to modify or deviate from the Preliminary Transfers without the prior
written consent of Buyer, which consent shall not be unreasonably withheld or
delayed; provided, however, that TRW shall furnish to Buyer all information
reasonably necessary to assess the effect on Buyer of any such modification or
deviation. Buyer shall promptly provide TRW with the basis for any withholding
of a consent pursuant to the preceding sentence.
(c) Without limiting the foregoing subsections of this
Section 2.1, and notwithstanding anything to the contrary in Section 6.1 hereof,
TRW may, in its sole discretion, cause any Aerospace Subsidiary or Aerospace
Affiliate to make a distribution of any Retained Assets prior to the Closing.
Buyer shall cause any such assets that are not distributed prior to the Closing
to be transferred by such Aerospace Subsidiary or Aerospace Affiliate to TRW at
or, to the extent not included in the Net Asset Value on the Closing Balance
Sheet, after the Closing.
(d) Without limiting the foregoing subsections of this
Section 2.1, and notwithstanding anything to the contrary in Section 6.1 hereof,
TRW may, in its sole discretion, cause any Aerospace Subsidiary or Aerospace
Affiliate to make a distribution of cash, cash equivalents and notes prior to
the Closing. Buyer shall cause any such assets that are not distributed prior to
Closing to be transferred by such Aerospace Subsidiary or Aerospace Affiliate to
TRW at or, to the extent not included in the Net Asset Value on the Closing
Balance Sheet, after the Closing.
Section 2.2 Sale of Equity Interests. Subject to the terms and
conditions of this Agreement, at the Closing, TRW shall, and shall cause the
other TRW Selling Shareholders to, sell, transfer, convey, assign and deliver to
Buyer and Buyer shall purchase, acquire and accept from TRW or the applicable
TRW Selling Shareholder all of the equity interests of the Aerospace
Subsidiaries and Aerospace Affiliates as set forth on Schedule 2.2 hereof held
by such TRW Selling Shareholder (the "Equity Interests"). At the Closing, Buyer
shall assume all liabilities and obligations arising out of or resulting from
the ownership of the equity interests of the Aerospace Affiliates on and after
the Closing Date, except for those liabilities that relate to TRW or its
14
Subsidiaries breaching or failing to perform an obligation on or before the
Closing Date, pursuant to the agreements relating to such equity ownership.
Section 2.3 Transfer of Assets; Retained Assets.
(a) Subject to the terms and conditions of this Agreement
and the Ancillary Agreements, at the Closing, TRW shall, and shall cause the
Asset Selling Subsidiaries identified on Schedule 2.3(a) to, sell, convey,
assign, transfer and deliver to Buyer and Buyer shall purchase, acquire and
accept (x) from TRW, all of TRW's right, title and interest in and to the
rights, properties and assets, other than the Retained Assets and the Equity
Interests, which are used or held for use primarily in the Business, tangible
and intangible, wherever located and (y) from the Asset Selling Subsidiaries,
all of the Asset Selling Subsidiaries' right, title and interest in and to the
rights, assets and properties, other than the Retained Assets and the Equity
Interests, which are used or held for use primarily in the Business, tangible
and intangible, wherever located (each and all such items being herein referred
to as the "Acquired Assets"), including all of such right, title and interest to
the following:
(i) all books of account, general, financial, tax
and personnel records for the Affected Employees which become employees
of Buyer or its Subsidiaries, invoices, shipping records, supplier
lists, correspondence and other documents, records and files and any
rights thereto owned by TRW or the Asset Selling Subsidiaries (including
those stored in electronic format), and used or held for use primarily
in the Business, other than organizational documents, minute and stock
record books and the corporate seals of TRW and the Asset Selling
Subsidiaries and other than as provided in Section 2.3(b)(iv);
(ii) all sales and promotional literature, customer
lists and other sales-related materials used or held for use primarily
in the Business;
(iii) all Receivables other than those referred to in
Section 2.3(b)(ii) which primarily relate to the Business;
(iv) prepaid expenses, deferred charges, advance
payments, and similar items of the type reflected on the Reference
Balance Sheet which primarily relate to the Business;
(v) all Inventories used or held for use primarily
in the Business by TRW or an Asset Selling Subsidiary;
(vi) all Owned Real Property used or held for use
primarily in the Business by TRW or an Asset Selling Subsidiary and all
Leased Real Property used or held for use primarily in the Business by
TRW or an Asset Selling Subsidiary;
15
(vii) all Equipment used or held for use primarily in
the Business by TRW or an Asset Selling Subsidiary;
(viii) subject to Section 6.5 hereof, Contracts
primarily related to the Business or to which the Acquired Assets are
subject, including (A) all orders, contracts, and commitments for the
purchase or use of goods and services primarily for the benefit of the
Business; (B) all rights under all bids and offers that primarily relate
to the Business; (C) all awards, orders, contracts, commitments, and
proposals for the design, development, manufacture or sale of
Inventories that primarily relate to the Business; (D) all
distributorship agreements, sales agency agreements, teaming, and
similar business alliance agreements relating to the design,
manufacture, sale and distribution of Inventories for use primarily in
the Business; and (E) all other assignable contracts, licenses,
sublicenses, agreements, leases and commitments used or held for use
primarily in the Business, including all agreements with individual
Affected Employees assumed by Buyer pursuant to Section 6.8(i)
(collectively, the "Assumed Contracts");
(ix) all existing claims and other rights arising
from the performance or breach by third parties of their obligations
under the Assumed Contracts;
(x) all Transferred Intellectual Property, subject
to the terms of Section 6.14 herein;
(xi) to the extent transferable, all Permits issued
by any Governmental Entity used or held for use primarily in the
Business by TRW or any of the Asset Selling Subsidiaries and all
applications therefor;
(xii) all existing causes of action, judgments,
claims, reimbursements and demands, of whatever nature (including rights
under and pursuant to all warranties, representations and guarantees
made by suppliers of products, materials or Equipment, or components
thereof) and rights to insurance proceeds (to the extent such rights to
insurance proceeds are allocated to Buyer in the Insurance Agreement) in
favor of TRW or the Asset Selling Subsidiaries other than those
specified in Section 2.3(b)(vi);
(xiii) all Plan assets transferred to Buyer pursuant to
Section 6.8, or held in connection with any Assumed Plan; and
(xiv) all hedging Contracts that primarily relate to
the Business, as set forth on Schedule 2.3(a)(xiv); provided that TRW
shall be solely responsible for any fees, penalties or other
consideration in connection with obtaining any novations (or
replacements of such contracts on the same economic terms and
conditions) of such contracts.
16
(b) Notwithstanding Section 2.3(a), the term "Acquired
Assets" shall not include the following (each and all such items other than
Equity Interests being herein referred to as "Retained Assets"), but only to the
extent not included in the Net Asset Value for purposes of the Closing Balance
Sheet:
(i) all cash and cash equivalent items, including
but not limited to such items held by or for the account of TRW and the
Asset Selling Subsidiaries, whether or not arising from the conduct of
the Business, including, without limitation, demand accounts,
certificates of deposit, time deposits, marketable securities,
negotiable instruments and the proceeds of accounts receivable paid on
or prior to the Closing Date;
(ii) all intercompany accounts receivable and notes
for those accounts receivable and notes where the obligor is TRW or any
Affiliate of TRW which will remain an Affiliate of TRW after the
consummation of the transactions contemplated by this Agreement;
(iii) the Licensed Trademarks and Licensed
Intellectual Property and all other Excluded Intellectual Property;
(iv) any records which TRW or any Asset Selling
Subsidiary is required by law to retain in its possession or any records
for which it is the business custom to retain; provided in each case
that a copy of any such record shall be furnished to Buyer;
(v) all causes of action, judgments, claims,
reimbursements and demands, of whatever nature (including rights under
and pursuant to all warranties, representations and guarantees made by
suppliers of products, materials or Equipment, or components thereof),
in favor of TRW or any Asset Selling Subsidiary to the extent related to
the Retained Assets and the Excluded Liabilities;
(vi) any claims under insurance policies maintained
by TRW or the Asset Selling Subsidiaries to the extent related to
Retained Assets or Excluded Liabilities or to the extent allocated to
TRW or the Asset Selling Subsidiaries pursuant to the Insurance
Agreement;
(vii) all other rights, property interests (whether
real or personal) and assets (whether tangible or intangible) of TRW and
its Affiliates that are not primarily used or held for use in the
Business;
(viii) such other rights, properties and assets set
forth on Schedule 2.3(b) hereto;
(ix) except as may be provided in Section 6.8 hereof
and except for assets held in connection with any Assumed Plan, any
agreement with any individual Affected Employee or any claim to any
surplus assets in any retirement plan or trust for same; and
17
(x) the Real Property set forth on Schedule
2.3(b)(x).
Section 2.4 Assumption of Liabilities; Excluded Liabilities.
(a) Subject only to the provisions of this Agreement, at the
Closing, Buyer shall assume and agree to pay, perform and discharge when due,
only the following liabilities and obligations of TRW or the Asset Selling
Subsidiaries (the "Assumed Liabilities"):
(i) all accrued liabilities and obligations in
categories that are reflected on both the Reference Balance Sheet and
the Closing Balance Sheet, but only to the extent such accrued
liabilities and obligations are set forth on the Closing Balance Sheet;
(ii) all liabilities and obligations under the
Assumed Contracts to the extent relating to performance after the
Closing;
(iii) solely to the extent provided in this Section
2.4(a)(iii), liabilities and obligations arising out of, resulting from,
or relating to customer claims which have not been resolved or settled
prior to the Closing Date, including but not limited to those claims
seeking return, replacement, modification and/or repair of products sold
by the Business either pursuant to express product warranties extended
by a TRW Participant prior to the Closing Date or product warranties or
obligations implied or provided by law or pursuant to contractual claims
of design or manufacturing defects including, without limitation,
contractual claims arising from an event or events arising out of a
recall or "rollover" of a product designed, manufactured or sold by TRW
or the Asset Selling Subsidiaries prior to the Closing Date (such claims
collectively, "Pre-Closing Campaign Claims"); provided that with respect
to all liabilities and obligations arising out of, resulting from, or
relating to Pre-Closing Campaign Claims that are asserted within five
years following the Closing Date, that are required to be paid and that
relate solely to products shipped by a TRW Participant prior to the
Closing Date ("Shared Campaign Claims"), to the extent that liabilities
for such Shared Campaign Claims payable to third parties for repair or
replacement of products (at standard manufacturing cost), in the
aggregate, exceed $6,082,000, TRW and Buyer shall share equally the next
$2,000,000 of such Shared Campaign Claims in excess of $6,082,000 (but
only to the extent of such excess); provided, further, that to the
extent such Shared Campaign Claims exceed $8,082,000, TRW shall be
solely liable for such excess; and provided, further, that Buyer shall
manage such Shared Campaign Claims in accordance with the procedures set
forth in Section 6.22 hereof;
(iv) solely to the extent provided in this Section
2.4(a)(iv), liabilities and obligations arising out of, resulting from,
or
18
relating to customer claims which have not been resolved or settled
prior to the Closing Date relating to breach of contract, including but
not limited to claims relating to late delivery or late performance of
contract milestones, in each case with respect to products designed,
manufactured or sold for the Business by a TRW Participant prior to the
Closing Date (such claims collectively, "Pre-Closing Customer Contract
Claims"); provided that Buyer and TRW shall share equally any
liabilities and obligations to third parties that are asserted within
five years following the Closing Date which arise out of, result from,
or relate to those Pre-Closing Customer Contract Claims set forth on
Schedule 2.4(a)(iv) only to the extent that such liabilities and
obligations to third parties, in the aggregate, exceed $6,013,000 but
are less than $8,013,000 (but only to the extent of the amount in excess
of $6,013,000); provided, further, that to the extent that such
liabilities and obligations exceed $8,013,000, TRW shall be solely
liable for all such excess (but only to the extent of such excess);
provided, further, that Buyer shall have no liability or obligation with
respect to any Pre-Closing Customer Contract Claim not set forth on
Schedule 2.4(a)(iv); and provided, further, that Buyer shall manage such
Pre-Closing Customer Contract Claims in accordance with the procedures
set forth in Section 6.22 hereof;
(v) the first $3,913,000 of Environmental
Liabilities, and to the extent that Environmental Liabilities, in the
aggregate, exceed $3,913,000 but are less than $8,913,000, one-half of
all such Environmental Liabilities in excess of $3,913,000 (and only to
the extent of such excess); provided that to the extent Environmental
Liabilities, in the aggregate, exceed $8,913,000, Buyer shall assume no
liability for the excess of such Environmental Liabilities above such
amount. Buyer shall be entitled to manage any proceedings relating to
any Environmental Claim and any Remediation arising therefrom; provided
that at any time after Buyer ceases to have any further liability with
respect to Environmental Liabilities pursuant to this Section 2.4(a)(v),
TRW may elect, upon written notice to Buyer, to manage any further
Environmental Claim and any further Remediation and shall be entitled to
control and appoint lead counsel or consultants for any defense,
investigation or remedial action relating to such Environmental Claim or
Remediation; provided, further, that in managing any Environmental Claim
or Remediation, TRW shall obey all applicable laws, rules, regulations
or orders of any Governmental Entity relating thereto and shall not
unreasonably interfere, to the extent practicable, with the operations
of the Business (and if TRW fails to meet the conditions set forth in
this proviso, Buyer shall be entitled to resume the management of
Environmental Claims and Remediation). A party's management of
Environmental Claims and Remediation shall be governed by the provisions
set forth in Section 6.19(b) hereof. For the avoidance of doubt, this
Section 2.4(a)(v) shall not apply to, and Buyer shall have no liability
under this Section for,
19
any asbestos-related claim or liability, which shall be governed
exclusively by Section 2.4(b)(v);
(vi) all liabilities and obligations expressly
assumed by Buyer pursuant to this Agreement and the Ancillary
Agreements, including without limitation obligations assumed pursuant to
Sections 6.6 and 6.10(b) hereof;
(vii) all liabilities and obligations under any
guarantees issued, granted or provided in connection with the Business
as set forth on Schedule 2.4(a)(vii);
(viii) all liabilities and obligations arising out of,
resulting from, or relating to claims, whether founded upon negligence,
strict liability in tort, and/or other similar legal theory, seeking
compensation or recovery for or relating to injury to person or damage
to property from (x) an event or events occurring after the Closing
Date, but arising out of a defect or alleged defect (other than recall
or "rollover") of a product designed, but not manufactured or sold, for
the Business by TRW, an Aerospace Subsidiary, an Aerospace Affiliate or
an Asset Selling Subsidiary prior to the Closing Date or (y) an event or
events occurring on or after May 1, 2004, but arising out of a defect or
alleged defect (other than a recall or "rollover") of a product
manufactured or sold for the Business by TRW, an Aerospace Subsidiary,
an Aerospace Affiliate or an Asset Selling Subsidiary prior to the
Closing Date (such events described in subclauses (x) and (y) are
collectively referred to as "Product Liability Claims"), provided,
however, that TRW shall purchase the insurance coverage described in
Section 6.20(b) hereof;
(ix) solely to the extent specifically provided in
Section 6.8 hereof, obligations of TRW or its Affiliates with respect to
Affected Employees; and
(x) any liabilities arising out of any continuation
of conduct, by Buyer, its subsidiaries, that took place as of the
Closing Date which had infringed upon or otherwise misappropriated the
Intellectual Property rights of another person as of the Closing Date,
if such conduct continues following notice to Buyer or its Subsidiaries
that such conduct constitutes infringement or misappropriation of the
Intellectual Property rights of another Person (provided, however, that
nothing in this Section 2.4(a)(x) shall affect Buyer's ability to seek
any remedy for a breach of the representations and warranties contained
in Section 4.14 hereof).
(b) Notwithstanding anything in this Agreement to the
contrary, Buyer shall not assume or be deemed to have assumed, and TRW or the
Asset Selling Subsidiaries, as the case may be, shall be solely and exclusively
liable with respect to, all liabilities and obligations, whether known or
unknown, and, except as specifically noted
20
below, whether arising before or after the Closing, of TRW or the Asset Selling
Subsidiaries resulting from or related to the Business other than the Assumed
Liabilities (collectively, the "Excluded Liabilities") including the following:
(i) all intercompany accounts payable and notes
existing as of the Closing Date, other than the Ancillary Agreements,
where the obligee is TRW or any Affiliate of TRW which will remain an
Affiliate of TRW after the consummation of the transactions contemplated
by this Agreement;
(ii) except as specifically provided in Section 6.8,
all obligations and liabilities of TRW or its Affiliates with respect to
their respective employees (including the Affected Employees) and former
employees including, but not limited to, those arising from or relating
to their employment with TRW or its Affiliates, or the termination
thereof including medical, other health benefits, life insurance plans,
pension plans, retiree benefits, workers compensation claims and
obligations and liabilities with respect to any Plan that is not an
Assumed Plan;
(iii) all liabilities (including Taxes and
Restructuring Taxes) to the extent relating to or arising out of the
Retained Assets;
(iv) any indebtedness for borrowed money of TRW or
the Asset Selling Subsidiaries (other than borrowed money of the
Aerospace Affiliates in an amount not to exceed $4.4 million) and any
guarantees in respect thereof, except as set forth on Schedule
2.4(a)(vii);
(v) any and all liabilities to employees, former
employees, third parties, Governmental Entities, customers or any other
Persons relating to the exposure to, use of, manufacture of, transport
of or any action taken by TRW or its Subsidiaries prior to the Closing
Date with respect to asbestos, including but not limited to the
incorporation of asbestos into products of the Business or the use of
asbestos or products containing asbestos in the operation of the
Business, or the presence of asbestos in any facility or location used
in the conduct of the Business prior to the Closing, but excluding all
liabilities and obligations relating to removal of asbestos from any
Owned Real Property or Leased Real Property following the Closing Date,
provided that the presence of asbestos in its then-current condition at
any Owned Real Property or Leased Real Property is lawful as of the
Closing Date. The defense of all legal claims of any nature, under any
legal or equitable theory of recovery whatsoever, concerning
asbestos-containing products used or actions taken prior to the Closing
Date shall be strictly governed by the procedures set forth in Schedule
2.4(b)(v) to this Agreement;
(vi) all liabilities and obligations with respect to
claims of infringement or other misappropriation of the Intellectual
Property
21
rights of other persons by the Business that either arose on or before
the Closing Date or that related to continuation of conduct that took
place as of the Closing Date which had infringed or otherwise
misappropriated the Intellectual Property rights of another Person as of
the Closing Date (except for any continuation of conduct that takes
place following notice to Buyer or its subsidiaries that such conduct
constitutes infringement or misappropriation of Intellectual Property
rights of another person; provided, however that nothing in this
exception shall affect Buyer's ability to seek any remedy for a breach
of the representations and warranties contained in Section 4.14 hereof);
(vii) all liabilities related to any site that was
previously owned or operated by the TRW Participants and which is not,
as of the Closing Date, being operated in connection with the Business;
(viii) all liabilities and obligations resulting from
or relating to litigation, proceedings, actions, claims, or
investigations at law or in equity pending against TRW or the Asset
Selling Subsidiary to the extent relating to matters occurring on or
prior to the Closing Date, other than described in clauses (ix), (x),
(xi) and (xii) of this Section 2.4(b);
(ix) to the extent Environmental Liabilities, in the
aggregate, exceed $3,913,000 but are less than $8,913,000, one-half of
such Environmental Liabilities in excess of $3,913,00 (but only to the
extent of such excess); and to the extent Environmental Liabilities
exceed $8,913,000, 100% of the excess of such Environmental Liabilities
above $8,913,000 (and only to the extent of such excess);
(x) to the extent that Shared Campaign Claims exceed
$6,082,000 but are less than $8,082,000, one-half of the excess over
$6,082,000 (and only to the extent of such excess), and to the extent
that Shared Campaign Claims exceed $8,082,000, 100% of the amount in
excess of $8,082,000 (and only to the extent of such excess);
(xi) to the extent that Pre-Closing Customer Contract
Claims exceed $6,013,000 but are less than $8,013,000, one-half of the
excess over $6,013,000 (and only to the extent of such excess), and to
the extent that the Pre-Closing Customer Contract Claims exceed
$8,013,000, 100% of the amount in excess of $8,013,000 (and only to the
extent of such excess);
(xii) all liabilities and obligations arising out of,
resulting from, or relating to claims, whether founded upon negligence,
strict liability in tort, and/or other similar legal theory, seeking
compensation or recovery for or relating to injury to person or damage
to property from (x) an event or events occurring before the Closing
Date, and arising out of a defect or alleged defect (other than a recall
or "rollover") of a product
22
designed, manufactured or sold for the Business by TRW, an Aerospace
Subsidiary, an Aerospace Affiliate or an Asset Selling Subsidiary prior
to the Closing Date and (y) an event or events occurring after the
Closing Date but prior to May 1, 2004, and arising out of a defect or
alleged defect (other than recall or "rollover") of a product
manufactured or sold for the Business by TRW, an Aerospace Subsidiary,
an Aerospace Affiliate or an Asset Selling Subsidiary prior to the
Closing Date;
(xiii) fines or penalties associated with noncompliance
with import/export laws on or prior to the Closing Date;
(xiv) those liabilities and obligations listed on
Schedule 2.4(b)(xiv); and
(xv) all Excluded Taxes.
(c) Except for the Assumed Liabilities and except as
expressly provided otherwise in this Agreement, neither Buyer nor any of its
Affiliates is assuming, and shall not be deemed to have assumed, any debts,
liabilities, commitments or obligations (including Taxes), whether fixed,
contingent or absolute, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whether or not required by GAAP to be
reflected in financial statements or disclosed in the notes thereto, of any
Aerospace Subsidiary, Aerospace Affiliate or their respective Subsidiaries, and
TRW or the Asset Selling Subsidiaries shall remain solely and exclusively liable
with regard thereto.
(d) Nothing in this Agreement shall be construed to impose
on TRW any liability or obligation that does not arise out of, relate to, or
concern actions taken by TRW, its Subsidiaries, or Affiliates on or before the
Closing Date.
Section 2.5 The Purchase Price.
(a) In consideration of the aforesaid sale, conveyance,
assignment, transfer and delivery to Buyer of the Assets and the agreement of
TRW to enter into this Agreement, and subject to the adjustments set forth in
Section 2.6, Buyer shall assume the Assumed Liabilities and pay or cause to be
paid in full to TRW (or its designated Affiliates) for the benefit of TRW and
the Asset Selling Subsidiaries (and TRW shall apportion the Purchase Price among
the selling parties) an aggregate purchase price of $1,500,000,000 (one billion,
five hundred million dollars) in cash (the "Purchase Price"). The Purchase Price
will be payable at the Closing by wire transfer of same day funds to an account
or accounts and in such amounts as designated by TRW. TRW shall designate such
account or accounts and amounts in writing at least two Business Days prior to
Closing.
Section 2.6 Purchase Price Adjustment.
(a) Within 90 days after the Closing Date, Buyer shall cause
Ernst & Young LLP to prepare and deliver to TRW a balance sheet dated as of the
Closing Date
23
prepared in accordance with GAAP, consistently applied, as interpreted by the
Supplemental Accounting Principles and in a manner consistent with the
preparation of the Reference Balance Sheet (the "Closing Balance Sheet"). TRW
shall cause its and its Affiliates' respective officers and employees to fully
cooperate and assist Buyer and its representatives in connection with the
preparation of the Closing Balance Sheet. The "Adjustment Amount" (which may be
a negative value) shall be an amount equal to the difference between the Net
Asset Value set forth on the Closing Balance Sheet and the Net Asset Value set
forth on the Reference Balance Sheet.
(b) If TRW disagrees with the determination of the
Adjustment Amount, TRW shall notify Buyer in writing of such disagreement within
the 30-day period immediately following the delivery of the Closing Balance
Sheet, which notice shall describe the specific nature of any such disagreement
and provide reasonable supporting documentation for such disagreement; provided,
however, TRW shall not disagree with any valuation made by Buyer which has been
made in accordance with GAAP, as interpreted by the Supplemental Accounting
Principles. During the 30-day period of its review, TRW shall have reasonable
access to any documents, schedules or work papers used in the preparation of the
Closing Balance Sheet. TRW agrees that any failure by it to notify Buyer of any
such disagreement prior to end of the 30-day period immediately following the
delivery of the Closing Balance Sheet shall be deemed to be an acceptance by TRW
of the Closing Balance Sheet and shall constitute a complete waiver of any right
of TRW to dispute such Closing Balance Sheet and Adjustment Amount for purposes
of this Agreement.
(c) Buyer and TRW agree to negotiate in good faith to
resolve any such disagreement regarding the determination of the Adjustment
Amount, and any resolution of such disagreement agreed to in writing by Buyer
and TRW shall be final and binding upon the parties and their successors and
assigns. If Buyer and TRW are unable to resolve such disagreement identified by
TRW pursuant to Section 2.6(b) within 30 days after delivery to Buyer of written
notice of such disagreement by TRW, then the disputed matters shall be referred
for final determination to PriceWaterhouseCoopers. If PriceWaterhouseCoopers is
unable or unwilling to serve, Buyer and TRW shall jointly select an arbitrator
from an internationally recognized accounting firm that is not the independent
auditor for either Buyer or TRW; provided, however, that if Buyer and TRW are
unable to select such an accounting firm within 45 days after delivery of
written notice of a disagreement, the Center for Public Resources shall make
such selection. (PriceWaterhouseCoopers or the internationally recognized
accounting firm so selected shall be referred to herein as the "Accounting
Arbitrator"). The Accounting Arbitrator shall only consider those items and
amounts as to which Buyer and TRW have disagreed within the time periods and on
the terms specified above and shall resolve the matter in accordance with the
terms and provisions of this Agreement and the Ancillary Agreements. The
Accounting Arbitrator is expressly limited to the selection of either TRW's or
Buyer's position on a disputed item (or a position in between the positions of
TRW or Buyer) and it shall thus select as a resolution for each disputed matter
the position of either Buyer or TRW (or a position in between the positions of
TRW or Buyer) (based solely on presentations and supporting material provided by
the parties and not pursuant to any independent review) and the Accounting
Arbitrator may not impose
24
an alternative resolution outside those bounds. The Accounting Arbitrator shall
deliver to Buyer and TRW, as promptly as practicable and in any event within 45
days after its appointment, a written report setting forth the resolution of
each disputed matter and its determination of the Adjustment Amount determined
in accordance with the terms of this Agreement. Such report shall be final,
non-appealable and binding upon the parties to the fullest extent permitted by
applicable law and may be enforced in any court having competent jurisdiction.
The 45-day period for delivering the written report may be extended for up to 30
days for good cause by the mutual written consent of the parties or by the
Accounting Arbitrator at its sole discretion. The fees, expenses and costs of
the Accounting Arbitrator shall be borne one-half by Buyer and one-half by TRW.
(d) If and to the extent the Adjustment Amount is not zero,
as finally determined after the procedures set forth in this Section 2.6, the
Purchase Price shall be increased on a dollar for dollar basis by the amount of
the Adjustment Amount if a positive number, or decreased on a dollar for dollar
basis by the Adjustment Amount if a negative number, as the case may be. If the
Purchase Price is decreased as a result of the purchase price adjustment
mechanism set forth in this Section 2.6, TRW shall pay to Buyer the amount of
such decrease along with interest accrued thereon, and if the Purchase Price is
increased as a result of the purchase price adjustment mechanism set forth in
this Section 2.6, Buyer shall pay to TRW the amount of such increase along with
interest accrued thereon, in either case, by delivery within two (2) Business
Days of such determination. Interest on the amount of such increase or decrease
shall accrue at a rate equal to daily average one month LIBOR plus one percent
(1%) commencing on the Closing Date. All payments pursuant to this Section
2.6(d) shall be made by wire transfer of same day funds to an account designated
by TRW or Buyer, as the case may be, within two (2) Business Days of such
determination.
Section 2.7 Allocation of Consideration.
(a) TRW and Buyer agree to allocate the Purchase Price and
the Assumed Liabilities (the sum of the Purchase Price and the Assumed
Liabilities shall be referred to herein as the "Closing Price") as set forth in
Schedule 2.7 hereto (the amount set forth on Schedule 2.7 with respect to each
item, an "Initial Allocation"); provided that no later than fourteen (14) days
after the date hereof, Buyer shall either retain Corporate Value Consulting
(Standard & Poor's) or select and retain such other third-party accounting firm
or appraisal firm as is reasonably acceptable to TRW ("Buyer's Appraiser") to
determine the reasonableness of the allocation of the Closing Price.
(i) Buyer's Appraiser shall provide Buyer and TRW
with an appraisal of each UK Item ("Buyer's Appraisal"). If the
aggregate of the Buyer's Appraisals with respect to the UK Items is
within 10% of the aggregate Initial Allocations with respect to the UK
Items, then the Buyer's Appraisal shall be accepted by Buyer and TRW,
and the Closing Price allocated to each UK Item shall equal the amount
of Buyer's Appraisal and that amount shall be the final allocation with
respect to each such item (the "Final Allocation"); provided, however,
that in the event that the aggregate Buyer's Appraisals with respect to
the UK Items varies
25
by more than 10% in either direction from the aggregate Initial
Allocations with respect to the UK Items, TRW may retain American
Appraisal or select and retain such other third-party accounting firm or
appraisal firm as is reasonably acceptable to Buyer ("TRW's Appraiser")
to determine the reasonableness of Buyer's Appraisal and to provide
Buyer and TRW with an appraisal of such items (the "TRW's Appraisal"),
in which case the Final Allocation will be the average of the Buyer's
Appraisal and TRW's Appraisal and the Final Allocation so determined
shall be accepted by Buyer and TRW.
(ii) After the Final Allocation has been determined
with respect to each UK Item, the Net UK Appraisal Adjustment (as
defined in the following sentence) shall be computed. The "Net UK
Appraisal Adjustment" shall equal (i) the aggregate Final Allocations
with respect to the UK Items minus (ii) the aggregate Initial Allocation
with respect to the UK Items. If the Net UK Appraisal Adjustment is less
than zero (i.e., a negative number), then the Initial Allocation with
respect to each non-UK Item will be adjusted and increased by a pro rata
amount (based on Initial Allocations) of the absolute value of the Net
UK Appraisal Adjustment (each such adjusted Initial Allocation, a
"Revised Allocation"); provided, however, that if the Net UK Appraisal
Adjustment is greater than zero (i.e., a positive number), then the
Revised Allocation with respect to each non-UK Item will be the Initial
Allocation with respect to such item reduced by a pro rata amount (based
on Initial Allocations) of the Net UK Appraisal Adjustment; provided
further, however, if the Net UK Appraisal Adjustment is equal to zero,
then no change shall be made to the Initial Allocations and the Revised
Allocation with respect to each non-UK Item will be the Initial
Allocation with respect to such item.
(iii) After the Revised Allocation has been determined
with respect to each non-UK Item, Buyer's Appraiser will provide Buyer
and TRW with an allocation of the Residual Purchase Price (as defined in
the following sentence) to the non-UK Items (the "Buyer's Allocation").
The "Residual Purchase Price" shall equal the excess of (i) the Closing
Price over (ii) the aggregate Final Allocations with respect to the UK
Items. With respect to each non-UK Item, if the Buyer's Allocation is
within 10% of the Revised Allocation, then the Buyer's Allocation shall
be accepted by Buyer and TRW and shall be the Final Allocation;
provided, however, that in the event that the Buyer's Allocation varies
by more than 10% in either direction from the Revised Allocation, TRW
may elect to have TRW's Appraiser determine the reasonableness of
Buyer's Allocation and provide Buyer and TRW with an allocation of the
Residual Purchase Price (the "TRW's Allocation"), in which case the
Final Allocation will be the average of the Buyer's Allocation and TRW's
Allocation and the Final Allocation so determined shall be accepted by
Buyer and TRW.
26
(iv) Each party will bear the cost of any third-party
accounting firm or appraisal firm it retains.
(b) Within 30 days of determination of the Adjustment Amount
pursuant to Section 2.6 hereof, Buyer shall prepare a revised Purchase Price
allocation to provide for the allocation of the Adjustment Amount in a manner
that is consistent with the Purchase Price allocation determined pursuant to
Section 2.7(a) and shall deliver such revised allocation to TRW for TRW's review
and approval; provided, however, that if TRW does not approve of such revised
Purchase Price allocation, TRW shall select and retain a third-party accounting
firm or appraisal firm to determine the reasonableness of the allocation of the
Adjustment Amount. If Buyer does not approve the revised allocation so
determined, the dispute shall be resolved according to the procedures set forth
in Section 2.6(c) hereof, provided, however, that in no event shall the
aggregate allocation to the UK Items result in an allocation that is less than
actual fair market value of the UK Items determined under the principles of
Section 2.7(a)(i).
(c) Neither TRW, Buyer nor any of their respective
Affiliates shall file any Tax Return or other document relating to Taxes or
otherwise take any position or agree to take any position relating to Taxes
which is inconsistent with the allocation (including any revision under this
Section 2.7) determined pursuant to this Section 2.7 unless required to do so
pursuant to a Final Determination.
Section 2.8 Proration.
(a) Buyer and TRW agree that all of the items normally
prorated, including those listed below, relating to the business and operation
of the Acquired Assets will be prorated as of the Closing Date, with TRW liable
to the extent such items relate to any time period through the Closing Date, and
Buyer liable to the extent such items relate to periods subsequent to the
Closing Date:
(i) personal property, real estate, occupancy and
any other similar non-Income Taxes, assessments and other charges, if
any, on or with respect to the ownership, use or business and operation
of the Acquired Assets;
(ii) rent and Taxes (other than Income Taxes);
(iii) any permit, license or registration fees with
respect to any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone,
electricity, gas and other utilities.
(b) In connection with such proration, in the event that
actual amounts are not available at the Closing Date, the proration shall be
based upon the actual amount of such Taxes or fees for the preceding year (or
appropriate period) for which such actual Taxes or fees are available and such
Taxes or fees shall be reprorated upon request of either TRW or Buyer made
within sixty (60) days of the date that the actual amounts
27
become available. TRW and Buyer agree to furnish each other with such documents
and other records as may be reasonably requested in order to confirm all
adjustment and proration calculations made pursuant to this Section 2.8.
ARTICLE III
CLOSING
Section 3.1 Closing. Upon the terms and subject to the
conditions of this Agreement and the Ancillary Agreements, the consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements
(the "Closing") shall take place no later than five (5) Business Days following
the satisfaction or waiver of the conditions set forth in Article VII hereof, at
10:00 a.m., at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP, Xxxx
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time and place as shall
be agreed upon by the parties hereto. The date on which the Closing occurs is
herein referred to as the "Closing Date." The Closing will be deemed to have
occurred as of 11:59 p.m. local time on the Closing Date.
Section 3.2 Deliveries at Closing.
(a) At the Closing, TRW shall deliver or cause to be
delivered to Buyer (unless previously delivered), the items identified on
Schedule 3.2(a).
(b) At the Closing, Buyer shall deliver or cause to be
delivered to TRW (unless previously delivered), the items identified on Schedule
3.2(b).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRW
Except as disclosed in a separate disclosure statement, a copy
of which has been delivered by TRW to Buyer prior to the execution of this
Agreement and is attached hereto (the "TRW Disclosure Letter"), TRW hereby
represents and warrants to Buyer the matters set forth below. Information
disclosed in any section of the TRW Disclosure Letter shall be deemed to be
disclosed with respect to such other sections of this Agreement or the TRW
Disclosure Letter to which such disclosure on its face would reasonably pertain
in light of the form and substance of the disclosure made. All representations
and warranties relating to the Spanish Affiliate are made only to the knowledge
of TRW.
Section 4.1 Organization and Existence. Each of the TRW Entities
is a legal entity duly established, validly existing, and (where applicable) in
good standing under the laws of its jurisdiction of organization or
incorporation, as the case may be. Each of the TRW Entities has all requisite
power and authority to own, lease and operate its properties and to conduct the
Business as it is currently conducted, except where the
28
failure to have such power and authority, individually or in the aggregate, has
not resulted, and is not reasonably likely to result, in a Material Adverse
Effect. Each of the TRW Entities is duly qualified or licensed to do business
under the laws of each jurisdiction in which the nature of the activities
conducted by it makes such qualification necessary, except where the failure to
be so qualified or licensed, individually or in the aggregate, has not resulted,
and is not reasonably likely to result, in a Material Adverse Effect.
Section 4.2 Power and Authority. TRW has all requisite corporate
or other organizational power and authority to execute and deliver, to perform
its obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements to which it is a party. Each of the TRW
Selling Shareholders and Asset Selling Subsidiaries has all requisite corporate
or other organizational power and, as of the Closing, will have the corporate or
other organizational authority to execute and deliver, to perform its
obligations under, and to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements to which it is a party.
Section 4.3 Authorization. The execution and delivery by TRW of,
the performance by TRW of its obligations under, and the consummation by TRW of
the transactions contemplated by, this Agreement have been, and the other
Ancillary Agreements, as of the Closing, will be, duly authorized by all
requisite organizational action of TRW. The execution and delivery by each of
the Asset Selling Subsidiaries and the TRW Selling Shareholders of, the
performance by each of the Asset Selling Subsidiaries and the TRW Selling
Shareholders of its obligations under, and the consummation by each of the Asset
Selling Subsidiaries and the TRW Selling Shareholders of the transactions
contemplated by, the Ancillary Agreements, as of the Closing, will be duly
authorized by all requisite organizational action of each such Asset Selling
Subsidiary and TRW Selling Shareholder.
Section 4.4 Binding Effect. This Agreement has been duly
executed and delivered by TRW and is, and each Ancillary Agreement will be duly
executed and delivered by each TRW Entity which is a party thereto and when
executed and delivered by all parties thereto will be, the valid and binding
obligation of the TRW Entities which are a party hereto or thereto, enforceable
against the TRW Entities which are a party hereto or thereto in accordance with
their terms, assuming due authorization, executions and delivery by Buyer (and
as applicable, Buyer's Affiliates).
Section 4.5 Interest in Subsidiaries and Affiliates.
(a) Section 4.5 of the TRW Disclosure Letter sets forth the
name and jurisdiction of organization or incorporation, the authorized capital
stock, partnership capital or equivalent, the number and type of its issued and
outstanding shares of capital stock, partnership interest or similar ownership
interests and the current ownership of such shares, partnership interests or
similar ownership interests of each Aerospace Subsidiary and their Subsidiaries
and each Aerospace Affiliate and their Subsidiaries.
29
(b) All of the shares of capital stock of, or other equity
interest in, the Aerospace Subsidiaries and the Aerospace Affiliates owned by
TRW Selling Shareholders, (i) are owned by one or more TRW Selling Shareholders,
free and clear of all Liens, and (ii) have been duly authorized, validly issued
and are fully paid and nonassessable.
(c) There are no outstanding options, warrants, convertible
securities or other rights, agreements, arrangements or commitments relating to
the capital stock of, or other equity interest in, any Aerospace Subsidiary or
in any Aerospace Affiliate, obligating any TRW Selling Shareholder, Aerospace
Subsidiary or Aerospace Affiliate, at any time or upon the occurrence of certain
events, to offer, issue, sell, transfer, vote or otherwise dispose of or sell
any shares of capital stock of, or other equity interest in, any Aerospace
Subsidiary or Aerospace Affiliate.
Section 4.6 No Defaults; Consents. (a) Neither the execution and
delivery of this Agreement or any Ancillary Agreement by the TRW Entities, nor
the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements will violate, breach, contravene, conflict with, result in
the termination or acceleration of, entitle any party to payment under, entitle
any party to exercise any right of first refusal, first offer, preemptive right
or other option right under, or otherwise constitute or give rise to a Default
under, as applicable, (i) any provision of the articles of incorporation, the
by-laws or similar organizational documents of any of the TRW Entities, (ii) any
Contract or other instrument or obligation to which any of the TRW Entities is a
party or by which any of the Assets or Subsidiary interests are bound, or (iii)
any writ, injunction, decree, statute, rule or regulation applicable to any TRW
Selling Shareholder, any Asset Selling Subsidiary or the Assets or the
Subsidiary interests; except, in the case of the foregoing clauses (ii) and
(iii), for such violations, breaches, conflicts, terminations, accelerations,
entitlements or Defaults which, individually or in the aggregate, have not
resulted in, or which would not reasonably be likely to result in, a Material
Adverse Effect.
(b) No filing with or notice to, and no permit,
authorization, registration, consent or approval of, any Governmental Entity is
required on the part of any TRW Entity for the execution, delivery and
performance by TRW of this Agreement or the consummation by any TRW Entity of
the transactions contemplated hereby, except (i) the filing of a notification
and report form under the HSR Act and the termination or expiration of any
waiting period under the HSR Act, (ii) the filings, consents, approvals or
clearances required under any foreign antitrust or investment laws (including
without limitation under Council Regulation No. 4064/89 of the European
Community, as amended (the "EU Merger Regulation")), (iii) the filings,
consents, approvals or clearances required by the department of defense or
department of aviation of any jurisdiction, including, without limitation, the
United States Department of Defense, the Ministry of Defense of the United
Kingdom and the Federal Aviation Agency, or (iv) where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings or
give such notice would not have, individually or in the aggregate, and would not
reasonably be likely to have, a Material Adverse Effect.
30
Section 4.7 Financial Statements.
(a) Section 4.7(a) of the TRW Disclosure Letter contains the
Supplemental Accounting Principles and the following financial statements
relating to the Business: the balance sheet of the Business as of March 29, 2002
and May 31, 2002 and the related Statement of Operations for the respective
three-month period and five-month period then ended (collectively the "2002
Financial Statements").
(b) The 2002 Financial Statements have been prepared in
accordance with the books of account and other financial records of the TRW
Entities, the Standard Practice Instructions as applied by the Business, Local
Standard Practice Instructions in use by the Business and with the Supplemental
Accounting Principles, in use by the Business, as of the dates and for the
periods set forth. The 2002 Financial Statements present fairly, in all material
respects, in accordance with GAAP consistently applied, the consolidated
financial condition and results of operations of the Business as of March 31,
2002 and May 31, 2002 and for the respective three-month period and five-month
period then ended, subject to normal year-end adjustments, except that they
exclude all applicable footnote disclosure as required by GAAP and except as set
forth in Section 4.7(b) of the TRW Disclosure Letter.
(c) Section 4.7(c) of the TRW Disclosure Letter contains the
following financial statements relating to the Business: the balance sheets of
the Business as of December 31, 2000 and December 31, 2001, and the related
statements of operations for the annual periods ended on such dates,
respectively (collectively, the "Historical Financial Statements"). The
Historical Financial Statements have been prepared in accordance with the books
of account and other financial records of the TRW Entities, the Standard
Practice Instructions as applied by the Business and Local Standard Practice
Instructions in use by the Business, as of the dates and for the periods therein
set forth. The Historical Financial Statements present fairly, in all material
respects, in accordance with GAAP consistently applied, the consolidated
financial condition and results of operations of the Business as of December 31,
2000 and December 31, 2001 and for the respective twelve-month periods then
ended, except that they exclude all applicable footnote disclosure as required
by GAAP and except as set forth in Section 4.7(c) of the TRW Disclosure Letter.
31
Section 4.8 No Undisclosed Liabilities. The TRW Participants
have no liabilities (whether absolute, accrued, contingent or otherwise) that
are required by GAAP (as consistently applied by the Business in accordance with
the Standard Practice Instructions or the Business' Local Standard Practice
Instructions, which are in accordance with GAAP) to be reflected on the
consolidated financial statements of the Business or reflected in the footnotes
thereto, except (a) liabilities disclosed and reserved against in the May 31,
2002 Balance Sheet, (b) items disclosed in Section 4.8 of the TRW Disclosure
Letter, (c) liabilities incurred in the ordinary course of business consistent
with past practice since May 31, 2002 and (d) liabilities that, individually or
in the aggregate, have not resulted in, or which would not be reasonably likely
to result in, a Material Adverse Effect.
Section 4.9 Absence of Certain Changes. Since May 31, 2002, the
TRW Entities have conducted the Business in the ordinary course of business
consistent with past practice and have not experienced any development or change
which, individually or in the aggregate, has resulted in or which would be
reasonably likely to result in a Material Adverse Effect. From May 31, 2002
until the date of this Agreement, none of the TRW Entities has undertaken any
actions that are material in the aggregate to the Business and that would be
prohibited under Section 6.1(a) if undertaken after the date hereof.
Section 4.10 Litigation. Except as set forth in the litigation
schedule included in Section 4.10 of the TRW Disclosure Letter, as of the date
of litigation schedule there is no claim, demand, action, suit, in law or in
equity, or proceeding or audit outside the ordinary course of business or, to
the knowledge of TRW, investigation (collectively "Actions") before or involving
any Governmental Entity or private arbitration tribunal pending or, to the
knowledge of TRW, threatened, against any TRW Entity in respect of the Assets or
the Business which, individually or in the aggregate, has resulted in, or which,
if determined adversely to TRW, would be reasonably likely to result in a
Material Adverse Effect. There are no judgments, decrees, orders, agreements or
litigation or other adversary proceeding settlements specifically against or
binding upon any of the TRW Participants or the Business, or which prohibit or
restrict the Business as currently conducted, or to the knowledge of TRW, any
such actions threatened against any of the TRW Participants except as set forth
in Section 4.10 of the TRW Disclosure Letter or that, individually or in the
aggregate, have not resulted in, and would, if determined adversely to TRW, not
reasonably be likely to result in, a Material Adverse Effect.
Section 4.11 Compliance with Applicable Law.
(a) Each TRW Entity holds all Permits necessary for each of
them to own, lease or operate its properties and assets and for the lawful
conduct of their respective businesses (with respect to the Business), except
where the failure to hold such Permits would not, individually or in the
aggregate, be reasonably likely to result in a Material Adverse Effect. No
material Permit is or will be materially impaired by the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
32
(b) Each TRW Entity is in compliance with the terms of its
respective Permits (with respect to the Business), except where noncompliance
with the terms of such Permits would not, individually or in the aggregate, be
reasonably likely to result in a Material Adverse Effect.
(c) Each TRW Entity has complied and is in compliance, in
all material respects, with all material laws, rules and regulations,
ordinances, judgments, decrees, orders, writs, and injunctions of all
Governmental Entities applicable to the Business except as disclosed in Section
4.11 of the TRW Disclosure Letter, and no written notice has been received by a
TRW Entity (with respect to the Business) alleging any material violation of any
of the foregoing.
Section 4.12 Taxes.
(a) All material Tax Returns required to be filed with
respect to each of the Asset Selling Subsidiaries and their Subsidiaries
(including the consolidated federal income Tax Return of TRW and any state,
local or foreign Tax Return that includes any of the Aerospace Subsidiaries on a
consolidated, combined or unitary basis) have been timely filed, and all such
Tax Returns are true, correct and complete in all material respects; all Taxes
shown as due on such Tax Returns as filed have been paid; there are no material
Tax liens (other than Permitted Liens) on the Acquired Assets of the Business;
and TRW and each other entity transferring a United States real property
interest (within the meaning of Section 897(c)(1) of the Code) hereunder is not
a foreign person within the meaning of Section 1445(f)(3) of the Code.
(b) Each of the TRW-controlled Aerospace Affiliates and
their respective Subsidiaries have withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
former employee, independent contractor, creditor, stockholder, or other third
party.
(c) No position has been asserted or adjustment proposed in
writing by any Tax Authority, and there are no pending or, to the knowledge of
TRW, threatened actions or proceedings for the assessment or collection of Taxes
against the TRW-controlled Aerospace Affiliates or any of their Subsidiaries,
which, if asserted by such Tax Authority in a Tax period ending after the date
of this Agreement, has resulted or would reasonably be likely to result in a
Material Adverse Effect. No issues have been raised in any examination by any
Taxing Authority with respect to any of the Acquired Assets, the TRW-controlled
Aerospace Affiliates or their respective Subsidiaries which, by application of
similar principles, reasonably could be expected to result in a proposed
deficiency or increase in Tax for any other period not so examined. Section
4.12(c) of the TRW Disclosure Letter lists all state, local, and foreign income
Tax Returns filed with respect to any of the TRW-controlled Aerospace Affiliates
and their respective Subsidiaries for taxable periods ended on or after December
31, 1999, indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. TRW delivered or made
available to Buyer correct and complete copies all Tax Returns, examination
reports, and statements of deficiencies assessed against or
33
agreed to by the TRW-controlled Aerospace Affiliates and their respective
Subsidiaries since December 31, 1999.
(d) None of the TRW-controlled Aerospace Affiliates and
their respective Subsidiaries has waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) To the knowledge of TRW no liability is outstanding or
has been asserted against any of the Aerospace Affiliates or their Subsidiaries,
with respect to material Taxes of any other Person pursuant to any Tax
allocation or sharing agreement with any such Person, or any agreement to
indemnify any such Person with respect to Taxes.
(f) Each of the TRW-controlled Aerospace Affiliates and
their respective Subsidiaries qualifies and has since the date of its formation
qualified to be treated as a corporation for federal income tax purposes and
none of the TRW-controlled Aerospace Affiliates and their respective
Subsidiaries nor, to the knowledge of TRW, any of the shareholders thereof has
taken a position inconsistent with such treatment with regard to any Tax.
Section 4.13 Employee Benefit Plans.
(a) Section 4.13 of the TRW Disclosure Letter contains a
true and complete list of each Assumed Plan and of each material Plan. For all
purposes herein, "Plan" shall mean each material "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each material "pension" plan, fund or
program (within the meaning of Section 3(2) of ERISA); and each other material
employee benefit plan, including, but not limited to, any bonus, retention,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, change of control or fringe benefit plan, agreement, program or
written policy, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by TRW or any ERISA Affiliate thereof (in any
event, including the Aerospace Subsidiaries and the Aerospace Affiliates and
their respective Subsidiaries) or to which TRW or any ERISA Affiliate thereof is
party, for the benefit of any employee or former employee of the Business (the
"Plans"). Each Plan that is (i) sponsored and maintained solely by any Aerospace
Subsidiary or any Aerospace Affiliate or any of their respective Subsidiaries
and (ii) expressly assumed by Buyer pursuant to Section 6.8 and identified as
such on Section 4.13 of the TRW Disclosure Letter shall be referred to herein as
an "Assumed Plan." For purposes of this Agreement, (x) "Business Plan" means
each Assumed Plan and each Plan with respect to which Buyer receives assets
pursuant to Section 6.8 and (y) "ERISA Affiliate" means, with respect to any
entity, trade or business, any other entity, trade or business that is, or was
at the relevant time, a member of a group described in Section 4.14(b), (c), (m)
or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the
first entity, trade or business, or that is, or was at the relevant time, a
member of the same "controlled group" as the first entity, trade or business
pursuant to Section 4001(a)(14) of ERISA.
34
(b) With respect to each Plan that is a Multiemployer Plan
(as defined in Section 4.13(i)), the representations in Sections 4.13(b) through
(g) and (k) through (m) shall not be applicable.
(c) With respect to each Business Plan, TRW has heretofore
delivered or made available to Buyer true and complete copies of each of the
following documents: (i) a copy of the Plan (or to the extent no such copy
exists, an accurate written description thereof), and any amendments, trusts,
and insurance contracts with respect thereto; (ii) a copy of the most recent
summary plan description and summary of material modifications required under
ERISA with respect thereto; (iii) with respect to each Business Plan that is a
pension plan within the meaning of Section 3(1) of ERISA (a "Pension Plan"), a
copy of each trust or other funding arrangement; (iv) the most recent
determination letter (or analogous approval in a jurisdiction other than the
United States) most recently issued by the U.S. Internal Revenue Service ("IRS")
(or other relevant national or provincial tax authority); (v) the most recently
prepared actuarial report and financial statement and (vi) the two most recent
Annual Reports (Form 5500 Series). Except as specifically provided in the
foregoing documents delivered or made available to Buyer, there are no
amendments to any Business Plan that has been adopted or approved, nor has any
party undertaken to make any such amendments or to adopt or approve any new
Business Plan. With respect to each material Plan (other than a Business Plan),
TRW has heretofore delivered or made available to Buyer true and complete copies
of each of the following documents: (i) a copy of the Plan (or to the extent no
such copy exists, an accurate written description thereof) and (ii) a copy of
the most recent summary plan description and summary of material modifications
under ERISA with respect thereto, to the extent these documents exist for such
plans.
(d) With respect to each Plan that is subject to United
States law, each such Plan that is a Pension Plan is now and always has been
operated in accordance with its terms and the requirements of all applicable
laws, regulations and rules promulgated thereunder, including, without
limitation, ERISA and the Code, except to the extent such noncompliance would
not reasonably be expected to result in a Material Adverse Effect. There are no
material pending or, to the knowledge of TRW, threatened claims (other than
claims for benefits in the ordinary course) or lawsuits with respect to the
Affected Employees which have been asserted or instituted, and, to the knowledge
of TRW, no set of circumstances exists which may reasonably give rise to a claim
or lawsuit, against the Assumed Plans, any fiduciaries thereof with respect to
their duties to the Assumed Plans or the assets of any of the trusts under any
of the Assumed Plans which could reasonably be expected to result in any
material liability of Buyer, the Aerospace Subsidiaries or the Aerospace
Affiliates or any of their respective subsidiaries to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the Department of Labor, any
Multiemployer Plan, any Plan, any participant in a Plan, or any other party.
(e) Each Business Plan that is intended to be qualified
under Section 401(a) of the Code or Section 401(k) of the Code has timely
received a favorable determination letter from the IRS that has not been revoked
to the effect that such Business Plan and the related trust is so qualified, and
no fact or event has occurred since the date of such determination letter or
letters from the IRS to adversely affect the
35
qualified status of any such Business Plan or the exempt status of any such
trust. No trust funding any Business Plan is intended to meet the requirements
of Code Section 501(c)(9).
(f) With respect to each Business Plan that is subject to
United States law, no liability under Title IV or Section 302 of ERISA has been
incurred by TRW, the Aerospace Affiliates or the Aerospace Affiliates or any of
their respective ERISA Affiliates that has not been satisfied in full, and to
the knowledge of TRW, no condition exists that presents a material risk to Buyer
of incurring any such liability, other than liability for premiums due the
Pension Benefit Guaranty Corporation (which premiums have been fully paid when
due). Without limiting the generality of the foregoing, with respect to each
Business Plan that is subject to Title IV or Section 302 of ERISA or Section 412
or 4971 of the Code: (i) there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA, whether
or not waived; (ii) as of January 1, 2002, the fair market value of the assets
of such Business Plan held with respect to the Affected Employees equals or
exceeds the projected benefit obligation ("PBO") determined in accordance with
Statement of Financial Accounting No. 87 ("FAS") of the accrued obligations of
such Business Plan (whether or not vested); (iii) no reportable event within the
meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has
not been waived has occurred, and the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements will not result in
the occurrence of any such reportable event; (iv) no liability (other than for
premiums to the PBGC) under Title IV of ERISA has been or is expected to be
incurred by the Aerospace Subsidiaries or the Aerospace Affiliates or any of
their respective Subsidiaries or ERISA Affiliates; (v) the PBGC has not
instituted proceedings to terminate any such Business Plan and to the knowledge
of TRW, no condition exists that presents a risk that such proceedings will be
instituted or which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such Business
Plan; and (vi) there is not now, nor to the knowledge of TRW, do any
circumstances exist that could give rise to, any requirement for the posting of
security with respect to any such Business Plan or the imposition of any Lien on
the assets of the Business or any Aerospace Subsidiary or Aerospace Affiliate or
any of their respective subsidiaries under ERISA or the Code.
(g) With respect to each Business Plan that is subject to
United States law, all pension contributions and payments required to be made
with respect to any Business Plan by applicable law or regulation or by any plan
document or other contractual undertaking, and all premiums due or payable with
respect to insurance policies funding any Business Plan, for any period through
the date hereof have been timely made or paid in full or, to the extent not
required to be made or paid on or before the date hereof, have been fully
reflected on the Financial Statements. Each Assumed Plan that is an employee
welfare benefit plan under Section 3(1) of ERISA either (i) is funded through an
insurance company contract and is not a "welfare benefit fund" with the meaning
of Section 419 of the Code or (ii) is unfunded.
(h) Except as set forth in Section 4.13 of the TRW
Disclosure Letter, no Plan provides that the consummation of the transactions
contemplated by this
36
Agreement will, either alone or in combination with another event, (i) entitle
any current or former employee or officer of the Business to any severance pay,
unemployment compensation or other payment or benefit, except as expressly
provided in this Agreement, or (ii) materially accelerate the time of payment or
vesting of any amount or benefit, or increase the amount of compensation or
benefits due any such employee or officer.
(i) Except as set forth in Section 4.13 of the TRW
Disclosure Letter: (i) no Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or
more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"); (ii)
none of TRW, the Aerospace Subsidiaries or the Aerospace Affiliates nor any
ERISA Affiliates thereof has, at any time during the last six years, contributed
to or been obligated to contribute to any Multiemployer Plan or Multiple
Employer Plan with respect to any Affected Employee; (iii) none of the Aerospace
Subsidiaries or the Aerospace Affiliates nor any ERISA Affiliates has incurred
or, to the knowledge of TRW, is reasonably expected to incur, any liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan (as those terms are defined in Part I of Subtitle E of Title
IV of ERISA) that has not been satisfied in full; (iv) as a result of the
transaction set forth in this Agreement or otherwise, to the knowledge of TRW,
no such Multiemployer Plan is in reorganization, and no increased contributions
may be required to avoid a reduction in benefits or an excise tax; and (v)
neither TRW nor any subsidiary has failed to make any required contribution with
respect to such Multiemployer Plan.
(j) There does not now exist, nor do any circumstances exist
that could reasonably be expected to result in a liability of the Aerospace
Subsidiaries (other than the Asset Selling Subsidiaries) or the Aerospace
Affiliates or any of their respective subsidiaries following the Closing, as a
result of joint and several liability, with respect to any liabilities of an
entity other than the Aerospace Subsidiaries or the Aerospace Affiliates or any
of their respective Subsidiaries (i) under Title IV of ERISA, (ii) under Section
302 of ERISA, (iii) under Sections 412 and 4971 of the Code, or (iv) as a result
of a failure to comply with the continuation coverage requirements of Section
601 et seq. of ERISA and Section 4980B of the Code. None of the Aerospace
Affiliates or Aerospace Subsidiaries or any of their respective Subsidiaries,
nor any fiduciary with respect to a Business Plan, has engaged in any
"prohibited transaction" (as defined in Section 4975 of the Code or Section 406
of ERISA), which could subject any of the Business Plans or their related
trusts, the Aerospace Affiliates (other than the Asset Selling Subsidiaries) or
Aerospace Subsidiaries or any of their respective Subsidiaries or any Person
that any such entity has an obligation to indemnify, to any material tax or
penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
(k) With respect to Affected Employees and former employees
of the Business, no TRW Participant has or could reasonably be expected to have
any liability for life, health, medical or other welfare benefits to former
employees or persons who could become former employees or beneficiaries or
dependents thereof, except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of
37
ERISA and at no expense to the TRW Participant (each such plan, practice or
arrangement, a "Retiree Plan"). With respect to Affected Employees and former
employees of the Business, each Retiree Plan that is an Assumed Plan can be
freely amended or terminated without the consent of participants without
liability according to its terms, and no representations or communications have
been made that any such Retiree Plan could or would not be so amended or
terminated.
(l) Each individual who renders services to the Aerospace
Subsidiaries or the Aerospace Affiliates or any of their respective Subsidiaries
who is classified as having the status of an independent contractor or other
non-employee status for any purpose (including for purposes of taxation and Tax
reporting and under the Plans) is properly so characterized except as would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(m) With respect to each Business Plan that is not subject
to United States law (each, a "Non-U.S. Benefit Plan"):
(i) all employer and employee payments,
contributions or accruals (including premiums) for each Non-U.S. Benefit
Plan required by law or by the terms of such Non-U.S. Benefit Plan have
been made when due, or, if applicable, accrued, in accordance with "FAS
87";
(ii) the fair market value of the assets of any
funded Non-U.S. Benefit Plan that is a Pension Plan (excluding any book
reserves or balance sheet accruals) equals or exceeds the benefit
obligations of such Plans determined on a PBO basis;
(iii) each Non-U.S. Benefit Plan required to be
registered has been registered (including pursuant to the UK Pension
Schemes Act of 1993) and has been maintained in good standing with
applicable laws and regulatory authorities (including the UK Pension
Schemes Act of 1993);
(iv) all amounts required to be reserved under each
book reserved Non-U.S. Benefit Plan have been so reserved in accordance
with normal accounting practices prevailing in the country where such
plan is maintained;
(v) if intended to qualify for special tax
treatment, each Non-U.S. Benefit Plan meets all requirements for such
treatment and TRW knows of no circumstances that might give reason to
any applicable governmental authority to revoke such treatment;
(vi) Section 4.13(l) of the TRW Disclosure Letter
lists each Non-U.S. Benefit Plan that is a defined benefit pension plan;
and
(vii) No power has been exercised to provide
additional benefits in respect of any UK Affected Employee or to admit a
UK
38
Affected Employee on special terms and no proposal or announcement has
been made to any UK Affected Employee about the introduction,
continuance, increase or improvement of any pension, lump sum, death,
ill-health, disability or accident benefit.
(n) There are no actions, proceedings or claims (other than
routine claims for benefits) outstanding, pending or threatened by the UK
Affected Employees or any of them in respect of the TRW UK pension scheme
relating to any act, event, omission or other matter arising out of or in
connection with the TRW UK pension scheme.
(o) TRW has taken all necessary action with respect to trade
unions, work councils and employee representatives required to be, or which
would be customarily, taken prior to the date hereof in connection with the
transactions contemplated by this Agreement.
Section 4.14 Intellectual Property.
(a) Section 4.14(a) of the TRW Disclosure Letter sets forth
a true and complete list of all material (i) Patents, (ii) Trademarks, (iii)
Copyright, (iv) Domain Names and (v) Software (but excluding off-the-shelf
Software) included in the Equity Intellectual Property and Transferred
Intellectual Property. Within 30 days following the date of this Agreement,
Section 4.14(a) of the TRW Disclosure Letter will be updated to specify whether
such Intellectual Property constitutes Equity Intellectual Property or
Transferred Intellectual Property.
(b) The Equity Intellectual Property and Transferred
Intellectual Property includes all of the Intellectual Property used or held for
use primarily in the Business by the TRW Participants. The Business Intellectual
Property includes all of the Intellectual Property used in the operation of the
Business immediately prior to the Closing (with the exception of Software
obtained pursuant to corporate-level agreements listed in Section 4.14(b) of the
TRW Disclosure Letter) and, to TRW's knowledge, no facts or circumstances exist
with respect to the Business Intellectual Property that would reasonably be
expected to preclude, or limit or impair in any material respect, Buyer's
ability to conduct the Business as currently conducted.
(c) To the knowledge of TRW, other than as set forth in
Section 4.14(c) of the TRW Disclosure Letter, no TRW Participant has interfered
with, infringed upon, misappropriated or violated any Intellectual Property
rights of any third party. No TRW Participant has received written notice from
any third party alleging any such interference, infringement, misappropriation
or violation. To the knowledge of TRW, no third party has interfered with,
infringed upon, misappropriated or violated any Business Intellectual Property
in any material respect and TRW has no knowledge of any information, materials,
facts or circumstances that would render any of the Business Intellectual
Property invalid or unenforceable in any material respect.
39
(d) The owned Business Intellectual Property, excluding the
Licensed Trademarks and the Licensed Intellectual Property, is owned by one of
the TRW Participants free and clear of any Liens other than Permitted Liens.
Except as disclosed in Section 4.14(d) of the TRW Disclosure Letter, one of the
TRW Participants owns all right, title and interest in and to, or has a valid
and enforceable right to use, by license or other agreement, and assign, convey
and otherwise transfer all of its right, title and interest in and to the
Transferred Intellectual Property to Buyer except where the failure to make such
transfer, individually or in the aggregate, would not reasonably be likely to
result in a Material Adverse Effect.
(e) All material application, registration, maintenance and
renewal fees in connection with the registered owned Business Intellectual
Property and applications therefor have been paid and all material documents and
certificates in connection with such registered owned Business Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authority in the United States, regional or non-U.S. jurisdictions, as the case
may be, for the purposes of maintaining such registered owned Business
Intellectual Property except as would not reasonably be likely, individually or
in the aggregate, to result in a Material Adverse Effect.
(f) Other than as set forth in Section 4.14(f) of the TRW
Disclosure Letter, no TRW Participant licenses any Business Intellectual
Property to third parties, or permits third parties to use any Business
Intellectual Property rights and no TRW Participant owes any material royalties
or payments to any third party for using or licensing to others any Business
Intellectual Property.
(g) The TRW Participants have taken commercially reasonable
steps to protect the TRW Participants' rights in confidential information and
Trade Secrets of the TRW Participants or as required by any other person who has
provided its confidential or proprietary information, source code or Trade
Secrets to the TRW Participants, including by requesting that employees of the
Business assign to a TRW Participant their Intellectual Property rights created
for the Business, except where the failure to take such steps would not
reasonably be likely to result in a material adverse impact or the Business.
Section 4.15 Labor Relations; Employees. Except as set forth in
the TRW Disclosure Letter, to the knowledge of TRW, none of the Affected
Employees is represented by any labor organization and no union organizing
activities have occurred with respect to Affected Employees within the past
year. Except as set forth in the TRW Disclosure Letter, no TRW Participant is a
party to or bound by any collective bargaining or similar agreement with any
labor organization applicable to Affected Employees. Except as set forth in
Section 4.15 of TRW Disclosure Letter, (i) there is no labor strike, dispute,
lock-out or stoppage pending or, to the knowledge of TRW, threatened, against or
affecting the Business and the Business has not experienced any such strike,
dispute, lock-out or stoppage within the past two years and (ii) to the
knowledge of TRW, the Business has not materially breached or otherwise failed
to comply with the provisions of any collective bargaining or union contract and
there are no material written grievances outstanding against the Business under
any such agreement or contract. With respect to
40
the Affected Employees, the TRW Participants have in the past been and are in
compliance in all material respects with applicable laws respecting employment,
employment practices, employee classification, labor relations, safety and
health, wages, hours and terms and conditions of employment except where
failures to comply would not, individually or in the aggregate, be reasonably
likely to result in a Material Adverse Effect. The TRW Participants have
complied with their payment obligations to all Affected Employees in respect of
all wages, salaries, commissions, bonuses, benefits, vacation pay and other
compensation due and payable to such employees under any policy, practice,
agreement, plan, program or applicable law except where failures to comply would
not, individually or in the aggregate, be reasonably likely to result in a
Material Adverse Effect.
Section 4.16 Environmental Matters. Except as set forth in
Section 4.16 of the TRW Disclosure Letter, or except as has not, individually or
in the aggregate, resulted in, or would not be reasonably likely to result in, a
Material Adverse Effect:
(a) The TRW Participants are, and within all applicable
statutes of limitation have been, in compliance in all respects with all
Environmental Laws applicable to the operation of the Business as currently or
formerly conducted;
(b) The TRW Participants have obtained all Environmental
Permits (each of which is in full force and effect) required for the conduct and
operation of the Business and are in compliance with the terms and conditions
therein;
(c) No review by, or approval of, any Governmental Entity or
other Person is required under any order or agreement currently in effect in
connection with the execution or delivery of this Agreement and the consummation
of the transactions contemplated hereby; and
(d) There is no Environmental Claim pending, or to the
knowledge of TRW, threatened, against any TRW Participant, or against any Person
(including without limitation any predecessor of any TRW Participant) whose
liability any TRW Participant has or may have retained or assumed either
contractually or by operation of law, in connection with, related to or arising
out of the ownership or operation of the Business.
(e) As soon as practicable following the date of this
Agreement, TRW will provide Buyer with a list of any Aboveground Storage Tanks
or Underground Storage Tanks that are beneath any Owned Real Property or Leased
Real Property as of the date of this Agreement.
(f) TRW has previously furnished to Buyer or its
representatives the results of any ground, water or soil monitoring undertaken
by the TRW Participants or undertaken by any Governmental Entity and known to
TRW relating to the TRW Participants or any real property currently or
previously owned or leased by the TRW Participants.
(g) Section 4.16 of the TRW Disclosure Letter identifies all
material environmental audits, assessments or occupational health studies
undertaken by the TRW
41
Participants or its agents or undertaken by any Governmental Entity or any other
Person and known to TRW, relating to the TRW Participants or any real property
currently or previously owned or leased by the TRW Participants. As soon as
practicable following the date of this Agreement, TRW will provide Buyer with a
list of all material written communications between the TRW Participants and any
Governmental Entity arising under or related to Environmental Laws.
Section 4.17 Real Property.
(a) Section 4.17(a) of the TRW Disclosure Letter includes a
complete and correct list of each parcel of Owned Real Property.
(b) Section 4.17(b) of the TRW Disclosure Letter includes a
complete and correct list of all leases relating to the Leased Real Property.
True, correct and complete copies, including all amendments thereto, of each
such lease have been provided to Buyer or its representatives.
(c) The applicable TRW Participant holds good, valid and
marketable title to each parcel of Owned Real Property in fee simple absolute,
free and clear of all Liens, except for Permitted Encumbrances and Permitted
Liens and is in exclusive possession thereof. To the knowledge of TRW, no
material expenditures are required, in TRW's reasonable discretion, to be made
for the repair or maintenance of any improvements on the Owned Real Property or
for the Owned Real Property to be used for its intended purpose other than
routine repairs and maintenance in the ordinary course of business.
(d) The applicable TRW Participant holds good, valid and
marketable leasehold title to each parcel of Leased Real Property, free and
clear of all Liens, other Permitted Liens and Permitted Encumbrances, and is in
exclusive possession as lessee thereof. Each parcel of Leased Real Property is
held under a valid, binding and enforceable lease, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium,
and other similar laws relating to or limiting creditors' rights generally. No
TRW Participant is in material default under any material agreement relating to
the Leased Real Property nor, to the knowledge of TRW, is any other party
thereto in material default thereunder. There is no pending or, to the knowledge
of TRW, threatened action or proceeding that could materially interfere with the
use by the lessee of any such Leased Real Property. To the knowledge of TRW, no
material expenditures are required, in TRW's reasonable discretion, to be made
for the repair or maintenance of any improvements on the Leased Real Property
which exceed those set forth in the 2002 Capital Expenditure Plan (which is set
forth on Schedule 6.1(a)(xv)), or for routine repairs and maintenance in the
ordinary course of business.
(e) There are no condemnation proceedings or eminent domain
proceedings of any kind pending or, to the knowledge of TRW, threatened with
respect to any portion of the Real Property.
42
(f) None of the improvements comprising the Real Property,
or the businesses conducted by any TRW Participant thereon, is in violation of
any building line or use or occupancy restriction, limitation, condition or
covenant of record or any zoning or building law, code, or ordinance, public
utility or other easement or other applicable law, except for violations which,
individually or in the aggregate, have not resulted in, and would not reasonably
be likely to result in, a Material Adverse Effect.
Section 4.18 Material Contracts.
(a) Section 4.18 of the TRW Disclosure Letter lists each of
the following Contracts of the TRW Participants that relate primarily to the
Business and exist as of the date hereof (the "Material Contracts"):
(i) all material distributor and sales agent
agreements to which any of the TRW Entities is a party;
(ii) the material contracts for the top 14 vendors
and top 20 customers of the Business, based on 2001 revenues of the
Business;
(iii) all joint venture and partnership agreements and
similar material contracts involving a sharing of profits or expenses
(including joint research and development contracts);
(iv) all material employment contracts with Affected
Employees whose base salary exceeds $150,000;
(v) all material licenses, licensing arrangements,
and other Contracts providing in whole or in part for the use of, or
limiting the use of, Business Intellectual Property other than Contracts
entered into in the ordinary course of business which contain customary
provisions entitling the other party thereto to receive a license to use
Intellectual Property rights upon termination of such Contract in the
event the applicable TRW Entity is in material breach thereof provided
that any such Contracts have not been materially breached as of the date
of this Agreement;
(vi) all loan agreements, indentures, letters of
credit, mortgages, security agreements, pledge agreements, deeds of
trust, bonds, notes, guarantees and other agreements and instruments
relating to the borrowing of money or obtaining of or extension of
credit pursuant to which an Aerospace Subsidiary or an Aerospace
Affiliate or any Subsidiary thereof is a guarantor or obligor and in
each case which will be an Assumed Liability;
(vii) all Contracts that contain a provision or
covenant materially prohibiting, impairing, limiting or restricting, or
purporting to materially prohibit, impair, limit or restrict, the
ability of the TRW Participants to (i) sell or license any products or
services of or to any other
43
person in any material respect, (ii) engage in any line of business, or
(iii) compete with or to obtain products or services from any person or
limiting the ability of any person to provide products or services to
the TRW Participants;
(viii) Contracts with any director, or officer, or
stockholder or Affiliate of the TRW Participants;
(ix) Contracts granting any third party any rights of
first refusal, rights of first offer, preemptive rights, or similar
rights;
(x) all material Contracts between any of the
Aerospace Affiliates, the Aerospace Subsidiaries or their Subsidiaries,
on one hand, and TRW or any Affiliate of TRW (other than the Aerospace
Affiliates and the Aerospace Subsidiaries), on the other hand;
(xi) all asset purchase agreements and other
acquisition or divestiture agreements, including but not limited to any
agreements relating to the sale, lease or disposal of any Acquired
Assets or any assets of any Aerospace Subsidiary or Aerospace Affiliate
or any of their Subsidiaries (other than sales of inventory in the
ordinary course of business);
(xii) Contracts or other commitments relating to
capital expenditure or expenditures in excess of $5 million in any
calendar year;
(xiii) all Contracts relating to the lease of real
property leased (whether as lessor or lessee), used or operated by the
TRW Participants;
(xiv) all collective bargaining agreements; and
(xv) all settlement contracts, consent orders and
similar agreements under which the TRW Participants have ongoing
obligations.
(b) Each Material Contract is valid and binding on the TRW
Participants pursuant to its terms and is in full force and effect, except as
disclosed in Section 4.18 of the TRW Disclosure Letter. None of the TRW
Entities, or, to the knowledge of TRW, any other party thereto, is in breach of
or default under, any Material Contract and, to the knowledge of TRW, no event
has occurred and no condition exists which, with the lapse of time, the giving
of notice, or both, or the happening of any further event or condition, would
become a default of a provision under any Material Contract, except for such
breaches or defaults which have not resulted in, or would not be reasonably
likely to result in, individually or in the aggregate, a Material Adverse
Effect. None of the TRW Entities has released or waived any material right or
benefit under any such Material Contract other than in the ordinary course of
business consistent with past practices.
44
Section 4.19 Title to Assets. The TRW Participants (i) own or
have other legal rights to all of the Assets and (ii) have good title to the
Assets owned by them free and clear of all Liens, other than Permitted Liens and
Permitted Encumbrances; provided, that this representation does not concern
Intellectual Property or Real Property which are the subject of the
representations in Sections 4.14 and 4.17 hereof.
Section 4.20 Affiliated Transactions. Except as described in
Section 4.20 of the TRW Disclosure Letter, and except for trade payables and
receivables arising in the ordinary course of business for purchases and sales
of goods or services consistent with past practice on terms no less favorable
than those available from non-Affiliated parties, the Aerospace Subsidiaries,
the Aerospace Affiliates or their Subsidiaries have not been a party over the
past 12 months to any material transaction or agreement with TRW or any
Affiliate of TRW (other than the Aerospace Subsidiaries, the Aerospace
Affiliates or their respective Subsidiaries). Except as set forth in Section
4.20 of the TRW Disclosure Letter, there are no material agreements or other
transactions between the TRW Participants, on the one hand, and any Affiliate of
the TRW Participants, on the other hand, and no director or officer of a TRW
Participant has, directly or indirectly, any material interest in any of the
assets or properties of the TRW Participants. Prior to the Closing, all amounts
due and owing to or from the TRW Participants by or to any of the Affiliates of
the TRW Participants (excluding employee compensation and other incidents of
employment) shall be paid in full.
Section 4.21 Product Liability; Airworthiness. Except as set
forth in Section 4.21 of the TRW Disclosure Letter, none of the TRW Participants
has received any written notice relating to, nor does TRW have any knowledge of
any facts or circumstances which are reasonably expected to give rise to, any
claim involving any service provided or any product designed, manufactured,
serviced, produced, modified, distributed or sold by or on behalf of the TRW
Participants resulting from an alleged defect in design, manufacture, materials
or workmanship, performance, or any alleged failure to warn, or from any alleged
breach of implied warranties or representations, or any alleged noncompliance
with any applicable laws, requirements, specifications, rules and regulations,
other than notices or claims that have been settled or resolved by the TRW
Participants prior to the date of this Agreement or those that would not,
individually or in the aggregate, and would not reasonably be likely to have,
have a Material Adverse Effect. Except as set forth in Section 4.21 of the TRW
Disclosure Letter, there is no publicly and formally announced rule or
regulation by any Governmental Entity that could reasonably be expected to
affect the various airworthiness or repair station approvals, licenses, permits,
qualifications or certifications applicable to the goods, services, assets,
facilities or operations of the TRW Participants, except to the extent that such
rules or regulations would not, individually or in the aggregate, have, and
would not reasonably be likely to have, a Material Adverse Effect.
Section 4.22 Insurance. Section 4.22 of the TRW Disclosure
Letter lists all material insurance policies or contracts (or programs) of
self-insurance owned or held by any TRW Participant on the date hereof which
cover the Business or the Assets. All such insurance policies are in full force
and effect, are valid and enforceable, all premiums due thereunder have been
paid and cover against the risks of the nature
45
normally insured against by entities in the same or similar lines of business in
coverage amounts typically and reasonable carried by such entities. In the last
two years, no TRW Participant has received notice of cancellation or termination
other than in connection with normal renewals, of any such insurance policies,
and no claim is pending as of the date of this Agreement under any insurance
policy involving an amount in excess of $750,000.
Section 4.23 Inappropriate Payments. None of the TRW Participants nor,
to the knowledge of TRW, any of their respective officers, directors, principal
stockholders, employees, agents or representatives with respect to the Business
has knowingly violated any law relating to bribery, kickbacks, illegal political
contributions, payments from corporate funds to governmental officials, in their
individual capacities, for the purpose of affecting their action or the action
of the government they represent, to obtain favorable treatment in securing
business or licenses or to obtain special concessions, or illegal payments from
corporate funds to obtain or retain business.
Section 4.24 Entire Business; Sufficiency of Assets. The sale of the
Assets by TRW and the Asset Selling Subsidiaries, together with the sale of the
Equity Interests by TRW and the TRW Selling Shareholders, to Buyer pursuant to
this Agreement will convey to Buyer the entire Business and all of the assets
and properties used or held for use (whether owned, leased or held under
license) primarily in connection with the operation of the Business as
heretofore conducted (except for the Retained Assets) including, without
limitation, all assets and properties relating to the Business reflected in the
balance sheet of the Business as of December 31, 2001 and assets and properties
acquired since December 31, 2001 in the conduct of the Business (except for the
Retained Assets and assets and properties disposed of since such date without
violation of the terms and provisions of this Agreement). Except as set forth in
Section 4.24 of the TRW Disclosure Letter and except for the Retained Assets
(other than those Retained Assets described in Section 2.3(b)(vii) hereof) as of
the Closing Date, the Assets will constitute all of the assets used by TRW
immediately prior to the Closing to conduct the Business as heretofore
conducted, other than the rights of Buyer under the Ancillary Agreements.
Section 4.25 Brokers and Finders. Except for Xxxxxxx, Xxxxx & Co. and
Credit Suisse First Boston Corporation, whose fees and expenses will be paid by
TRW, none of the TRW Entities has employed any broker, financial advisor or
finder or incurred any liability for any broker, financial advisory or finders'
fees in connection with this Agreement or the transactions contemplated hereby.
Section 4.26 No Other Representations and Warranties. No TRW Participant
or any other Person makes any other express or implied representation or
warranty on behalf of a TRW Participant or any of their Affiliates other than as
expressly set forth in this Article.
46
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to TRW as follows:
Section 5.1 Organization and Existence. Buyer and each of Buyer's
Affiliates who will participate in the transactions contemplated by this
Agreement is a legal entity duly established, validly existing and (where
applicable) in good standing under the laws of its jurisdiction of organization
or incorporation, as the case may be, and has all requisite power and authority
to own, lease and operate its properties and to conduct its business as it is
currently conducted, except where the failure to have such power and authority,
individually or in the aggregate, has not resulted in, and is not reasonably
likely to result in, a material adverse effect on Buyer's ability to consummate
the transactions contemplated hereby. Buyer, and each of Buyer's Affiliates who
will participate in the transactions contemplated by this Agreement, is duly
qualified or licensed to do business under the laws of each jurisdiction in
which the nature of the activities conducted by it makes such qualification
necessary, except where the failure to be so qualified or licensed, individually
or in the aggregate, has not resulted or is not reasonably likely to result, in
a material adverse effect on Buyer's ability to consummate the transactions
contemplated hereby.
Section 5.2 Power and Authority. Buyer, and each of Buyer's Affiliates
who will participate in the transactions contemplated by this Agreement, has all
requisite corporate or other organizational power and authority to execute and
deliver, to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Agreements to which it is a
party. Buyer, and each of Buyer's Affiliates who will participate in the
transactions contemplated by this Agreement, has all requisite corporate or
other organizational power and, as of the Closing will have the corporate or
other organizational authority to execute and deliver, to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements to which it is a party.
Section 5.3 Authorization. The execution and delivery by Buyer (and each
of Buyer's Affiliates who will participate in the transactions contemplated by
this Agreement) of, the performance by Buyer (and each of Buyer's Affiliates who
will participate in the transactions contemplated by this Agreement) of its
obligations under, and the consummation by Buyer (and each of Buyer's Affiliates
who will participate in the transactions contemplated by this Agreement) of the
transactions contemplated by this Agreement have been, and the other Ancillary
Agreements, as of the Closing, will be, duly authorized by all requisite
corporate or other organizational action of Buyer (and each of Buyer's
Affiliates who will participate in the transactions contemplated by this
Agreement).
Section 5.4 Binding Effect. This Agreement has been duly executed and
delivered by Buyer and is, and each Ancillary Agreement will be duly executed
and delivered by Buyer (and each of Buyer's Affiliates who is a party to such
Ancillary
47
Agreement) and when executed and delivered by all parties thereto will be, the
valid and binding obligation of Buyer (and as applicable, Buyer's Affiliates),
enforceable against Buyer (and as applicable, Buyer's Affiliates) in accordance
with their terms, assuming due authorization, executions and delivery by the
relevant TRW Entity.
Section 5.5 No Defaults; Consents.
(a) Neither the execution and delivery of this Agreement or any
Ancillary Agreement, nor the consummation of the transactions contemplated by
this Agreement or the Ancillary Agreements, will violate, breach, contravene,
conflict with, result in the termination or acceleration of, entitle any party
to any payment under, entitle any party to exercise any right of first refusal,
first offer, preemptive right or other option right under, or otherwise
constitute or give rise to a Default under, as applicable, (i) any provision of
the articles of incorporation, the by-laws or similar organizational documents
of Buyer or any of Buyer's Affiliates, (ii) any Contract or other instrument or
obligation to which Buyer or any of Buyer's Affiliates is a party; or (iii) any
writ, injunction, decree, statute, rule or regulation applicable to Buyer or
Buyer's Affiliates; except in the case of the foregoing clauses (ii) and (iii)
such violations, breaches, conflicts, terminations, accelerations, entitlements,
or Defaults which, individually or in the aggregate, have not resulted in, or
which would not reasonably be likely to result in, a material adverse effect on
Buyer's ability to consummate the transactions contemplated hereby.
(b) No filing with or notice to, and no permit, authorization,
registration, consent or approval of, any Governmental Entity is required on the
part of Buyer or any of its Subsidiaries for the execution, delivery and
performance by Buyer of this Agreement or the consummation by Buyer of the
transactions contemplated hereby, except (i) the filing of a notification and
report form under the HSR Act and the termination or expiration of any waiting
period under the HSR Act, (ii) the filings, consents, approvals or clearances
required under any foreign antitrust or investment laws (including without
limitation under EU Merger Regulation) or (iii) where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not have, individually or in the aggregate, a material adverse
effect on Buyer's ability to consummate the transactions contemplate hereby.
Section 5.6 Litigation. There are no judgments, decrees, orders, writs
or injunctions, nor any actions, claims, suits or proceeding before or involving
any Governmental Entity or private arbitration tribunal pending or, to the
knowledge of Buyer, threatened, against Buyer or any of Buyer's Affiliates which
has resulted, or which would be reasonably likely to result, in a prohibition
against, or a material delay in completing, all or any part of the transactions
contemplated by this Agreement.
Section 5.7 Financing. Buyer has or will have available, at or prior
to Closing, sufficient cash in immediately available funds to pay the Purchase
Price and necessary to consummate the transactions contemplated hereby. Buyer
has received the executed commitment letter attached to Schedule 5.7 hereof (the
"Commitment Letter") with respect to the financing arrangements for the
transactions contemplated hereby (the "Financing"). As of the date of this
Agreement, the Commitment Letter is in full force
48
and effect and has not been amended or rescinded. The aggregate proceeds of the
Financing provided for in the Commitment Letter, together with available cash
and other credit facilities available to Buyer, will be sufficient to pay the
Purchase Price and satisfy the other obligations of Buyer and its Affiliates
necessary to consummate the transactions contemplated hereby. As of the date
hereof, Buyer believes that such Financing will be obtained.
Section 5.8 Brokers or Finders. Except for Xxxxxxx Xxxxx, whose fees
and expenses will be paid by Buyer, neither Buyer, nor any Affiliate thereof,
has employed any broker, financial advisor or finder or incurred any liability
for any broker, financial advisory or finders' fees in connection with this
Agreement or the transactions contemplated hereby.
Section 5.9 Investment Representations.
(a) Buyer is acquiring the Equity Interests to be acquired by it
hereunder for its own account, solely for the purpose of investment and not with
a view to, or for sale in connection with, any distribution thereof in violation
of the federal securities laws or any applicable foreign or state securities
law.
(b) Buyer is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act of 1933, as amended.
(c) Buyer understands that the acquisition of the Equity Interests to
be acquired by it pursuant to the terms of this Agreement involves substantial
risk. Buyer and its officers have experience as an investor in securities and
Equity Interests of companies such as the ones being transferred pursuant to
this Agreement and acknowledges that it can bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that Buyer is capable of evaluating the merits and risks of its
investment in the Equity Interests to be acquired by it pursuant to the
transactions contemplated hereby.
(d) Buyer understands that the Equity Interests to be acquired by it
hereunder have not been registered under the Securities Act on the basis that
the sale provided for in this Agreement is exempt from the registration
provisions thereof. Buyer acknowledges that such securities may not be
transferred or sold except pursuant to the registration and other provisions of
applicable securities laws or pursuant to an applicable exemption therefrom.
(e) Buyer acknowledges that the offer and sale of the Equity Interests
to be acquired by it in the transactions contemplated hereby has not been
accomplished by the publication of any advertisement.
Section 5.10 No Other Representations and Warranties. Except for the
representations and warranties contained in this Article V, neither Buyer nor
any other Person makes any other express or implied representation or warranty
on behalf of Buyer or any of its Affiliates.
49
Section 5.11 Certain Transactions. There are no existing agreements or
arrangements pursuant to which Buyer will divest or otherwise dispose of the
assets of or equity in, or by any other manner, the Business, except as set
forth in Sections 6.3 and 6.4.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business.
(a) During the period from the date hereof until the Closing, except
as otherwise provided for in this Agreement or any Ancillary Agreement or with
the prior written consent of Buyer (which consent shall not be unreasonably
withheld or delayed), TRW shall, and shall cause each of the other TRW
Participants (other than the Spanish Affiliate), and will use its reasonable
best efforts to cause the Spanish Affiliate (including by not providing consent
to an action that would otherwise be prohibited by this Section 6.1) to, (1)
operate the Business in the ordinary course consistent with past practice; (2)
maintain the existing assets of the Business in the ordinary course consistent
with past practice and (3) use reasonable best efforts, generally consistent
with existing practices, to keep available the services of employees and
preserve relationships with all key customers, suppliers, licensors, licensees,
distributors, creditors and other Persons having business dealings with the
Business in order to preserve, in all material respects, the goodwill and
ongoing operations of the Business at the Closing. Except (a) for actions
necessary to effectuate the Preliminary Transfers, (b) for actions permitted
pursuant to the first sentence of this Section 6.1(a), and (c) as set forth in
Schedule 6.1(a) hereof, TRW shall not, and shall cause the other TRW
Participants (other than the Spanish Affiliate, for which TRW shall use its
reasonable best efforts to cause the Spanish Affiliate) not to (in each case
only with respect to the Business):
(i) enter into any sale commitment in excess of $10 million
or purchase commitment in excess of $5 million;
(ii) other than in the ordinary course of business consistent
with past practice, sell, transfer, lease, sublease, license or
otherwise dispose of any real property, real property interest, personal
property (tangible or intangible) or any other material asset that would
otherwise be an Acquired Asset or any asset of any Aerospace Subsidiary
(or Subsidiary thereof) or any Aerospace Affiliate (or Subsidiary
thereof);
(iii) enter into any lease of real property or any renewals
thereof involving a term of one (1) year or more;
(iv) enter into any lease of personal property or any renewals
thereof involving a term of one (1) year or more, other than in the
ordinary course of business, consistent with past practice;
50
(v) other than in the ordinary course of business consistent
with past practice, enter into any transaction, contract or commitment
or otherwise incur any obligation or liability that would constitute an
Assumed Liability;
(vi) abandon, sell, license, assign, or grant any security
interest in or to any material item of the Business Intellectual
Property other than in the ordinary course of business;
(vii) fail to perform or cause to be performed all applicable
material filings, recordings and other acts, and pay or cause to be paid
all required fees and taxes, to maintain and protect its interest, in
each and every material item of the Business Intellectual Property,
except where it has been determined by a TRW Entity in the ordinary
course of business, not to maintain or protect such interests;
(viii) (A) grant any increase in compensation or benefits or
make any bonus payments to any of its directors, officers, employees or
consultants except in the ordinary course of business consistent with
past practice, (B) adopt or amend (or otherwise increase or accelerate
the vesting of benefits or severance with respect to or make any payment
not otherwise due to) any employee benefit plan, agreement or
arrangement with or for the benefit of any of its directors, officers,
employees or consultants that Buyer could assume or employ as of the
Closing Date pursuant to this Agreement, or (C) take any action that
could give rise to severance benefits payable to any employee as a
result of consummation of any of the transactions contemplated by this
Agreement except in each case (x) as required by contractual commitments
existing on the date hereof and(y) as required by applicable law;
(ix) except in the ordinary course of business, permit or
allow any Acquired Asset or any asset of any Aerospace Subsidiary (or
Subsidiary thereof) or any Aerospace Affiliate (or Subsidiary thereof)
to be subjected to any Lien, other than Permitted Liens, Permitted
Encumbrances and material Liens that will be released at or prior to the
Closing;
(x) make any material change in any method of accounting or
accounting practice or policy used by the TRW Entities, other than such
changes required by GAAP or applicable law;
(xi) except in the ordinary course of business consistent with
past practice, enter into, modify, extend or terminate any Material
Contract or enter into a Contract that would be a Material Contract if
in existence on the date hereof; provided that in no event shall any TRW
Participant or any Affiliate thereof enter into any new hedging Contract
(other than a replacement of any existing hedging Contract, on the same
51
economic terms and conditions, that is entered into in connection with
transferring the hedging Contracts that primarily relate to the Business
to Buyer);
(xii) settle any suit, claim, action or proceeding, whether
pending on the date hereof or hereafter made or brought if such
settlement contains injunctive, equitable or other provisions that
affect the ongoing operation of the Business;
(xiii) with respect to any Aerospace Subsidiary (or Subsidiary
thereof) or any Aerospace Affiliate (or Subsidiary thereof), (A) redeem,
purchase or otherwise acquire any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any
shares of its capital stock, or any options, warrants or conversion or
other rights to acquire any shares of its capital stock or any such
securities or obligations; (B) effect any reorganization or
recapitalization; (C) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of
its capital stock; or (D) issue, deliver, or sell, or authorize or
propose the issuance, delivery or sale (including the grant of any
encumbrance) of, any shares of any class of its capital stock (including
shares held in treasury), any securities convertible into or exercisable
or exchangeable for any such shares, any notes, bonds or other
securities or any rights, warrants or options to acquire same or any
other interest;
(xiv) merge with, enter into a consolidation with or acquire
an interest of 5% or more in any Person or acquire substantially all of
the assets or business of any Person;
(xv) make any capital expenditure or commitment for any
capital expenditure in excess of $1 million individually; provided,
however, that the Business can make any capital expenditures or
commitments that are reflected in its 2002 Capital Expenditure Plan, a
true, accurate and complete copy of which is set forth on Schedule
6.1(a)(xv);
(xvi) permit any Aerospace Subsidiary or Aerospace Affiliate,
or any of their respective Subsidiaries to incur or guarantee additional
indebtedness for borrowed money individually in excess of $1 million
individually; provided that this restriction shall not apply to the
Spanish Affiliate to the extent that the Spanish Affiliate may incur or
guarantee such additional indebtedness without the consent of TRW;
(xvii) except as otherwise explicitly permitted by this
Agreement or required by applicable law, amend or restate the
certificate of incorporation or by-laws (or other organizational
documents) of any
52
Aerospace Subsidiary or Aerospace Affiliate, or any of their respective
Subsidiaries; provided that this restriction shall not apply to the
Spanish Affiliate to the extent that the Spanish Affiliate may amend or
restate such organizational documents without the consent of TRW;
(xviii) take or agree or commit to take any action that would
make any representation or warranty of TRW under this Agreement
inaccurate in any material respect, at, or as of any time prior to, the
Closing Date or that would, or would be reasonably likely to, result in
any of the conditions set forth in Article VII not being satisfied on
the Closing Date (provided, however that a breach of this covenant shall
only be considered a breach of representation and warranty for purposes
of Article IX); and
(xix) agree, commit or resolve to do any of the foregoing.
Notwithstanding the foregoing, during the thirty (30) Business Days immediately
preceding the anticipated Closing Date, TRW shall, and shall cause all TRW
Participants to, settle intercompany accounts payable and accounts receivable
and arrange for the termination of other matters as contemplated by this
Agreement, including Sections 2.3 and 2.4 hereof. TRW shall determine the method
by which such intercompany accounts are eliminated including, but not limited
to, by means of setoff, settlement or capital contribution. TRW shall terminate
the involvement of the Business in TRW's accounts receivable securitization
program, terminate the related security interests, and have the previously
transferred receivables transferred back to the Business prior to the Closing.
(b) Promptly following the date hereof, Buyer shall appoint a
representative who shall have authority to respond to any request for consent to
a TRW Participant taking an action that would otherwise be prohibited by Section
6.1(a) hereof. Promptly following the appointment of such representative, Buyer
shall provide TRW with the name and contact information for such representative.
Section 6.2 Access to Information.
(a) TRW shall permit, and shall cause the other TRW Participants to
permit, to the extent permitted by law, Buyer and any of its agents,
representatives, advisors and consultants to have reasonable access to the
premises taking into account, among other things, the level of disruption to the
operations at any facility, the number of employees at such facility and the
size of such facility, and reasonable access to the non-privileged books and
records of the TRW Participants related to the Business (including records and
files relating to Taxes), and to the officers and employees of the TRW Entities
with knowledge of the whereabouts and/or contents of such books and records;
provided, such access does not interfere with the conduct of, or otherwise
disrupt, the Business or the other businesses of TRW and is consistent with
applicable laws and regulations (including, without limitation, industrial
security and export control laws and regulations); provided, further, that any
such access shall occur after reasonable notice and during normal business
hours. In an effort to prevent any interference or disruption caused by such
access, TRW may, at its sole discretion, reasonably limit the number of
53
individuals and the number of visits to its facilities. Buyer shall coordinate
all such access with a TRW employee who will be identified to Buyer promptly
after the execution of this Agreement, and shall not directly or indirectly
contact any other employee of TRW or of the Business without the prior approval
of the designated employee.
(b) Any information regarding the Business or Assets heretofore or
hereafter obtained from TRW or its Subsidiaries or Affiliates by Buyer or their
representatives shall be subject to the terms of the Confidentiality Agreement,
and such information shall be held in confidence by Buyer and its
representatives in accordance with the terms of the Confidentiality Agreement.
(c) If requested by Buyer, TRW shall allow Ernst & Young LLP personnel
who are familiar with the Business, on behalf of Buyer, to conduct as promptly
as practicable following the Closing Date an audit of the financial statements
of the Business as of, and for the twelve months ended, December 31, 2000 and
December 31, 2001, and shall cooperate with the conduct of such audit. The cost
of such audit shall be borne by Buyer.
Section 6.3 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions of this Agreement and
the Ancillary Agreements, each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all appropriate actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements as promptly as
practicable including, without limitation, (i) subject to Section 6.4, the
preparation and filing of all forms, registrations and notices required to be
filed to consummate the transactions contemplated by this Agreement and the
Ancillary Agreements and the taking of such actions as are necessary to obtain
any requisite approvals, consents, orders, exemptions or waivers by any third
party or Governmental Entity and (ii) using their reasonable best efforts to
cause the satisfaction of all conditions to Closing. Subject to Section 6.4,
each party shall promptly consult with the other with respect to, provide any
necessary information with respect to, and provide copies of all filings made by
such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby.
Subject to Section 6.4, TRW and Buyer shall, and shall cause their respective
Affiliates to, with respect to a threatened or pending preliminary or permanent
injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of any party to this
Agreement or an Ancillary Agreement to consummate the transactions contemplated
hereby or thereby, use their respective reasonable best efforts to prevent the
entry, enactment or promulgation thereof, as the case may be (including by
pursuing any available appeal process).
(b) Subject to Section 6.4, each party hereto shall promptly inform
the other of any communication from any Governmental Entity regarding any of the
transactions contemplated by this Agreement and the Ancillary Agreements.
Subject to
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Section 6.4, if any party or Affiliate thereof receives a request for additional
information or documentary material from any such Governmental Entity with
respect to the transactions contemplated by this Agreement, then such party will
use its reasonable best efforts to make, or cause to be made, as soon as
practicable and after consultation with the other party, an appropriate response
in compliance with such request.
(c) Neither this Section 6.3 nor Section 6.4 shall be deemed to require
any party hereto to sell or otherwise dispose, hold separate, agree to sell or
otherwise dispose of any assets or facilities, or to take any other actions
affecting, or accept any limitations on, its ability, the ability of its
Affiliates or the ability of the Business, to own their respective assets or
conduct their respective businesses substantially as currently conducted or
proposed to be conducted, which, if such actions or limitations were with
respect to a comparable amount of assets, businesses or product lines of the
Business would be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Business. Any action or limitation contemplated
by this Section 6.3 or by Section 6.4 affecting the ability of TRW, Buyer or
their Affiliates, to own their respective assets or conduct their respective
businesses substantially as currently conducted or proposed to be conducted
shall not be required to be effective prior to the Closing.
Section 6.4 Consents and Approvals.
(a) Without limiting the generality of the undertakings pursuant to
Section 6.3 and subsections (b) and (c) of this Section 6.4 and upon the terms
and subject to the conditions herein provided, each of TRW and Buyer shall use
its reasonable best efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary under applicable antitrust laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, (i) to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement and
the transactions contemplated hereby by any Governmental Entities with
regulatory jurisdiction over enforcement of any applicable antitrust laws
("Governmental Antitrust Entity") (which actions shall include, without
limitation, furnishing all information required by applicable law in connection
with approvals of or filings with any Governmental Antitrust Entity), including
filing, or causing to be filed, as promptly as practicable, any required
notification and report forms (x) under the HSR Act with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
or (y) under other applicable non-U.S. laws with the applicable non-U.S.
Governmental Antitrust Entities including without limitation filings required
pursuant to the EU Merger Regulation, (ii) to obtain any consent, authorization,
order or approval of, or any exemption by, any Governmental Antitrust Entity
required to be obtained or made by TRW and Buyer, or any of their Subsidiaries
or Affiliates in connection with the transaction contemplated by this Agreement
or the taking of any action contemplated by this Agreement, and (iii) to take
any action reasonably necessary to defend vigorously, lift, mitigate or, rescind
the effect of any litigation or administrative proceeding involving any
Governmental Antitrust Entity adversely affecting the transaction contemplated
by this Agreement or this Agreement, including promptly appealing any adverse
court or administrative decision. Without limitation of the foregoing, TRW,
Buyer and their respective Affiliates shall not extend any waiting period
55
under the HSR Act, the EU Merger Regulation or any other foreign antitrust
merger control laws or enter into any agreement with the FTC or the Antitrust
Division not to consummate the transactions contemplated by this Agreement,
except with the prior written consent of the other parties hereto.
(b) Without limiting the generality of the undertakings pursuant to
Section 6.3 and subsections (a) and (c) of this Section 6.4 and subject to
appropriate confidentiality protections, TRW and Buyer shall each furnish to the
other such necessary information and reasonable assistance as the other party
may request in connection with the foregoing and, shall each provide counsel for
the other party with copies of all filings made by such party, and all
correspondence between such party (and its advisors) with any Governmental
Antitrust Entity and any other information supplied by such party and such
party's Affiliates to a Governmental Antitrust Entity in connection with this
Agreement and the transactions contemplated hereby, provided, however, that
materials may be redacted (i) to remove references concerning the valuation of
the Business and (ii) as necessary to comply with contractual arrangements. Each
party shall, subject to applicable law permit counsel for the other party to
review in advance, and consider in good faith the views of the other party in
connection with, any proposed written communication to any Governmental
Antitrust Entity. TRW and Buyer agree not to participate, or to permit their
affiliates to participate, in any substantive meeting or discussion, either in
person or by telephone, with any Governmental Antitrust Entity in connection
with this Agreement and the transactions contemplated hereby unless it consults
with the other party in advance and, to the extent not prohibited by such
Governmental Antitrust Entity, gives the other party the opportunity to attend
and participate. Upon the terms and subject to the conditions herein provided,
in case at any time after the Closing Date any further action is necessary or
desirable to secure the approvals from any and all Governmental Antitrust
Entities necessary to carry out the purposes of this Agreement, the proper
officers and/or directors of the parties shall use their best efforts to take or
cause to be taken all such necessary action.
(c) Consistent with the undertakings pursuant to Section 6.3 and
subsections (a) and (b) of this Section 6.4, TRW and Buyer agree to take or
cause to be taken the following actions: (i) provide as promptly as practicable
information and documents requested by any Governmental Antitrust Entity
necessary, proper or advisable to permit consummation of the transactions
contemplated by this Agreement; (ii) without in any way limiting the provisions
of (c)(i) above, use its best efforts to certify as soon as practicable their
substantial compliance with any requests for additional information or
documentary material that may be made under the HSR Act; and (iii) take
promptly, in the event that any permanent or preliminary injunction or other
order is entered or becomes reasonably foreseeable to be entered in any
proceeding that would make consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements in accordance with the terms thereof
unlawful or that would prevent or delay consummation of any such transactions,
any and all steps (including the appeal thereof and the posting of a bond)
necessary to vacate, modify or suspend such injunction or order so as to permit
such consummation on a schedule as close as possible to that contemplated by
this Agreement.
56
Section 6.5 Further Assurances.
(a) Subject to Section 6.5(b), on and after the Closing Date, TRW and
Buyer shall cooperate and use their respective reasonable best efforts to take
or cause to be taken all appropriate actions and do, or cause to be done, all
things necessary or appropriate to consummate and make effective the
transactions contemplated hereby, including the execution of any additional
documents or instruments of any kind, the obtaining of consents which may be
reasonably necessary or appropriate to carry out any of the provisions hereof
and the taking of all such other actions as such party may reasonably be
requested to take by the other party hereto from time to time, consistent with
the terms of this Agreement and the Ancillary Agreements, in order to effectuate
the provisions and purposes of this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby.
(b) Notwithstanding subsection (a), nothing in this Agreement shall be
deemed to require the conveyance, assignment or transfer of any Asset that by
its terms or by operation of applicable law cannot be freely conveyed, assigned,
transferred or assumed. To the extent a party hereto has been unable to obtain
any governmental or any third party consents or approvals required under
applicable law for the transfer of any Asset and to the extent not otherwise
prohibited by the terms of any Asset, TRW and its Affiliates shall continue to
be bound by the terms of such applicable Asset and Buyer shall pay, perform and
discharge fully all of the obligations of TRW and its Affiliates thereunder from
and after the Closing to the extent that the corresponding benefit is received.
TRW shall, without consideration therefor, pay, assign and remit to Buyer
promptly all monies, rights and other consideration received in respect of such
performance. To the extent permitted by law, TRW and its Affiliates shall
exercise or exploit their rights in respect of such Assets only as reasonably
directed by Buyer and at Buyer's expense. Each party hereto shall continue to
use reasonable best efforts to obtain all such unobtained consents or approvals
required to be obtained by it at the earliest practicable date; provided that
neither TRW, Buyer nor any of their Affiliates or Subsidiaries shall be required
to pay any consideration, other than a de minimus amount, in connection with
such consents or approvals. If and when any such consents or approvals shall be
obtained, then TRW and its Affiliates shall promptly assign their rights and
obligations thereunder to Buyer without payment of consideration and Buyer
shall, without the payment of any consideration therefor, assume such rights and
obligations. Each party shall execute such good and sufficient instruments as
may be necessary to evidence such assignment and assumption.
Section 6.6 Property Transfer Taxes; Other Expenses; Bulk Transfer
Laws.
(a) The payment of fees, charges, Taxes or other payments (including,
any notary and registration fees) required to be made by TRW or Buyer to any Tax
Authority or other Person in connection with the transfer of the Assets,
including by way of license, pursuant to the terms of the Agreement shall be
treated as follows:
57
(i) Buyer and TRW shall each pay or cause to be paid, and
shall indemnify, defend and hold harmless the other for, one half of any
and all real property, transfer, personal property, sales and use, value
added, stamp taxes, documentary taxes and similar Taxes (including any
Taxes imposed by way of withholding) and notary fees ("Transfer Taxes")
attributable to the transactions contemplated by this Agreement;
provided, however, that TRW shall pay or cause to be paid and indemnify,
defend and hold harmless Buyer against any and all Restructuring Taxes
and any and all UK stamp duties and stamp Taxes that relate to the
transactions described in Schedule 2.1;
(ii) TRW, on the one hand, and Buyer, on the other hand, shall
each pay or cause to be paid, and shall indemnify, defend and hold
harmless the other for, their own expenses in connection with the
filings and other actions necessary for compliance with the HSR Act and
other any regulatory filings (provided, however, that Buyer shall pay
all governmental fees and charges imposed with respect to such
regulatory filings);
(iii) each of TRW and Buyer shall pay or cause to be paid, and
shall indemnify and hold harmless the other party for, any such other
fees, charges or the other payments for which such party is legally
responsible under applicable law and which are not covered by clauses
(i) and (ii); and
(iv) TRW and Buyer shall cooperate and work together as the
parties may mutually agree in the future to reduce or to obtain
exemption where available from sales and use, value added, goods and
services taxes and any other Transfer Tax. In addition, TRW and Buyer
agree that the transfer of the Acquired Assets in each country
constitutes the transfer of a going concern in each country for purposes
of obtaining exemption as such from any sales and use, value added,
goods and services taxes and other Transfer Taxes.
(b) Each of TRW and Buyer will be responsible for the preparation and
filing of any Tax Return with respect to any Transfer Taxes for which such party
is legally responsible under applicable law. The non-filing party shall pay the
other the amount of any Transfer Taxes shown due on any Tax Return relating to
Transfer Taxes for which such party is liable under Section 6.6(a)(i) of this
Agreement within three (3) Business Days of demand by the filing party.
Section 6.7 Publicity. Except as otherwise required by law or court
process or by any listing agreement with a national securities exchange or
trading market, until the Closing, or the date the Agreement is terminated
pursuant to Article VIII, TRW and Buyer shall not, and each of them shall cause
their respective officers, directors, partners, Affiliates, representatives and
agents not to, disclose or cause the disclosure of information, or issue or
cause the publication of the initial press release or public
58
announcement, with respect to the transactions contemplated by this Agreement or
any Ancillary Agreement, without the prior review and approval thereof by the
other party hereto, such approval not to be unreasonably withheld. All
subsequent press releases or public announcements by any party hereto with
respect to the transactions contemplated by this Agreement or any Ancillary
Agreement require consultation, to the extent practicable, with the other party
hereto. Nothing in this Section 6.7 shall restrict TRW from disclosing
information with respect to the transactions contemplated by this Agreement or
any Ancillary Agreement to a third party who may engage in a business
combination transaction resulting in the acquisition (by purchase or otherwise)
of all or substantially all of the capital stock or assets of TRW; provided that
such third party is subject to a customary confidentiality agreement.
Section 6.8 Employees and Employee Benefit Plans.
(a) General. For purposes hereof, (i) "Affected Employees" shall mean
those current employees of the Business (including those employees who are on
vacation, approved leave of absence, lay-off status or short-term disability and
excluding those on long-term disability) as of the Closing Date; (ii)
"Regulations" shall mean Section 18A of the Employment Act Cap. 91 of Singapore,
the Transfer of Undertakings (Protection of Employment) Regulations 1981, as
amended, or Section L122-12, paragraph 2 of the French Labor Code, as amended,
or Section 613a of the Civil Code of Germany, as amended; and (iii) "Aerospace
Employee" shall mean any Affected Employee employed by the Aerospace
Subsidiaries or by the Aerospace Affiliates as of the Closing Date, but
specifically excluding the UK-based Affected Employees ("UK Affected
Employees").
(b) Transferred Employees. The parties hereto intend that there will
be a continuity of employment for all Affected Employees following the Closing
Date, except for the persons identified on Schedule 6.8(b) hereof as expressly
excluded and persons on extended leaves of absence as specifically referred to
herein. In order to effectuate such transfer of employment as of the Closing
Date, except as otherwise provided herein, Buyer shall make a general offer of
employment on terms no less favorable than the employees' current conditions of
employment in the aggregate, provided that, unless required by applicable law or
otherwise provided for herein, Buyer shall not be obligated to continue such
terms beyond the Closing Date, through a general notice of transfer (pursuant to
methodologies mutually agreed upon by TRW and Buyer) to each Affected Employee
who is not an Aerospace Employee or a U.K. Affected Employee, and who will not
become an employee of Buyer by operation of the Regulations and who is not
identified on Schedule 6.8(b) (each an "Offer Employee"). Such general offer of
employment will be deemed accepted by each Offer Employee unless (A) expressly
rejected by the Offer Employee prior to the Closing Date or (B) if the Offer
Employee otherwise indicates by his or her actions that such offer of employment
has not been accepted and Buyer notifies TRW within 30 days following the
Closing Date of such non-acceptance of the offer (each Offer Employee who acts
under (A) or (B), a "Non-Acceptance Offer Employee"). For purposes of this
Agreement, "Transferred Employee" shall mean (i) each Offer Employee other than
a Non-Acceptance Offer Employee; provided that, in the case of Offer Employees
on short term
59
disability or other approved leaves of absence, such employees must commence
service with Buyer prior to the six-month anniversary of the Closing Date to
become Transferred Employees; (ii) each Affected Employee whose employment
transfers to Buyer pursuant to operation of Regulations and (iii) each Affected
Employee who is a UK Affected Employee or an Aerospace Employee. Any Affected
Employee who does not commence employment with Buyer as described above shall
not be treated as a Transferred Employee. Except as otherwise provided in this
Section 6.8, all Transferred Employees will cease to accrue benefits under and
participate as active participants in all Plans (that are not Assumed Plans) as
of the Closing Date. The parties will cooperate to comply with legal and
regulatory requirements to accomplish the employment transfers described in this
Section 6.8, including without limitation any requirements for TRW to terminate
the employment of any Affected Employee and for Buyer to make a specific
employment offer to such Affected Employees, and TRW will transfer (at TRW's
cost and expense) any work permits or passes applicable to the Affected
Employees who receive offers to become Transferred Employees. No later than 30
days after the date of this Agreement, TRW shall provide Buyer with respect to
each Affected Employee (i) years of service; (ii) job title; (iii) base salary
or current wages; (iv) date of hire; (v) employment status; and (vi) work
location. TRW shall update the information required to be provided by the
preceding sentence and shall deliver such updated information to Buyer no later
than 15 days prior to the Closing Date.
(c) Pre-Closing Welfare Benefits. Notwithstanding anything in this
Agreement to the contrary, TRW and the Asset Selling Subsidiaries shall be
solely responsible for (A) claims for the type of benefits described in Section
3(1) of ERISA (whether or not covered by ERISA) ("Welfare Benefits") that are
incurred by or with respect to any Affected Employee (other than an Aerospace
Employee) and his or her beneficiaries or dependents on or before the Closing
Date and (B) claims relating to COBRA continuation coverage attributable to
"qualifying events" with respect to any Affected Employee (other than an
Aerospace Employee) and his or her beneficiaries and dependents that occur on or
before the Closing Date. For purposes of the foregoing, a medical/dental claim
shall be considered incurred when the services are rendered, the supplies are
provided or medications are prescribed, and not when the condition arose;
provided that claims relating to a hospital confinement that begins on or before
the Closing Date but continues thereafter shall be treated as incurred on or
before the Closing Date. A disability claim shall be considered incurred on or
before the Closing Date if the injury or illness resulting in such disability
occurs on or prior to the Closing Date.
(d) US Transferred Employees. The provisions of this Section 6.8(d)
apply only to US-based Transferred Employees ("US Transferred Employees").
(i) Workers' Compensation. TRW will bear the entire cost and
expense of all workers' compensation claims arising out of injuries
identifiably sustained by US Transferred Employees on or before the
Closing. Buyer will bear the entire cost and expense of all workers'
compensation claims arising out of injuries identifiably sustained by US
Transferred Employees after the Closing. TRW will bear the entire cost
and expense of all workers' compensation claims arising out of injuries
60
without an identifiable date of occurrence and which are alleged to have
arisen either before or before and after the Closing which are filed
within sixty (60) calendar days after the Closing Date. Buyer shall bear
the entire cost and expense of all workers' compensation claims arising
out of injuries sustained by US Transferred Employees without an
identifiable date of occurrence and which are alleged to have arisen
either before or before and after the Closing which are filed more than
sixty (60) calendar days after the Closing Date. From and after the
Closing, Buyer will use its reasonable efforts to facilitate the return
to work of any Transferred Employees who were on disability leave on the
Closing Date as a result of a work-related injury or illness.
(ii) Non-Represented Employees. The following provisions of
this Section 6.8(d)(ii) shall apply only to US Transferred Employees
whose terms of employment are not governed by a collective bargaining
agreement ("Non-Represented Employees").
(A) Buyer is not assuming, and will not have liability
for the continuation of, or any liability for claims under, any
Plan (other than the Assumed Plans and, to the extent of
liabilities assumed in connection with the receipt of assets as
provided in this Section 6.8, the Business Plans) applicable to
Non-Represented Employees, and Buyer will not be deemed a
successor employer to TRW and any Asset Selling Subsidiary with
respect to any such Plan. No Plan adopted or maintained by Buyer
with respect to the Non-Represented Employees will be deemed a
successor plan of any plan maintained or adopted by TRW or an
Asset Selling Subsidiary.
(B) No assets held in trust for any Plan (other than the
TRW Salaried Pension Plan ) applicable to the Non-Represented
Employees, specifically including but not limited to, , the
Xxxxx Retirement Account Plan and the TRW Employee Stock
Ownership and Savings Plan ("Stock Savings Plan"), will be
transferred to Buyer or to any Plan adopted or maintained by
Buyer.
(C) From the Closing Date until the first anniversary
thereof, Buyer will provide all Non-Represented Employees with
benefits (including, if so determined by Buyer, defined benefit
pension plans and defined contribution pension plans) that are
comparable in the aggregate to those maintained by TRW for the
Non-Represented Employees prior to the Closing; provided,
however, without limiting the generality of the foregoing, Buyer
shall not be required to provide equity-based compensation or
post-retirement medical, dental or other post-retirement welfare
benefits to any person. Buyer will waive any
61
pre-existing condition exclusions otherwise applicable to the
Non-Represented Employees under any benefit plan of Buyer
providing medical, dental and vision benefits in which such
Non-Represented Employee becomes eligible to participate
("Medical Plans"), and will credit all payments made by each
Non-Represented Employee against annual deductibles and
out-of-pocket maximums under Medical Plans prior to the Closing
Date to the annual deductibles and out-of-pocket maximums under
the Buyer's Medical Plans. Buyer will give each Non-Represented
Employee credit for such employee's service with TRW or any
Asset Selling Subsidiary prior to the Closing Date (to the
extent recognized by TRW or the Asset Selling Subsidiaries, as
applicable, under their respective plans) only for purposes of
any participation requirement and for vesting (but not for
benefit accrual purposes, or to the extent such treatment would
result in a duplication of benefits or a duplicative accrual on
or after the Closing Date of benefits for the same period of
service, or to the extent such service is prior to a specific
date before which service would not have been credited for
employees of Buyer) under any defined benefit pension plan and
defined contribution savings plan of Buyer in which such
Non-Represented Employee becomes eligible to participate. Except
as otherwise provided herein, TRW and Buyer reserve the right to
establish, eliminate or change any employee benefit plans in the
future when and as they deem appropriate.
(D) TRW will provide Non-Represented Employees who,
prior to the Closing, have met the requirements for retiree
medical under TRW's retiree medical plan with benefit coverage
under the TRW Retiree Select Medical Plan upon their retirement
from Buyer and will provide retired employees of the Business
immediately prior to the Closing with retiree medical plan
benefit coverage under TRW's Retire Select Medical Plan if such
employees have met the requirements for such coverage.
(iii) Represented Employees. The following provisions of this
Section 6.8(d)(iii) shall apply only to Transferred Employees whose
terms of employment are governed by a collective bargaining agreement
listed on Schedule 6.8(d)(iii) ("Represented Employees").
(A) Buyer shall assume the collective bargaining
agreements applicable to the Represented Employees as of the
Closing and shall continue all terms and conditions of
employment under such assumed collective bargaining agreements
through the expiration or other termination of such agreements
in conformity with labor laws and regulations of the applicable
country. Buyer and TRW shall take all steps necessary under
ERISA Section 4204 so that the transaction contemplated by this
Agreement will not
62
constitute a partial or complete withdrawal under section 4201
of ERISA, other than the posting of any bond, escrow or other
security. If Buyer withdraws in a complete or partial withdrawal
with respect to the Business during the five-year period
following the Closing, TRW will be secondarily liable for any
withdrawal liability it would have had if it had withdrawn as of
the Closing Date, to the extent Buyer fails to satisfy such
liability upon Buyer's complete or partial withdrawal.
(B) Certain of the Aerospace Subsidiaries and Aerospace
Affiliates maintain defined benefit plans (the "Hourly Defined
Benefit Plans") for the benefit of their Affected Employees
covered by collective bargaining agreements, all of the assets
for which are held in the TRW Master Trust (the "Master Trust").
At the Closing, Buyer shall assume all of the relevant TRW
Subsidiary's obligations and liabilities, and acquire all of the
relevant TRW Subsidiary's right, title and interests in, to and
under the Hourly Defined Benefit Plans by adopting, effective as
of the Closing Date, the Hourly Defined Benefit Plans; provided
that TRW will continue to be responsible for the payment of
benefits from the Hourly Defined Benefit Plans until the
transfer described in this Section 6.8(d)(ii)(B) is made.
Participation in the Hourly Defined Benefit Plans, as adopted by
Buyer, by the Transferred Employees participating thereunder
shall not be deemed terminated, nor shall their employment be
deemed otherwise interrupted for purposes of the Hourly Defined
Benefit Plans, as adopted by Buyer, by reason of the
transactions contemplated under this Agreement and
notwithstanding anything in the Agreements to the contrary, the
Transferred Employees shall maintain their service credit under
the Hourly Defined Benefit Plan for benefit accrual purposes.
Buyer shall, prior to or at the Closing, complete all actions as
shall be necessary or desirable to evidence its sponsorship of
the Hourly Defined Benefit Plans and the assumption of the
ongoing administration and management of such Plans, including
establishing or designating one or more successor trusts for the
maintenance of the Hourly Defined Benefit Plans' assets. As soon
as administratively possible after receipt by TRW of evidence
that Buyer has taken the actions required by this Section
6.8(d)(iii)(B), TRW shall cause cash (or property in kind, if
reasonably requested by Buyer and approved by TRW, which
approval shall not be unreasonably withheld) equal to the fair
market value, as of the date immediately preceding the date of
transfer, of the assets attributable to the Hourly Defined
Benefit Plans held by the TRW master trustee to be transferred
to the successor trust or trusts established by Buyer.
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(C) Certain of the Aerospace Subsidiaries in the
United States maintain the retiree medical plans set
forth on Schedule 6.8(d)(iii)(C) (the "Hourly Retiree I
Medical Plans"), providing medical benefits to retirees
and their eligible beneficiaries. At the Closing, Buyer
shall assume all of TRW's obligations and liabilities
under the Hourly Retiree Medical Plans with respect to
Non-Represented Employees. TRW will provide retired
employees of the Business immediately prior to the
Closing with retiree medical plan benefit coverage under
the Hourly Retiree Medical Plans if such former
employees meet the requirements for coverage.
(D) Xxxxx Western Inc. sponsors and maintains
the Xxxxx Western Inc. 401(k) Plan for the benefit of
the Represented Employees at its Diamond Bar, California
facility (the "Union 401(k) Plan"). Buyer shall assume
all of Xxxxx Western Inc.'s obligations and liabilities,
and acquire all of Xxxxx Western Inc.'s right, title and
interest in, to and under the Union 401(k) Plan and
Xxxxx Western Inc. shall transfer to Buyer on the
Closing Date all of the assets held with respect to the
Union 401(k) Plan.
(e) UK Transferred Employees. The provisions of this
Section 6.8(e) apply only to Transferred Employees employed by
TRW Limited or any of its Subsidiaries ("UK Transferred
Employees"). TRW and Buyer acknowledge that the transaction
contemplated by this Agreement constitutes a relevant transfer
under the Regulations.
(i) Buyer will continue, and will cause any
Subsidiary of Buyer to which the contract of employment
of any UK Transferred Employee is transferred by
operation of the Regulations to continue all terms and
conditions of employment defined in individual contracts
and in collective bargaining agreements applicable to UK
Transferred Employees as of the Closing through the
respective expiration or other termination of such
agreements to the extent required by Regulations,
subject to any ability to modify such terms or
conditions as set forth in the applicable contract or
agreement. Schedule 6.8(e) contains each form of
individual contract entered into with UK Transferred
Employees and lists each collective bargaining agreement
applicable to UK Affected Employees.
(ii) TRW shall transfer assets and liabilities
from the TRW UK Pension Scheme in accordance with the
terms and conditions of Schedule 6.8(e)(ii).
(iii) TRW will bear the entire cost and expense
of all employers' liability claims arising out of
injuries sustained (or to the extent sustained) by UK
Transferred Employees on or before the Closing. Buyer
will bear the entire cost and expense of all employers'
liability
64
claims arising out of injuries sustained (or to the
extent sustained) by UK Transferred Employees after the
Closing.
(f) Canadian Affected Employees. The provisions of
this Section 6.8(f) apply only to Canadian based Transferred
Employees of TRW or any Asset Selling Subsidiary, ("Canadian
Transferred Employees")
(i) As of the Closing, TRW and the
applicable Asset Selling Subsidiary (TRW Aeronautical
Systems Canada Limited) hereby assign to Buyer and Buyer
hereby assumes the employment contracts, and collective
bargaining agreement of TRW, any of its Subsidiaries or
the relevant Canadian Asset Selling Subsidiary with
respect to Canadian Transferred Employees. TRW shall
provide Buyer with each form of contract with Canadian
Transferred Employees no later than thirty Business Days
after the Closing and a statement of the number of
employees subject to such form agreements.
(ii) Salaried Pension Plan
(A) The Buyer shall, effective as of
and from the Closing Date, designate a
registered pension plan to provide pension
benefits to Canadian salaried Affected Employees
from and after the Closing Date (the "Buyer's
Canadian Salaried Pension Plan").
(B) Effective as of the Closing Date,
each Canadian salaried Affected Employee who is
a member of the TRW Canada Limited Salaried
Pension Plan (the "TRW Canadian Salaried Pension
Plan") shall cease to actively participate in
and accrue benefits under the TRW Canadian
Salaried Pension Plan and shall commence
participation in and accrue benefits under the
Buyer's Canadian Salaried Pension Plan. The
Buyer shall enroll each Canadian salaried
Affected Employee in the Buyer's Canadian
Salaried Pension Plan effective as at the
Closing Date. The Buyer's Canadian Salaried
Pension Plan shall recognize each Canadian
salaried Affected Employee's period of service
prior to the Closing Date (as recognized under
the TRW Canadian Salaried Pension Plan) for the
purposes of vesting of and eligibility for
benefits under the Buyer's Canadian Salaried
Pension Plan.
(C) All benefits accrued by a
Canadian salaried Transferred Employee under the
TRW Canadian Salaried Pension Plan up to the
Closing Date shall be transferred from the TRW
Canadian Salaried Pension Plan to the Buyer's
Canadian Salaried Pension Plan, subject to and
upon the completion of, the transfer of assets
from the TRW Canadian Salaried Pension Plan to
the
65
Buyer's Canadian Salaried Pension Plan as
contemplated by this Section 6.8(f)(ii).
(D) Upon the completion of the
transfer of assets from the TRW Canadian
Salaried Pension Plan to the Buyer's Canadian
Salaried Pension Plan, the Buyer's Canadian
Salaried Pension Plan shall, for each Canadian
salaried Affected Employee, recognize such
period of service (as recognized under the TRW
Canadian Salaried Pension Plan) for all purposes
relating to the determination of such Canadian
salaried Affected Employee's benefits under the
Buyer's Canadian Salaried Pension Plan.
(E) As soon as practicable after the
Closing Date, TRW shall update the pension
records of each Canadian salaried Affected
Employee in relation to the TRW Canadian
Salaried Pension Plan up to the Closing Date,
and shall provide to TRW's actuary such data,
records and other information as is necessary to
enable TRW's actuary to determine the amount of
the Canadian Salaried Affected Employee
Liabilities for the TRW Canadian Salaried
Pension Plan. As soon as practicable after such
information has been provided to TRW's actuary,
TRW shall instruct its actuary to determine the
amount of the Canadian Salaried Affected
Employee Liabilities for the TRW Canadian
Salaried Pension Plan. TRW shall make the
details of these calculations and their results
available to the Buyer and its actuary for their
review and confirmation, and shall furnish to
them such data and other information as may be
required or requested to permit a review,
recalculation and confirmation of the Canadian
Salaried Affected Employee Liabilities by the
Buyer and its actuary. The Buyer shall within
thirty (30) days of receiving such information
and data (or such later date as the parties may
agree to) notify TRW as to its agreement or
disagreement with TRW's calculation of the
Canadian Salaried Affected Employee Liabilities.
For purposes of this Section 6.8(f)(ii)(E),
"Canadian Salaried Affected Employee
Liabilities" means the greatest of the going
concern liabilities, the solvency liabilities
and the projected benefit obligation for the
benefits accrued by the Canadian salaried
Affected Employees under the TRW Canadian
Salaried Pension Plan. For these purposes, the
ongoing liabilities shall be calculated as of
the Closing Date using the actuarial methods and
assumptions set out in the most recent actuarial
report filed with the regulators in respect of
plan, the solvency liabilities shall be
calculated as of the Closing using the actuarial
methods and assumptions which would have as of
December 31, 2001 or January 1, 2002 (whichever
is plan's traditional measurement date) had an
actuarial report prepared as of that date for
filing with the regulators in of such plan, and
projected benefit obligation shall be calculated
as of
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the Closing Date using the same actuarial
methods and assumptions as used by TRW to
calculate the projected benefit obligations as
of January 1, 2002 as documented on page 5 of
the Towers Report.
(F) If the Buyer and TRW cannot reach
agreement with respect to calculations under
this Section 6.8(f)(ii), any such disputes shall
be referred to and settled with final and
binding effect by an independent actuary
mutually agreeable to the Buyer and TRW. The
costs, fees and expenses which are associated
with any such appointment shall be borne equally
by TRW and the Buyer.
(G) As soon as practicable, but in any
event within thirty (30) days after final
agreement is reached between TRW and the Buyer
with respect to the amount of the Canadian
Salaried Affected Employee Liabilities in
relation to the TRW Canadian Salaried Pension
Plan, TRW shall instruct its actuary to make
application to the applicable governmental
authorities for approval of the transfer of
assets equal to the Transfer Amount from the TRW
Canadian Salaried Pension Plan to the Buyer's
Canadian Pension Plan. For purposes of this
Section 6.8(f)(ii)(G), "Transfer Amount" means,
in relation to the TRW Canadian Salaried Pension
Plan, the amount of assets of the TRW Canadian
Salaried Pension Plan to be transferred to the
Buyer's Canadian Salaried Pension Plan,
determined as at the Closing Date to be equal to
the Canadian Salaried Affected Employee
Liabilities. Written confirmation of any and all
approvals of applicable governmental authorities
shall be forwarded by TRW to the Buyer within
five (5) business days of receipt of such
approvals.
(H) If any governmental authority or
court refuses to permit a transfer of assets
from the TRW Canadian Salaried Pension Plan to
the Buyer's Canadian Salaried Pension Plan in an
amount equal to the Transfer Amount, the
transfer shall be made from the TRW Canadian
Salaried Pension Plan in the amount that such
governmental authority or court advises would be
acceptable to it. The asset transfer amount
approved by the governmental authority or court,
whether equal to the Transfer Amount or some
other amount, shall be referred to as the
"Regulatory Amount". TRW shall provide Buyer all
information relevant to calculate the Regulatory
Amount. In the event that the Regulatory Amount
is greater than the Transfer Amount, the Buyer
shall not be required to pay any amount to TRW
or any other person in respect of such excess.
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(I) From the Closing Date to the
Transfer Date, TRW shall cause the funding agent
for the TRW Canadian Salaried Pension Plan to
accept and record, as required, all benefit
payments relating to Canadian salaried Affected
Employees under the TRW Canadian Salaried
Pension Plan and shall remain responsible for
all benefit calculations, communications and the
completion of all forms and reports under the
TRW Canadian Salaried Pension Plan relating to
the Canadian salaried Affected Employees. All
benefit payments payable between the Closing
Date and the Transfer Date to Canadian salaried
Affected Employees under the terms of the TRW
Canadian Salaried Pension Plan shall be payable
out of such plan. For purposes of this Section
6.8(f)(ii), "Transfer Date" means the date
assets are actually transferred from the TRW
Canadian Salaried Pension Plan to the Buyer's
Canadian Salaried Pension Plan.
(J) Within thirty (30) days of receipt
of all required approvals from the governmental
authorities in relation to the TRW Canadian
Salaried Pension Plan, TRW shall calculate the
Final Transfer Amount and shall advise the Buyer
of such Final Transfer Amount. For purposes of
this Section 6.8(f)(ii), the term "Final
Transfer Amount" shall mean, in relation to the
TRW Canadian Salaried Pension Plan, the
Regulatory Amount adjusted for (i) a
proportionate share of the fund rate of return
(positive or negative) earned by the TRW
Canadian Salaried Pension Plan from the Closing
Date to the Transfer Date, (ii) any data
corrections identified subsequent to the
determination of the Canadian Salaried Affected
Employee Liabilities, (iii) any benefit payments
paid pursuant to Section 6.8(f)(ii), and (iv)
all fees and expenses relating to the Canadian
Salaried Affected Employee Liabilities between
the Closing Date and the Transfer Date. TRW
shall make the details of these calculations and
their results available to the Buyer and its
actuary for their review and confirmation, and
shall furnish to them such other information and
data as may reasonably be required or requested
to permit a review, recalculation and
confirmation of the Final Transfer Amount by the
Buyer and its actuary. The Buyer shall notify
TRW within thirty (30) days of receiving such
information and data as to its agreement or
disagreement with TRW's calculation of the Final
Transfer Amount.
(K) Within thirty (30) days of TRW and
the Buyer reaching agreement on a Final Transfer
Amount, TRW shall cause an amount of cash,
assets in kind or a combination thereof, as
determined by TRW and the Buyer, equal to the
Final Transfer Amount, to be transferred from
the TRW Canadian Salaried Pension Plan to the
Buyer's Canadian Salaried Pension Plan.
68
(iii) Hourly Pension Plan
(A) Effective as of the Closing Date, TRW
shall cause TRW Canada to assign and transfer to Buyer or its
subsidiary or affiliate, as applicable, its rights, obligations
and liabilities with respect to the Retirement Pension Plan for
Hourly-Paid Employees of Xxxxx Industries Canada Limited (the
"Canadian Hourly Pension Plan") and its related funding medium
(the "Canadian Hourly Fund"). Effective as of the Closing Date,
the Buyer or its subsidiary or affiliate, as applicable, shall
accept such assignment and transfer, provided that any required
approvals of the employee association or bargaining agent are
obtained. TRW shall cause TRW Canada to cause to be filed with
the applicable federal and provincial regulatory authorities, as
soon as possible after the Closing Date, such documentation as
may be required with respect to the assumption of sponsorship of
the Canadian Hourly Pension Plan and the Canadian Hourly Fund as
provided for hereunder. The Buyer agrees to do all things
required of it under applicable laws to establish that it or its
affiliate or subsidiary, as applicable, is the successor sponsor
under the terms of the Canadian Hourly Pension Plan and the
Canadian Hourly Fund as provided hereunder.
(B) TRW shall cause TRW Canada to be
responsible for satisfying any and all governmental reporting
and/or disclosure requirements applicable to the Canadian Hourly
Pension Plan and the Canadian Hourly Fund with respect to plan
years ending prior to the Closing Date and the Buyer shall be
responsible for satisfying any and all governmental reporting
and/or disclosure requirements with respect to plan years ending
on or after the Closing Date. TRW shall cause TRW Canada to
co-operate with the Buyer with respect to such reporting
requirements for the plan year in which the Closing occurs.
Prior to and following the Closing Date, TRW shall cause TRW
Canada to provide the Buyer with such books, records and other
relevant data within its control or access relating to the
Canadian Hourly Pension Plan and the Canadian Hourly Fund as the
Buyer shall reasonably request.
(C) The parties acknowledge that TRW Canada
and the Canadian Hourly Fund participate in the TRW Canada
Master Trust. The parties shall co-operate with each other to
effect the removal of the Canadian Hourly Fund and its assets
(in cash or in kind, as agreed to by the parties) from the TRW
Canada Master Trust. Without limiting the generality of the
foregoing, the removal shall occur on a fair market value basis,
determined as of the date immediately preceding the date of
removal.
69
(iv) TRW Aeronautical Systems Canada Ltd. maintains a retiree
medical plan (the "Canadian Retiree Medical Plan"), providing medical
and life insurance benefits to retirees and their eligible
beneficiaries. At the Closing, Buyer shall assume all of TRW
Aeronautical Systems Canada Ltd.'s obligations and liabilities under the
Canadian Retiree Medical Plan with respect to the Canadian Transferred
Employees and TRW shall retain liabilities for all other current or
former Canadian employees of the Business and will provide retired
employees of the Business with retiree medical plan benefit coverage
under Canadian Retiree Medical Plan if such employees has met the
requirements for such coverage.
(g) Subsequent Terminations or Layoffs. Buyer will be solely
responsible for all costs related to the termination or layoff of a Transferred
Employee by it after the Closing Date, including but not limited to severance
expenses, penalties, damages and/or attorneys' fees related to Buyer's failure
to comply with the WARN Act or any other applicable law ("Lay-off Payments").
Buyer will give all Transferred Employees full credit for such employee's
services with TRW or any Subsidiary thereof prior to the Closing Date. TRW shall
be solely responsible for all Lay-off Payments with respect to terminations of
employment of any Affected Employees before or after Closing and arising from
any notice of termination given by TRW or any of its subsidiaries of any
Affected Employee prior to the Closing Date. TRW shall be solely responsible for
all severance payments (and similar payments) to Affected Employees incurred as
a result of the transactions contemplated by this Agreement which are not caused
(i) by Buyer's failure to offer employment to or accept transfers of employment
of Affected Employees consistent with Section 6.8(b) or (ii) by a termination of
employment following the Closing Date. TRW will also be responsible for
complying with all obligations and liabilities arising under the WARN Act and
any comparable state law with respect to any actions taken by TRW prior to or on
the Closing Date.
(h) Personal Employee Contracts.
(i) TRW will be solely responsible for all obligations arising
under all plans, programs, practices or agreements with respect to
Affected Employees, if any, providing financial incentives to such
employees relating to their services to TRW during the process of
selling the Business.
(ii) With respect to any expatriate/inpatriate Transferred
Employees, Buyer or a Subsidiary of Buyer will assume as of the Closing
the agreements between TRW or any of the Asset Selling Subsidiaries and
such Transferred Employees listed on Schedule 6.8(h) through the terms
thereof, subject to the ability to modify or amend according to the
terms thereof.
(i) Payroll Obligations. TRW shall pay each Transferred Employee who
is a participant in any cash incentive plan of TRW or the Asset Selling
Subsidiaries a
70
bonus for the plan year in which the Closing Date occurs equal to a pro rated
portion of the full bonus amount that would have otherwise been paid for such
year to such Transferred Employee pursuant to the terms of such plans as in
effect immediately prior to the Closing Date. Such bonus shall be paid based
upon the bonus performance for the full year and shall be pro rated based upon
the number of days the Transferred Employee is employed by TRW or the Asset
Selling Subsidiary for the plan year in which the Closing Date occurs, and shall
be paid at the time bonuses for such plan year are paid.
(j) Vacation. As of the Closing, Buyer will assume all obligations of
TRW, the Aerospace Affiliates and the Asset Selling Subsidiaries to Transferred
Employees for any accrued vacation entitlement and vacation pay entitlement
solely to the extent such liability is properly reflected on the Closing Balance
Sheet. TRW, the Aerospace Affiliates and the Asset Selling Subsidiaries will
have no obligation to make any payment to Transferred Employees after the
Closing with respect to any such accrued vacation entitlement and vacation pay
entitlement to the extent such liability is properly reflected on the Closing
Balance Sheet. Buyer will give the Transferred Employees full credit for their
respective service with TRW and the Asset Selling Subsidiaries prior to the
Closing Date for purposes of entitlement and accrual of vacation and vacation
pay from and after the Closing Date (to the extent Buyer gives credit to its
similarly situated employees for such purposes).
(k) Severance. From the Closing Date until the first anniversary
thereof, Buyer will provide all Transferred Employees with a severance policy
comparable in the aggregate to that provided by TRW, and the Asset Selling
Subsidiaries, respectively, immediately prior to the Closing Date and listed in
Schedule 6.8(k) and, for all purposes with respect to such severance policies,
will provide each of the Transferred Employees credit for past service with TRW
and its Subsidiaries and Affiliates to the extent such service was credited
under severance plans of TRW, or the Asset Selling Subsidiaries. From the
Closing Date until the first anniversary thereof, Buyer will cause the Aerospace
Subsidiaries and will use its reasonable best efforts to cause the Aerospace
Affiliates to maintain the severance policies in place as of the date of this
Agreement with respect to the Affected Employees, or severance policies that are
comparable in the aggregate to such severance policies and for purposes of
Section 2.4 such severance obligations are deemed assumed by Buyer.
(l) Aerospace Subsidiary and Aerospace Affiliate Employees. With
respect to employees of the Aerospace Subsidiaries and Aerospace Affiliates,
Buyer shall, or shall cause the Aerospace Subsidiaries and Aerospace Affiliates
that will be controlled by Buyer (and shall use reasonable efforts to cause the
Aerospace Affiliates not controlled directly or indirectly by Buyer) to, (a)
honor all terms and conditions of employment defined in individual contracts and
in applicable collective bargaining agreements through the respective expiration
or other termination of such agreements to the extent required by the labor laws
and regulations of the applicable country, and (b) assume the
expatriate/inpatriate agreements between TRW or any of its Subsidiaries or
Affiliates, on the one hand, and any Aerospace Employees, on the other hand.
71
(m) Transition Services. TRW and the Asset Selling Subsidiaries shall
reasonably cooperate with Buyer to implement this Section 6.8, including, but
not limited to, allowing Buyer access to the Affected Employees for interviews
on a mutually convenient basis prior to the Closing Date, as well as access to
their personnel records and other related information, as reasonably requested
by Buyer. TRW and the Asset Selling Subsidiaries agree to provide to Buyer
administrative payroll and benefits services during a transition period after
the Closing Date on a fully reimbursed basis pursuant to a transition services
agreement, the terms of which shall be mutually agreed upon by TRW and Buyer,
for the purpose of providing continuous benefits coverage to the Transferred
Employees.
(n) Alternate Procedure. TRW and the Asset Selling Subsidiaries agree
that, pursuant to the "Alternate Procedure" (provided in Section 5 of Revenue
Procedure 96-60, 1996-2 C.B. 399), with respect to filing and furnishing IRS
Forms W-2, W-3, W-4, W-5, and 941, (i) TRW and the Asset Selling Subsidiaries,
as applicable, shall report on a "predecessor-successor" basis (as set forth
therein), (ii) TRW and the Asset Selling Subsidiaries, as applicable, shall be
relieved from furnishing Forms W-2 to any of the Transferred Employees, and
(iii) Buyer shall assume the obligations of TRW and its Affiliates, as
applicable, to furnish such Forms W-2 to any such Transferred Employees for the
year in which the Closing occurs; provided that, in each case TRW and the Asset
Selling Subsidiaries shall cooperate with Buyer in such transition procedures by
supplying Buyer with all relevant wage, withholding and other relevant
information in respect of periods prior to the Closing Date on a timely basis.
(o) Australian Employees. The provisions of this Section 6.8(o) apply
only to Australia-based Transferred Employees of TRW or any Asset Selling
Subsidiary, ("Australian Transferred Employees").
(i) Any offer of employment to an Australian based Affected
Employee shall be conditional on Closing and shall also require the
Australian Transferred Employee to resign from employment with TRW or
the Asset Selling Subsidiary if the Australian Transferred Employee
accepts employment with Buyer. The offer must be in the form as agreed
between Buyer and TRW and shall be made by Buyer at least fifteen
Business Days prior to the Closing Date. Buyer and TRW shall use
reasonable endeavors to ensure that each Australian Transferred Employee
accepts the offer.
(ii) On Closing, TRW shall (A) pay each Australian Transferred
Employee his accrued entitlement to annual leave and long service leave,
and (B) provide Buyer with documentation concerning all entitlements to
which each Australian Transferred Employee is entitled as at the Closing
Date, including accrued sick leave, annual leave and long service leave
together with evidence of payment of the amounts referred to in clause
(A) above.
72
(iii) Buyer shall, with respect to all existing benefit plans as
listed in Section 4.13 of the TRW Disclosure Letter in which each
Australian Transferred Employee is eligible to participate waive all
limitations relating to pre-existing conditions, exclusions or waiting
periods applicable to the Australian Transferred Employees.
(iv) From the Closing Date, Buyer shall (A) treat each
Australian Transferred Employee as if the Australian Transferred
Employee had been continuously employed by Buyer from the time of
commencement of employment with TRW or with any predecessor of TRW in
any part of the Business, and (B) deal with all entitlements (including
bonus payments or incentive schemes) to which each Australian
Transferred Employee is entitled as if each entitlement had been accrued
by the Australian Transferred Employee while in the employment of Buyer
in each case, except to the extent doing so would result in a
duplication of benefits for the same period of service; provided, that
TRW will reimburse Buyer as soon as practicable following calculation of
amounts for any bonus amounts TRW would have otherwise been required to
pay the Australian Transferred Employees pursuant to Section 6.8(i) in
the absence of this Section 6.8(o)(iv).
(v) Superannuation.
(A) For purposes of this Section 6.8(o)(v), the following
definitions will apply:
"Funds" shall mean the Xxxxx (Australia) Staff Superannuation
Fund, a subplan of the Mercer Master Retirement Trust, the Mercer
Retirement Fund, and the AMP SuperLeader Fund.
"SGA" means the Superannuation Guarantee (Administration) Act 1992
(Cth).
"Superannuation" shall mean any fund, scheme, benefit or
contribution and shall include any pension, retirement, provident
or similar fund, scheme, benefit or contribution.
"Superannuation Commitment" means every amount: (x) needed to
satisfy any actual or contingent liability, including under the
governing rules of a superannuation fund, a contract of
employment, an industrial instrument such as an award or
agreement, or any law for any superannuation contribution; (y)
needed to satisfy any moral obligation to pay superannuation
contributions or benefits in accordance with the same practices,
standards and procedures that applied before the date concerned;
or (z) needed so that on the date concerned, the employer is free
of actual and contingent liability (making the assumption that the
73
superannuation guarantee charge accrues from day to day during
each contribution period) for superannuation guarantee charge
under the SGA for any contribution period or part period under the
SGA up to that date.
"Tax Act" means the Income Tax Assessment Xxx 0000 and the Income
Tax Assessment Xxx 0000, jointly, as applicable.
(B) To the extent permitted by applicable law and by the
trustee of the Funds, TRW and Buyer shall each do what is
reasonably needed so that with effect from the Closing Date: (x)
TRW shall cease to contribute to, and participate in, the Fund as
employer in relation to each Australian Transferred Employee who
is a member of the Funds; and (y) Buyer shall contribute to, and
participate in, the Funds in place of TRW as employer in relation
to each Australian Transferred Employee on terms no less favorable
to those on which TRW did immediately prior to the date hereof
until at least the first anniversary of the Closing Date.
(C) Prior to and following the Closing, TRW shall give and
do all that is reasonably needed on its part to ensure that the
trustee of the Funds gives Buyer all records and information
reasonably needed, including information concerning each
Australian Affected Employee and such Australian Affected
Employee's participation in the Funds, such that Buyer can
contribute to and participate in the Funds in respect of each
Australian Affected Employee and assume responsibility for
superannuation for each Australian Affected Employee.
(D) TRW shall pay to the Funds on or before Closing the
full amount of the TRW's Superannuation Commitment in respect of
every Australian Affected Employee for any period up to the
Closing Date.
(E) TRW shall not, without the prior written consent of
Buyer, do anything or omit to do anything that would, either
directly or indirectly: (x) alter the method for calculating the
benefits payable by the Funds in respect of any Australian
Transferred Employee; (y) increase the obligations of TRW as
employer of any Australian Transferred Employee in relation to the
Funds or contributions to it; or (z) increase from the present
Superannuation Commitment of TRW, the Superannuation Commitment of
Buyer after Closing for an Australian Transferred Employee or the
Australian Affected Employee's dependents.
74
(p) Singapore Transferred Employees. The provisions of this
Section 6.8(p) apply only to Singapore-based Transferred Employees of TRW
or any Asset Selling Subsidiary, ("Singapore Transferred Employees").
(i) With respect to Singapore Transferred Employees who are
employed by a TRW or an Asset Selling Subsidiary and are subject
to the regulations of the Singapore Employment Act Cap.91 Revised
Edition 1996 (the "Employment Act", and such employees
collectively, the "EA Affected Employees"), the parties
acknowledge and agree that the EA Affected Employees, and the
terms and conditions of their employment, shall be transferred to
Buyer in compliance with the Employment Act and that the
individual contracts of employment shall have and shall be deemed
to have effect after the Closing as if originally made between
Buyer and the EA Affected Employees.
(ii) To the extent required by applicable laws and
regulations and subject to any right of an Affected Employee to
consent, Buyer shall continue to observe and comply with all terms
and conditions of employment defined in individual contracts
applicable to the Singapore Transferred Employees as of the
Closing through the expiration or other termination of the
respective individual contracts in conformity with the applicable
labor laws and regulations.
(q) German Transferred Employees. The provisions of this Section
6.8(q) apply only to Germany-based Transferred Employees of TRW or any
Asset Selling Subsidiary, ("German Transferred Employees"). As of the
Closing, TRW or the applicable Asset Selling Subsidiary shall assign and
Buyer shall assume all employment contracts of Pierburg Luftahrtgerate
Union GmbH ("PLU Gmb") with German Transferred Employees, subject to the
right of any individual to consent to the assumption of such contracts,
with all rights and claims as well as all obligations and liabilities
resulting therefrom, including, without limitation, the pension liability
with respect to the German Transferred Employees; provided, however, that
this sentence shall not be read as requiring Buyer to assume any Plans
other than such individual employment contracts. PLU Gmb and Buyer
acknowledge that these employment relationships, with rights and
obligations including pension obligations will pass to Buyer pursuant to
Section 613a Civil Code of Germany as a result of the purchase of the
sold Business. TRW shall provide Buyer with each form of contract with
such employees no later than thirty Business Days after the Closing
together with a statement of the number of employees subject to such form
agreement. Without limiting the forgoing, Buyer will assume all of PLU
Gmb's obligations and liabilities under the pension plan maintained by
PLU Gmb (the "German Pension Plan") for the German Transferred Employees
as of the Closing, as referenced in, and pursuant to assumptions
consistent with those used for, the Towers Report, but in any event to
the extent required by law. As soon as practicable following the Closing,
TRW will transfer all of the assets held with respect to the German
Pension Plan in respect of the German Transferred Employees' accrued
liabilities to Buyer.
75
(r) French Transferred Employees. The provisions of this Section
6.8(r) apply only to France-based Transferred Employees of TRW or any
Asset Selling Subsidiary, ("French Transferred Employees"). As of the
Closing, TRW or the applicable Asset Selling Subsidiary shall assign and
Buyer shall assume all employment contracts of the relevant French Asset
Selling Subsidiary with French Transferred Employees, subject to the
right of any individual to consent to the assumption of such contracts,
with all rights and claims as well as all obligations and liabilities
resulting therefrom, including, without limitation, the pension liability
with respect to the French Transferred Employees; provided, however, that
this sentence shall not be read as requiring Buyer to assume any Plans
other than such individual employment contracts. TRW and Buyer
acknowledge that these employment relationships, with rights and
obligations including pension obligations with respect to French Affected
Employees will pass to Buyer (pursuant to Article L. 122-12 of the French
Labour Code) as a result of the purchase of the sold Business. TRW shall
provide Buyer with each form of contract with such employees no later
than thirty Business Days after the Closing together with a statement of
the number of employees subject to such form agreement. Without limiting
the forgoing, Buyer will assume all of TRW's and the Asset Selling
Subsidiary's obligations and liabilities under any pension plans,
including the pension plan for executives (the "French Pension Plan"),
maintained by TRW or any of its Subsidiaries for the French Transferred
Employees and those already entitled to and receiving benefits under such
pension plans as of the Closing, as referenced in, and pursuant to
assumptions consistent with those used for, the Towers Report, but in any
event to the extent required by law. As soon as practicable following the
Closing, TRW will transfer all of the assets held with respect to the
French Pension Plan in respect of the French Transferred Employees'
accrued liabilities to Buyer.
(s) US Salaried Asset Transfer
(i) As soon as practicable following the Closing Date,
Buyer will:
(A) establish a defined benefit pension plan designed to
be a qualified plan under section 401(a) of the Code; or
(B) designate an existing defined benefit pension plan
that is so qualified, (such plan, in either case, the "Buyer U.S.
Pension Plan") to provide benefits to Transferred Employees who
were participants in the TRW Salaried Pension Plan as of the
Closing Date and to accept the transfer of assets and assumption
of liabilities from the TRW Salaried Pension Plan as provided for
in Section 6.8(s)(ii).
(ii) Subject to Section 6.8(s)(vi), as soon as practicable
following the Closing, TRW will cause the trustees of the TRW Salaried
Pension Plan to transfer to the Buyer U.S. Pension Plan an amount in
cash, to the extent reasonably practicable, as may be determined by
the trustees
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of the TRW Salaried Pension Plan (or in kind, to the extent requested
by Buyer) calculated in accordance with the following formula:
W = X minus Z, both adjusted for Y
where:
W = the amount to be transferred to the Buyer U.S.
Pension Plan under this Section 6.8(s)(ii);
X = the assets in the TRW Salaried Pension Plan
equal to the "Projected Benefit Obligations"
(calculated in accordance with FAS 87) of the
Transferred Employees as of the Closing Date (the
"Measurement Date") determined on the basis of the
actuarial and other assumptions and methods used
by the TRW Salaried Pension Plan, subject to
Section 6.8(s)(iii), but in no event less than the
amount required to be transferred under section
414(l) of the Code (using ERISA section 4044 safe
harbor assumptions to the extent applicable and
where not applicable relying on the assumptions
used in the most recent expense valuation
calculated in accordance with FAS 87 prior to the
date of the Agreement);
Y = the sum of:
the time-weighted rate of return (positive
or negative), net of expenses, on the assets
in the TRW Salaried Pension Plan from the
Measurement Date and ending on the last day
of the month immediately preceding the date
of transfer under this Section 6.8(s)(ii)
applied solely to X and Z; and
for the month during which the date of
transfer occurs, interest at the total rate
of return on a 90-day Treasury Xxxx as
determined by Xxxxxxx Xxxxx for the last day
of the month preceding the month of
transfer; and
Z = any benefits paid by the TRW Salaried Pension
Plan to such employees after the Closing Date and
prior to the date of such transfer under this
Section 6.8(s)(ii) to the Transferred Employees.
(iii) All determinations of the amount of assets of the
TRW Salaried Pension Plan to be transferred under Section 6.8(s)(ii)
will be made by the actuaries for the TRW Salaried Pension Plan. Buyer
may retain its designated actuary to perform the determinations under
Section
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6.8(s)(ii). If there is a dispute between those actuaries, then TRW and
Buyer will agree on a third actuary to resolve the dispute. The
independent actuary shall act on the following bases, as applicable:
(A) the independent actuary shall not act as an
arbitrator;
(B) TRW and Buyer shall each provide the
independent actuary with all information relating to the
dispute which the independent actuary reasonably requires; and
(C) any findings or reports prepared by the
independent actuary will be provided to both TRW and Buyer at
the same time.
(iv) The decision of the independent actuary is, in the
absence of fraud or manifest error, final and binding on the parties.
TRW and Buyer shall each pay one half of the independent actuary's
costs.
(v) In connection with matters addressed in this Section
6.8(s), TRW and Buyer will co-operate in:
(A) the filing of any IRS Forms 5310-A required
with respect to the transfer of assets and liabilities
described in this Section 6.8(s);
(B) making all other filings required under the
Code or ERISA and any applicable securities laws; implementing
all appropriate communications with participants;
(C) transferring appropriate records;
(D) taking all such other actions as may be
necessary and appropriate to implement the provisions of this
Section 6.8(s) in a timely manner; and
(E) transferring all information to enable the
enrolled actuaries for the TRW Salaried Pension Plan and Buyer
the Salaried Pension Plan to issue the certifications required
by section 6058(b) of the Code (Form 5310-A).
(vi) The transfer referred to in Section 6.8(s)(ii) will
not take place until as soon as practicable after the later of:
(A) the expiration of the 30-day period following
the filing of any required notices with the IRS pursuant to
section 6058(b) of the Code;
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(B) the date TRW has delivered to Buyer (with
respect to the TRW Salaried Pension Plan) a copy of the most
recent determination letter from the IRS to the effect that
the TRW Salaried Pension Plan is qualified under section
401(a) of the Code, together with documentation (in a form and
substance satisfactory to Buyer acting reasonably) evidencing
the due adoption of any amendments to the TRW Salaried Pension
Plan required by the IRS as a condition to such qualification
and a certificate from TRW that no events have occurred that
would adversely affect the continued validity of such
determination letters (apart from the enactment of any United
States' federal law for which the remedial amendment period
under section 401(b) of the Code has not yet expired); and
(C) the date Buyer has delivered to TRW a copy of
the most recent determination letter from the IRS to the
effect that the Buyer U.S. Pension Plan is qualified under
section 401(a) of the Code, together with documentation (in a
form and substance satisfactory to TRW acting reasonably)
evidencing the due adoption of any amendments to the Buyer
U.S. Pension Plan required by the IRS as a condition to such
qualification and a certificate from Buyer that no events have
occurred that would adversely affect the continued validity of
such letters (apart from the enactment of any United States'
federal law for which the remedial amendment period under
section 401(b) of the Code has not yet expired).
(vii) The parties agree to pursue the receipt of the
items described in this Section 6.8(s) as soon as reasonably
practicable following the Closing Date. For each Buyer U.S. Pension
Plan which is newly created (if any), Buyer will provide TRW with
written evidence (in form and substance satisfactory to TRW acting
reasonably) of:
(A) the adoption of the Buyer U.S. Pension Plan by
Buyer; and
(B) the creation of the trust under the Buyer U.S.
Pension Plan.
(C) Notwithstanding anything in this Agreement to
the contrary, the Transferred Employees who became
participants in the Buyer U.S. Pension Plan will be given
service credit for such plan for benefit accrual purposes
equal to their service credit under the TRW Salaried Pension
Plan.
(t) Cooperation. TRW and Buyer will cooperate to effectuate
the provisions of this Section 6.8, including without limitation,
informing and consulting
79
with trade unions, works councils, and employee representatives prior
to the Closing Date in accordance with, and at such time or times as
shall be required under, applicable law. TRW and Buyer shall cooperate
and consult with one another as necessary as to the content of such
information and consultation.
(u) Pension Shortfall
(i) For purposes of this Section 6.8(u), (a) "Buyer PBO" shall be
calculated pursuant to the provisions of Schedule 6.8(u) to
the Agreement, (b) "TRW PBO" shall have the meaning set forth
in the Actuary's Letter that is part of Schedule 6.8(e)(ii)
(the "Actuary's Letter"), (c) the "Transfer Amount" shall have
the meaning set forth in the Actuary's Letter, (d) "unadjusted
Transfer Amount" shall have the meaning set forth in the
Actuary's Letter, (e) "Full Funding Amount" is the amount by
which the Buyer PBO exceeds the TRW PBO (but in no event
greater than $35 million), (f) the "Pension Surplus" means the
excess, if any, of the unadjusted Transfer Amount over the TRW
PBO, (g) the "Pension Deficit" means the excess of E17.1
million (or E19.4 million, if the assets applicable to French
and German pension liabilities, denominated in Euros as of
January 1, 2002, are not transferred by TRW to Buyer) over the
German pension liability, denominated in Euros as of January
1, 2002, retained by TRW (which is a component of the German
pension liability described in the Towers Xxxxxx Summary
Report provided in Annex 1 to Section 4.13 of the TRW
Disclosure Letter (the "Towers Report") and is determined
under the same assumptions set forth in the Towers Report), if
any, with respect to former TRW employees converted into US
dollars at the spot $/E exchange rate two days before the
payment thereof in accordance with paragraphs (iii), (iv) or
(vi) below, plus $6.2 million, (h) "Members" shall have the
meaning set forth in Schedule 6.8(e)(ii), (i) "Consenting
Members" shall have the meaning set forth in Schedule
6.8(e)(ii), and (j) "Currency Averaged Pension Deficit" means
the excess of E17.1 million (or E19.4 million, if the assets
applicable to French and German pension liabilities,
denominated in Euros as of January 1, 2002, are not
transferred by TRW to Buyer) over the German pension
liability, denominated in Euros as of January 1, 2002,
retained by TRW, if any, with respect to former TRW employees
converted into US dollars at the average of the spot $/E
exchange rates on (i) January 1, 2002 and (ii) two days before
payment, plus $6.2 million. In the event of any conflict
between the provisions of this Section 6.8(u) and Schedule
6.8(e)(ii), the provisions of this Section 6.8(u) shall
control. For the avoidance of doubt, (x) once a Pension
Deficit is paid, the amount deemed paid for purposes of this
Agreement shall not vary when referred to in other
calculations in this Section 6.8(u) and (y) the amount of the
Buyer PBO, TRW PBO, Transfer Amount, unadjusted Transfer
Amount, Full Funding Amount and Pension Surplus each shall be
deemed to be in pounds sterling for purposes of this
Agreement.
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(ii) The parties hereby agree to use their reasonable best efforts
to effectuate the calculation of the unadjusted Transfer
Amount and the transfer of the Transfer Amount pursuant to
Schedule 6.8(e)(ii), including without limitation soliciting
consents from Members to transfer their accrued benefits under
the TRW Pension Scheme to a Buyer UK Pension Scheme in the
event such Members become UK Transferred Employees (the
"Transfer Consents"), and instructing their respective
actuaries to perform the actuarial services necessary to
calculate the unadjusted Transfer Amount and the TRW PBO and
the Buyer PBO as promptly as practicable. Buyer shall solicit
Transfer Consents as soon as practicable following the
execution of this Agreement, and TRW shall cooperate fully in
assisting Buyer to solicit such consents. The period during
which Members may provide Transfer Consents shall be four
weeks following the later of the Closing Date and the date of
commencement of the solicitation of Transfer Consents and may
be extended up to an additional six weeks at the discretion of
Buyer (the "Transfer Consent Period"), and the end of such
four-week or extended period shall be the end of the Transfer
Consent Period for purposes of this Section 6.8(u). Buyer
agrees to consider in good faith any request by TRW that it be
permitted to make the payments described in subsection (iii)
and (iv) below in lieu of transferring the Transfer Amount
pursuant to this Section 6.8(u)(ii).
(iii) If at the six-month anniversary of the end of the Transfer
Consent Period (or earlier = in the case of (y) below), (x)
the Transfer Amount has not been transferred or (y) the
Trustees of the TRW Pension Scheme have determined not to
permit the transfer of any portion of the Pension Surplus to a
Buyer UK Pension Scheme, TRW shall transfer the Pension
Deficit in a lump sum within five business days following the
first to occur of (a) the six-month anniversary of the end of
the Transfer Consent Period or (b) the action by the trustees
of the TRW Pension Scheme denying the transfer of the Pension
Surplus, but in no event prior to the Closing Date.
(iv) If at the nine-month anniversary of the end of the Transfer
Consent Period, (or = earlier in the case of (y) below), (x)
the Transfer Amount has not been transferred or (y) the
Trustees of the TRW Pension Scheme have determined not to
permit the transfer of any portion of the Pension Surplus to a
Buyer UK Pension Scheme, TRW shall transfer the Full Funding
Amount (or if the Full Funding Amount cannot be calculated,
$35 million (as modified below, the "Estimated Full Funding
Amount")), converted to U.S. dollars at the spot $/Pound
Sterling exchange rate on the date that is two days before
payment, to Buyer within five business days following the
first to occur of (a) the nine-month anniversary of the end of
the Transfer Consent Period or (b) the action of the trustees
of the TRW Pension Scheme denying the transfer of the Pension
Surplus, but in no event prior to three months after the end
of the Transfer Consent Period. Within five business days
following the final calculation of the Full Funding Amount,
TRW and Buyer shall, if necessary, adjust the amount
transferred as the
81
Estimated Full Funding Amount by a payment in U.S. dollars
from Buyer to TRW equal to the excess of the Estimated Full
Funding Amount over the Full Funding Amount, so that Buyer
will have actually received and retained the Full Funding
Amount in US dollars (the Full Funding Amount having been
converted to U.S. dollars at the spot $/Pound Sterling
exchange rate on the date that is two days before payment)
pursuant to this Section 6.8(u)(iv).
(v) If the Transfer Amount is transferred to the Buyer UK Pension
Scheme following the time that a cash payment is made by TRW
to Buyer pursuant to Section 6.8(u)(iii) or (iv) above and
within 48 months following the end of the Transfer Consent
Period, Buyer shall reimburse TRW for such cash payment by
paying to TRW the amount obtained by netting the payment
required by paragraph (vi) below against the refund of such
cash payment plus interest on such amount from the one-year
anniversary of the date on which TRW made the payment under
clause (iii) to the date on which Buyer makes the payment
required under this sentence at a rate equal to the daily
average one month LIBOR plus one percent (1%) during such
period. If the Transfer Amount is transferred to the Buyer UK
Pension Scheme more than 48 months following the end of the
Transfer Consent Period, Buyer shall have no obligation to
reimburse TRW for any cash payments made under this Section
6.8(u). For the avoidance of doubt, TRW shall have no
obligation to make any payment to the Buyer under this Section
6.8(u)(v).
(vi) If a transfer of the Transfer Amount is made from the TRW
Pension Scheme to the Buyer UK Pension Scheme, TRW will pay
Buyer in US dollars within five business days following such
transfer, the amount determined, if any, under clause (a) or
(b) below, as applicable:
(a) If the Pension Surplus (transferred as part of the
Transfer Amount) is less than the Full Funding Amount,
an amount in US dollars equal to the sum of (1) the
excess of (A) the Full Funding Amount over (B) the
Pension Surplus converted to US dollars at the average
of the $/Pound Sterling exchange rate at January 1, 2002
and the date that is two days before the transfer of the
Transfer Amount, plus (2) the Pension Deficit; or
(b) If the Pension Surplus (transferred as part of the
Transfer Amount) is equal to or greater than the Full
Funding Amount, an amount in US dollars equal to the (1)
the Currency Averaged Pension Deficit, less (2) the
quotient obtained by dividing (A) the excess of the
Pension Surplus over the Full Funding Amount converted
to US dollars at the average of the $/Pound Sterling
exchange rate at January 1, 2002 and the date that is
two days before the transfer of the Transfer Amount, by
(B) three.
82
For the avoidance of doubt, Buyer shall have no obligation to
make any payment to TRW under this Section 6.8(u)(vi).
(vii) The Buyer UK Pension Scheme shall be required to maintain
"ringfencing" on the use of the Pension Surplus for no more
than five years from the Closing Date, and Buyer shall be
specifically permitted to use the Pension Surplus for
Consenting Members for (a) employer contribution holidays, (b)
retirement redundancy benefits and (c) augmentations. In the
event the trustees of the TRW Pension Scheme require a
deviation from the provisions of this Section 6.8(u)(viii) in
order to effectuate a transfer of the Transfer Amount, the
parties agree that such transfer will not occur unless
expressly agreed to by Buyer and, if it would be adversely
affected, TRW.
(viii) At the Closing, TRW will pay Buyer a cash amount in US
dollars equal to $20.7 million in connection with the retiree
medical liability assumed by Buyer pursuant to Section
6.8(d)(iii)(C).
(ix) At the Closing, TRW will pay Buyer a cash amount in US dollars
equal to $300,000 in connection with the retiree medical
liability assumed by Buyer pursuant to Section 6.8(f)(iv).
The unadjusted Transfer Amount will be calculated by TRW's actuary
as provided in Schedule 6.8(e)(ii) and Buyer's actuary shall have the right to
review the TRW actuary's calculation pursuant to the terms of paragraph 4 of
Schedule 6.8(e)(ii) with disputes settled pursuant to paragraph 4 of Schedule
6.8(e)(ii). Buyer's actuary will calculate the Full Funding Amount subject to
the right of TRW's actuary to review those calculations pursuant to the same
principles as are set forth in paragraph 4 of Schedule 6.8(e)(ii), with disputes
settled pursuant to the same principles as are set forth in paragraph 8 of
Schedule 6.8(e)(ii) (such principles in paragraph 4 and 8, the "Actuarial Review
Principles"). TRW's actuary will calculate the retained German pension liability
of TRW subject to the right of Buyer's actuary to review pursuant to the
Actuarial Review Principles.
(v) Access to Affected Employees. After the Closing, Buyer will
permit TRW (and its subsidiaries and affiliates) to have access to Transferred
Employees of Buyer or the Aerospace Subsidiaries or controlled Aerospace
Affiliates whom TRW or its Subsidiaries or Affiliates may reasonably need in
order to defend or prosecute any legal or administrative action to which TRW or
any of its Subsidiaries or Affiliates is a party and which relates to the
conduct of the Business prior to the Closing. TRW or the applicable Subsidiary
or Affiliate will pay or reimburse Buyer 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 or the applicable
Subsidiary or Affiliate will compensate Buyer 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
83
performed. Buyer may deny such access to the extent it reasonably believes such
access would be disruptive to the business, other than to a de minimus extent,
or to the extent such access interferes, other than to a de minimus extent, with
the conduct of the business.
Section 6.9 Novation of Government Contracts; Hedging Contracts.
The parties will cooperate and use their reasonable best efforts to obtain, to
the extent legally required, the novation of all government contracts and
subcontracts included in the Acquired Assets. Subject to Section 2.3(a)(xiv),
the parties will cooperate and use their reasonable best efforts to obtain the
novation of each hedging Contract set forth on Schedule 2.3(a)(xiv).
Section 6.10 Tax Matters.
(a) Assistance and Cooperation. Within sixty (60) days after the
receipt of a customary package of Tax information materials from TRW, Buyer
shall provide to TRW a package of Tax information materials, including schedules
and work papers required by TRW to enable TRW to prepare and file all Tax
Returns required to be prepared and filed by it with respect to the Acquired
Assets to the extent that TRW or any of the Asset Selling Subsidiaries has
transferred the relevant books and records to Buyer in connection herewith.
Buyer shall prepare such package in good faith in a manner consistent with TRW's
past practice. After the Closing Date, each of TRW and Buyer shall (and shall
cause their respective Affiliates to), at the reasonable request of the other
party, (i) assist the other party in preparing and filing any Tax Returns,
amended Tax Returns or refund claims which such other party is responsible for
preparing and filing including Tax Returns and amended Tax Returns with respect
to the Acquired Assets, and (ii) cooperate fully with the other party in
preparing for any audits of, or disputes with any Tax Authority regarding, any
Tax Returns of TRW or its Affiliates, any of the Aerospace Subsidiaries or their
Affiliates or the Acquired Assets. Such assistance and cooperation shall include
providing the other party and, at the direction of the other party, any Tax
Authority, with copies (at the other party's expense) of relevant Tax Returns or
portions thereof, together with accompanying schedules, related work papers and
documents relating to rulings or other determinations by Tax Authorities. Each
of TRW and Buyer shall make its employees available on a basis mutually
convenient to both parties to provide explanations of any documents or
information provided hereunder to the other party and, at the direction of the
other party, any Tax Authority. In connection therewith, TRW and Buyer shall not
dispose of any Tax work papers, books or records relating to any of the
Aerospace Subsidiaries or the Acquired Assets until the later of the expiration
of the six-year period following the Closing Date or expiration of the statute
of limitations of the taxable period to which such Tax Returns and other
documents relate, without regard to extensions, except to the extent notified by
the other party in writing of such extensions for the respective Tax periods,
and thereafter shall give the other party reasonable written notice, and the
opportunity to take possession of any such items, before disposing of such
items. Any information obtained under this Section 6.10(a) shall be kept
confidential except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting an audit or other Tax
proceeding.
84
(b) Tax Indemnification.
For the purpose of this Section 6.10, "Losses" shall mean any and
all actual losses, liabilities, costs and expenses (including reasonable
attorneys' fees and costs of investigation), after giving effect to any amounts
recovered from third parties, including amounts recovered under insurance
policies, with respect to such Losses.
(i) Indemnification by TRW. Notwithstanding any other
provision of this Agreement or any Ancillary Agreement, TRW shall
indemnify Buyer, from and against and in respect of any and all Losses
incurred by Buyer, which may be imposed on, sustained, incurred or
suffered by or assessed against Buyer, directly or indirectly, to the
extent relating to or arising out of:
(A) any liability for Taxes imposed upon or relating
to TRW, the TRW Selling Shareholders or the Asset Selling
Subsidiaries for any period (whether before or after the Closing
Date);
(B) any liability for Taxes imposed on each of the
Aerospace Affiliates, the Aerospace Subsidiaries, and the Acquired
Assets for any Pre-Closing Tax Period;
(C) any liability, or increase in a liability, for
Taxes imposed on Buyer or any of its Affiliates (including, after
the Closing Date, the TRW-controlled Aerospace Affiliates) as a
result of any failure by TRW to perform or comply with its
obligations under this Agreement;
(D) any Taxes for which TRW is liable pursuant to
Section 6.6; and
(E) any liability for Restructuring Taxes (together
with the Taxes described in clauses (A) through (E), "Excluded
Taxes").
(ii) Indemnification by Buyer. Notwithstanding any other
provision of this Agreement or any Ancillary Agreement, Buyer shall
indemnify TRW from and against and in respect of any and all Losses
incurred by TRW or its Affiliates, which may be imposed on, sustained,
incurred or suffered by or assessed against TRW or its Affiliates,
directly or indirectly, to the extent relating to or arising out of:
(A) any liability for Taxes imposed upon or relating
to Buyer or Buyer's designee for any period (whether before or after
the Closing Date) for which TRW is not required to indemnify Buyer
pursuant to Section 6.10(b)(i) hereof;
85
(B) any liability for Taxes imposed on any of the
Aerospace Affiliates and any liability for Taxes incurred in
connection with the Business, for Post-Closing Tax Periods;
(C) any liability, or increase in a liability, for
Taxes imposed on TRW or any of its Affiliates as a result of any
failure by Buyer to perform or comply with its obligations under
this Agreement; and
(D) any and all Taxes for which Buyer is liable
pursuant to Section 6.6.
(iii) Payment in full of any amount due from TRW or Buyer
under this Section 6.10(l) shall be made to the affected party in
immediately available funds at least two business days before the
date payment of the Taxes to which such payment relates is due, or,
if no Tax is payable, within fifteen days after written demand is
made for such payment.
(c) Survival of Tax Provisions. Notwithstanding any other
provision of this Agreement to the contrary, any claim to be made pursuant to
Section 6.10 hereof shall survive until thirty days after the expiration of the
applicable statutes of limitations relating to the Taxes at issue.
(d) Tax Treatment. Any payment made pursuant to this Section 6.10
will be treated as an adjustment to the Purchase Price for all Tax purposes. TRW
and Buyer agree, and agree to cause the controlled Aerospace Affiliates (and to
use reasonable best efforts to cause the Aerospace Affiliates not controlled
directly or indirectly by TRW), not to take any position inconsistent with this
Section 6.10(d) for Tax purposes in connection with their respective Federal,
state and local Tax returns and other filings, unless required to do otherwise
pursuant to a Final Determination.
(e) TRW warrants and undertakes to Buyer that all documents
forming part of the title to any asset that is the subject of the restructuring
described in Schedule 2.1 and that a UK resident company may wish to enforce or
produce in evidence are or will be duly stamped and have where appropriate been
or will be adjudicated. If this warranty is untrue, or if this undertaking is
not satisfied, with respect to any document and in the reasonable opinion of
Buyer it is necessary to procure stamping of such document, then at Buyer's
option (i) TRW shall pay to Buyer by way of liquidated damages an amount equal
to any unpaid stamp duty and any interest or penalties payable in respect
thereof or (ii) TRW shall procure the stamping of such document.
Section 6.11 Transition and Ancillary Agreements.
(a) Between the signing of this Agreement and the Closing, the
parties shall negotiate in good faith and enter into an agreement (the
"Transition Agreement") pursuant to which TRW shall, or shall cause its
Affiliates to, provide such services as requested by Buyer, which services may
be necessary to facilitate the operation of the
86
Business during the period following the Closing and shall include at a maximum
those services that are currently provided to the Business by TRW or any of its
Affiliates, including without limitation all services set forth in Section
4.24(a) of the TRW Disclosure Letter (but not those noted in Section 4.24(b) of
the TRW Disclosure Letter), and which are necessary to conduct the Business as
currently conducted. At Buyer's request, these services shall be provided (i)
during the period from the Closing Date until the first anniversary of the
Closing Date, (ii) in substantially the same manner as of the date hereof and
(iii) at a cost not to exceed the direct cost of providing such services without
taking into account any allocation of overhead. Between the signing of this
Agreement and the Closing, the parties shall negotiate in good faith such other
agreements as are reasonably necessary to consummate the transactions
contemplated by this Agreement, and such agreements together with the Transition
Agreement, the Local Transfer Agreements, the Insurance Agreement and the
license agreements referenced in Sections 6.11(a), 6.14(a), 6.14(b) and 6.20
hereof shall constitute the "Ancillary Agreements". If, and to the extent an
Affiliate of TRW is a party to any of the Ancillary Agreements, TRW will
unconditionally guarantee the performance of such Affiliate under that
agreement. If, and to the extent an Affiliate of Buyer is a party to any of the
Ancillary Agreements, Buyer will unconditionally guarantee the performance of
such Affiliate under that agreement.
(b) For those foreign jurisdictions where (i) applicable laws in
such jurisdiction require any of the parties to be a party to a Local Transfer
Agreement in order to effect the sale, assignment, transfer or delivery (as the
case may be) of Assets in such jurisdiction, or (ii) a Local Transfer Agreement
is otherwise deemed necessary or appropriate for tax or other purposes, TRW or
the applicable TRW Selling Shareholders or Asset Selling Subsidiaries. Buyer
shall negotiate in good faith to enter into a Local Transfer Agreement for each
such jurisdiction between the date hereof and the Closing Date. "Local Transfer
Agreements" shall mean the separate transfer and sale agreements to be entered
into by TRW, the applicable TRW Selling Shareholders or Asset Selling
Subsidiaries and Buyer for the transfer, assignment and sale of the Equity
Interest or the Acquired Assets, as the case may be, in such form and substance
as may be reasonably required to give effect to such transfer, assignment and
sale or the allocation of the Purchase Price in accordance with Section 2.7
under the applicable laws in effect in the jurisdiction in which the relevant
Acquired Assets are located or which governs the Equity Interest. The terms of
the Local Transfer Agreements shall be consistent with and governed by the terms
of this Agreement.
Section 6.12 Waiver of Bulk Sales Requirement. Each of the parties
hereto waives compliance with any applicable bulk sales laws, including without
limitation the Uniform Commercial Code Bulk Transfer provisions.
Section 6.13 Post-Closing Access to Records and Employees. Buyer
shall permit, to the extent permitted by law, TRW, and any of its agents,
representatives, advisors and consultants, to have reasonable access to the
employees of the Business for information relating to periods up to and
including the Closing which is reasonably requested by TRW, subject to the same
conditions and limitations as set forth in Section
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6.2(a). This Section 6.13 does not apply to Taxes or Tax Returns, which are
covered by Section 6.10(d) hereof.
Section 6.14 Intellectual Property Licenses; Related Matters.
(a) Buyer License. The parties shall enter into a license
agreement, substantially on the terms and in the form of Schedule 6.14(a),
whereby Buyer shall grant to TRW, effective as of Closing, a perpetual,
irrevocable, royalty-free, in those jurisdictions where TRW has such rights,
non-exclusive license set forth on Schedule 6.14(a) to the Licensed-Back
Intellectual Property, and to use the foregoing, to make, have made, use and
sell products and processes in the fields other than the Business.
(b) TRW License. The parties shall enter into a license agreement,
substantially on the terms and in the form of Schedule 6.14(b), whereby TRW
shall grant to Buyer, effective as of Closing, a perpetual, irrevocable,
royalty-free, in those jurisdictions where TRW has such rights, non-exclusive
license set forth on Schedule 6.14(b) to the Licensed Intellectual Property, and
to use the foregoing, to make, have made, use and sell products and processes in
the fields of the Business.
(c) Xxxxx Trademarks. The parties shall negotiate in good
faith to enter into a license agreement at Closing whereby TRW shall grant to
Buyer a perpetual royalty-free license with respect to the trademarks listed in
Schedule 6.14(c), which license shall be non-exclusive, except such license
shall be exclusive with respect to those trademarks listed on Schedule 6.14(c)
that are used as of the date hereof in the aerospace field (except for those
trademarks that are used in the design, development, manufacture or sale of (i)
engine valves, valve train components and valve train systems for aircraft
applications; (ii) occupant restraint components and systems and occupant head
and body protection components and systems for aircraft applications; (iii)
automotive components and (iv) power systems and engine systems for applications
other than aircraft).
(d) Trademark License. Notwithstanding Section 2.3(b)(iii) hereof,
Buyer and its Affiliates shall have the right to resell any and all of the
Inventories included in the Assets. Within four months of the Closing with
respect to products with a serial number or other conclusive xxxx identifying
whether TRW or the Buyer manufactured such product, and within 30 days of the
Closing, with respect to all other products and inventory, Buyer will, and will
cause its Affiliates to, institute a procedure whereby a stamp or other
indelible identifying xxxx is affixed to products sold by the Business in order
to distinguish such products from products sold by the Business prior to the
Closing. Following the Closing, Buyer shall use the names, forms, marketing
materials, signage and similar items of any TRW Entity included in the Acquired
Assets only to the extent that the use thereof cannot be commercially reasonably
avoided in the conduct of the Business following the Closing and shall in any
event cease all such uses, for any purpose whatsoever, not more than four months
following the Closing.
(e) Effective as of the Closing, TRW shall grant to Buyer a
limited, royalty-free license to use the Domain Names listed on Schedule 6.14(e)
attached hereto
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solely in connection with the Business for a period of three (3) months from the
date of Closing. Buyer shall cease all uses, for any purpose whatsoever no more
than three months following the Closing.
Section 6.15 Non-Competition Agreement. During the period
beginning on the Closing Date and ending on the third anniversary thereof, none
of TRW nor any of its Subsidiaries shall directly or indirectly engage in any
business or activity in any geographic area in which the Business operates which
is in competition with the Business, as conducted on the Closing Date; provided,
however, that neither TRW nor any of its Affiliates shall be prevented from:
(i) acquiring as an investment in the ordinary course of
business (including investments by any trust of any of its employee
benefit plans) any securities required to be registered under the
Securities Exchange Act of 1934, as amended, of any Person to the extent
that such acquisitions do not result in TRW or any of its Affiliates
owning in the aggregate 5% or more of any class of such securities;
(ii) acquiring (through merger, stock purchase or sale of
all or substantially all of the assets or otherwise) of ownership of or
any equity interest in any Person, provided that the annual revenues of
such Person from any business that competes with the Business are not more
than 10% of such Person's total annual revenues (based on the most recent
full fiscal year revenues of such Person); or
(iii) engaging and continuing to engage in any business or
activities in which TRW or any of its Subsidiaries shall be engaged
immediately after the Closing, including:
(A) the design, development, manufacture and sale of
missile and spacecraft products;
(B) the design, development, manufacture and sale of
engine valves and valve train components and valve train systems for
aircraft applications;
(C) the design, development, manufacture and sale of
occupant restraint components and systems and occupant head and body
protection components and systems for aircraft applications;
(D) the design, development, manufacture and sale of
avionics;
(E) the design, development, manufacture and sale of
automotive components;
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(F) the design, development, manufacture and sale of
power systems and engine systems for applications other than on
aircraft;
(G) the design, development, provision and sale of
software, information consulting and related services;
(H) integration of products into systems (e.g. UAVs
and other aeronautical and space platforms); and
(I) purchasing aeronautical systems products from
third parties and incorporating such products into other TRW
products and selling such products;
Nothing in this Agreement shall restrict the activities of any Person or any of
its Affiliates who engages in a business combination transaction resulting in
the acquisition (by purchase or otherwise) of all or substantially all of the
capital stock or assets of TRW; provided that nothing in this Section 6.15 shall
be construed to allow TRW or any of its subsidiaries to directly or indirectly
engage in any business or activity otherwise prohibited by this Section 6.15 (it
being understood that if TRW is merged with an unaffiliated third party, the
resulting merged company will not be subject to the terms of this Section 6.15,
except that the assets of the resulting merged company that were the assets of
TRW immediately prior to such merger, as well as all subsidiaries of such merged
company that were previously subsidiaries of TRW, shall remain bound by this
Section 6.15).
Section 6.16 No Hire and Non-Solicitation of Employees. None of
TRW, any of its Affiliates or any of their respective representatives will at
any time prior to one year from the Closing Date, directly or indirectly,
solicit the employment or services of, or hire in any capacity (whether as an
employee, consultant, independent contractor or otherwise), any Affected
Employee who is a Transferred Employee without Buyer's prior written consent.
None of Buyer, any of its Affiliates or any of their respective representatives
will at any time prior to one year from the Closing Date, directly or
indirectly, solicit the employment or services of, or hire in any capacity
(whether as an employee, consultant, independent contractor or otherwise), any
TRW Employee without TRW's prior written consent. For purposes of this Section
6.16, the term "solicit the employment or services" shall not be deemed to
include generalized searches for employees through media advertisements of
general circulation, employment firms, open job fairs or otherwise provided that
such searches are not focused or targeted on Persons employed by Buyer or any of
its Affiliates or TRW or any of its Affiliates, as the case may be. Nothing in
this Agreement shall restrict the activities of any Person or any of its
Affiliates who engages in a business combination transaction resulting in the
acquisition (by purchase or otherwise) of all or substantially all of the
capital stock or assets of TRW; provided that nothing in this Section 6.16 shall
be construed to allow TRW or any of its subsidiaries to directly or indirectly
solicit the employment of or hire any Affected Employee who is a Transferred
Employee if otherwise prohibited by this
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Section 6.16 (it being understood that if TRW is merged with an unaffiliated
third party, the resulting merged company will not be subject to the terms of
this Section 6.16, except that the portion of the resulting merged company that
was TRW immediately prior to such merger, as well as all subsidiaries of such
merged company that were previously subsidiaries of TRW, shall remain bound by
this Section 6.16).
Section 6.17 No Shop. From the date hereof until the earlier to occur
of (i) termination of this Agreement pursuant to the terms and conditions hereof
and (ii) the Closing, each TRW Participant will not (and each TRW Participant
will cause each of its employees, officers, directors, representatives and
agents not to) (a) solicit, initiate, entertain, consider, encourage or accept
the submission of any proposal or offer from any third party relating to the
acquisition (whether by merger, purchase of stock, purchase of assets or
otherwise) of all or substantially all or any significant part of the Business
or of the Assets (other than through an offer or proposal for a majority of the
shares of TRW), or (b) participate in any discussions or negotiations (and each
TRW Participant shall immediately cease any discussions or negotiations that are
ongoing) regarding, furnish any information with respect to, assist or
participate in any effort or attempt by any third party to do or seek any of the
foregoing.
Section 6.18 Certain Transactions.
(a) Buyer shall not, and shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets if the entering into of a definitive agreement relating to or the
consummation of such acquisition, merger or consolidation would reasonably be
expected to (i) impose any material delay in the obtaining of, or significantly
increase the risk of not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Entity necessary to consummate the
transactions contemplated by this Agreement or the expiration or termination of
any applicable waiting period, (ii) significantly increase the risk of any
Governmental Entity entering an order prohibiting the consummation of the
transactions contemplated by this Agreement, (iii) significantly increase the
risk of not being able to remove any such order on appeal or otherwise or (iv)
materially delay or prevent the consummation of the transactions contemplated by
this Agreement. Notwithstanding the foregoing, the restrictions set forth in
this Section 6.18 shall not apply (x) in the event a third party commences a
tender offer or exchange offer for equity securities of Buyer, which tender
offer or exchange offer, if consummated, would result in such third-party
offeror and/or its affiliates beneficially owning securities having not less
than a majority of the ordinary voting power in the election of directors
("Majority Voting Power") or (y) to any merger, consolidation or other business
combination as a result of which Buyer's stockholders own securities of the
ultimate parent of the resulting entity having less than Majority Voting Power.
(b) Prior to Closing, Buyer shall not, and shall not permit any of its
Subsidiaries to, divest or otherwise dispose of or enter into any agreement or
arrangement
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to divest or otherwise dispose of any of the assets of or equity in, or by any
other manner, the Business, except as set forth in Sections 6.3 and 6.4 hereof.
Section 6.19 Environmental Matters. (a) Each party agrees that it will
not, and agrees to use and use its reasonable best efforts to ensure that its
Affiliates do not, voluntarily or by discretionary action, accelerate the
timing, or increase the cost, of any obligations of the other party under this
Agreement, except as required by law, provided the conduct of Phase I or Phase
II environmental assessments as part of a sale of any Real Property or sale of
the Business shall not be construed as a violation of this Section 6.19;
provided, further, that this Section 6.19(a) shall not require either party to
refrain from taking any action for which it has a bona fide commercial purpose.
(b) If pursuant to Section 2.4(a)(v) hereof either party shall be
entitled to manage any proceedings relating to any Environmental Claim and any
Remediation arising therefrom, such party must conduct its actions including any
Remediation in a good workmanlike and expeditious manner, consistent with
industry standards, and use only competent and qualified professionals.
Additionally, such party must continue to perform such Remediation until the
project fully complies with applicable legal and Governmental Entity
requirements.
(c) In connection with any Remediation, the party entitled to the
management thereof shall: (i) consult with the other party in connection with
such Remediation; (ii) provide all material correspondence to and from
Government Entities and any other third parties to the other party; (iii) give
due and proper consideration to all reasonable directions of the other party and
take into account such directions in the conduct of the Remediation; (iv)
provide the other party a draft scope of any investigation prior to
implementation of any Remediation and allow the other party the opportunity to
comment on such draft scope; (v) provide the other party with all material
drafts of specifications for the scope of remedial work prior to implementation
of such work; (vi) give the other party the opportunity to make comments and
provide input on such draft scope and give due and proper consideration to such
comments; (vii) give the other party the opportunity to observe the progress of
any Remediation and provide the other party advance notice of any material
Remediation; (viii) provide the other party with the opportunity to be present
and participate in any meeting of the Governmental Entity considering the
Remediation; and (ix) provide the other party with quarterly reports on the
progress of all investigations and Remediations.
Section 6.20 Insurance Matters. (a) Between the signing of this
Agreement and the Closing, TRW and Buyer shall negotiate in good faith and enter
into the Insurance Agreement, based upon the terms and conditions set forth in
Schedule 6.20 hereto.
(b) TRW shall maintain aviation products liability insurance for the
period beginning on the Closing Date thru April 30, 2004 for claims, lawsuits or
proceedings arising out of any occurrences taking place on the Closing Date thru
April 30, 2004 and relating to a product manufactured by the Business prior to
the Closing Date. Subject to insurance market conditions and insurer agreement,
TRW shall use all
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reasonable efforts to continue an insurance program with at least the annual
limits in place as of the date of this Agreement, and TRW shall use its
reasonable best efforts to have Buyer included as an additional insured under
said insurance. TRW shall have no obligation to maintain aviation products
liability insurance for claims, lawsuits or proceedings arising out of an
occurrence taking place after April 30, 2004. Buyer agrees to fully cooperate
with TRW and its insurers in the investigation, analysis and resolution of any
aviation product liability claim that is covered by the insurance that is the
subject of this paragraph or which is covered by any previous insurance
purchased by TRW. Buyer further agrees to substantively continue the processes
and procedures relating to the investigation of incidents and the handling of
claims that currently fall within the responsibility of the Business' Aerospace
Safety Review Board (ASRB) and to provide TRW immediate notice of any occurrence
that might give rise to a claim under the insurance described hereunder. TRW
shall provide Buyer with a certificate of insurance evidencing the purchase of
insurance required pursuant to this Section 6.20(b) promptly following the
receipt of such certificate.
(c) Buyer shall maintain aviation products liability insurance for
claims, lawsuits or proceedings that relate to a product manufactured by the
Business on or after the Closing Date. Furthermore, beginning on May 1, 2004
Buyer shall maintain aviation products liability insurance for any aviation
product liability claim, lawsuit or proceeding arising out of a product of the
Business irrespective of when the product was manufactured. Subject to insurance
market conditions and insurer agreement, Buyer shall use all reasonable efforts
to continue an insurance program with at least the annual limits in place as of
the date of this Agreement, and Buyer shall use its reasonable best efforts to
have TRW included as an additional insured for a period beginning with the
Closing Date and ending not less on April 30, 2009. TRW agrees to cooperate with
Buyer and its insurers in the investigation, analysis and resolution of any
aviation product liability claim that is the subject of Buyer's aviation product
liability insurance. Buyer shall provide TRW with a certificate of insurance
evidencing the purchase of insurance required pursuant to this Section 6.20(c)
promptly following the receipt of such certificate.
Section 6.21 Communications with Customers. Buyer and TRW shall
cooperate with each other and shall use their respective reasonable best efforts
to obtain each of the third-party consents set forth in Section 4.6 of the TRW
Disclosure Letter. With respect thereto, subject to applicable law, TRW and
Buyer will (a) communicate the initial disclosure of Buyer's agreement to
acquire the Business to third parties and the form and content of such
disclosure shall be mutually agreed upon by Buyer and TRW and (b) permit the
other party to review in advance any proposed communication between it and any
third party regarding any such consent.
Section 6.22 Claim Management.
(a) Buyer agrees that it will not, and agrees to use and use its
reasonable best efforts to ensure that its Affiliates do not, voluntarily or by
discretionary action, accelerate the timing, or increase the cost, of any
obligations of TRW under this
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Agreement relating to Shared Campaign Claims or Pre-Closing Customer Contract
Claims, except as required by law.
(b) If pursuant to Section 2.4(a)(iii) or (iv) hereof Buyer shall manage
any proceedings relating to any Shared Campaign Claims or Pre-Closing Customer
Contract Claims, Buyer must conduct its actions in a good workmanlike and
expeditious manner, consistent with industry standards, and use only competent
and qualified professionals with the goal of minimizing any amounts payable
consistent with industry practice and consistent with the ordinary course of
business of the Business.
(c) In connection with management of any Shared Campaign Claims or
Pre-Closing Customer Contract Claims for which TRW shall bear sole liability
pursuant to Section 2.4 hereof, Buyer shall: (i) consult with TRW in connection
with such management; (ii) provide any material correspondence to and from the
parties seeking payment pursuant to any Shared Campaign Claims or Pre-Closing
Customer Contract Claims, that is reasonably requested by TRW; and (iii) give
due and proper consideration to all reasonable directions of TRW in the conduct
of such management. With respect to all Shared Campaign Claims and Pre-Closing
Customer Contract Claims, Buyer shall provide TRW with quarterly reports on the
progress of all settlements of Shared Campaign Claims and Pre-Closing Customer
Contract Claims.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The respective
obligation of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing of the following conditions:
(a) all authorizations, consents, registrations, notices or approvals
required by third parties (other than Governmental Antitrust Entities) and set
forth in Schedule 7.1(a) hereto shall have occurred or been obtained;
(b) any waiting period (and any extension thereto) (i) applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated and (ii) approval by the European
Commission of the transactions contemplated by this Agreement shall have been
obtained pursuant to the EU Merger Regulation;
(c) all waiting periods applicable to the transactions contemplated by
this Agreement or any Ancillary Agreement under any applicable other antitrust
or competition law shall have expired or been terminated, all filings required
by law to be made prior to Closing by TRW or Buyer with, and all consents,
approvals and authorizations required by law to be obtained prior to Closing by
TRW or by Buyer from any Governmental Antitrust Entities under any applicable
foreign antitrust or
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competition law (collectively, "Governmental Antitrust Consents") in order to
consummate the transactions contemplated by this Agreement shall have been made
or obtained (as the case may be), except where the failure for such waiting
periods to expire or to be terminated, to make such filings, or to obtain any
such Governmental Antitrust Consents, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect if the transactions
contemplated by this Agreement were consummated to the extent legally
permissible;
(d) no provision of any applicable law or regulation and no judgment,
injunction (preliminary or permanent), order or decree that prohibits, makes
illegal or enjoins the consummation of the transactions contemplated by this
Agreement shall be in effect (each party taking any and all steps required by
Section 6.3 and Section 6.4 of this Agreement), except where the applicable law
or regulation or judgment, injunction, order or decree is not reasonably likely
to have more than an immaterial effect on the Business if the transactions
contemplated by this Agreement were consummated to the extent legally
permissible; and
(e) the Preliminary Transfers shall have been completed in accordance
with Schedule 2.1 hereto.
Section 7.2 Conditions to Obligations of Buyer. The obligation of Buyer
to effect the transactions contemplated by this Agreement shall further be
subject to the satisfaction at or prior to the Closing of the following
conditions, which are for the benefit of Buyer only and may only be waived by
Buyer at or prior to the Closing in its sole discretion:
(a) all representations and warranties of TRW in this Agreement (without
taking into account any materiality or Material Adverse Effect qualification)
shall be true and correct, except where such failure to be so true and correct,
individually or in the aggregate, has not resulted in, and would not be
reasonably likely to result in, a Material Adverse Effect, in each case as of
the Closing Date with the same effect as though such representations and
warranties had been made at and as of such time, other than representations and
warranties that expressly speak as of a specific date or time (which shall be
true and correct, as modified in the manner described above with respect to
representations and warranties which do not speak as of a specific date or time,
only as of such time);
(b) TRW shall have performed and complied with in all material respects
all of its covenants, undertakings and agreements required by this Agreement to
be performed or complied with by it at or prior to the Closing; and
(c) TRW shall have delivered or caused to be delivered to Buyer each of
the documents specified in Schedule 3.2(a) hereof;
Section 7.3 Conditions to Obligations of TRW. The obligation of TRW to
effect the transactions contemplated by this Agreement shall be further subject
to the satisfaction at or prior to the Closing of the following conditions,
which are for the
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benefit of TRW only and may only be waived by TRW at or prior to the Closing in
its sole discretion:
(a) all representations and warranties of Buyer in this Agreement
(without taking into account any materiality or material adverse effect
qualification) shall be true and correct, except where such failure to be so
true and correct, individually or in the aggregate, has not resulted in and
would not be reasonably likely to result in, a material adverse effect on
Buyer's ability to consummate the transactions contemplated hereby, in each case
as of the Closing Date with the same effect as though such representations and
warranties had been made at and as of such time, other than representations and
warranties that speak as of a specific date or time (which shall be true and
correct, as modified in the manner described above with respect to
representations and warranties which do not speak as of a specific date or time,
only as of such time);
(b) Buyer shall have performed and complied with in all material
respects all of its respective covenants, undertakings and agreements required
by this Agreement to be performed or complied with by it at or prior to the
Closing;
(c) Buyer shall have delivered or caused to be delivered to TRW
each of the documents specified in Schedule 3.2(b) hereof.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any
time prior to the Closing by:
(a) mutual written consent of TRW and Buyer;
(b) either TRW or Buyer if the Closing shall not have occurred on
or prior to the six month anniversary of this Agreement; provided, however, that
if (i) the Closing has not occurred by such date by reason of nonsatisfaction of
any of the conditions set forth in Section 7.1(a), Section 7.1(b) or Section
7.1(c) and (ii) all other conditions set forth in Article VII have heretofore
been satisfied or waived or are then capable of being satisfied, then such date
shall automatically be extended to the date that is the nine month anniversary
of this Agreement; provided, further, that the right to terminate this Agreement
under this Section 8.1(b) shall not be available to any party whose failure to
fulfill in any material respect any obligation under this Agreement has caused
or resulted in the failure of the Closing to occur on or before such date,
whether or not such date has been so extended;
(c) TRW (i) if Buyer shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform would
render any condition to TRW's obligations under Section 7.1 or 7.3 hereof
incapable of being
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satisfied; provided, however, that if such breach or failure to perform is
curable by Buyer through the exercise of its reasonable best efforts, and for so
long as Buyer continues to exercise such reasonable best efforts, TRW may not
terminate this Agreement under this Section 8.1(c); provided, further, that the
preceding proviso shall not in any event be deemed to extend the date set forth
in Section 8.1(b), or (ii) if a condition under Section 7.1 or 7.3 hereof to
TRW's obligations hereunder has been rendered incapable of being satisfied;
(d) Buyer (i) if TRW shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform would
render any condition to Buyer's obligations under Section 7.1 or 7.2 hereof
incapable of being satisfied; provided, however, that if such breach or failure
to perform is curable by TRW through the exercise of its reasonable best
efforts, and for so long as TRW continues to exercise such reasonable best
efforts, Buyer may not terminate this Agreement under this Section 8.1(d);
provided, further, that the preceding proviso shall not in any event be deemed
to extend the date set forth in Section 8.1(b), or (ii) if a condition under
Section 7.1 or 7.2 hereof to Buyer's obligations hereunder has been rendered
incapable of being satisfied; or
(e) either TRW or Buyer if any court of competent jurisdiction or
other competent Governmental Entity shall have issued a statute, rule,
regulation, order, decree or injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such statute, rule, regulation, order, decree or injunction
or other action shall have become final and non-appealable, unless the failure
to consummate the Closing because of such action by a Governmental Entity shall
be due to the failure of the party seeking to terminate this Agreement to have
fulfilled any of its obligations under Section 6.3 or Section 6.4.
Section 8.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.1 hereof, this Agreement (except for
Section 6.2(b), Section 6.6(a), Section 8.4 and Article X) shall forthwith
become void and have no effect, without any liability on the part of any party
hereto or its Affiliates; provided, however, that nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement.
Section 8.3 Extension; Waiver. At any time prior to the Closing,
each of the parties hereto may (i) extend the time for the performance of any of
the obligations or acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto, (iii) waive compliance with any of the
agreements of the other party contained herein or (iv) waive any condition to
its obligations hereunder. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. No failure or delay in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor will
any single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege hereunder.
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ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival Periods.
(a) All representations and warranties of the parties contained in
this Agreement or any certificate or instrument delivered in connection herewith
shall survive the Closing for a period of eighteen (18) months immediately
following the date of the Closing, except that (i) the representations and
warranties contained in Section 4.16 (Environmental Matters) shall not survive
the Closing, and (ii) the representations and warranties contained in Section
4.12 (Taxes) shall survive the Closing for the period of the applicable statute
of limitations. The Closing shall not in and of itself constitute a waiver by
any party of any rights it may have with respect to any obligations of the other
parties hereunder. In the event that an Indemnified Party (as defined below)
provides written notice in accordance with Section 10.1 to the Indemnifying
Party (as defined below) within the 18 month period set forth in the first
sentence of this Section 9.1(a), and such claim shall not have been finally
resolved before the expiration of the applicable period referred to in the first
sentence of this Section 9.1(a), any representation, warranty, covenant or
agreement that is the basis for such claim shall continue to survive and shall
remain a basis for indemnity only as to such specific claim (but as to no other
claim) until such claim is finally resolved. Notwithstanding the foregoing,
there shall be no period of time within which notice of or a claim for indemnity
against TRW must be provided by Buyer with respect to those items set forth in
Section 9.2(a)(iii), (iv) or (v), or a claim for indemnity against Buyer must be
provided by TRW with respect to those items set forth in Section 9.2(b)(iii) or
(iv) hereof.
(b) This Section 9.1 shall not limit any covenant or agreement of
the parties contained in this Agreement or the Ancillary Agreements which by its
terms contemplates performance after the Closing, and shall not extend the
applicability of any covenant or agreement of the parties contained in this
Agreement or the Ancillary Agreements which by its terms solely relates to the
period between the date hereof and the Closing.
Section 9.2 Indemnification. Except for all claims related to
Taxes (which shall be governed solely by Section 6.10) and subject to the other
provisions of this Article IX, from and after the Closing:
(a) TRW shall indemnify, defend and hold harmless Buyer and its
Affiliates from and against any and all costs and expenses (including reasonable
attorney's fees), suits, proceedings, judgments, settlements, fines, losses,
claims, liabilities, deficiencies, interest, awards, penalties, demands,
assessments and damages, (excluding punitive, special, exemplary, consequential,
incidental or indirect damages unless payable to a third party and directly
attributable to actions of TRW or its Affiliates, but including losses
attributable to the loss of profits of the Business that are directly
attributable to breaches of this Agreement by TRW or its Affiliates)
(collectively, "Damages") to the extent relating to or arising out of (i) any
breach of any representation
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or warranty made by TRW in this Agreement or the Ancillary Agreements (such
Damages determined, except in the case of Section 4.7 (Financial Statements),
without regard to any materiality or Material Adverse Effect qualification),
(ii) breach of or failure to perform any covenant, agreement or undertaking,
made by or on behalf of TRW under this Agreement, required to be taken prior to
the Closing, (iii) breach of or failure to perform any covenant, agreement or
undertaking, made by or on behalf of TRW under this Agreement, required to be
taken after the Closing, (iv) any failure of TRW to comply with any applicable
bulk sales laws in connection with the transfers hereunder (unless any Damages
thereunder arise as a result of Buyer's failure to satisfy the Assumed
Liabilities); or (v) any Excluded Liability; provided, however, that Buyer will
pay over to TRW any insurance proceeds received in respect of any such Damages
to the extent such Damages shall have been paid by TRW pursuant to this Section
9.2(a) and such proceeds have not already been applied by Buyer to offset all or
any portion of such Damages.
(b) Buyer shall indemnify and hold harmless TRW and its Affiliates
from and against any Damages to the extent caused by (i) any breach of any
representation or warranty made by Buyer in this Agreement or the Ancillary
Agreements, (ii) breach of or the failure to perform any covenant, agreement or
undertaking, made by or on behalf of Buyer under this Agreement, required to be
taken prior to the Closing, (iii) breach of or failure to perform any covenant,
agreement or undertaking, made by or on behalf of Buyer under this Agreement,
required to be taken after Closing or (iv) the Assumed Liabilities; provided,
however, that TRW will pay over to Buyer any insurance proceeds received in
respect of any such Damages to the extent such Damages shall have been paid by
Buyer pursuant to this Section 9.2(b) and such proceeds have not already been
applied by TRW to offset all or any portion of such Damages.
(c) For purposes of this Agreement, the term "Indemnified Party"
shall mean any party hereto which shall incur or suffer any Damages in respect
of which indemnification may be sought pursuant to the terms of this Article IX.
For purposes of this Agreement, Damages shall be calculated after giving effect
to any related tax benefit net of any reserves on the Closing Balance Sheet and
amounts recovered from third parties, including amounts recovered under
insurance policies with respect to such Damages, net of any costs to recover
such amounts. Any Indemnified Party having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, costs, damages
and expenses from insurers of such Indemnified Party under applicable insurance
policies so as to reduce the amount of any Damages hereunder. No Indemnified
Party will, in any event, be entitled to any incidental, indirect,
consequential, special, exemplary or punitive damages resulting from or arising
out of any claim under this Section 9.2, unless payable to a third party and
directly attributable to actions of TRW or its Affiliates (it being understood
that damages attributable to the loss of profits of the Business that are
directly attributable to breaches of this Agreement by TRW or its Affiliates
shall be recoverable). Notwithstanding, anything in this Article IX, Section 2.4
shall govern all indemnification claims for any and all Environmental
Liabilities, Shared Campaign Claims, Pre-Closing Customer Contract Claims, and
Product Liability Claims, and Buyer shall not be entitled to any indemnification
claim for a breach of a representation, warranty or covenant relating to such
matters.
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Section 9.3 Claims. If an Indemnified Party intends to seek
indemnification pursuant to this Article IX with respect to third party claims,
such Indemnified Party shall promptly provide written notice to the party from
whom indemnification is being sought (the "Indemnifying Party"), in writing in
accordance with Section 10.1 hereof of such claim describing such claim in
reasonable detail including the sections of this Agreement which form the basis
for such claim; copies of all material written evidence thereof and the
estimated amount of the Damages that have been or may be sustained by an
Indemnified Party; provided that the failure to provide such notice shall not
affect the obligations of the Indemnifying Party unless it is actually
materially prejudiced thereby, subject, however, to the time periods specified
in Section 9.1 hereof. In the event that such claim involves a claim by a third
party against the Indemnified Party, the Indemnifying Party shall have twenty
days after receipt of such notice to decide whether it will undertake, conduct
and control, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and if it so decides, the Indemnified Party shall
cooperate with the Indemnifying Party in connection with the settlement or
defense of such claim; provided, however, that the Indemnified Party may
participate in such settlement or defense through counsel chosen by it;
provided, further, that the fees and expenses of such counsel shall be borne by
the Indemnified Party. Notwithstanding anything in this Section 9.3 to the
contrary, the Indemnifying Party may not, without the consent of the Indemnified
Party, settle or compromise any action or consent to the entry of any judgment
unless such settlement or compromise includes as an unconditional term thereof
the delivery by the claimant or plaintiff to the Indemnified Party of a duly
executed written release of the Indemnified Party from all liability in respect
of such action, which release shall be reasonably satisfactory in form and
substance to counsel for the Indemnified Party; provided that the Indemnifying
Party shall not effect a settlement or compromise without the prior written
consent of the Indemnified Party if such settlement or compromise contains
injunctive, equitable or other provisions that materially affect, the ongoing
business of the Indemnified Party. So long as the Indemnifying Party has agreed
to undertake, conduct and control the settlement or defense of any such claim
and is contesting any such claim in good faith, the Indemnified Party shall not
pay or settle any such claim without the consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. If the Indemnifying Party
elects not to defend the Indemnified Party against such claim or demand, whether
by not giving the Indemnified Party timely notice as provided above or
otherwise, then the Indemnified Party shall have the right to defend against
such claim or demand and the portion of any such claim or demand as to which the
defense by the Indemnified Party is unsuccessful (and the reasonable costs and
expenses pertaining to such defense) shall be a liability of the Indemnifying
Party hereunder.
Section 9.4 Limitation of Liability.
(a) In no event shall TRW be liable for indemnification pursuant
to Section 9.2(a)(i) for any claim that is less than $100,000 (the "Minimum
Claim Amount") and in no event shall TRW be liable for indemnification pursuant
to Section 9.2(a)(i) unless and until the aggregate of all such claims that
exceed the Minimum Claim Amount result in total Damages which are incurred or
suffered by Buyer that exceed five million dollars ($5,000,000) (the
"Threshold"), in which case Buyer shall be entitled to
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indemnification for only such Damages that are in excess of the threshold; and
provided, however, that the aggregate liability of TRW pursuant to Section
9.2(a)(i) shall not be in excess of an aggregate amount of twenty-five percent
(25%) of the Purchase Price (the "Cap").
(b) In no event shall Buyer be liable for indemnification pursuant
to Section 9.2(b)(i) for any claim that is less than the Minimum Claim Amount
and in no event shall Buyer be liable for indemnification pursuant to Section
9.2(b)(i) unless and until the aggregate of all such claims exceeding the
Minimum Claim Amount result in total Damages which are incurred or suffered by
TRW that exceed the Threshold, in which case TRW shall be entitled to
indemnification for only such Damages that are in excess of the threshold; and
provided, however, that the aggregate liability of Buyer pursuant to Section
9.2(b)(i) shall not be in excess of the Cap.
Section 9.5 Nature of Remedies. If the Closing shall occur, the
remedies set forth in this Article IX shall be the sole and exclusive remedies
of, and in lieu of any other remedies that may be available to, the Indemnified
Parties arising out of or relating to, whether based on contract, tort or other
claims, this Agreement and the Business or any other agreements or documents
signed or executed in relation to the transactions contemplated hereby and
thereby by the parties to this Agreement or their Affiliates, except as
otherwise expressly provided in this Agreement or such other agreements or
documents.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given (i) by personal delivery to the appropriate
address as set forth below (or at such other address for the party as shall have
been previously specified in writing to the other party), (ii) by reliable
overnight courier service (with confirmation) to the appropriate address as set
forth below (or at such other address for the party as shall have been
previously specified in writing to the other party), or (iii) by facsimile
transmission (with confirmation) to the appropriate facsimile number set forth
below (or at such other facsimile number for the party as shall have been
previously specified in writing to the other party) with follow-up copy by
reliable overnight courier service the next Business Day:
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(a) if to Buyer, to:
Xxxxxxxx Corporation
Four Coliseum Centre
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, X.X. 00000 XXX
Attention: Corporate Secretary
Telecopy: 000-000-0000
and
(b) if to TRW, to:
TRW Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 XXX
Attention: Secretary
Telecopy: 000-000-0000
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. (New York City time) and such day is a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding Business Day in the place of
receipt.
Section 10.2 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
an authorized officer of each party. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by an authorized
officer of the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
Section 10.3 Headings. The table of contents and the article,
section, paragraph and other headings contained in this Agreement are inserted
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 10.4 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same agreement.
Section 10.5 Entire Agreement. This Agreement, the Ancillary
Agreements, the TRW Disclosure Letter, the Exhibits hereto, the Schedules
hereto, and the Confidentiality Agreement constitute the entire agreement
between the parties hereto
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with respect to the subject matter hereof, and supersede and cancel all prior
agreements, negotiations, correspondence, undertakings, understandings and
communications of the parties, oral and written, with respect to the subject
matter hereof.
Section 10.6 Governing Law. THIS AGREEMENT, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY
OTHER JURISDICTION OTHER THAN THE STATE OF NEW YORK APPLICABLE HERETO.
Section 10.7 Resolution of Disputes. Except for the resolution of
matters as addressed by Sections 2.6 and 6.10 hereof (which shall be resolved in
accordance with the procedures set forth in those sections), all other disputes
arising out of or relating to this Agreement or an Ancillary Agreement or the
breach, termination or validity thereof or the parties' performance hereunder or
thereunder ("Dispute") shall be resolved as provided by this Section 10.7.
(a) Mediation.
(i) If the Dispute has not been resolved by executive
officer negotiation within thirty (30) days of the disputing party's
notice requesting negotiation, or if the parties fail to meet within
twenty (20) days from delivery of said notice, such Dispute shall be
submitted to non-binding mediation in accordance with the then-current
Model Procedure for Mediation of Business Disputes of the CPR Institute
for Dispute Resolution. The mediation shall be completed within thirty
(30) days of the time the mediator is selected. Unless otherwise agreed,
the parties will select a mediator from the CPR Panels of Distinguished
Neutrals; provided, however, that if no mediator from that list can be
mutually agreed upon, each party will submit to the CPR its own list of
acceptable mediators from the CPR Panels of Distinguished Neutrals and the
CPR shall appoint one of those listed as the mediator for the parties. The
costs of the mediation, including the mediator's fees, shall be borne
equally by the parties to the Dispute.
(ii) By agreeing to mediation, the parties do not intend to
deprive any court of its jurisdiction to issue an injunction, attachment
or other order in aid of mediation proceedings. The parties agree to
participate in good faith in the mediation to its conclusion. If the
Dispute has not been resolved by mediation within ninety (90) days of the
disputing party's notice requesting negotiation pursuant to Section
10.7(a)(i), then either party may pursue other available remedies. The
parties hereby unconditionally and irrevocably submit to the exclusive
jurisdiction of the courts of the State of New York located within the
County of New York and of the United States of America located in the
000
Xxxxxxxx Xxxxxxxx of the State of New York for the purpose of any
preliminary relief in aid of mediation or in connection with any other
action or proceeding arising out of this Agreement or any Ancillary
Agreement, and hereby waive any objection to such jurisdiction including
without limitation objections by reason of lack of personal jurisdiction,
improper venue, or inconvenient forum.
(b) Notwithstanding anything to the contrary in this
Agreement, TRW and Buyer, as parties to the Confidentiality Agreement,
acknowledge that their remedies at law for a breach or threatened breach of the
Confidentiality Agreement would be inadequate and, in recognition of this fact,
upon a breach or threatened breach of the Confidentiality Agreement, either
party to the Confidentiality Agreement, without posting any bond, and in
addition to all other remedies which may be available, shall be entitled to
immediately seek or obtain equitable relief in the form of specific performance,
a temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
Section 10.8 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION,
CLAIM, SUIT, LITIGATION OR OTHER PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.9 Assignment. This Agreement may not be assigned
by any party hereto without the written consent of the other party; provided,
however, that Buyer may assign this Agreement or any of its rights, remedies and
obligations hereunder to one or more of its wholly-owned Subsidiaries without
the consent of TRW; provided, that Buyer guarantees the performance of such
Subsidiaries and provided further, that no such assignment shall relieve Buyer
of any of its rights and obligations hereunder.
Section 10.10 Fees and Expenses. Except as otherwise provided
in Section 6.6, whether or not the transactions contemplated by this Agreement
are consummated, each party shall bear its own fees and expenses incurred in
connection with the transactions contemplated by this Agreement.
Section 10.11 Binding Nature; Third-Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors (whether by operation of law or
otherwise) and permitted assigns. Nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person or Persons any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.12 Severability. This Agreement shall be deemed
severable; the invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of this Agreement or
of any other term hereof, which shall remain in full force and effect, for so
long as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially
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adverse to any party. TRW and Buyer hereby acknowledge and agree that the
covenants set forth in Section 6.16 and Section 6.17 are reasonable in scope and
in all other respects. If it is ever held that any restriction hereunder is too
broad to permit enforcement of such restriction to its fullest extent, each
party agrees that such restriction may be enforced to the maximum extent
permitted by law, and each party hereby consents and agrees that such scope may
be judicially modified accordingly in any proceeding brought to enforce such
restriction.
Section 10.13 No Right of Setoff. Neither party hereto nor
any Affiliate thereof may deduct from, set off, holdback or otherwise reduce in
any manner whatsoever against any amounts such Persons may owe to the other
party hereto or any of its Affiliates any amounts owed by such other party or
its Affiliates to the first party or its Affiliates.
Section 10.14 Currency. All monetary amounts mentioned or
referred to herein are in United States dollars unless otherwise indicated.
Section 10.15 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 10.16 Construction.
(a) For the purposes hereof, (i) words in the singular shall
be held to include the plural and vice versa and words of one gender shall be
held to include the other genders as the context requires, (ii) the words
"hereof," "herein," and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
the TRW Disclosure Letter, the Schedules hereto and the Exhibits hereto) and not
to any particular provision of this Agreement, and article, section, paragraph,
exhibit and schedule references are to the articles, sections, paragraphs, and
exhibits and schedules of this Agreement unless otherwise specified, (iii) the
words "including" and words of similar import when used in this Agreement shall
mean "including, without limitation," unless otherwise specified, (iv) the word
"or" shall not be exclusive, (v) Buyer and TRW will be referred to herein
individually as a "party" and collectively as "parties" (except where the
context otherwise requires), (vi) the phrases "used or held for use primarily in
the Business," "primarily related to the Business" and "primarily arising from
the conduct of the Business" are to be determined in relation to the business of
TRW and its Affiliates collectively and (vii) the phrase "transactions
contemplated by this Agreement" or "transactions contemplated herein" shall
include the transactions contemplated by the Exhibits and Schedules to this
Agreement.
(b) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no
105
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
(c) Any reference to any federal, state, local or non-U.S. statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context otherwise requires.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
TRW INC.
By:
---------------------------------
Name:
Title:
XXXXXXXX CORPORATION
By:
---------------------------------
Name:
Title:
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