-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EB+mzwHRKNOPV/HUEi8ksf1vogAEXkCJ0e6YTrsJZn04cJtxIIr6HYq4ajIpObc8 6xPQxKYOobOhoj6cz1EieQ== 0000950152-96-005092.txt : 19961007 0000950152-96-005092.hdr.sgml : 19961007 ACCESSION NUMBER: 0000950152-96-005092 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960919 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961004 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRW INC CENTRAL INDEX KEY: 0000100030 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 340575430 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02384 FILM NUMBER: 96639509 BUSINESS ADDRESS: STREET 1: 1900 RICHMOND RD CITY: CLEVELAND STATE: OH ZIP: 44124 BUSINESS PHONE: 2162917000 MAIL ADDRESS: STREET 1: 1900 RICHMOND ROAD CITY: CLEVELAND STATE: OH ZIP: 44124 8-K 1 TRW 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): September 19, 1996 ------------------ TRW Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Ohio 1-2384 34-0575430 - ---------------------- ------------------------ ------------------- (State or Other (Commission File Number) (I.R.S. Employer Jurisdiction of Identification No.) Incorporation) 1900 Richmond Road, Cleveland, Ohio 44124 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (216) 291-7000 N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Change Since Last Report) 2 Item 2. Acquisition or Disposition of Assets On September 19, 1996, TRW Inc. ("TRW") sold substantially all of the businesses of its Information Systems and Services business ("IS&S Business") to Experian Corporation ("Experian), a Delaware corporation, in a transaction structured as a recapitalization, for an aggregate purchase price of approximately $1.1 billion pursuant to the Recapitalization Agreement, dated as of February 9, 1996 (the "Recapitalization Agreement), as amended, among Experian, TRW and certain TRW affiliates, including IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.) ("Holdings"), a Delaware corporation and a wholly-owned subsidiary of TRW. Experian was organized by certain investors, including Bain Capital, Inc. and certain of its affiliates (collectively, "Bain") and Thomas H. Lee Company and certain of its affiliates (collectively, "THL"). The sale of the IS&S Business was effected by a recapitalization of TRW's IS&S Business (the "Recapitalization Transactions"), pursuant to which TRW received in exchange for its Holdings' stock approximately $1.010 billion in cash and approximately 16% of the stock of Experian on fully diluted basis. Holdings was renamed Experian in connection with the Recapitalization Transactions. The aggregate consideration for the IS&S Business was determined on the basis of arm's-length negotiations by the parties. After giving effect to the Recapitalization Transactions, Bain and THL will own collectively a majority of the voting power of Experian. Prior to the consummation of the Recapitalization Transactions, TRW had no material relationship with Experian, Bain, THL or any other investor in Experian other than pursuant to the Recapitalization Agreement. After consummation of the Recapitalization Transactions, TRW will be a party, together with Bain, THL and certain other investors in Experian, to a stockholders' agreement relating to Experian. Item 7. Financial Statements and Exhibits (a) Not applicable (b) Pro forma financial information This report includes an unaudited pro forma condensed consolidated balance sheet as of June 30, 1996 and unaudited pro forma consolidated income statements for the fiscal year ended December 31, 1995 and the fiscal six months ended June 30, 1996, giving pro forma effect to the disposition described above. 3 The accompanying Pro Forma Condensed Consolidated Balance Sheet of TRW Inc. ("TRW") as of June 30, 1996 and Pro Forma Statements of Consolidated Earnings for the six months ended June 30, 1996 and for the year ended December 31, 1995 have been prepared to reflect the historical financial position and results of continuing operations adjusted to reflect the elimination of TRW's Information Systems and Services business as Pro Forma Adjustments. The results of TRW's Information Systems and Services business will be reported as discontinued operations in TRW's historical financial statements in the September 30, 1996 Quarterly Report on Form 10-Q. In the opinion of management, all adjustments necessary to present fairly such pro forma financial statements have been made. The pro forma financial information is unaudited. SUBSEQUENT EVENTS On September 19, 1996, the Company completed the sale of substantially all of its Information Systems & Services business to an investor group led by Bain Capital, Inc. and the Thomas H. Lee Company for $1.01 billion and stock of Experian Corporation, representing a continuing interest of approximately 16 percent. The proceeds from the sale will be used to fund investment opportunities in the Automotive and Space and Defense businesses and to purchase the Company's Common Stock. In addition, the sale resulted in a gain to be recognized in the third quarter which will be offset by certain charges and restructuring actions primarily in the Company's Automotive and Space and Defense businesses. The gain on sale and the certain charges and restructuring actions have not been included in the Pro Forma Adjustments. 4 TRW INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1996 In millions
Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- Assets Current assets Cash and cash equivalents $ 64 $ -- $ 64 Accounts receivable 1,558 (88) 1,470 Inventories 517 -- 517 Prepaid expenses 110 (10) 100 Deferred income taxes 113 (19) 94 - --------------------------------------------------------------------------------------- Total current assets 2,362 (117) 2,245 Property, plant and equipment - on the basis of cost 5,867 (140) 5,727 Less accumulated depreciation and amortization 3,399 (95) 3,304 - --------------------------------------------------------------------------------------- Total property, plant and equipment - net 2,468 (45) 2,423 Intangible assets Intangibles arising from acquisitions 476 (239) 237 Capitalized data files 509 (509) -- Other 91 (53) 38 - --------------------------------------------------------------------------------------- 1,076 (801) 275 Less accumulated amortization 431 (353) 78 - --------------------------------------------------------------------------------------- Total intangible assets - net 645 (448) 197 Other assets 448 (16) 432 Net assets of discontinued operations 0 444 444 - --------------------------------------------------------------------------------------- $ 5,923 $ (182) $ 5,741 ======================================================================================= Liabilities and shareholders' investment Current liabilities Short-term debt $ 239 $ -- $ 239 Accounts payable 717 (17) 700 Current portion of long-term debt 68 (1) 67 Other current liabilities 1,097 (70) 1,027 - --------------------------------------------------------------------------------------- Total current liabilities 2,121 (88) 2,033 Long-term liabilities 789 -- 789 Long-term debt 513 (2) 511 Deferred income taxes 184 (65) 119 Minority interests in subsidiaries 80 (27) 53 Capital Stock 41 -- 41 Other Capital 432 -- 432 Retained earnings 1,898 -- 1,898 Cumulative translation adjustments 48 -- 48 Treasury shares - cost in excess of par value (183) -- (183) - --------------------------------------------------------------------------------------- Total shareholders' investment 2,236 -- 2,236 - --------------------------------------------------------------------------------------- $ 5,923 $ (182) $ 5,741 =======================================================================================
5 TRW INC. AND SUBSIDIARIES PRO FORMA STATEMENT OF CONSOLIDATED EARNINGS SIX MONTHS ENDED JUNE 30, 1996 In millions except earnings per share data
Pro Forma Historical Adjustments Pro Forma ----------- ----------- --------- Sales $5,399 $ (313) $5,086 Cost of sales 4,329 (185) 4,144 - ----------------------------------------------------------------------------------------- Gross profit 1,070 (128) 942 Administrative and selling expenses 397 (67) 330 Research and development expenses 225 (20) 205 Interest expense 39 -- 39 Other expense - net 10 5 15 - ----------------------------------------------------------------------------------------- Earnings from continuing operations before income taxes 399 (46) 353 Income taxes 152 (18) 134 - ----------------------------------------------------------------------------------------- Earnings from continuing operations 247 (28) 219 Earnings from discontinued operations -- 28 28 - ----------------------------------------------------------------------------------------- Net earnings $ 247 $ -- $ 247 ========================================================================================= Per share of common stock Fully diluted Continuing operations $ 3.67 $(0.42) $ 3.25 Discontinued operations -- 0.42 0.42 - ----------------------------------------------------------------------------------------- Net earnings $ 3.67 $ -- $ 3.67 ========================================================================================= Primary Continuing operations $ 3.70 $(0.42) $ 3.28 Discontinued operations -- 0.42 0.42 - ----------------------------------------------------------------------------------------- Net earnings $ 3.70 $ -- $ 3.70 ========================================================================================= Shares used in computing per share amounts Fully diluted 67.4 Primary 66.8
6 TRW INC. AND SUBSIDIARIES PRO FORMA STATEMENT OF CONSOLIDATED EARNINGS YEAR ENDED DECEMBER 31, 1995 In millions except earnings per share data
Pro Forma Historical Adjustments Pro Forma ------------ ----------- --------- Sales $ 10,172 $ (604) $ 9,568 Cost of sales 8,190 (322) 7,868 - ------------------------------------------------------------------------------------------------------------------ Gross profit 1,982 (282) 1,700 Administrative and selling expenses 747 (151) 596 Research and development expenses 422 (45) 377 Interest expense 95 - 95 Other expense - net 10 (3) 7 - ------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations before income taxes 708 (83) 625 Income taxes 262 (32) 230 - ------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations 446 (51) 395 Earnings from discontinued operations - 51 51 - ------------------------------------------------------------------------------------------------------------------ Net earnings $ 446 $ - $ 446 ================================================================================================================== PER SHARE OF COMMON STOCK Fully diluted Continuing operations $ 6.62 $ (0.76) $ 5.86 Discontinued operations - 0.76 0.76 - ------------------------------------------------------------------------------------------------------------------ Net earnings $ 6.62 $ - $ 6.62 ================================================================================================================== Primary Continuing operations $ 6.69 $ (0.77) $ 5.92 Discontinued operations - 0.77 0.77 - ------------------------------------------------------------------------------------------------------------------ Net earnings $ 6.69 $ - $ 6.69 ================================================================================================================== Shares used in computing per share amounts Fully diluted 67.4 Primary 66.6
(c) Exhibits 2.1 Recapitalization Agreement, dated as of February 9, 1996, among IS&S Acquisition Corp., TRW Inc., TRW IS&S 7 International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). In accordance with Item 601(b)(2) of Regulation S-K, certain of the exhibits described in the Table of Contents of Exhibit 2 have not been filed. The Registrant hereby agrees to furnish supplementally copies of such exhibits to the Commission upon request. 2.2 Amendment No. 1, dated June 17, 1996, to Recapitalization Agreement, dated as of February 9, 1996, among IS&S International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). 2.3 Amendment No. 2, dated August 13, 1996, to Agreement, dated as of February 9, 1996, among IS&S International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). 2.4 Amendment No. 3, dated September 18, 1996, to Recapitalization Agreement, dated as of February 9, 1996, among IS&S International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). 99.1 Press release dated September 19, 1996, regarding the sale of TRW's IS&S Business. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRW INC. Date: October 4, 1996 By: /s/ Martin A. Coyle ------------------ --------------------------------- Martin A. Coyle Executive Vice President, General Counsel and Secretary 9 INDEX TO EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT 2.1 Recapitalization Agreement, dated as of February 9, 1996, among IS&S Acquisition Corp., and TRW Inc., TRW IS&S International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). 2.2 Amendment No. 1, dated June 17, 1996, to Recapitalization Agreement, dated as of February 9, 1996, among IS&S International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). 2.3 Amendment No. 2, dated August 13, 1996, to Recapitalization Agreement, dated as of February 9, 1996, among IS&S International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). 2.4 Amendment No. 3, dated September 18, 1996, to Recapitalization Agreement, dated as of February 9, 1996, among IS&S International, Inc., Information Systems and Services, Inc. (f/k/a TRW Environmental Management Company), TRW Hotel Company Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services, Inc.). 99.1 Press Release dated September 19, 1996 regarding the sale of TRW's IS&S Business.
EX-2.1 2 EXHIBIT 2.1 1 Exhibit 2.1 CONFIDENTIAL =============================================================================== RECAPITALIZATION AGREEMENT AMONG IS&S ACQUISITION CORP. AND TRW INC. TRW IS&S INTERNATIONAL, INC. TRW ENVIRONMENTAL MANAGEMENT COMPANY TRW HOTEL COMPANY INC. TRW MICROWAVE INC. AND TARGET MARKETING SERVICES, INC. Dated as of February 9, 1996 =============================================================================== 2
TABLE OF CONTENTS PAGE RECITALS 1 TERMS AND CONDITIONS 4 ARTICLE I - GENERAL PROVISIONS 4 1.1 Definitions 4 1.2 Other Definitions and Meanings; Interpretation 4 1.3 TRW's Knowledge 4 1.4 Parts of Disclosure Package; Disclosure of Exceptions 4 ARTICLE II - RECAPITALIZATION 5 2.1 Pre-Merger Recapitalization Transactions 5 2.2 Acquired Assets 6 2.3 Excluded Assets 8 2.4 Assumed Liabilities 9 2.5 Excluded Liabilities 10 2.6 Merger of Purchaser into Holdings 11 (a) The Merger 11 (b) The Closing 11 (c) Time, Date, and Place of Closing 11 (d) Actions at the Closing 12 (e) Effect of Merger 12 (i) General 12 (ii) Certificate of Incorporation 12 (iii) Bylaws 12 (iv) Directors and Officers 12 (v) Conversion of Holdings Shares 12 (vi) Conversion of Capital Stock of Purchaser 13 (f) Procedure for Payment 13 (g) Trademark Agreement 13 2.7 Purchase Price 13
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PAGE 2.8 Adjustment 13 (a) Determination of Adjustment 13 (b) Certain Definitions 14 (c) Closing Audit 14 (d) Review by Operating Company 15 2.9 Payment of Adjustment 15 2.10 Method of Payment of Adjustment 16 2.11 No Set Off 16 2.12 Real Estate Conveyance 16 (a) Title Insurance Commitment 16 (b) Limited Warranty Deed 16 (c) Instructions 17 (d) Confirmation 17 (e) Title Company's Fee 17 ARTICLE III - REPRESENTATIONS AND WARRANTIES 17 3.1. TRW's General Representations and Warranties 17 (a) Organization and Existence 17 (b) Power and Authority 17 (c) Authorization 17 (d) Binding Effect 18 (e) No Default 18 (f) Finders 18 (g) Representations and Warranties True and Complete 18 3.2 TRW's Representations and Warranties 18 (a) Financial Statements 18 (b) Investments 19 (c) Subsidiary Companies 19 (d) Receivables 20 (e) Real Estate 20 (f) Personal Property 21 (g) Liabilities 21 (h) Litigation 21 (i) Contracts 22 (j) Intellectual Property 22 (k) Employee Benefits 23 (l) Permits and Approvals 23
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PAGE (m) Compliance with Laws and Environmental Matters 23 (n) Taxes 24 (o) Partnership 25 (p) No Material Events 25 (q) Customers and Suppliers 26 (r) Employees 26 (s) Transactions with Affiliates 26 (t) Required Consents 27 3.3 Purchaser's Representations and Warranties 27 (a) Organization and Existence 27 (b) Power and Authority 27 (c) Authorization 27 (d) Binding Effect 27 (e) No Default 27 (f) Finders 27 (g) Representations and Warranties True and Complete 28 3.4 Disclaimer 28 3.5 Survival 28 ARTICLE IV - ACTIONS BEFORE CLOSING 29 4.1 Access to Records 29 4.2 Interim Conduct of the Business 29 4.3 Purchaser's Approval of Certain Transactions 30 4.4 Other Agreements 31 4.5 Consents to Assignment 32 4.6 Government Approvals 32 4.7 Consent Orders and Assurances of Discontinuance 33 4.8 Public Announcements 33 4.9 Exclusivity 33 4.10 Termination of Intercompany Obligations 33 4.11 Name Changes 33 ARTICLE V - CONDITIONS 34 5.1 Conditions to Purchaser's Obligations 34 5.2 Conditions to TRW's Obligations 35
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PAGE ARTICLE VI - TAX MATTERS 37 6.1 Characterization of Transaction and Reporting of Purchase Price 37 6.2 Tax Returns 38 6.3 Liability for Pre-Closing Taxes 39 6.4 Tax Audits Relating to the Business 40 6.5 Code Section 338(h)(10) Election and Code Section 197(f)(9)(B) 40 6.6 Cooperation Regarding Tax Matters 41 6.7 Tax Sharing Agreements 41 6.8 Payment of Transfer Taxes and Other Charges 41 6.9 Survival of Obligations, Etc. 42 6.10 Other 42 ARTICLE VII - ACTIONS AFTER CLOSING 42 7.1 Further Conveyances 42 7.2 Further Consents to Assignment 42 7.3 Access to Former Business Records 43 7.4 Access to Former Employees 43 7.5 Use of TRW Trademark 44 7.6 Nondisclosure 44 ARTICLE VIII - EMPLOYEES AND EMPLOYEE BENEFITS 46 8.1 Employment of Initial Employees 46 8.2 Subsequent Terminations or Layoffs 46 8.3 Employee Benefits 46 8.4 Pension Plan 47 8.5 Medical, Dental and Vision Benefits 47 8.6 Life Insurance 48 8.7 Vacation 48 8.8 401(k) Plans 48 8.9 Workers' Compensation 49 8.10 No Rights 49 8.11 Family and Medical Leave Act 49 ARTICLE IX - INDEMNIFICATION 49 9.1 Indemnification of TRW 49 9.2 Indemnification of Transaction Companies 50
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PAGE 9.3 Claims 50 (a) Notice 51 (b) Responsibility for Defense 51 (c) Right to Participate/Right to Assume Responsibility for 51 Defense of a Claim (d) Settlement 52 9.4 Limitation on TRW Indemnification 54 9.5 Limitation on Transaction Companies Indemnification 54 9.6 Miscellaneous 54 ARTICLE X - AMENDMENT, WAIVER, AND TERMINATION 54 10.1 Amendment 54 10.2 Waiver 55 10.3 Termination 55 10.4 Procedure and Effect of Termination 55 ARTICLE XI - MISCELLANEOUS 56 11.1 Cooperation 56 11.2 Confidentiality 56 11.3 Severability 56 11.4 Expenses 56 11.5 Bulk Sales 57 11.6 Notices 57 11.7 Dispute Resolution 57 (a) Notice 58 (b) Negotiation 58 (c) Referral 58 (d) Stay 58 11.8 Exclusive Remedy 58 11.9 Assignment 59 11.10 No Third Parties 59 11.11 Incorporation by Reference 59 11.12 Governing Law 59 11.13 Counterparts 59 11.14 Complete Agreement 59 11.15 Consent to Jurisdiction 60 11.16 Waiver of Jury Trial 60
v 7 APPENDICES APPENDIX A CERTAIN DEFINITIONS APPENDIX B DUE DILIGENCE REVIEW AND CERTIFICATIONS APPENDIX C ADDITIONAL EXCLUDED ASSETS AND EXCLUDED LIABILITIES APPENDIX D INTENTIONALLY OMITTED APPENDIX E-1 SUPPLEMENTAL ACCOUNTING PRINCIPLES APPENDIX E-2 SUPPLEMENTAL ACCOUNTING PRINCIPLES APPENDIX E-3 SUPPLEMENTAL ACCOUNTING PRINCIPLES APPENDIX F CONTENTS OF THE DISCLOSURE PACKAGE APPENDIX G REQUIRED CONSENTS APPENDIX H NONCOMPETITION AGREEMENT APPENDIX I FORM OF TRANSITION AGREEMENT APPENDIX J TRADEMARK AGREEMENT APPENDIX K FORM OF SHARED ASSETS AGREEMENT APPENDIX L SHARED LIABILITIES AGREEMENT APPENDIX M DOCUMENTS TO BE DELIVERED BY TRW AT THE CLOSING APPENDIX N DOCUMENTS TO BE DELIVERED BY THE PURCHASER AT THE CLOSING APPENDIX O RETAINED EMPLOYEES APPENDIX P TERMS OF HOLDINGS SHAREHOLDERS' AGREEMENT APPENDIX Q TERMS OF SENIOR CONVERTIBLE PREFERRED STOCK OF HOLDINGS vi 8 RECAPITALIZATION AGREEMENT THIS RECAPITALIZATION AGREEMENT ("Agreement") is made the 9th day of February, 1996, by and among TRW INC. ("TRW"), an Ohio corporation, TRW IS&S INTERNATIONAL, INC. ("IS&S International"), an Ohio corporation, TARGET MARKETING SERVICES, INC. ("Holdings"), a Delaware corporation, TRW HOTEL COMPANY INC. ("TRW Hotel"), an Ohio corporation, TRW MICROWAVE INC. ("Microwave"), a California corporation, TRW ENVIRONMENTAL MANAGEMENT COMPANY ("Operating Company"), an Ohio corporation, and IS&S ACQUISITION CORP. ("Purchaser"), a Delaware corporation. RECITALS A. The TRW Information Systems & Services Business provides consumer and business credit decision support, marketing information services and real estate information services to a variety of customers (the "Business"). B. The Business is organized as follows: Consumer Information Services provides consumer credit reports to banks, retailers, financial organizations and other credit-granting organizations and provides information used for targeted marketing by businesses in the credit, real estate, banking and direct marketing industries. Business Information Services provides business credit decision support and demographic information for business-to-business credit granting and direct marketing efforts. Real Estate Information Services, through TRW REDI Property Data, an Ohio general partnership ("Partnership"), provides property data services and title information services to title companies, appraisers, real estate brokers, lenders, county governments and other organizations. C. TRW, Holdings, IS&S International, Microwave, Operating Company, TRW Hotel and Purchaser desire to consummate the recapitalization transactions contemplated by this Agreement on the terms and conditions set forth herein. D. The Recapitalization will consist of the following transactions (collectively, the "Recapitalization"), which transactions will be consummated in the following order and, with the exception of steps 1 through 3 below, each will be conditioned upon the occurrence of the other transactions: 1 9 1. IS&S International will distribute to TRW, as a dividend, the Mexican Investments (as herein defined) and all other Acquired Assets (as herein defined) held by IS&S International; 2. TRW will transfer to Microwave, as a capital contribution, TRW's 60% interest in the Partnership; 3. Microwave will acquire from TRW and assume, and TRW will assign and transfer to Microwave, as a capital contribution, the Acquired Assets (including, without limitation, the Mexican Investments and all TRW Hotel Shares) and the Assumed Liabilities, and TRW and Microwave will enter into a trademark agreement substantially in the form of the Trademark Agreement; 4. Microwave will transfer to TRW Hotel, as a capital contribution, Microwave's 60% interest in the Partnership; 5. TRW Hotel will purchase from Elsevier Realty Information, Inc. ("Elsevier"), Elsevier's 40% interest in the Partnership, with the result that TRW Hotel will have 100% of the interests in the Partnership and the Partnership's existence will terminate; 6. Operating Company will purchase from Microwave and assume, and Microwave will sell, assign and transfer to Operating Company, the Acquired Assets (including, without limitation, the Mexican Investments, all TRW Hotel Shares and an assignment of Microwave's rights and interests under the trademark agreement between TRW and Microwave referred to above) and the Assumed Liabilities for an aggregate consideration of One Billion One Hundred Million Dollars ($1,100,000,000), consisting of a Seven Hundred Fifty-Five Million Dollars ($755,000,000) demand promissory note payable by Operating Company to Microwave (the "Demand Note") and shares of stock in Operating Company with an aggregate issuance price of Three Hundred Forty-Five Million Dollars ($345,000,000); 7. TRW will transfer to Microwave, as a capital contribution, all remaining outstanding shares of stock of Operating Company; 8. TRW will transfer to Microwave, as a capital contribution, all issued and outstanding shares of stock of Holdings; 9. Holdings will purchase from Microwave, and Microwave will sell and transfer to Holdings, all issued and outstanding shares of stock of 2 10 Operating Company in consideration of the issuance by Holdings to Microwave of shares of stock in Holdings with an aggregate issuance price of Three Hundred Forty-Five Million Dollars ($345,000,000); 10. In connection with the Recapitalization, TRW, Microwave and Holdings will make an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code") and other related elections as described in Article VI hereof; 11. Certain investors (the "Equity Investors") will make capital contributions to Purchaser in an aggregate cash amount of not less than Two Hundred Fifty-Five Million Dollars ($255,000,000) and Purchaser will issue to the Equity Investors shares of stock in respect thereof; 12. Purchaser will merge with and into Holdings, with Holdings surviving the merger (the "Merger"); 13. Pursuant to and immediately following the Merger, (a) the Equity Investors in the aggregate will hold not more than 94.44% of the shares of Holdings' outstanding common stock, (b) Microwave will hold not less than 5.56% of Holdings' then outstanding common stock, and (c) Microwave will receive Two Hundred Fifty-Five Million Dollars ($255,000,000) in cash and shares of Holding's senior convertible preferred stock with an aggregate issuance price of Seventy-Five Million Dollars ($75,000,000) and having the other terms set forth on Appendix Q hereto; 14. Operating Company will obtain debt financing in an aggregate amount of not less than Eight Hundred Five Million Dollars ($805,000,000) in the form of senior secured credit facilities and senior subordinated notes; 15. Operating Company will pay Seven Hundred Fifty-Five Million Dollars ($755,000,000) in cash to Microwave as payment in full of the Demand Note; and 16. Operating Company and TRW will enter into the Trademark Agreement as a replacement of the trademark agreement referred to in paragraphs 3 and 6 above which will be cancelled. 3 11 TERMS AND CONDITIONS NOW, THEREFORE, in consideration of the premises and of other good and valuable consideration, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I GENERAL PROVISIONS 1.1 DEFINITIONS: Appendix A to this Agreement sets forth the definitions of certain terms used in this Agreement. 1.2 OTHER DEFINITIONS AND MEANINGS; INTERPRETATION: For purposes of this Agreement, the term "parties" means (except where the context otherwise requires) TRW, Holdings, IS&S International, Microwave, Operating Company, TRW Hotel and Purchaser; the term "person" includes any natural person, firm, association, partnership, corporation, governmental agency, or other entity other than the parties; and the words "hereof", "herein", "hereby" and other words of similar import refer to this Agreement as a whole. The table of contents and the headings of the Articles and Sections of this Agreement have been included herein for convenience of reference only and will not be deemed to affect the meaning of the operative provisions of this Agreement. All dollar ($) amounts referred to herein are in United States Dollars. 1.3 TRW'S KNOWLEDGE: Where a statement contained in this Agreement or an Appendix hereto is said to be to "TRW's knowledge" (or words of similar import) such expression means that, after having conducted a reasonable due diligence review and in reliance on due diligence certifications resulting from that review, both as described in Appendix B hereto, TRW believes the statement to be true, accurate, and complete in all material respects. 1.4 PARTS OF DISCLOSURE PACKAGE; DISCLOSURE OF EXCEPTIONS: Neither the reference to any item or matter in any of the nineteen (19) Parts to the Disclosure Package (as herein defined), nor the inclusion of any document therein, will disclose an exception to any representation or warranty, except to the extent that such item, matter or document is disclosed under the caption "Exceptions" in the Part referred to in such representation and warranty. In addition to any item, matter or document which is specifically referenced in any Part and thereby disclosed by such reference, any item, matter or document so disclosed in any of said Parts will be deemed to have been disclosed in any other Part to the extent that (a) it should have been disclosed on such other Part and (b) it is apparent from the disclosure on such first Part that the information disclosed is germane to the representation to which such other Part relates. 4 12 ARTICLE II RECAPITALIZATION 2.1 PRE-MERGER RECAPITALIZATION TRANSACTIONS: On and subject to the terms and conditions of this Agreement, prior to the Effective Time (as herein defined), TRW will cause the following to occur: (a) IS&S International will distribute to TRW, as a dividend, the Mexican Investments and all other Acquired Assets held by IS&S International; (b) TRW will transfer to Microwave, as a capital contribution, TRW's 60% interest in the Partnership; (c) Microwave will acquire from TRW and assume, and TRW will assign and transfer to Microwave, as a capital contribution, the Acquired Assets (including, without limitation, the Mexican Investments and all TRW Hotel Shares) and the Assumed Liabilities and TRW Microwave will enter into a trademark agreement substantially in the form of the Trademark Agreement; (d) Microwave will transfer to TRW Hotel, as a capital contribution, Microwave's 60% interest in the Partnership; (e) TRW Hotel will purchase from Elsevier Elsevier's 40% interest in the Partnership, with the result that TRW Hotel will hold 100% of the interests in the Partnership and the Partnership's existence will terminate; (f) Operating Company will purchase from Microwave and assume, and Microwave will sell, assign and transfer to Operating Company, the Acquired Assets (including, without limitation, the Mexican Investments, all TRW Hotel shares and an assignment of its rights and interests under the trademark agreement between TRW and Microwave referred to above) and the Assumed Liabilities for an aggregate consideration of One Billion One Hundred Million Dollars ($1,100,000,000), consisting of the Demand Note and shares of stock in Operating Company with an aggregate issuance price of Three Hundred Forty-Five Million Dollars ($345,000,000); (g) TRW will transfer to Microwave, as a capital contribution, all remaining outstanding shares of stock of Operating Company; (h) TRW will transfer to Microwave, as a capital contribution, all issued and outstanding shares of stock of Holdings; 5 13 (i) Holdings will purchase from Microwave, and Microwave will sell and transfer to Holdings, all issued and outstanding shares of stock of Operating Company in consideration of the issuance by Holdings to Microwave of shares of stock in Holdings with an aggregate issuance price of Three Hundred Forty-Five Million Dollars ($345,000,000); and (j) In connection with the Recapitalization, TRW, Microwave and Holdings will make an election under Section 338(h)(10) of the Code and other related elections as described in Article VI hereof. 2.2 ACQUIRED ASSETS: For purposes hereof, the term "Acquired Assets" means all assets, properties, and rights held or used by the members of the TRW Group as of the Closing which relate to the conduct of the Business and, in the case of tangible assets, are located on or at a Business Facility, subject, however, to the provisions of Section 7.2 hereof and excluding the Excluded Assets. Without limiting the generality of the foregoing, the Acquired Assets will include all of the following assets which are used or held by the members of the TRW Group in the conduct of the Business and, in the case of tangible assets, are located on or at a Business Facility as of the Closing and are not identified as Excluded Assets: (a) The Databases; (b) All Proprietary Software, Non-Proprietary Software, computer systems, telecommunication systems and other systems and services used primarily in the conduct of the Business; (c) All notes and accounts receivable other than those to be retained by TRW under the Supplemental Accounting Principles set forth in Appendix E-1 hereto; (d) All prepaid and similar items, including, without limitation, all prepaid expenses, deferred charges, advance payments and other prepaid items other than those to be retained by TRW under the Supplemental Accounting Principles set forth in Appendix E-1 hereto; (e) All inventories, wherever located, including, without limitation, inventories of finished goods and operating supplies; (f) All real property (whether as owner, lessor, lessee or otherwise), including, without limitation, all land, buildings, improvements, fixtures and appurtenances thereto and all such items under construction; 6 14 (g) All personal property (whether as owner, lessor, lessee or otherwise), including, without limitation, all computer hardware, communications equipment, machinery, furniture, office equipment, cars, trucks and other vehicles; (h) All supplier lists and all orders, contracts and commitments for the purchase of goods and/or services, including, without limitation, all such items relating to the purchase of data, products and supplies; (i) All customer lists and all orders, contracts, commitments and proposals for the sale of products and services, including, without limitation, all agency agreements and all distribution and similar arrangements; (j) All other orders, contracts and commitments, including, without limitation, all leases, licenses, causes of action, rights of action and warranty and product liability claims against other persons; (k) All IS&S Intellectual Property (whether as owner, inventor, employer of an inventor, licensor, licensee or otherwise); (l) The Mexican Investments; (m) The TRW Hotel Shares; (n) The CCB Shares; (o) The capital stock of Lusk; (p) The capital stock of Operating Company; (q) The REDI Trademark; (r) All permits, approvals, qualifications and the like issued by any government or governmental unit, agency, board, body or instrumentality, whether federal, state or local and all applications therefor; (s) The goodwill of the Business in or arising from the Acquired Assets; and (t) Subject to the provisions of Section 7.3 hereof, all business books and records of the Business, including, without limitation, all financial, operating, inventory, legal, personnel, payroll and customer records and all sales and promotional literature, correspondence and files; provided, however, that in 7 15 the event that any such books or records are subject to any legal privilege, the parties agree to cooperate to protect such privilege to the extent practicable. Notwithstanding the foregoing, any asset of the Business that requires a consent for transfer or assignment and as to which consent for such transfer or assignment has not been obtained by TRW prior to the Closing will be treated in accordance with Section 7.2 hereof and will not be deemed to be transferred or assigned to Purchaser as part of the Acquired Assets. 2.3 EXCLUDED ASSETS: Notwithstanding anything contained herein to the contrary, TRW will retain the Excluded Assets. Subject only to the provisions of the Other Agreements, for purposes hereof the term "Excluded Assets" means all tangible assets used by TRW at a location other than a Business Facility including, without limitation, the following rights, properties and assets of TRW as the same will exist as of the Closing: (a) All cash and cash equivalent items on the books of TRW as of the Closing, including, without limitation, certificates of deposit, time deposits, marketable securities and the proceeds of accounts receivable received on or prior to the Closing Date; (b) All rights, properties and assets of TRW used exclusively in businesses other than the Business; (c) All rights, properties and assets of the Business which will have been transferred or disposed of prior to the Closing in transactions conducted in the Ordinary Course of Business and not in breach of this Agreement; (d) The name and trademark and service mark "TRW" and the stylized "TRW" logo or their variations which are used by TRW as part of any trademark or trade name except for the rights granted pursuant to the Trademark Agreement; (e) All assets, whether or not used by TRW in its conduct of the Business, which are identified as Additional Excluded Assets on Appendix C hereto; (f) All accounts or other receivables of the Business payable from TRW or any subsidiary or affiliate of TRW; and (g) All current and deferred income tax assets and refunds (including interest) arising out of the conduct of the Business prior to the Closing. 8 16 2.4 ASSUMED LIABILITIES: Subject to any contrary terms contained in the Other Agreements, the term "Assumed Liabilities" means all liabilities and obligations of the TRW Group as of the Closing arising out of the conduct of the Business, other than the Excluded Liabilities. Without limiting the generality of the foregoing, the Assumed Liabilities will include the following liabilities and obligations which arise or have arisen out of the conduct of the Business at or prior to the Closing and are not identified as Excluded Liabilities: (a) All liabilities and obligations incurred by TRW in its conduct of the Business which are accrued on the books of the Business as of the Closing; (b) All liabilities and obligations of TRW under (i) purchase orders, contracts, and other commitments for the purchase by TRW of products, data, information, supplies, leases or services in the conduct of the Business, and (ii) contracts, leases and purchase orders included in the Acquired Assets, including, without limitation, rights arising as a consequence of the assignment of the same by TRW to Purchaser hereunder; (c) All liabilities and obligations arising out of, resulting from or relating to claims arising out of the conduct of the Business which have not been resolved or settled prior to the Closing; (d) All liabilities and obligations arising out of, resulting from or relating to claims, whether founded upon negligence, breach of warranty, strict liability in tort or other similar legal theory, seeking compensation or recovery for or relating to injury to person or damage to property arising out of the conduct of the Business whether before or after the Closing; (e) All liabilities and obligations arising out of, resulting from or relating to any violation of any statute, ordinance, regulation, order or other governmental requirement, including, without limitation, (i) the FCRA (ii) the Consent Orders or (iii) the Assurances of Discontinuance, in connection with the conduct of the Business before the Closing; (f) All liabilities and obligations arising out of Purchaser's obligations in connection with this Agreement and all liabilities and obligations arising out of the obligations of Holdings, Operating Company and TRW Hotel under Articles VII, VIII, IX and X hereof; (g) All liabilities and obligations arising out of, resulting from or relating to claims of infringement or other misappropriation of the Intellectual Property rights of other persons with respect to the production, preparation, use and 9 17 sale of products and services by the Business whether before or after the Closing; and (h) All liabilities and obligations which are the responsibility of the Transaction Companies under the Shared Liabilities Agreement. 2.5 EXCLUDED LIABILITIES: Notwithstanding anything contained herein to the contrary, TRW will retain and timely discharge the Excluded Liabilities. For the purposes hereof the term "Excluded Liabilities" means the following liabilities and obligations of TRW: (a) All liabilities and obligations (including, without limitation, any Environmental Claim) incurred by TRW and its subsidiaries in connection with the conduct of their businesses other than the Business; (b) All liabilities and obligations of the Business which have been fully discharged or satisfied by the members of the TRW Group before the Closing in transactions in the Ordinary Course of Business and not in breach of this Agreement; (c) All liabilities and obligations arising out of, resulting from or relating to any violation of any statute, ordinance, regulation, order or other governmental requirement in existence prior to the Closing, including, without limitation, (i) the FCRA, (ii) the Consent Orders or (iii) the Assurances of Discontinuance, with respect to which either (x) to the knowledge of TRW prior to the Closing, there exists a threat of claim whether or not in writing other than in the Ordinary Course of Business or (y) a written claim has been filed against any member of the TRW Group prior to the Closing before any court or by or before any administrative agency or any governmental authority; (d) All obligations arising out of litigation, legal proceedings or investigations at law or in equity or by or before governmental agencies pending against TRW or any of its subsidiaries before the Closing, including, without limitation, the matters listed in Part H of the Disclosure Package; (e) All liabilities and obligations arising out of the obligations of the TRW Group in connection with this Agreement, excluding all liabilities and obligations arising out of the obligations of Holdings, Operating Company and TRW Hotel under Articles VII, VIII, IX and X hereof; (f) All accounts and notes payable of the Business payable to TRW or any subsidiary or affiliate of TRW on the Closing Date; 10 18 (g) All liabilities and obligations, whether or not arising primarily out of the conduct of the Business, which (1) are to be retained by TRW in accordance with Appendix E-1 or (2) which are identified as Additional Excluded Liabilities on Appendix C hereto; (h) All liability of the TRW Group for unpaid Taxes (i) related to the operation of the Business for periods ending on or prior to the Closing Date, or (ii) arising in connection with the transfer of the Acquired Assets by TRW and Microwave to Operating Company; (i) All liabilities and obligations arising out of, resulting from or relating to the purchase of the Elsevier Partnership Interest and all obligations of the parties arising out of, resulting from or relating to the Partnership Agreement between TRW and Elsevier; (j) Except as otherwise expressly provided by Article VIII hereof, all liabilities and obligations arising out of, resulting from or relating to any employee benefit plan, program, arrangement or agreement maintained or contributed to by TRW or any entity (other than the Partnership) which is or has been aggregated with TRW for purposes of section 414 of the Code or section 4001 of ERISA; and (k) All liabilities and obligations arising out of, resulting from or relating to any Environmental Condition relating to the operations of the Business or the Business Facilities existing on or before the Closing and known to TRW. 2.6 MERGER OF PURCHASER INTO HOLDINGS: (a) THE MERGER: On and subject to the terms and conditions of this Agreement, the Purchaser will merge with and into Holdings at the Effective Time. Holdings will be the corporation surviving the Merger. (b) THE CLOSING: For purposes hereof, the term "Closing" means the consummation of the transactions contemplated hereby. (c) TIME, DATE, AND PLACE OF CLOSING: The Closing will occur at 10:00 a.m. (Eastern Standard U.S.A. Time) on the later of (i) the date on which all of the conditions set forth in Article V of this Agreement are satisfied or waived and (ii) the date which is 45 days after satisfaction of the condition in Section 5.1(g) hereof (the "Closing Date"). The Closing will take place at the offices of TRW at 1900 Richmond Road, Lyndhurst, Ohio, or at such other place 11 19 as the parties may agree in writing. The Closing will be deemed to have occurred as of the close of business on the Closing Date. (d) ACTIONS AT THE CLOSING: At the Closing (i) the members of the TRW Group will deliver to Purchaser the various certificates, instruments and documents referred to on Appendix M hereto, (ii) Purchaser will deliver to the members of the TRW Group the various certificates, instruments and documents referred to on Appendix N hereto, (iii) Holdings and Purchaser will file with the Secretary of State of the State of Delaware a Certificate of Merger in the customary form (the "Certificate of Merger"), and (iv) Purchaser will cause Holdings to deliver the Merger Consideration to Microwave. (e) EFFECT OF MERGER: (i) GENERAL: The Merger will become effective at the time (the "Effective Time") Holdings and Purchaser file the Certificate of Merger with the Secretary of State of the State of Delaware. The Merger will have the effects set forth in the Delaware General Corporation Law. Holdings may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name and on behalf of either Holdings or Purchaser in order to carry out and effectuate the transactions contemplated by this Agreement. (ii) CERTIFICATE OF INCORPORATION: The Certificate of Incorporation of Holdings will be amended and restated at and as of the Effective Time to read as did the Certificate of Incorporation of Purchaser immediately prior to the Effective Time. (iii) BYLAWS: The Bylaws of Holdings will be amended and restated at and as of the Effective Time to read as did the Bylaws of Purchaser immediately prior to the Effective Time. (iv) DIRECTORS AND OFFICERS. The directors and officers of Purchaser will become the directors and officers of Holdings at and as of the Effective Time (retaining their respective positions and terms of office) and one director will be designated by TRW. (v) CONVERSION OF HOLDINGS SHARES: At and as of the Effective Time, (A) all the Holdings Shares (other than the Retained Holdings Shares) will be converted into the right to receive an aggregate Two Hundred Fifty-Five Million Dollars ($255,000,000) cash payment, plus shares of Holdings' Senior Convertible Preferred Stock, with an 12 20 issuance price of Seventy-Five Million Dollars ($75,000,000), and having the other terms set forth in Appendix Q hereto (collectively, the "Merger Consideration"), and (B) Microwave will retain the Retained Holdings Shares. No Holdings Shares will be deemed to be outstanding or to have any rights other than those set forth above in this Section 2.6(e)(v) after the Effective Time. (vi) CONVERSION OF CAPITAL STOCK OF PURCHASER: At and as of the Effective Time, each share of capital stock of Purchaser will be converted into one share of capital stock of Holdings representing in the aggregate not more than 94.44% of the then issued and outstanding common equity of Holdings. (f) PROCEDURE FOR PAYMENT: Immediately after the Effective Time, (i) Holdings will make full payment of the Merger Consideration to the holders of all the outstanding Holdings Shares (other than the Retained Holdings Shares) (i.e., such payment will be made to Microwave), and (ii) Operating Company will make payment of the Demand Note to Microwave, each in the manner set forth in Section 2.10 hereof for payment of the Adjustment. (g) TRADEMARK AGREEMENT: Immediately after the Effective Time, Operating Company and TRW will enter into the Trademark Agreement as a replacement of the trademark agreement referred to in Section 2.1(c) hereof, and such Section 2.1(c) trademark agreement will be cancelled. 2.7 PURCHASE PRICE: For purposes hereof, the term "Purchase Price" means the sum of (a) the Seven Hundred Fifty-Five Million Dollars ($755,000,000) original principal amount of the Demand Note plus (b) the Two Hundred Fifty-Five Million Dollars ($255,000,000) cash and Seventy-Five Million Dollars ($75,000,000) value of the Senior Convertible Preferred Stock constituting the Merger Consideration, plus (c) the Retained Holdings Shares with a value of Fifteen Million Dollars ($15,000,000) which sum will be One Billion One Hundred Million Dollars ($1,100,000,000) plus or minus the Adjustment. 2.8 ADJUSTMENT: The Adjustment will be determined as follows: (a) DETERMINATION OF ADJUSTMENT: The Adjustment will be: (i) the amount, if any, of the Closing Date Net Working Capital Excess; plus 13 21 (ii) the aggregate amount of foreign investments made and the consideration paid for business acquisitions by the Business commencing on the date hereof and ending on the Closing Date that in each case are approved by Purchaser in accordance with Section 4.3 hereof ("Approved Investments"); less (iii) the amount, if any, of the Closing Date Net Working Capital Deficiency. (b) CERTAIN DEFINITIONS: For the purposes hereof: (i) "Closing Date Net Working Capital Excess" means the amount by which Net Working Capital on the Closing Date exceeds Fifty-Three Million Dollars ($53,000,000); (ii) "Closing Date Net Working Capital Deficiency" means the amount by which Net Working Capital on the Closing Date is less than Forty-Five Million Dollars ($45,000,000); and (iii) "Net Working Capital" means the account balance of those current assets of Holdings on a consolidated basis less the account balance of those current liabilities of Holdings on a consolidated basis determined by reference to the specific accounts identified as a "Closing-Acquired Assets" account or a "Closing-Assumed Liability" account, but excluding those accounts identified as a "Closing-Excluded Assets" account or a "Closing-Excluded Liabilities" account (and excluding those amounts indicated as "to be determined pursuant to the Shared Liabilities Agreement") in the Supplemental Accounting Principles attached hereto as Appendix E-2, but will exclude any step-up in the basis of the REDI assets or liabilities resulting from the acquisition of the remaining 40% interest in the REDI partnership. (c) CLOSING AUDIT: Promptly after the Closing, TRW will cause Ernst & Young LLP (the "Auditors"), independent certified public accountants, to conduct an audit of the Net Working Capital on Closing Date and the Approved Investments. Within ninety (90) days after the Closing, the Auditors will deliver to Operating Company and TRW a report (the "Auditors' Report") based on the audit stating the amount of the Net Working Capital and the Approved Investments reflected on the books of the Business as of the Closing in accordance with the Supplemental Accounting Principles described in Appendix E-2. Operating Company, if it so elects, will have the 14 22 right to have its own independent certified public accountants or internal auditors observe the audit to be conducted by the Auditors. (d) REVIEW BY OPERATING COMPANY: Following receipt of the Auditors' Report, Operating Company will be afforded a period of thirty (30) days to review the Auditor's Report (the "Review Period"). Operating Company will be deemed to have accepted the entire Auditors' Report unless, prior to the expiration of the Review Period, Operating Company delivers to TRW and the Auditors written notice and a detailed written explanation of those items in the Auditors' Report which Operating Company disputes, in which case the Auditors' Report and the items identified by Operating Company will be deemed to be in dispute. Within a further period of thirty (30) days from the end of the Review Period, the parties will attempt to resolve in good faith any disputed items. Failing such resolution, the unresolved disputed items will be referred for final binding resolution to the firm of Arthur Andersen & Co. The items of Net Working Capital and Approved Investments affected by such unresolved disputed items (if any) will be deemed to be as determined by such firm in accordance with the Supplemental Accounting Principles described in Appendix E-2 within thirty (30) days of such reference. One half of the cost of the determination by Arthur Andersen & Co. will be paid by Operating Company and one half by TRW. The decision of Arthur Andersen & Co. will be final and binding on the parties and will not be subject to appeal or challenge for any reason. 2.9 PAYMENT OF ADJUSTMENT: The Adjustment will be paid as follows: (a) If the Adjustment is a positive amount, Operating Company will pay Microwave the amount of the Adjustment, together with interest thereon (compounded monthly) at an annual rate equal to the Prime Rate for the period from the Closing Date through and including the date on which the Adjustment is paid, such payment to be made within ten (10) business days after the final determination of the Adjustment. (b) If the Adjustment is a negative amount, then TRW will cause Microwave to refund to Operating Company the amount of the Adjustment together with interest thereon (compounded monthly) at an annual rate equal to the Prime Rate for the period from the Closing Date through and including the date on which the Adjustment is paid, such payment to be made within ten (10) business days after the final determination of the Adjustment. (c) Any payment of the Adjustment will be treated for tax purposes as an adjustment to the Demand Note. 15 23 2.10 METHOD OF PAYMENT OF ADJUSTMENT: Payments of the Adjustment will be made by delivery to the payee upon the prior request of the payee, by depositing, by bank wire transfer, the required amount (in immediately available funds) in an account of the payee, which account will be designated by the payee for such purpose at least five (5) business days prior to the date of the required payment. 2.11 NO SET OFF: The obligation of Microwave or Operating Company, as the case may be, to pay the Adjustment as determined in accordance with the provisions of Section 2.8 hereof will be absolute and unconditional and will not be affected by any circumstance, including, without limitation, any set off, counterclaim, recoupment, defense (other than payment itself), or other right which either party may have or allege to have against the other for any reason whatsoever. 2.12 REAL ESTATE CONVEYANCE: TRW's conveyance of the owned real estate included as part of the Acquired Assets will be carried out as follows: (a) TITLE INSURANCE COMMITMENT: Prior to the Closing, TRW will obtain or will cause to be obtained a commitment from a nationally-recognized title insurance company (the "Title Company"), with a copy to Purchaser, that the Title Company will issue to Operating Company or TRW Hotel, as the case may be, as the owner of the real property listed in Annex E-1 to Part E of the Disclosure Package at the Closing an ALTA Owner's Policy of Title Insurance in an amount equal to the fair market value of the insured real estate and in form and substance satisfactory to Purchaser insuring fee simple title to such real estate to be in Operating Company or TRW Hotel, as the case may be, as the owner of the real property listed in Annex E-1 to Part E of the Disclosure Package subject only to applicable zoning and building laws and regulations, the lien of real estate taxes and assessments not yet due and payable and such other Encumbrances that do not have a material adverse impact on the use of the real estate in the Business (the "Exceptions"), and the standard survey reservations and any other standard reservations of the Title Company. (b) LIMITED WARRANTY DEED: Prior to the Closing, the owner of each of the parcels of real property will execute and deliver to the Title Company for safekeeping a limited warranty deed conveying and warranting title to such real estate to be free and clear of all liens and encumbrances created by, through or under such owner, subject to the Exceptions and to minor encroachments which, in the aggregate, do not have a significant effect on the marketability of such real estate, together with such affidavits, certificates, and other instruments as are ordinarily delivered to a purchaser of real estate or filed in the public records of the county in which the property is located. 16 24 (c) INSTRUCTIONS: At the time such limited warranty deeds are delivered to the Title Company, TRW, the owners of the real property and Purchaser will deliver to the Title Company a joint letter instructing the Title Company to hold such warranty deed until the Closing and, at the Closing: (1) if the Title Company is then prepared to issue to Operating Company or TRW Hotel as the owner of the real estate the Title Company's Owner's Policy of Title Insurance in the form set forth in the commitment described in Section 2.12(a) hereof, and upon joint telephonic instructions from TRW, Operating Company and TRW Hotel, to file the limited warranty deed for record in appropriate public records, or (2) otherwise, to return such limited warranty deed to TRW. (d) CONFIRMATION: If the Title Company is instructed to file the warranty deed for record, then such warranty deed will be deemed to have been filed as of the close of business on the Closing Date. (e) TITLE COMPANY'S FEE: TRW will pay the Title Company's fee or premium in respect of the Owner's Policy of Title Insurance described in Section 2.12(a) hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 TRW'S GENERAL REPRESENTATIONS AND WARRANTIES: TRW as of the date hereof hereby represents and warrants to Purchaser the following: (a) ORGANIZATION AND EXISTENCE: Each of the TRW Signatories is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation. (b) POWER AND AUTHORITY: Each of the TRW Signatories has full power and authority under its incorporating and governing documents and the laws of its state of incorporation to execute, deliver and perform this Agreement and each of the Other Agreements to which it is a party and to consummate the transactions contemplated by this Agreement and, if such other entity is a party thereto, the Other Agreements. (c) AUTHORIZATION: The execution, delivery and performance of this Agreement and the Other Agreements by each of the TRW Signatories which 17 25 is a party thereto has been duly authorized by all requisite corporate action on the part of each such company. (d) BINDING EFFECT: This Agreement and, to the extent the TRW Signatories are parties thereto, the Other Agreements are valid, binding and legal obligations of each of the TRW Signatories. (e) NO DEFAULT: Neither the execution and delivery of this Agreement nor the full performance of its obligations hereunder by each of the TRW Signatories will violate or breach or otherwise constitute or give rise to a Default under the terms or provisions of such entity's incorporating and governing documents or of any material contract, commitment or other obligation to which any of such entities is a party. (f) FINDERS: Except by and pursuant to a certain agreement with Bear, Stearns & Co. Inc., neither TRW nor any of its subsidiaries has engaged and none are directly or indirectly obligated to any person acting as a broker, finder or in any similar capacity in connection with the transactions contemplated hereby. (g) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE: Neither this Agreement, including, without limitation, the representations and warranties contained in this Section 3.1 and in Section 3.2 hereof, the information set forth in the Disclosure Package, nor any certificate furnished or to be furnished by or on behalf of the TRW Group, contains or will contain any untrue statement of a material fact. 3.2 TRW'S REPRESENTATIONS AND WARRANTIES: Concurrently with the execution and delivery of this Agreement, TRW will deliver to Purchaser a disclosure package (the "Disclosure Package") which will consist of nineteen (19) parts, consecutively lettered A - S, inclusive. TRW hereby represents and warrants to Purchaser that the Disclosure Package will contain the information required by Appendix F hereto. In addition, TRW as of the date hereof hereby represents and warrants to Purchaser the following: (a) FINANCIAL STATEMENTS: Except as otherwise disclosed on Annex A-3(B) to Part A, (1) the audited combined financial statements contained in Annex A-1 to Part A are true and correct in all material respects and present fairly, in all material respects, the combined financial position of the Business, at December 31, 1995, 1994 and 1993 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles consistently applied; and (2) the audited financial statements contained in Annex A-2 to Part A are true and correct in all material respects and present fairly, in all material respects, the financial 18 26 position of the Partnership at December 31, 1995, 1994 and 1993 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles consistently applied. (b) INVESTMENTS: Except as otherwise disclosed on Annex B-2 to Part B, (1) Annex B-1 to Part B contains a complete list as of the date hereof of (a) all direct or indirect interests of TRW or the Partnership in the securities of any corporation or in any partnership, joint venture or other entity relating to the Business and (b) any agreement, understanding, contract or commitment relating to an interest or investment in any such entity; (2) the CCB Shares are fully paid and non-assessable and there are no restrictions on the ability of TRW to sell and transfer the CCB Shares; and (3) subject to investments arising out of the temporary investment of short term cash and of TRW employee benefit plans, neither TRW, the Partnership, IS&S International nor Lusk owns or holds, directly or indirectly, any equity interest, directly or indirectly, in any corporation, partnership, joint venture, business, firm or other entity which, to TRW's knowledge, engages in any business in competition with the Business, and no member of the TRW Group is a party to a commitment or agreement to acquire any such interest. As provided in Appendix M, TRW will represent on and as of the Closing as to the direct and indirect interests of TRW in the securities of any partnership, joint venture or other entity relating to the Business after giving effect to the transactions referred to in Section 2.1 hereof. (c) SUBSIDIARY COMPANIES: Except as otherwise disclosed on Annex C-6(B) to Part C, (1) as of the date hereof (A) Microwave is a wholly owned subsidiary of TRW, (B) Holdings is a wholly owned subsidiary of TRW, (C) Operating Company is a wholly owned subsidiary of TRW, (D) TRW Hotel is a wholly owned subsidiary of TRW and (E) Lusk is a wholly owned subsidiary of the Partnership; (2) Annex C-1 to Part C lists the authorized and issued share capital of each of Holdings, Operating Company, TRW Hotel and Lusk (the "Transaction Companies") (including all options, warrants, convertible securities or other rights to acquire such share capital) (collectively the "Shares"); (3) as of the date hereof, the Shares are legally and beneficially owned as set forth on Annex C-1 free and clear of all preemptive rights, Encumbrances, restrictions, and limitations; (4) all of the Shares are fully paid and non-assessable; (5) each of the Transaction Companies is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate power and authority to conduct its business as presently being conducted by it (although certain filings and registrations may be required following the Recapitalization which will not be undertaken by TRW); (6) each of the Transaction Companies is duly qualified 19 27 or licensed and in good standing to do business in each jurisdiction where the failure to be so duly qualified or licensed and in good standing as of the date hereof (prior to giving effect to the Recapitalization) would be likely to have, individually or in the aggregate, a Material Adverse Effect; (7) set forth as Annexes to Part C are the Certificates or Articles of Incorporation and By-Laws or Regulations, as the case may be, currently in effect and the minutes of meetings of the board of directors and shareholders of each of the Transaction Companies. As of immediately prior to the Closing, the ownership of the Transaction Companies will be as set forth in clauses (1) and (3) above, as modified by the effectiveness of the transactions referred to in Section 2.1 hereof. (d) RECEIVABLES: Except as otherwise disclosed on Annex D-3 to Part D, (1) TRW, directly or indirectly, Lusk or the Partnership owns all notes receivable and accounts receivable listed on Annexes D-1 and D-2 to Part D and Microwave will own as of the Closing all notes receivable and accounts receivable that are Acquired Assets; (2) all of such notes receivable and accounts receivable are or will be valid receivables arising in the Ordinary Course of Business and the reserves with respect thereto have been determined in accordance with generally accepted accounting principles consistently applied; and (3) none of such receivables are or will be owing to the Business by other subsidiaries or affiliates of TRW except as may be described in the Supplemental Accounting Principles set forth in Appendix E-1. (e) REAL ESTATE: Except as otherwise disclosed on Annex E-3(B) to Part E, (1) TRW or the Partnership owns all of the real properties listed as "owned" on Annex E-1 to Part E; (2) in all material respects, TRW, Lusk or the Partnership has the right under valid and existing leases to occupy and control as a lessee (subject to the terms of such leases and to the possible effect of the Bankruptcy Code or similar laws in the event of a lessor's bankruptcy after the Closing or the effect of a condemnation or confiscation of the leased premises after the Closing) all of the real property listed as "leased" on Annex E-2 to Part E (such leased property together with all "owned" real property listed on Annex E-1 to Part E hereinafter referred to as the "Business Facilities"); (3) neither TRW nor the Partnership is in Default under any such lease, which Default has had or is likely to have, individually or in the aggregate, a Material Adverse Effect; (4) to TRW's knowledge, the real properties listed on Annexes E-1 and E-2 are subject to no zoning or similar restrictions which prohibit conduct of the Business as the same is being conducted; and (5) the improvements to the real property listed on Annexes E-1 and E-2 to Part E are in reasonably good condition and repair, ordinary wear and tear excepted except for such failures to be in such 20 28 condition and repair would have individually or in the aggregate a Material Adverse Effect. (f) PERSONAL PROPERTY: (i) Except as otherwise disclosed on Annex F-5(B) to Part F, (1) neither TRW nor the Partnership nor Lusk is in Default under any lease of personal property listed in the Annexes to Part F, which Default has had or is likely to have, individually or in the aggregate, a Material Adverse Effect; (2) either TRW or the Partnership or Lusk has good and marketable title to, or a valid leasehold interest in, or license for, all of the items of personal property which are Acquired Assets, free and clear of all Encumbrances except for (x) properties and assets disposed of in the Ordinary Course of Business since December 31, 1995 and (y) Encumbrances which have not had and are not likely to have, individually or in the aggregate, a Material Adverse Effect; (3) without limiting the generality of the foregoing, TRW or the Partnership has, and upon the consummation of the Closing one of the Transaction Companies will have, good and marketable title to, or a valid leasehold interest in, or license for, all of the Acquired Assets, free and clear of all Encumbrances, other than (x) Encumbrances and restrictions on transfers which have not had, and are not likely to have, individually or in the aggregate, a Material Adverse Effect and (y) Encumbrances created by, through or under the Transaction Companies, including, without limitation, liens granted by the Transaction Companies to their lenders; and (4) the items of personal property which are Acquired Assets are in reasonably good condition and repair, ordinary wear and tear excepted except for such failures to be in such condition and repair would have individually or in the aggregate a Material Adverse Effect and (ii) in addition, without limiting the generality of this or any other clause in this Section 3.2, the Acquired Assets constitute all of the assets necessary for the conduct of the Business as currently conducted, except for such assets the absence of which would not have a Material Adverse Effect. (g) LIABILITIES: Except as otherwise disclosed on Annex G-3(B) to Part G, no member of the TRW Group is in Default under or with respect to any agreement, undertaking, note, bond, debenture, mortgage, indenture, security agreement, guaranty or other instrument, which Default has had or is likely to have, individually or in the aggregate, a Material Adverse Effect. (h) LITIGATION: Except as otherwise disclosed on Annex H-4(B) to Part H, (1) there presently exists no litigation, proceedings, actions, claims or investigations, pending, or to TRW's knowledge, threatened against or affecting the Business which would, individually or in the aggregate, have a Material Adverse Effect; and (2) no member of the TRW Group is subject to any injunction, order or decree of any court, agency or other governmental 21 29 authority which has had or is likely to have, individually or in the aggregate, a Material Adverse Effect. (i) CONTRACTS: Except as otherwise disclosed on Annex I-10(B) to Part I, (1) each of the agreements, contracts, commitments and other obligations listed or included in Annexes I-1 through I-9 to Part I is a valid and binding obligation of the member of the TRW Group party thereto and, to TRW's knowledge, the other party or parties thereto; (2) neither TRW nor the Partnership nor, to TRW's knowledge, any other party thereto has terminated, canceled or substantially modified any such contract, commitment or other obligation; (3) neither TRW nor the Partnership nor, to TRW's knowledge, any other party thereto is in Default under any such agreement, contract, commitment or other obligation, which Default is likely to have a Material Adverse Effect; and (4) neither TRW nor the Partnership is a party to any collective bargaining agreement with respect to the employees of the Business. (j) INTELLECTUAL PROPERTY: Except as set forth on Annex J-8(B) to Part J, (1) Annex J-7 is a complete and accurate list of the IS&S Significant Intellectual Property; (2) a member of the TRW Group is the owner of, or otherwise has a valid license or other right to use, the IS&S Significant Intellectual Property reasonably necessary for the conduct of the Business in the Ordinary Course of Business or as proposed to be conducted in connection with present plans for the Copernicus/File One system under development; (3) to TRW's knowledge, the use of the IS&S Significant Intellectual Property in the conduct of the Business in the Ordinary Course of Business and as proposed to be conducted in connection with present plans for the Copernicus/File One system under development does not infringe any Intellectual Property of any third party; (4) to TRW's knowledge, no member of the TRW Group has received notice of any claim and there is no basis for any valid claim that any IS&S Significant Intellectual Property is invalid and unenforceable by a member of the TRW Group in the conduct of the Business; (5) members of the TRW Group have taken reasonable security measures to protect the secrecy and confidentiality of, and to restrict the use of, the IS&S Significant Intellectual Property primarily as against Competing Businesses, as defined in the Non-Competition Agreement, and have entered, generally and as a matter of practice, into confidentiality agreements with their employees and other persons who, either alone or in concert with others, develop, invent or create IS&S Significant Intellectual Property or who have knowledge of or access to source code for the IS&S Significant Intellectual Property; (6) no member of the TRW Group has granted any third party the right to use, sublicense, distribute or acquire any IS&S Significant Intellectual Property except such rights as have been entered into in the Ordinary Course of 22 30 Business; and (7) neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will cause a default under or alter or impair any rights or give rise to any rights of termination or cancellation or loss of any right or benefit with respect to any IS&S Significant Intellectual Property provided that members of the TRW Group first have ninety (90) days to cure such as by way of obtaining a license. Consents required to be obtained in connection with the assignment to any of the Transaction Companies of any IS&S Intellectual Property will be obtained, to the extent required, in accordance with the procedures set forth Sections 4.5 and 7.2 of this Agreement. (k) EMPLOYEE BENEFITS: (1) Except as otherwise listed on Annex K-6(B) to Part K, neither TRW nor the Partnership has any material pension, profit-sharing, employee stock option or stock purchase, bonus, incentive compensation, life insurance or health insurance plan applicable to any employees of the Business; (2) Annex K-3 to Part K contains a complete list of each "Employee Welfare Benefit Plan" (as defined in Section 3(1) of ERISA) and Annex K-2 to Part K contains a list of each "Employee Pension Benefit Plan" (as defined in Section 3(2) of ERISA) sponsored or maintained by TRW or the Partnership for the benefit of employees engaged in the operation of the Business; and (3) except as otherwise disclosed in Part K, (x) each of TRW and the Partnership has been and currently is in compliance in all material respects with the applicable provisions of ERISA and the Code with respect to each Employee Welfare Benefit Plan and each Employee Pension Benefit Plan maintained by TRW or the Partnership for the benefit of employees engaged in the operation of the Business, and (y) to the knowledge of TRW, no event has occurred, and there exists no condition or set of circumstances, which has resulted in or which could result in the imposition of any liability on TRW or the Partnership under ERISA or the Code with respect to any Employee Welfare Benefit Plan or Employee Pension Benefit Plan maintained by TRW or the Partnership for the benefit of employees engaged in the operation of the Business. (l) PERMITS AND APPROVALS: Except as otherwise disclosed on Annex L-2(B) to Part L, the members of the TRW Group have been granted and currently hold all material permits, approvals, qualifications and other authorizations under any legal requirement of any government agency or board, whether foreign, federal, state or local, which are necessary for the conduct of the Business as the same is currently being conducted or currently proposed to be conducted by TRW, the Partnership, Lusk and IS&S International as of Closing, except where failure to have such permits, approvals, qualifications or other authorizations has not had and is not likely to have, individually or in the aggregate, a Material Adverse Effect. 23 31 (m) COMPLIANCE WITH LAWS AND ENVIRONMENTAL MATTERS: Except as otherwise disclosed on Annex M-1 to Part M, (1) the operations of the Business as heretofore and currently conducted were not and are not in violation of, nor is any member of the TRW Group in Default or in violation under, any laws, regulations or other legal requirements except for such violations or Defaults as have not had and are not likely to have, individually or in the aggregate, a Material Adverse Effect; and (2) the operations of the Business are not subject to any Environmental Conditions, and TRW has not received any Environmental Claims nor, to TRW's knowledge, are any such claims threatened, which have had or are likely to have, individually or in the aggregate, a Material Adverse Effect. (n) TAXES: Except as otherwise disclosed on Annex N-1 to Part N, (1) TRW, the Partnership and the Transaction Companies (i) have timely filed with the appropriate taxing authorities all material Tax Returns required to be filed and will file all such Tax Returns required to be filed through the Closing related to the operation of the Business and all such Tax Returns are true and correct in all material respects and (ii) have paid in full all Taxes shown to be due on such filed Tax Returns; (2) TRW, the Partnership and all of the Transaction Companies have paid in full all other Taxes that are due; (3) neither TRW, the Partnership nor any of the Transaction Companies have received any written notice of deficiency or assessment from any taxing authority with respect to liabilities for income or other material Taxes of the Business which have not been fully paid or finally settled; (4) there are no liens with respect to Taxes upon any of the properties or assets of the Business other than customary Liens for current Taxes not yet due and payable with respect to any material Taxes of TRW (relating to the Business), the Partnership or the Transaction Companies; and (5) none of TRW, the Partnership and the Transaction Companies have filed a consent under Code Section 341(f) concerning collapsible corporations. With respect to the Business, neither TRW, the Partnership nor the Transaction Companies have made any payment, are obligated to make any payment, or are a party to any agreement that could obligate them to make any payments that will not be deductible under Code section 280G or subject to the excise tax of Code section 4999 by reason of the change in control contemplated by this Agreement (but not including any representation with respect to any other change in control, including that of TRW). None of TRW, the Partnership and the Transaction Companies have been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii) and each of TRW, the Partnership and the Transaction Companies are a U.S. Person within the meaning of Code Section 7701(a)(30). TRW is the "common parent" of an "affiliated group" of 24 32 corporations (as those terms are used in section 1504(a) of the Code and the Treasury regulations promulgated under section 1502 of the Code) that includes Microwave and all of the Transaction Companies except Lusk. TRW, Microwave and the Transaction Companies except Lusk were and are eligible to file consolidated federal income Tax Returns for the taxable periods ending on or before the date hereof. Microwave and the Transaction Companies except Lusk will be included in the U.S. federal consolidated return of TRW for the period including the Closing Date. TRW, the Partnership and the Transaction Companies have withheld from their employees, customers, and other payees (and timely paid to the appropriate governmental authority) all amounts required by the Tax withholding provisions of applicable federal, state, local, and foreign laws (including, without limitation, income, social security, and employment Tax withholding for all types of compensation, and withholding or payments to non-United States persons) for all periods, through the date hereof. For federal income Tax purposes, none of the Transaction Companies is a partner nor treated as a partner in any partnership; joint venture, or any other entity treated as a partnership related to the operation of the Business except as described in the Recapitalization transactions. (o) PARTNERSHIP: Except as otherwise disclosed on Annex O-2 to Part O, (1) a copy of the Partnership Agreement between TRW and Elsevier as currently in effect is set forth in Annex O-1 to Part O; (2) the Partnership is a general partnership, duly organized and validly existing under the laws of the State of Ohio; (3) the Partnership is duly qualified or licensed to do business in each jurisdiction where the failure to be so qualified or licensed would have a Material Adverse Effect; (4) TRW's percentage ownership of the Partnership is 60% ("TRW Partnership Interest") and the Elsevier percentage ownership of the Partnership is 40% (the "Elsevier Partnership Interest") (the TRW Partnership Interest and the Elsevier Partnership Interest are collectively referred to as the "Partnership Interests"); (5) pursuant to an Agreement of Purchase and Sale among TRW, Elsevier and Reed Elsevier, Inc. dated as of August 22, 1995, TRW has the right to purchase the Elsevier Partnership Interest on the Closing Date; and (6) upon the consummation of the transactions contemplated by this Agreement, Purchaser will acquire good and marketable title to the Partnership Interests, free and clear of all liens, charges, encumbrances or security interests of any kind or nature. (p) NO MATERIAL EVENTS: Except as otherwise disclosed on Annex P-1(B) to Part P, the Business has been conducted only in the Ordinary Course of Business since December 31, 1995, and no Material Events have occurred since that date. Without limiting the generality of the foregoing, except for those matters set forth in Part P, which matters have not had, individually or 25 33 in the aggregate, a Material Adverse Effect, (1) TRW, the Partnership, Lusk and IS&S International have conducted the Business since December 31, 1995 so that TRW would not have been in violation of Section 4.2 hereof if such Section had been applicable during the period from December 31, 1995 through the date hereof; and (2) since December 31, 1995, none of TRW, the Partnership, Lusk and IS&S International has taken any action which would have required the approval of the Purchaser under Section 4.3 hereof if such action had occurred after the date hereof and before the Closing. (q) CUSTOMERS AND SUPPLIERS: Except as otherwise disclosed on Annex Q-1 to Part Q, since December 31, 1995, (1) no significant subscriber, reseller or other customer of the Business (or group of subscribers, resellers and other customers which is significant in the aggregate) has given TRW, the Partnership, Lusk or IS&S International notice or, to the knowledge of TRW, has taken any other action to reduce materially the amount purchased of, data or other goods or services from the Business as compared to 1995, the result of which has caused or is likely to cause, individually or in the aggregate, a Material Adverse Effect; and (2) no significant vendor, contributor or other supplier to the Business (or group of vendors, contributors and suppliers which is significant in the aggregate) has given TRW, the Partnership, Lusk or IS&S International notice or, to the knowledge of TRW, has taken any action to cease to sell, contribute or supply data or other goods or services to the Business or restrict the amount, or change the price or terms to the Business, of data or other goods or services in a manner which has had or is likely to have, individually or in the aggregate, a Material Adverse Effect. (r) EMPLOYEES: Except as otherwise disclosed on Annex R-2 to Part R, none of the employees of the Business is represented by a labor union. To TRW's knowledge, no petition has been filed or proceedings instituted by any employee or group of employees with any labor relations board seeking recognition of a bargaining representative and there is no organizational effort currently being made or threatened by or on behalf of any labor union to organize any employees of the Business. There are no controversies or disputes pending between the Business on the one hand and any of its employees on the other hand, except for controversies and disputes with individual employees arising in the Ordinary Course of Business which have not had and are not likely to have, individually or in the aggregate, a Material Adverse Effect. (s) TRANSACTIONS WITH AFFILIATES: Except as otherwise disclosed on Annex S-5 to Part S, set forth in Annexes S-1 through S-3 are lists of (1) all Contractual Obligations relating to the Business between or among any of the Partnership, Lusk, IS&S International, Holdings, Operating Company and 26 34 TRW Hotel, on the one hand, and TRW or any of its subsidiaries on the other hand; (2) all other Contractual Obligations relating to the Business, if any, between or among any of TRW and its subsidiaries; and (3) the material services provided to the Business by, and all material transactions between the Business and, TRW or any of its subsidiaries (other than the Partnership, Lusk and IS&S International) during the fiscal year ended December 31, 1995 not listed in Clauses (1) and (2) above; and (4) all material tangible assets used in the conduct of the Business which are not located at a Business Facility. (t) REQUIRED CONSENTS: Except as listed in Appendix G, no consent or approval is required under any of the contracts, leases, licenses, permits, approvals and other similar items constituting part of the Acquired Assets in order to consummate the transactions contemplated hereby without breach, violation or loss of right thereunder, other than such consents or approvals the absence of which would not, individually, have a Material Adverse Effect. 3.3 PURCHASER'S REPRESENTATIONS AND WARRANTIES: Purchaser, as of the date hereof, hereby represents and warrants to TRW the following: (a) ORGANIZATION AND EXISTENCE: Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Delaware. (b) POWER AND AUTHORITY: Purchaser has full corporate power and authority under its Certificate of Incorporation and By-Laws and under the laws of Delaware to execute, deliver and perform this Agreement and the Other Agreements and to consummate the transactions contemplated hereby and thereby. (c) AUTHORIZATION: The execution, delivery and performance of this Agreement and the Other Agreements have been duly authorized by all requisite corporate actions on the part of Purchaser. (d) BINDING EFFECT: This Agreement is a valid, binding and legal obligation of Purchaser. (e) NO DEFAULT: Neither the execution and delivery of this Agreement nor Purchaser's full performance of its obligations hereunder will violate or breach or otherwise constitute or give rise to a Default under the terms or provisions of Purchaser's Certificate of Incorporation or By-laws or of any material contract, commitment or other obligation to which Purchaser is a party. (f) FINDERS: Other than in connection with the debt financing, Purchaser has not engaged and is not directly or indirectly obligated to any person acting as a 27 35 broker, finder or in any other similar capacity in connection with the transactions contemplated hereby. (g) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE: Neither this Agreement, including, without limitation, Purchaser's representations and warranties of Purchaser in this Section 3.3, nor any certificate furnished or to be furnished by or on behalf of Purchaser contains or will contain any untrue statement of material fact. 3.4 DISCLAIMER: Except as set forth in Article III of this Agreement, in the Other Agreements or in the certificates furnished in connection herewith or therewith, neither party has made any further representation or warranty, either express or implied, concerning the subject matter of this Agreement or the Other Agreements and neither party has relied on any such further representation or warranty. This Agreement will not be governed by the warranties provided by Article 2 of the Uniform Commercial Code or similar laws applicable to commercial sales as adopted in any jurisdiction. 3.5 SURVIVAL: The parties' respective representations and warranties contained in this Agreement will survive the Closing as set forth in this Section 3.5. Neither party will have any liability to the other arising out of a breach of any representation or warranty contained in Article III of this Agreement, and any claim or cause of action based thereupon will expire and terminate, unless the party claiming that such breach occurred delivers to the other party written notice and a reasonably full explanation of the alleged breach in light of the facts then known: (a) On or before 5:00 p.m. (Eastern Standard U.S.A. Time) on the first anniversary of the Closing with respect to all representations and warranties, except as set forth in (b) and (c) below; (b) On or before 5:00 p.m. (Eastern Standard U.S.A. Time) on the third anniversary of the Closing for the representations contained in Section 3.2(m) hereof; and (c) On or before 5:00 p.m. (Eastern Standard U.S.A. Time) on the thirtieth day following the expiration of the applicable statute of limitations with respect to the matters covered in Sections 3.2(k) and 3.2(n) hereof; provided, however, that there will be no limitation as to the time in respect of which any claim or cause of action may be made or initiated based on knowing, intentional conduct that constitutes common law fraud. 28 36 ARTICLE IV ACTIONS BEFORE CLOSING 4.1 ACCESS TO RECORDS: Between the date of this Agreement and the Closing, and subject to the obligation of confidentiality imposed by Section 11.2 hereof, TRW will afford, and will cause each member of the TRW Group to afford, duly authorized representatives of Purchaser, displaying appropriate credentials, free and full access during normal business hours to all of the assets, properties, books, contracts, records and documents of the Business and will permit such representatives to make abstracts from, or take copies of, such books, records or other documentation, or to obtain temporary possession of any thereof as may be reasonably required by Purchaser, and TRW will furnish, and will cause each member of the TRW Group to furnish, to Purchaser such information concerning the Business and its assets, liabilities or condition as Purchaser may reasonably request. Notwithstanding the foregoing, TRW will not be obligated to afford, nor will it be obligated to cause each member of the TRW Group to afford, such access, right to make abstracts or copies, obtain temporary possession or provide information with respect to any books, records or other documents that are subject to an attorney-client privilege, attorney work product privilege or other legal privilege in connection with any litigation, proceedings, actions, claims or investigations pending or threatened against any member of the TRW Group or affecting the Business, provided that TRW will supply to Purchaser a general description of the matter to which they relate. 4.2 INTERIM CONDUCT OF THE BUSINESS: TRW hereby covenants to Purchaser that, from the date of this Agreement to the Closing, TRW will conduct the Business, and will cause each member of the TRW Group to conduct the Business, only in the Ordinary Course of Business, subject to Purchaser's approval of certain transactions pursuant to Section 4.3 hereof. Without limiting the generality of the foregoing, insofar as the Business is concerned, TRW will use all reasonable efforts, and will cause each member of the TRW Group to use all reasonable efforts, to: (a) preserve the Business' relationships with suppliers, customers, employees, creditors and others having business dealings with the Business; (b) maintain in full force and effect existing policies of insurance which materially affect the Business; (c) maintain all Intellectual Property to be included as part of the Acquired Assets in substantially the same standing as exists on the date of this Agreement; 29 37 (d) continue performance in the ordinary course of their obligations under contracts, commitments or other obligations to be included as part of the Acquired Assets; and (e) continue to discharge liabilities and obligations in the Ordinary Course of Business. 4.3 PURCHASER'S APPROVAL OF CERTAIN TRANSACTIONS: Except as may otherwise be required under this Agreement, from the date of this Agreement to the Closing, insofar as the Business is concerned, the members of the TRW Group will refrain, and TRW will cause the Partnership to refrain, from any of the following without the prior approval of Purchaser, which approval will not be unreasonably withheld: (a) incur or permit the incurrence of any obligation or other liability which would constitute an Assumed Liability, except in the Ordinary Course of Business or incur or permit the incurrence of any obligation or other liability relating to debt for borrowed money, including, without limitation, capitalized lease obligations; (b) purchase or dispose of any real property or real property interest to be included as part of the Acquired Assets; (c) enter into any lease of real property used primarily in the Business or any renewals thereof involving a term of more than one (1) year or rental obligation exceeding One Hundred Thousand Dollars ($100,000) per annum in any single case or Five Hundred Thousand Dollars ($500,000) per annum in the aggregate; (d) enter into any lease of personal property used primarily in the Business or any renewals thereof involving a term of more than one (1) year or rental obligation exceeding Five Hundred Thousand Dollars ($500,000) per annum in any single case or One Million Dollars ($1,000,000) per annum in the aggregate; (e) voluntarily permit to be incurred any Encumbrances on any of the Acquired Assets, except in the Ordinary Course of Business; (f) increase the rate of compensation for any of the employees of the Business or otherwise enter into or alter any employment agreement primarily affecting the Business, except for normal merit or cost-of-living increases and incentive payments in accordance with the past practices of TRW and the Partnership, including the withholding or application of special incentives 30 38 relating to project performance but not to exceed Five Hundred Thousand Dollars ($500,000) per annum in the aggregate of special incentives; (g) commence, enter into or alter any pension, profit-sharing, employee stock option or stock purchase, bonus, incentive compensation plans, life insurance or health insurance plans applicable to any of the employees of the Business; (h) make any single new commitment or increase any single previous commitment for capital expenditures which will be an Assumed Liability in an amount exceeding Five Hundred Thousand Dollars ($500,000) or One Million Dollars ($1,000,000) per annum in the aggregate; (i) accelerate or delay the delivery or sale of products or services, the incurrence of capital expenditures, the satisfaction of payables or other liabilities or the collection of receivables of the Business except in the Ordinary Course of Business; (j) waive any right of substantial value, cancel any debt or claim except in the Ordinary Course of Business or voluntarily suffer any extraordinary loss; (k) sell, assign, transfer, license or convey any of the Intellectual Property to be included as part of the Acquired Assets, except in the Ordinary Course of Business; or (l) make any investment in international operations or enter into any agreement to make any such investment, except for investments in existing international operations in the Ordinary Course of Business but not to exceed Five Hundred Thousand Dollars ($500,000) in the aggregate per annum. Representatives of TRW, the Partnership and Purchaser will meet periodically to discuss the matters listed in this Section 4.3 that may occur within the following sixty-day period, with the objective of TRW and the Partnership obtaining preapproval from Purchaser of as many matters as may be reasonably possible. For items not preapproved as set forth above, Purchaser will provide a response within 72 hours. 4.4 OTHER AGREEMENTS: Between the date of this Agreement and the Closing, the parties will negotiate, in good faith, such other and further agreements as they may deem appropriate for the consummation of the Recapitalization. In addition, at the Closing, the parties will execute and deliver the Noncompetition Agreement, the Transition Agreement, the Trademark Agreement and the Shared Liabilities Agreement in substantially the form set forth in Appendices H, I, J and L, respectively, hereto and the shareholders' agreement with the terms set forth in Annex P hereto; provided, however, that at the request of the Purchaser made prior to the Closing, TRW agrees to negotiate in 31 39 good faith to make such modifications to such form of Transition Agreement as may be required to provide for the provision by TRW, at a cost equal to TRW's internal cost, of such additional services currently provided to the Business as the parties may agree for such reasonable period as the parties may mutually agree upon. 4.5 CONSENTS TO ASSIGNMENT: Between the date of this Agreement and the Closing, TRW will use all reasonable efforts to obtain, and will cause each member of the TRW Group to use all reasonable efforts to obtain, the consents or approvals (or effective waivers thereof) of assignment from those persons whose consents or approvals are required for the assignment of TRW's rights under those contracts, leases, licenses, permits, approvals and other items included in the Acquired Assets identified on Appendix G hereto. TRW further covenants to Purchaser that, between the date of this Agreement and the Closing, TRW will use all reasonable efforts to obtain, and will cause each member of the TRW Group to use all reasonable efforts to obtain, the consents or approvals (or effective waivers thereof) of other persons whose consents or approvals are required for the assignment of TRW's rights under other contracts, leases, licenses, permits, approvals and other similar items constituting part of the Acquired Assets. Failure of the TRW Group to obtain, after a good faith attempt and use of all reasonable efforts, the consents or approvals described in this Section 4.5 will not give rise to monetary damages against TRW. 4.6 GOVERNMENT APPROVALS: Purchaser and the members of the TRW Group will make all necessary filings, as promptly as practicable, including, without limitation, those required under the HSR Act, in order to facilitate prompt consummation of the transactions contemplated hereby and by the Other Agreements. In addition, each of Purchaser and the members of the TRW Group will use its best efforts (including, without limitation, payment of any required fees) and will cooperate fully with each other to (i) comply as promptly as practicable with all governmental requirements applicable to the transactions contemplated by this Agreement and the Other Agreements and (ii) obtain promptly all approvals, permits, orders or other consents of any applicable governmental authorities necessary for the consummation of the transactions contemplated by this Agreement and the Other Agreements. Each of the parties hereto will furnish to the other party such necessary information and reasonable assistance as such other party may reasonably request in connection with the foregoing. Purchaser will pay the statutory HSR fee in its entirety. Subject to the Confidentiality Agreement, each member of the TRW Group and Purchaser will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other may reasonably request in connection with the foregoing and in seeking early termination of any applicable waiting periods under the HSR Act or in connection with other regulatory approvals and consents. Each of TRW and Purchaser agrees to respond promptly to and comply fully with any request for additional information or documents under the HSR Act. Subject to the Confidentiality Agreement, each member of the TRW Group will provide Purchaser and Purchaser will provide TRW with copies of all correspondence, 32 40 filings or communications (or memoranda setting forth the substance thereof) between such party or any of its representatives, on the one hand, and any governmental agency or authority or members of their respective staffs, on the other hand, with respect to this Agreement and the transactions contemplated hereby. 4.7 CONSENT ORDERS AND ASSURANCES OF DISCONTINUANCE: Between the date of this Agreement and the Closing, the parties will cooperate fully with each other in obtaining a release of TRW effective as of the Closing Date from the Consent Orders and the Assurances of Discontinuance and the substitution of Holdings or Operating Company (as the case may be) as the affected party thereunder. 4.8 PUBLIC ANNOUNCEMENTS: Except as the parties will mutually agree, no party will issue any report, statement or press release or otherwise make any public statements with respect to this Agreement or the Other Agreements and the transactions contemplated hereby and thereby, except as in the reasonable judgment of the party may be required by law or in connection with the obligations of a publicly-held, exchange-listed company, in which case the language of any such report, statement or press release will, to the extent practicable, be mutually agreed to by the parties, which agreement will not be unreasonably withheld. 4.9 EXCLUSIVITY: During the term of this Agreement, TRW will not, and will cause each member of the TRW Group and their respective affiliates, directors, officers, employees, representatives and agents (including, without limitation, Bear, Stearns & Co. Inc.) not to, directly or indirectly, solicit or initiate or enter into discussions or transactions with, or encourage, or provide any information to, any corporation, partnership or other entity or group (other than Purchaser and its designees) concerning any sale of stock or partnership interests of, or any merger or sale of securities or substantial assets of, or any similar transaction involving, the Business or any of its component corporations or partnerships. TRW represents that neither it nor any of its affiliated entities is a party to or bound by any agreement with respect to any such transaction other than as contemplated by this Agreement. 4.10 TERMINATION OF INTERCOMPANY OBLIGATIONS: Prior to the Closing, TRW and its subsidiaries will have terminated all arrangements, contracts, obligations, liabilities and understandings with each of the Transaction Companies other than this Agreement and the Other Agreements. 4.11 NAME CHANGES: Between the date hereof and the Closing, Purchaser will advise TRW of new corporate names chosen by Purchaser for each of Holdings, Operating Company and TRW Hotel, such names to contain no reference to TRW or any of its subsidiaries or affiliates, and TRW will take appropriate action to cause such entities to amend their respective articles of incorporation to change their names to the 33 41 names so designated by Purchaser as of or prior to the Closing. ARTICLE V CONDITIONS 5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS: The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions at or before the Closing, any one or more of which may be waived in writing, in whole or in part, by Purchaser: (a) The representations and warranties made by TRW in Sections 3.1 and 3.2 of this Agreement will be true, accurate and complete as of the Closing as if such representations and warranties had been made anew as of the Closing, except with respect to the effect of the Recapitalization described in Section 2.1 or transactions permitted by this Agreement, provided, however, that such transactions will not affect those representations and warranties in Section 3.2(t) and in no event will the effect of such transactions limit the provisions of Sections 4.5 or 7.2 hereof; (b) Each member of the TRW Group will have performed and complied with all covenants and conditions required by this Agreement and the Other Agreements to be performed or satisfied by the members of the TRW Group, and each member of the TRW Group will have delivered to Purchaser all documents, certificates and instruments required to be delivered by members of the TRW Group under the terms of this Agreement, including, without limitation, the documents referred to on Appendix M hereto; (c) Each member of the TRW Group will have taken all corporate actions and other proceedings to be taken by it in connection with the transactions contemplated by this Agreement, and all documents incidental thereto will be reasonably satisfactory in form and substance to Purchaser; (d) All requisite governmental approvals and authorizations necessary for consummation of the transactions contemplated hereby will have been duly issued or granted, and the waiting period as prescribed by the HSR Act and the rules of the Federal Trade Commission thereunder will have expired; (e) There will not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions herein contemplated and no legal action or governmental investigation which might reasonably be expected to result in any such injunction or order will be pending; 34 42 (f) Purchaser will have received adequate assurances to its reasonable satisfaction that Operating Company will receive the funds contemplated by the financings described in (i) the Senior Subordinated Notes Forward Underwriting Commitment Letter dated February 7, 1996 from Chemical Securities, Inc. and BT Securities Corporation to Purchaser and (ii) the Senior Secured Credit Facilities Commitment Letter dated February 7, 1996 from Chemical Bank, Chemical Securities, Inc., Bankers Trust Company and BT Securities Corporation to Purchaser; (g) TRW will have Activated the Copernicus system and will have reasonably and in good faith determined that such system will permit continuity of normal business operations, will implement the new relational database architecture and will provide overall performance and overall functionality no worse than the predecessor legacy system, and TRW will share with Purchaser the basis for its determination; (h) The Partnership will have assigned the REDI Trademark to Operating Company; (i) Subject to the provisions of Section 7.2(b) hereof, TRW, IS&S International and Microwave will have obtained all of the consents and approvals listed in Appendix G or effective waivers thereof; (j) TRW and TRW Hotel will have delivered to Holdings a FIRPTA Certificate as provided in Treasury Regulation section 1.1445-2(b)(2); and (k) Since December 31, 1995, there will have been no material adverse change in the business, assets, results of operations or condition (financial or otherwise) of the Business taken as a whole and the Purchaser will have received a certificate to this effect signed by the chief executive officer of Operating Company on behalf of TRW. 5.2 CONDITIONS TO TRW'S OBLIGATIONS: The obligation of the members of the TRW Group to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions at or before the Closing, any one or more of which may be waived in writing, in whole or in part, by the members of the TRW Group: (a) The representations and warranties made by Purchaser in Section 3.3 of this Agreement will be true, accurate and complete as of the Closing as if such representations and warranties had been made anew as of the Closing, except with respect to the effect of transactions contemplated or permitted by this Agreement; 35 43 (b) Purchaser will have performed and complied with all covenants and conditions required by this Agreement to be performed or satisfied by Purchaser, and Purchaser will have delivered all documents, certificates and instruments required to be delivered by Purchaser under the terms of this Agreement, including, without limitation, the documents referred to on Appendix N hereto; (c) Purchaser will have taken all corporate actions and other proceedings to be taken by it in connection with the transactions contemplated by this Agreement, and all documents incidental thereto will be reasonably satisfactory in form and substance to TRW; (d) All requisite governmental approvals and authorizations necessary for consummation of the transactions contemplated hereby will have been duly issued or granted, and the waiting period as prescribed by the HSR Act and the rules of the Federal Trade Commission thereunder will have expired; (e) There will not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions herein contemplated and no legal action or governmental investigation which might reasonably be expected to result in any such injunction or order will be pending; (f) The Equity Investors will have made capital contributions to Purchaser in an aggregate cash amount of not less than Two Hundred Fifty-Five Million Dollars ($255,000,000), unless the failure to make such capital contributions is caused by a breach by any member of the TRW Group of any provision hereof or duty in connection herewith; (g) TRW will have received adequate assurances to its reasonable satisfaction that Operating Company will obtain debt financing in an aggregate amount of not less than Eight Hundred Five Million Dollars ($805,000,000), unless the failure to obtain such debt financing is caused by a breach by any member of the TRW Group of any provision hereof or duty in connection herewith; (h) The Holdings shareholders agreement will contain the terms set forth in Appendix P hereof, and any other provisions in such agreement materially affecting TRW's rights thereunder will be reasonably satisfactory to TRW; (i) The terms of the Senior Convertible Preferred Stock of Holdings will contain the terms set forth in Appendix Q hereof, and the other terms, if any, 36 44 of the Senior Convertible Preferred Stock of Holdings will be reasonably satisfactory to TRW; (j) Purchaser (x) will have disclosed to investors (including bank, institutional or other investors), in a manner reasonably satisfactory to TRW, in any financing of all or a portion of the Purchase Price that TRW will have no obligations with respect to the placement of bank debt or debt securities and (y) will have included provisions to that effect in any terms of any such debt placement; and (k) Purchaser, Holdings, Operating Company and TRW will have entered into an agreement reasonably satisfactory to TRW pursuant to which Holdings and Operating Company will indemnify, defend and hold harmless TRW and its subsidiaries and affiliates, and their respective officers, directors, employees, representatives, controlling persons and agents from and against any and all liabilities, damages, losses, claims, costs and expenses (including attorneys' fees) arising out of or resulting from any offer or sale of securities in connection with the financing of all or any portion of the Purchase Price; provided, however, that Holdings and Operating Company will not have any liability with respect to any diminution in the value of shares of capital stock in Holdings. ARTICLE VI TAX MATTERS 6.1 CHARACTERIZATION OF TRANSACTION AND REPORTING OF PURCHASE PRICE: The parties hereto recognize that the transactions that are contemplated by this Agreement constitute a fully taxable sale for all Tax purposes of all of the assets of the Business. The parties hereto agree to allocate the Purchase Price (and all other capitalized costs) plus liabilities assumed to the Acquired Assets, for all Tax purposes based upon the relative fair market value of such assets as determined by an independent appraisal to be obtained by Purchaser at its expense; provided, however, that the parties hereto agree that the Trademark License will be valued at $26 million and the tangible assets in California will be valued at their net book value as detailed on Schedule 6.1 hereto and no value is assigned to the covenant not to compete. Except as provided below in this Section 6.1, it is the intention of the parties that TRW will accept liability for and pay any and all Taxes of the TRW Group due for or attributable to Tax periods ending on or before the Closing Date and that portion related to the operation of the Business on or prior to the Closing Date for any Tax period ending after the Closing Date. It is the intention of the parties that the TRW affiliated group (other than the Transaction Companies) will accept liability for and pay any and all Taxes attributable to the transfer of Acquired Assets by TRW and Microwave to Operating Company. It is the intention of the parties that the 37 45 TRW affiliated group (other than the Transaction Companies) will accept liability for and pay all Taxes for any Transaction Companies attributable to the deemed sale of assets pursuant to the Section 338(h)(10) Election; provided, however, for those state jurisdictions which do not respect or allow the Section 338(h)(10) Election, the TRW affiliated group (other than the Transaction Companies) will pay Taxes on the sale of stock, but its obligations to pay Taxes on the deemed asset sale under the Section 338(h)(10) Election will be reduced correspondingly. Thus, it is the intention of the parties that the TRW affiliated group's gain from the transactions contemplated in this Agreement will be subject to Tax only once for any state or local purposes. The following provisions are intended to effectuate these principles and will be interpreted by the parties in a manner consistent with these principles. 6.2 TAX RETURNS: ----------- (a) TRW will file with the appropriate taxing authorities all Tax Returns required to be filed on its behalf and on behalf of the Partnership and the Transaction Companies for any taxable period ending on or before the Closing Date, and TRW will include the taxable income of the Partnership and the Transaction Companies (to the extent permitted by law) for each such period in its consolidated federal income Tax Return and in any consolidated, combined or unitary Tax Return (including Tax Returns based on or measured by net income) filed by TRW or any affiliate thereof in which such income can be included under applicable state or local law. Each Transaction Company will furnish Tax information to TRW for inclusion in such consolidated, combined or unitary Tax Returns filed by TRW or an affiliate thereof for the period which includes the Closing Date in accordance with such corporation's past custom and practice and TRW will make a reasonable effort to notify the Transaction Company if it utilizes the Tax information in a manner inconsistent with the manner in which it is provided. TRW and its affiliates will take no position on such Tax Returns that relate to any Transaction Company or any of its subsidiaries that is inconsistent with each of such entity's past custom and practice. TRW and its affiliates agree that they will take all actions necessary to treat the transactions contemplated by this Agreement as being a fully taxable sale of all of the assets of the Business pursuant to Section 338(h)(10) of the Code or otherwise and not subject to the anti-churning rules of Code Section 197(f)(9). TRW and its affiliates further agree that they will not take, or cause to be taken, any action which would be inconsistent with or prejudicial to the immediately preceding sentence. (b) Holdings will cause the Transaction Companies to file with the appropriate taxing authorities all Tax Returns required to be filed by them for any taxable period ending after the Closing Date and will remit any Taxes due in respect of such Tax Returns. TRW will pay to Holdings the Taxes for 38 46 which TRW is liable pursuant to Sections 6.1 and 6.3 hereof, but which are payable in respect of Tax Returns to be filed by Holdings pursuant to this Section 6.2(b) within 10 business days prior to the due date (taking account of any extensions of time for filing) for the filing of such Tax Returns but no earlier than 20 business days after such Tax Returns and the tax allocation calculations have been submitted to TRW for review and approval. (c) TRW will not be obligated or responsible for filing any returns or amended returns to reflect any carrybacks of post-Closing net operating losses of the Transaction Companies. 6.3 LIABILITY FOR PRE-CLOSING TAXES: TRW will be liable for and will pay, and hereby indemnifies, each Transaction Company for all Taxes, including, but not limited to, Taxes resulting from the Transaction Companies except Lusk ceasing to be members of the affiliated group (as defined in Section 1504(a) of the Code without regard to the limitations contained in Section 1504(d) of the Code) that includes TRW or any predecessors; Taxes imposed on any person for any taxable year (a) under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), (b) as a transferee or successor, or (c) by contract in or otherwise; amounts pursuant to any guaranty, indemnification, tax sharing, or similar agreement made on or before the Closing Date relating to the sharing of liability for payment of Taxes; Taxes resulting from the breach of any representation or warranty in Section 3.2(n) hereof imposed on TRW, the Partnership or any Transaction Company, or for which any of TRW, the Partnership, and the Transaction Companies may otherwise be liable; Taxes imposed by reason of, attributable to, or resulting from the Section 338(h)(10) Election as set forth in Sections 6.1 and 6.5 hereof; and Taxes resulting from transactions described in Sections 2.1(a) through 2.1(i) hereof, for any taxable year ending on or prior to the Closing Date and for the portions of such taxable year or period ending on or prior to the Closing Date (or, in the case of consolidated, combined or unitary Tax Returns, including TRW, any period including the Closing Date) and any costs and expenses (including, without limitation, costs of collection and attorneys' fees) arising out of or resulting from TRW's liability and indemnity for Taxes hereunder. TRW will be entitled to retain any refund of Taxes with respect to the Partnership and the Transaction Companies relating to any such periods. In order appropriately to apportion any income Taxes relating to any taxable year or period that begins before and ends after the Closing Date, the parties hereto will, to the extent permitted by applicable law, elect with the relevant taxing authority to terminate the taxable year as of the Closing Date (provided, however, that any Taxes related to the Section 338(h)(10) Election will be determined as provided in Section 6.1 and 6.5 hereof). In any case where applicable law does not permit any company to treat the Closing Date as the end of a taxable year of such corporation, then whenever it is necessary to calculate the liability for income or franchise Taxes of such company for a portion of a taxable year, such determination will (unless otherwise agreed to in writing by Holdings and TRW) be determined by a closing of such corporation's 39 47 books at the end of the Closing Date (provided, however, that any Taxes related to the Section 338(h)(10) Election will be determined as provided in Section 6.1 and 6.5 hereof), except that exemptions, allowances or deductions that are calculated on an annual basis, such as the deduction for depreciation, will be apportioned on a daily basis. In order appropriately to apportion any Taxes, other than income or franchise Taxes, relating to any taxable year or period that begins before and ends after the Closing Date, (i) ad valorem Taxes (including, without limitation, real and personal property Taxes) will be accrued on a monthly basis over the period for which the Taxes are levied, or if it cannot be determined over what period the Taxes are being levied, over the fiscal period of the relevant taxing authority, in each case irrespective of the lien or assessment date of such Taxes, and (ii) franchise and other privilege Taxes not measured by income will be accrued on a monthly basis over the period to which the privilege relates. 6.4. TAX AUDITS RELATING TO THE BUSINESS: (a) TRW will give notice to Holdings of any audits of or administrative or court proceedings relating to TRW's or any affiliate's consolidated, combined or unitary Tax Returns related to the operations of the Business for periods ending prior to the Closing Date, and will keep Holdings and its counsel informed of the progress of, and issues involved in, the same, all to the extent that such returns relate to the Partnership or the Transaction Companies. TRW will be entitled to control the defense of any such audits or proceedings. (b) Holdings will give notice to TRW of any Tax claim relating to any taxable year or period that includes the Closing Date, and will keep TRW and its counsel informed of the progress of, and the issues involved in, the same, in each case which may be the subject of indemnification by TRW pursuant to this Agreement. Holdings will be entitled to control the defense and resolutions of any such audits or proceedings; provided, however, that if any Transaction Company settles any Tax claim for the portion of a taxable year or period ending on or prior to or after the Closing Date or including the Closing Date which may be the subject of indemnification by TRW pursuant to this Agreement without the prior written consent of TRW, which consent will not be unreasonably withheld, TRW will be released from any indemnification obligations hereunder. 6.5. CODE SECTION 338(H)(10) ELECTION AND CODE SECTION 197(F)(9)(B): TRW agrees to join with Holdings in making an election under Section 338(h)(10) of the Code (and any corresponding elections under state, local, or foreign tax law) (collectively, a "Section 338(h)(10) Election") with respect to the actual or deemed purchase and sale of the stock of Operating Company, TRW Hotel and Lusk. TRW will pay any Tax, including any federal, foreign, state and local Taxes, whether determined on a consolidated, combined, unitary, separate or other return basis, attributable to, arising out 40 48 of or resulting from the making of the Section 338(h)(10) Election in accordance with Section 6.1 hereof and will indemnify the Partnership and the Transaction Companies against any Taxes arising out of any failure to pay such Tax. TRW will also pay any state, local, or foreign Tax (and indemnify the Partnership and the Transaction Companies against any Taxes arising out of any failure to pay such Tax) attributable to an election under state, local or foreign law similar to the election available under Section 338(g) of the Code (or which results from the actual or deemed making of an election under Section 338(g) of the Code) with respect to the actual or deemed purchase and sale of the stock of the Transaction Companies hereunder where the state, local, or foreign tax jurisdiction does not provide or recognize a Code Section 338(h)(10) Election. Notwithstanding the above, TRW's obligations hereunder will be reduced with respect to the state Taxes on the deemed sale of assets under Section 338(h)(10) Election in any state, where both (i) TRW or Microwave actually recognizes gain on the sale of Operating Company stock to Holdings that is taxed in that state and (ii) such state does not recognize the Section 338(h)(10) Election, by the amount of Taxes paid with respect to the sale of stock in Operating Company in that particular state. In addition, TRW will pay that portion of any income or similar Tax for the Transaction Companies (including Taxes in Texas and Ohio) due for a Tax period ending after the Closing Date to the extent such Tax is measured by gain or income recognized on account of the Section 338(h)(10) Election or the transfer of Acquired Assets. TRW and its affiliates will comply fully with all filing and other requirements necessary to effect the Section 338(h)(10) Election. In addition, at the request of Holdings), TRW and its affiliates will make an election under Code Section 197(f)(9)(B) in connection with the transactions contemplated by this Agreement. 6.6. COOPERATION REGARDING TAX MATTERS: The parties hereto will provide such necessary information as any other party hereto may reasonably request in connection with the preparation of such party's Tax Returns, or to respond to or contest any audit, prosecute any claim for refund or credit or otherwise satisfy any legal requirement relating to Taxes of each party hereto or their respective affiliates. 6.7. TAX SHARING AGREEMENTS: All Tax sharing agreements, policies, arrangements and practices between TRW or any of its affiliates and the Partnership or the Transaction Companies will terminate as of the Closing Date and will have no further effect for any taxable year (whether the current year, a future year, or a past year). TRW and its affiliates on the one hand and the Partnership and each of the Transaction Companies on the other will cancel any intercompany accounts in respect of Taxes with each other as of the Closing Date as provided in Section 4.10 hereof. Any powers of attorney with respect to Taxes of the Partnership or the Transaction Companies currently in force will be terminated effective as of the Closing. 6.8. PAYMENT OF TRANSFER TAXES AND OTHER CHARGES: TRW will pay all transfer Taxes, if any, including, but not limited to, sales, use, and value added Taxes due 41 49 on account of the Recapitalization transactions described in this Agreement. Purchaser and the Transaction Companies assume responsibility for and will pay any and all Taxes, fees and assessments due to or attributable to actions following the Recapitalization transactions including, but not limited to, filing fees, franchise Taxes, license fees or other costs for qualification or registration of, or for registration of shares of, TRW Hotel, Holdings, Operating Company, Comcred, S.A. de C.V., Servicred, S.A. de C.V., Lusk and CCB in any state or local jurisdiction, or any foreign jurisdiction including, without limitation, costs or fees, if any, to register or file articles or certificates or amended articles of incorporation with or to qualify to do business in any state or local jurisdiction. 6.9. SURVIVAL OF OBLIGATIONS, ETC.: The obligations of the parties set forth in this Article VI relating to Taxes will, except as otherwise agreed in writing, be unconditional and absolute and will remain in effect without limitation as to time or amount of recovery by any party hereto until thirty (30) days after the expiration of the applicable statute of limitations governing the Tax to which such obligations relate (after giving effect to any agreement extending or tolling such statute of limitations). 6.10 OTHER: Any indemnification payments or Adjustment to the Purchase Price made under this Agreement will be treated for Tax purposes as an adjustment to the Demand Note portion of the Purchase Price paid to Microwave by Operating Company. ARTICLE VII ACTIONS AFTER CLOSING 7.1 FURTHER CONVEYANCES: After the Closing and without further cost or expense to the Transaction Companies, TRW will execute and deliver to the Transaction Companies such additional instruments of conveyance and take such other and further actions as Operating Company may reasonably request, and as are ordinarily provided by a seller, more completely to sell, transfer and assign to Operating Company and vest Ownership in the appropriate Transaction Company to the Acquired Assets and to consummate the transactions contemplated hereby. 7.2 FURTHER CONSENTS TO ASSIGNMENT: As and to the extent any member of the TRW Group will have failed to obtain prior to Closing the consent or approval (or an effective waiver thereof) of any person or persons in respect of any item described in Section 4.5 hereof: (a) the parties will fully cooperate with each other to obtain from such person or persons the consents or approvals (or effective waivers thereof); (b) if the consent or approval is listed in Appendix G and is not obtained prior to the Closing, then (1) the members of the TRW Group will (x) use 42 50 reasonable efforts to provide the Transaction Companies with an alternative arrangement providing the benefit of all the rights of the members of the TRW Group under such contract, lease, license, permit, approval or similar item including, without limitation, enforcement (at TRW's expense) of any and all rights of the members of the TRW Group against such person as the Transaction Companies may reasonably request and (y) indemnify and hold harmless the Transaction Companies from and against any and all liabilities, damages, losses, claims, costs and expenses (including, without limitation, attorneys' fees and expenses) arising out of or related to the failure to obtain such consent, approval or waiver; (2) Purchaser, in its good faith reasonable judgment, may elect to accept or reject such proposed alternative arrangement; and (3) if Purchaser elects to reject such proposed alternative (or if an alternative is not proposed), such election (or failure to propose an alternative) will be deemed to constitute, pursuant to Section 5.1 hereof, a failure to satisfy a condition to Purchaser's obligation to consummate the transactions contemplated by this Agreement, but will not constitute a breach of covenant or a breach of warranty by any member of the TRW Group; and (c) if the parties are unable to obtain any consent or approval (or effective waiver thereof) under any of the contracts, leases, licenses, permits, approvals or other similar items constituting part of the Acquired Assets that are not listed in Appendix G, then after the Closing (1) this Agreement will not constitute or be deemed to be a contract to assign the same if an attempted assignment without such consent, approval or waiver would constitute a breach of such item or create in the issuer or any party thereto the right or power to cancel or terminate such item and, in such case, the consummation of the transactions contemplated hereby will not be deemed to constitute such an assignment and (2) TRW, IS&S International and Microwave will use reasonable efforts to cooperate with the Transaction Companies in any reasonable arrangement designed to provide the Transaction Companies with the benefit of all the rights of the members of the TRW Group under such contract, lease, license, permit, approval or similar item, including, without limitation, enforcement (at TRW's expense) of any and all rights of the members of the TRW Group against such person as the Transaction Companies may reasonably request. 7.3 ACCESS TO FORMER BUSINESS RECORDS: For a period of ten (10) years following the Closing, or until any audits of the Tax Returns of the TRW Group relating to periods prior to the Closing are completed, whichever occurs later, Operating Company will retain all business records of the Business other than those records destroyed in accordance with normal record retention procedures. During such period, Operating Company will afford duly authorized representatives of TRW or an appropriate tax auditor displaying appropriate credentials free and full access to all of 43 51 such records and will permit such representatives, at TRW's expense, to make abstracts from, or to take copies of any of such records or to obtain temporary possession of any thereof as may be reasonably required by TRW. During such period, Operating Company will cooperate with TRW or an appropriate tax auditor, and cause employees of the Business to cooperate with TRW or an appropriate tax auditor, at TRW's expense, in furnishing information, evidence, testimony and other assistance in connection with any action, proceeding or investigation relating to TRW's conduct of the Business prior to the Closing. If Operating Company desires to dispose of any such records prior to the expiration of such period other than in accordance with normal record retention procedures, Operating Company will, prior to such disposition, give TRW the opportunity, at TRW's expense, to segregate and remove such records as TRW may select. 7.4 ACCESS TO FORMER EMPLOYEES: After the Closing, Operating Company will make available to TRW any employees of Operating Company whom TRW may reasonably need in order to defend or prosecute any legal or administrative action to which TRW is a party and which relates to the conduct of the Business prior to the Closing. TRW will pay or reimburse Operating Company for all reasonable expenses which may be incurred by such employees in connection therewith, including, without limitation, all travel, lodging and meal expenses, and TRW will compensate Operating Company for the number of whole business days spent by each such employee in providing such services at the rate of one hundred thirty percent (130%) of the average daily gross pay per business day (excluding the value of employee benefits) of such employee during the calendar month in which such services are performed. 7.5 USE OF TRW TRADEMARK: The Transaction Companies will not use the TRW name or Trademark, except as authorized in accordance with the Trademark Agreement. 7.6 NONDISCLOSURE: (a) For a period of five (5) years after the Closing, TRW will not, and will cause each of its affiliates, and their respective successors and assigns not to, (i) use any Confidential Information (as hereinafter defined) for its own benefit or the benefit of any person, firm or corporation other than the Transaction Companies and their respective successors and assigns, or (ii) disclose any Confidential Information to any person, firm or corporation, other than to (x) the Transaction Companies and their respective successors and assigns or (y) entities controlled by TRW. The term "Confidential Information" will mean any trade secrets, any confidential or proprietary information and any tangible items which record such trade secrets or confidential or proprietary information that TRW or any of its affiliates has in its possession on or before the Closing Date concerning operations, inventions, developments, products, services, processes, discoveries or other matters relating to the Business, 44 52 except for any information which (x) is or becomes publicly known or within the public domain other than as a result of disclosure by TRW or any of its affiliates in violation of the terms of this Agreement or (y) becomes available subsequent to the Closing to TRW or any of its affiliates on a non-confidential basis from a source other than the Transaction Companies, provided that such source is not prohibited from disclosing such information to TRW or any of its affiliates by a contractual, legal or fiduciary obligation to the Transaction Companies. The covenant set forth in this Section 7.6 will not be applicable to TRW's use of any information concerning the Business in connection with (i) the payment or contesting of any Excluded Liability or (ii) the preparation and publication of TRW's financial statements and all reports and disclosures provided for in the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the respective regulations thereunder. (b) In the event that TRW or any of its affiliates receives a request or is required (by deposition, interrogatory, request for documents, subpoena, civil investigation or similar process) to disclose any or all of the Confidential Information, TRW agrees to (i) provide Operating Company with prompt notice of the existence, terms and circumstances surrounding such a request, (ii) consult with Operating Company on the advisability of taking legally available steps to resist or narrow such request, and (iii) provide reasonable assistance to Operating Company, at Operating Company's expense, in seeking a protective order or other appropriate remedy. In the event that a protective order or other remedy is not obtained or that Operating Company waives compliance with the provisions hereof, (i) the entity which received such a request may disclose only that portion of the Confidential Information which it is advised by opinion of its counsel is legally required to be disclosed and will cooperate with Operating Company in seeking to obtain reasonable assurance confidential treatment will be accorded to such portion of the Confidential Information, and (ii) such entity will not be liable for such disclosure unless such disclosure to any such tribunal was caused by or resulted from a previous disclosure by TRW or any of its affiliates not permitted by this Section 7.6. (c) The parties further agree that damages at law for violation of the foregoing covenant would not be an adequate or proper remedy and that, if TRW or any of its affiliates violates or threatens to violate the foregoing covenant, the Transaction Companies and their respective successors and assigns will be entitled, upon application to a court of competent jurisdiction and notice to TRW, to obtain a temporary or permanent injunction, without the posting of any bond, against TRW or any of its affiliates prohibiting any threatened or further violation of this covenant, and also to seek damages, compensatory, exemplary or otherwise, for such violation. Such remedies will not be deemed 45 53 to be the exclusive remedies for a breach of this Section 7.6 available to the Transaction Companies and their respective successors and assigns, but will be in addition to any and all other remedies available at law or in equity. ARTICLE VIII EMPLOYEES AND EMPLOYEE BENEFITS 8.1 EMPLOYMENT OF INITIAL EMPLOYEES: Reasonably in advance of the Closing, Purchaser will offer to substantially all TRW Employees and all Partnership Employees employment with Operating Company effective as of the Closing, with initial job responsibilities and cash compensation comparable in the aggregate to those extended to such employees by TRW or the Partnership, as the case may be. TRW will use all reasonable efforts to assist Purchaser in making arrangements for Operating Company to hire the TRW Employees and the Partnership Employees (other than those who elect to retire) as of the Closing. Effective as of the Closing, all TRW Employees and all Partnership Employees who accept Purchaser's offer of employment will become employees of Operating Company ("Hired Employees"). Purchaser may identify up to ten (10) individuals who will not become Hired Employees as of the Closing but who will remain employees of TRW and provide services to Operating Company on such terms and conditions (not less favorable to such individuals than the terms and conditions of their current employment) as Purchaser and TRW may agree. TRW and its subsidiaries will neither employ nor offer employment to any Hired Employee during the twelve (12) month period following the Closing without the prior written consent of Operating Company. During such period, Holdings and its subsidiaries will not, without the prior written consent of TRW, employ or offer employment to any former employee of the Business within six months of such person's retirement under any applicable TRW pension plan. 8.2 SUBSEQUENT TERMINATIONS OR LAYOFFS: In any termination or layoff by Operating Company of any Hired Employee after the Closing, Operating Company will comply fully (where applicable) with the Worker Adjustment and Retraining Notification Act of 1988 ("WARN") and all other applicable Federal, state and local laws, including those prohibiting discrimination and requiring notice. The Operating Company will be solely responsible for any severance expenses due a Hired Employee as a result of any such termination or layoff and will bear the cost of compliance with (or failure to comply with) any such laws. For six months after the Closing, Operating Company will maintain severance benefits comparable to severance benefits in effect, immediately prior to the Closing, for TRW Employees or Partnership Employees as the case may be. 8.3 EMPLOYEE BENEFITS: The Transaction Companies are not assuming and will not have any responsibility for the continuation of any Plan maintained by TRW for the Business, and no Plan adopted or maintained by Operating Company with respect to 46 54 the Business will be deemed a Successor Plan of TRW. The Operating Company will assume and maintain for the Partnership Employees for a reasonable period of time (not less than three months) after the Closing all employee benefit plans (which will include all employee pension benefit plans and employee welfare benefit plans) in effect as of the Closing which covered Partnership Employees, and Operating Company will be deemed a successor employer to all such plans. Without limiting the foregoing, TRW will be responsible for any claims incurred prior to the Closing under any group health, disability, life insurance or similar plan maintained by TRW. For purposes of this Section 8.3, a claim will be incurred upon (a) the rendering of a covered service or the commencement of hospitalization or confinement, in the case of a group health plan, (b) the disabling event, in the case of a disability plan, and (c) death, in the case of a life insurance plan. 8.4 PENSION PLAN: TRW will retain all assets and liabilities in the TRW Salaried Pension Plan (the "Pension Plan") allocable to the TRW Employees, including all Hired Employees. All benefit service and vesting service accruals for the TRW Employees, including the Hired Employees, under the Pension Plan will cease as of the Closing. TRW will amend the Pension Plan to provide those Hired Employees who (i) are covered under the Pension Plan at the Closing, (ii) have five or more years of vesting service under the Pension Plan at the Closing and (iii) are employed by Operating Company for at least one year from the Closing with a supplemental benefit. The supplemental benefit will be based upon the formula of 2.5% times pensionable earnings times years of benefit service where "benefit service" means the benefit service credited to such Hired Employee under the Pension Plan at the Closing and "pensionable earnings" (as defined in the Pension Plan but limited to 1995 earnings only) means the 1995 pensionable earnings of such Hired Employee. The parties may agree to allocate among such Hired Employees the aggregate amount of the supplemental benefit determined under such formula on a basis weighted for age or benefit service. The supplemental benefit will be paid as a single sum payment upon receipt of a deferred vested benefit or retirement benefit from the Pension Plan. Both the vested Pension Plan benefit and the supplemental benefit described herein will not be payable to the Hired Employee until such employee has (i) attained at least age 55, (ii) terminated employment from Operating Company (or any successor of Operating Company or purchaser of substantially all of the Business) and (iii) filed a written application therefore with the Pension Plan's Board of Administration. (Hired Employees still employed with Operating Company (or successor) after attainment of age 65 may file a written application for receipt of benefits from the Pension Plan.) 8.5 MEDICAL, DENTAL AND VISION BENEFITS: As of the Closing and without any waiting period, Operating Company will provide all Hired Employees (and their dependents) with medical, dental and vision benefit coverage under group health plans maintained by Operating Company, which may include the medical, dental and vision plans which cover Partnership Employees as of the Closing and which are being assumed 47 55 by Operating Company. The Operating Company will waive any pre-existing condition exclusions or limitations applicable to such persons under such medical, dental and vision plans. 8.6 LIFE INSURANCE: As of the Closing, Operating Company will provide all Hired Employees with coverage under life insurance benefit plans maintained by Operating Company, which may include the life insurance benefit plans which cover Partnership Employees as of the Closing and which are being assumed by Operating Company. 8.7 VACATION: As of the Closing, Operating Company will assume all obligations of TRW and the Partnership to Hired Employees for any accrued but unused vacation days in accordance with the Supplemental Accounting Principles set forth on Appendix E-1. TRW will have no obligation to make any payment to Hired Employees after the Closing with respect to any such vacation days. 8.8 401(K) PLANS: TRW currently maintains the TRW Employee Stock Ownership and Stock Savings Plan ("SSP") and the Partnership currently maintains the TRW REDI Employee Savings Plan ("Partnership Plan"), both plans being qualified under Sections 401(a) and 401(k) of the Code. All contributions to the SSP by TRW Employees and matching contributions by TRW will cease as of the Closing. The Operating Company will assume and maintain the Partnership Plan with an employer matching contribution no less than that in effect under the Partnership Plan at the Closing. The Operating Company agrees to either (i) cover all Hired Employees under the Partnership Plan being assumed by Operating Company as of the Closing or (ii) establish, effective as of the Closing, a 401(k) plan which will provide an employer matching contribution at least equal to the employer matching contribution in effect under the SSP at the Closing (the "Purchaser 401(k) Plan"). The Purchaser 401(k) Plan will recognize service of Hired Employees rendered to TRW and recognized by the TRW 401(k) Plan for all purposes for which service counts under the Purchaser 401(k) Plan. As soon as practicable thereafter, TRW and Purchaser will agree in good faith on a valuation date ("Valuation Date"). On a date as further agreed upon by the Purchaser and TRW after the Valuation Date, TRW will (i) cause the interests of each TRW Employee in the Insured Return, Equity, Bond Index and Small Company Equity Funds maintained pursuant to the SSP to be liquidated into an amount of cash equal to the value of each such person's interest in such fund as of the close of business on the Valuation Date; (ii) cause the interests of each TRW Employee in the TRW Stock Fund maintained pursuant to the SSP to be converted into shares of TRW Common Stock; and (iii) cause the cash amounts and shares of TRW Common Stock as so determined to be spun off and transferred to the Purchaser 401(k) Plan, once satisfactory evidence of intended IRS qualification of the Purchaser 401(k) Plan has been provided to TRW. 48 56 8.9 WORKERS' COMPENSATION: TRW will bear the entire cost and expense of all workers' compensation claims arising out of injuries identifiably sustained by Hired Employees before the Closing. Operating Company will bear the entire cost and expense of all workers' compensation claims arising out of injuries and illnesses identifiably sustained by Hired Employees after the Closing. TRW will bear the entire cost and expense of all workers' compensation claims arising out of injuries without an identifiable date of occurrence and which are alleged to have arisen before the Closing and which are filed before the Closing. Notwithstanding any state law to the contrary, Operating Company will bear the entire cost and expense of all workers' compensation claims arising out of injuries and illnesses sustained by Hired Employees without an identifiable date of occurrence and which are alleged to have arisen before or after the Closing which are filed after the Closing. From and after the Closing, Operating Company will use its good faith efforts to facilitate the return to work in the employment of Operating Company of any Hired Employee who is on disability leave on the Closing as a result of a work-related injury or illness. 8.10 NO RIGHTS: No former, present or future employees of either party (or any dependents of such employees) will be treated as third party beneficiaries in or under this Agreement. Except as provided in Section 8.2 hereof, nothing herein is to be construed to require the Transaction Companies to maintain any benefit or condition of employment for a period longer than three (3) months following the Closing. 8.11 FAMILY AND MEDICAL LEAVE ACT: Purchaser acknowledges that effective as of the Closing, Operating Company is a successor employer of the Hired Employees for purposes of compliance with the Family and Medical Leave Act. ARTICLE IX INDEMNIFICATION 9.1 INDEMNIFICATION OF TRW: Subject to the limitations set forth in Section 9.5 hereof, each of the Transaction Companies hereby agrees and covenants that after the Closing each will jointly and severally indemnify, defend and hold TRW and its subsidiaries harmless from and against any and all liabilities, damages, losses, claims, costs and expenses (including, without limitation, costs of collection and reasonable attorneys' fees) arising out of or resulting from (a) either (i) any misrepresentation or breach of warranty by Purchaser for which notice is given by TRW within the applicable periods specified in Section 3.5 hereof or (ii) any claim by a person other than TRW and its subsidiaries, which claim is based upon one or more allegations that, if true, would give rise to a right of indemnification under clause (a)(i) of this sentence and for which notice is given by TRW within the applicable periods specified in Section 3.5 hereof; (b) any failure to pay or satisfy or cause to be paid or satisfied any of the Assumed Liabilities when due and payable; (c) nonperformance by Purchaser of any obligation to be 49 57 performed on the part of the Purchaser under this Agreement prior to the Closing and the non-performance by any of the Transaction Companies of any obligation to be performed on their respective parts under this Agreement after the Closing including, without limitation, the obligations of each of the Transaction Companies under Article VIII hereof; or (d) any claim by a third party relating to the use after the Closing of the Trademark by Licensee (each as defined in the Trademark Agreement), including, without limitation, product liability; provided, however, that (a) there shall be no right of indemnification under this clause (d) in respect to (i) claims by any of the Transaction Companies under this Agreement or (ii) claims that the use of the Trademark (as defined in the Trademark Agreement) after the Closing (as distinct from the use of a mark or component of a mark not including TRW) infringes any third party's rights, and (b) the Transaction Companies shall not have any liability under this clause (d) with respect to any diminution in the value of shares of capital stock in Holdings. 9.2 INDEMNIFICATION OF TRANSACTION COMPANIES: Subject to the limitations set forth in Section 9.4 hereof, TRW hereby agrees and covenants that after the Closing it will indemnify, defend and hold each of the Transaction Companies and their subsidiaries harmless from and against any and all liabilities, damages, losses, claims, costs and expenses (including, without limitation, costs of collection and reasonable attorneys' fees) arising out of or resulting from (a) either (i) any misrepresentation or breach of warranty by TRW for which notice is given by such Transaction Company within the applicable periods specified in Section 3.5 hereof or (ii) any claim by a person other than the Transaction Companies and their subsidiaries, which claim is based upon one or more allegations that, if true, would give rise to a right of indemnification under clause (a)(i) of this sentence and for which notice is given by Transaction Companies within the applicable periods specified in Section 3.5 hereof; (b) any failure fully to pay or satisfy or cause to be paid or satisfied any of the Excluded Liabilities when due and payable; (c) nonperformance by any member of the TRW Group of any obligation to be performed on the part of any member of the TRW Group under this Agreement prior to the Closing and the nonperformance by TRW, Microwave or IS&S International of any obligation to be performed on their respective parts after the Closing, including, without limitation, the obligations of TRW under Article VIII hereof; or (d) any claim that the use of the Trademark (as defined in the Trademark Agreement) after the Closing in accordance with the terms of the Trademark Agreement infringes any trademark, service mark, trade name or other proprietary right of any third party. Any payments made by TRW pursuant to this Article IX will be made to Operating Company. 9.3 CLAIMS: If Section 6.4 hereof applies, the following provisions of this Section 9.3 do not apply. If an indemnified person (a "Claimant") desires to make a claim under Section 9.1 or Section 9.2 hereof against an indemnifying person (the "Indemnitor") which does not involve a claim by any person other than the parties and their subsidiaries, then such Claimant will make such claim by promptly delivering written notice to the other; provided, however, that, subject to Section 3.5 hereof, the failure to 50 58 give such notice will not relieve any Indemnitor from any obligation hereunder except where, and then solely to the extent that, such failure actually and materially prejudices the rights of such Indemnitor. If a Claimant desires to make a claim against an Indemnitor under Section 9.1 or Section 9.2 hereof, as the case may be, which involves a claim by a person other than the parties and their subsidiaries, then such claim will be made in the following manner and be subject to the following terms and conditions: (a) NOTICE: The Claimant will give prompt written notice to the Indemnitor of any demand, claim or threat of litigation or the actual institution of any action, suit or proceeding (collectively, a "Claim") served on or instituted against the Claimant with respect to which the Claimant believes it would have a right of indemnification under Section 9.1 or Section 9.2 hereof. In providing such notice, the Claimant will only state the existence of such Claim and need not admit or deny the validity of the facts or circumstances out of which such Claim arose. The failure to give such notice will not relieve an Indemnitor from any obligation hereunder except where, and then solely to the extent that, such failure actually and materially prejudices the rights of such Indemnitor. (b) RESPONSIBILITY FOR DEFENSE: Within thirty (30) days after receipt of any such notice, but not less than five (5) working days prior to the time the Claimant is required to respond to a Claim, the Indemnitor may, by giving written notice to the Claimant, and provided that in such notice the Indemnitor also agrees that it has responsibility hereunder to indemnify the Claimant with respect to such Claim, assume responsibility for the defense of the Claim (thereby becoming the "Defending Party") in the name of the Claimant or otherwise as the Indemnitor may elect. The Claimant will assume responsibility for the defense of such Claim as the Defending Party if the Indemnitor does not elect to assume responsibility for the defense of such Claim as provided in the previous sentence, in which event the Indemnitor will reimburse the Claimant for the costs of defending against such Claim, including reasonable attorneys' fees and expenses, and will be responsible for any Losses (as defined in Section 9(c) hereof) the Claimant may suffer as a result of such Claim, if, but only to the extent that, the Claimant is in fact entitled to indemnification under this Agreement with respect to such Claim. Subject to the provisions of Sections 9.3(c) and 9.3(d) hereof, the Defending Party will have full authority to defend, cure, adjust, compromise or settle such Claim or appeal any judgment or ruling of a court or other tribunal in connection with such Claim in its own name and/or in the name of the other party. (c) RIGHT TO PARTICIPATE/RIGHT TO ASSUME RESPONSIBILITY FOR DEFENSE OF A CLAIM: Notwithstanding a Defending Party's responsibility for the defense of a Claim, the other party will have the right to participate, at its own expense and with its own counsel, in the defense of a Claim and, upon 51 59 receiving a written request from the other party, the Defending Party will consult with the other party from time to time on matters relating to the defense of such Claim and provide the other party with copies of all pleadings and material correspondence relating to such Claim. In the event that a Claim seeks equitable or injunctive relief, the Claimant may, at its option, and notwithstanding anything to the contrary in Section 9.3(b) hereof, assume responsibility for the defense of such portion of the Claim seeking equitable or injunctive relief. In the event that pursuant to the preceding sentence the Claimant has assumed responsibility for the defense of such portion of the Claim as seeks equitable or injunctive relief, the Indemnitor will reimburse Claimant for the costs of defending the Claim including reasonable attorneys' fees and expenses, and the Indemnitor will remain monetarily responsible for any and all liabilities, damages, losses, claims, costs and expenses (including, without limitation, costs of collection and reasonable attorneys' fees) (collectively "Losses") the Claimant may suffer as a result of such Claim, if, but only to the extent that, such defense costs and such Losses are otherwise subject to indemnification pursuant to this Agreement. (d) SETTLEMENT: A Defending Party will provide the other party with timely written notice of any proposed adjustment, compromise or other settlement, including equitable or injunctive relief, of a Claim which the Defending Party intends to propose or accept, in which event the other party will within five business days after receipt thereof provide the Defending Party with a written notice (a "Response Notice") to the effect that (i) the other party consents to the settlement or (ii) the other party objects to the settlement, and in which event the following additional provisions will apply. (A) In the event that the other party (i) consents to the settlement in a timely Response Notice, or (ii) fails to provide the Defending Party with a timely Response Notice, the Defending Party will have the right to propose or accept, as the case may be, such settlement and to enter into any agreement, in its own name and/or in the name of the other party, giving legal effect to all aspects of such settlement. (B) When the Defending Party is also the Indemnitor, and the Claimant objects to the settlement by means of a timely Response Notice, then the Defending Party may, if it so elects, and provided that the settlement in question is purely monetary in nature and provides for a complete release of the Claim, tender the defense of the Claim to the Claimant by tendering the Claimant the amount of money proposed to be paid in settlement of the Claim (the "Tendered Amount"), in which case the Defending Party will have no further liability to the Claimant hereunder with respect to such Claim, and in which case the Claimant will have 52 60 full responsibility for any and all defense costs and Losses thereafter resulting from such Claim (the "Claimant's Costs") and, in addition, once the Claimant's Costs have been fully and finally determined, will reimburse the Defending Party for the amount (if any) by which the Tendered Amount exceeds the Claimant's Costs. (C) When the Defending Party is the Claimant, the Claim in question is not one that the Claimant assumed responsibility of pursuant to the second sentence of Section 9.3(c) hereof, and the Indemnitor objects to the settlement by means of a timely Response Notice, the Indemnitor will have the right to assume responsibility for the defense of the Claim by delivering with the Response Notice a notice in the form contemplated by the first sentence of Section 9.3(b) hereof. If the Indemnitor fails to exercise such right, and if the settlement in question would impose purely monetary obligations on the Indemnitor, the Defending Party will have the right to propose or accept, as the case may be, such settlement and to enter into any agreement, in its own name and/or in the name of the Indemnitor, giving legal effect to all aspects of such settlement, whereupon, if, but only to the extent that, the Defending Party is entitled to indemnification from the Indemnitor in respect to the Claim, and further subject to Sections 9.4 and 9.5 hereof, the amount paid under the terms of such settlement will be deemed to be Losses subject to indemnification to the extent, and only to the extent, such settlement is reasonable under all the facts and circumstances at the time of the settlement. Otherwise, Losses subject to indemnification will be deemed to be that portion of the amount paid under the terms of such settlement that would have been reasonable to pay under the terms of such settlement under all of the facts and circumstances at the time of such settlement. (D) Except as provided in Section 9.3(d)(C) hereof, the Defending Party will have no authority to enter into any proposed settlement that the other party has objected to by means of a timely Response Notice. If the other party has acted unreasonably in objecting to a proposed settlement by means of a timely Response Notice, and the Defending Party did not have either the right to tender the defense of the Claim in question to the other party pursuant to Section 9.3(d)(B) hereof or the right to enter into the proposed settlement of the Claim pursuant to Section 9.3(d)(C) hereof, then the other party will indemnify the Defending Party against any and all Losses that the Defending Party may suffer as a result of such unreasonable objection. 53 61 9.4 LIMITATION ON TRW INDEMNIFICATION: Notwithstanding the provisions of Section 9.2(a) hereof, TRW will be obligated to indemnify, defend, and hold the Transaction Companies and their subsidiaries harmless from or against any Losses arising out of a misrepresentation or breach of warranty by TRW only if, and then to the extent, the aggregate amount of all timely claims exceeds Five Million Dollars ($5,000,000). In no event will TRW's total obligation to the Transaction Companies and their subsidiaries under Section 9.2(a) hereof exceed, in the aggregate, Fifty Million Dollars ($50,000,000). The foregoing $5,000,000 and $50,000,000 limitations will not apply to claims based upon (i) knowing, intentional conduct that constitutes common law fraud or (ii) any misrepresentation or breach of warranty with respect to the following representations: Section 3.2(n) (captioned "Taxes") and Section 3.2(k) (captioned "Employee Benefits"). 9.5 LIMITATION ON TRANSACTION COMPANIES INDEMNIFICATION. Notwithstanding the provisions of Section 9.1(a) hereof, the Transaction Companies will be obligated to indemnify, defend, and hold TRW and its subsidiaries harmless from or against any Losses arising out of a misrepresentation or breach of warranty by the Purchaser only if, and then to the extent, the aggregate amount of all timely claims exceed Two Million Dollars ($2,000,000). In no event will the Transaction Companies' total obligation to TRW and its subsidiaries under Section 9.1(a) hereof exceed, in the aggregate, Seventy Million Dollars ($70,000,000). 9.6. MISCELLANEOUS: (a) CERTAIN MATTERS OF CONSTRUCTION: References in this Article IX to representations or warranties set forth in a particular Section will be deemed to include without limitation (i) all representations and warranties in Parts specifically referred to in such Section and (ii) such representations and warranties as confirmed by the certificates referred to in Sections 5.1(a), 5.1(k) and 5.2(a) hereof. (b) WAIVER OF SUBROGATION: Each of the parties hereby waive any insurer's right of subrogation under this Agreement except solely to the extent such waiver would result in a limitation or termination of coverage under any policy. ARTICLE X AMENDMENT, WAIVER, AND TERMINATION 10.1 AMENDMENT: This Agreement may be amended at any time, but only by written instrument executed by all the parties hereto. 54 62 10.2 WAIVER: Waiver of compliance by any party with any covenants or conditions contained in this Agreement may only be by written instrument executed by the party waiving such compliance. No such waiver, however, will be deemed to constitute the waiver of any such covenant or condition in any other circumstance or the waiver of any other covenant or condition. 10.3 TERMINATION: This Agreement may be terminated and the transactions contemplated hereby may be abandoned: (a) at any time, by mutual written consent of TRW and Purchaser; or (b) by either TRW or Purchaser if the other party will be in material breach of one or more of the provisions of this Agreement and has not cured such breach within 30 days following notice of such breach; or (c) by either TRW or Purchaser if, through no fault of the party seeking termination, the Closing has not occurred on or prior to December 3, 1996. 10.4 PROCEDURE AND EFFECT OF TERMINATION: In the event of the termination of this Agreement and the abandonment of the transactions contemplated hereby pursuant to Section 10.3 hereof, written notice thereof will forthwith be given by the party so terminating to the other party and this Agreement will terminate and the transaction contemplated hereby will be abandoned, without further action. If this Agreement is terminated pursuant to Section 10.3 hereof: (a) each party will redeliver all documents, work papers and other materials of the other parties relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same, and all confidential information received by any party hereto with respect to the other party will be treated in accordance with Section 11.2 hereof; (b) all filings, applications and other submissions made pursuant hereto will, at the option of TRW or Purchaser and to the extent practicable, be withdrawn from the agency or other person to which made; (c) there will be no liability or obligation hereunder on the part of TRW or Purchaser or any of their respective directors, officers, employees, affiliates, controlling persons, agents or representatives, except that any liability or obligation of TRW or Purchaser (the "Responsible Party"), as the case may be, arising from a material breach by the Responsible Party of one or more of the provisions of this Agreement will survive such termination; and 55 63 (d) the obligations provided for in this Section 10.4 and the obligation to treat information in a confidential manner as set forth in Section 11.2 hereof will survive any such termination. ARTICLE XI MISCELLANEOUS 11.1 COOPERATION: Each of the parties will cooperate with the other parties, at the request and expense of the requesting party, in furnishing information, testimony and other assistance in connection with any actions, proceedings, arrangements and disputes with other persons or governmental inquiries or investigations involving the conduct of the Business by the TRW Group or the transactions contemplated hereby. 11.2 CONFIDENTIALITY: Reference is made to the Confidentiality Agreement (the "Confidentiality Agreement") dated January 19, 1996 between Purchaser and TRW. Both parties will continue to be bound by and will continue to abide by the terms and conditions of the Confidentiality Agreement. TRW agrees to cooperate with Purchaser, after the Closing, to obtain the return of all documents and information supplied to other prospective purchasers of the Business or part thereof pursuant to Confidentiality Agreements executed by such prospective purchasers. TRW will seek, and Purchaser agrees to accept, assignments of Confidentiality Agreements that TRW entered into with other prospective purchasers of the Business. 11.3 SEVERABILITY: If any provision of this Agreement will finally be determined to be unlawful, then such provision will be deemed to be severed from this Agreement and every other provision of this Agreement will remain in full force and effect to the extent that such provisions can be given reasonable effect in accordance with the intentions of the parties. 11.4 EXPENSES: Except as otherwise provided in this Agreement, each party will bear its own expenses incurred in connection with this Agreement and the transactions contemplated hereby, whether or not such transactions will be consummated. For purposes of the preceding sentence, all expenses of TRW and its subsidiaries (including, without limitation, expenses of the Business) in connection with this transaction and the transactions contemplated hereby, including, without limitation, all legal, accounting and other advisory costs and expenses, broker's or finder's fees and expenses, investment banking fees and expenses, corporate staff expenses and all retention or deal bonuses, if any, will be paid by TRW and will not be charged by TRW to the Business; provided, however, that the Business may pay or be charged for the salaries and benefits (excluding retention or deal bonuses) of employees who are full time employees of the Business or whose salaries and benefits are allocated to the Business in the Ordinary Course of Business. 56 64 11.5 BULK SALES: The parties waive compliance with the provisions of any so-called bulk sales law of any state. 11.6 NOTICES: All notices, requests and other communications hereunder will be in writing and will be deemed to have been duly given at the time of receipt if delivered by hand or communicated by electronic transmission, or, if mailed, three (3) days after mailing registered or certified air mail, return receipt requested, with postage prepaid: If to Purchaser, to: IS&S Acquisition Corp. c/o both of: Ropes & Gray One International Place Boston, MA 02110-2624 Telefax: (617) 951-7050 Attention: R. Bradford Malt and Hutchins, Wheeler & Dittmar A Professional Corporation 101 Federal Street Boston, MA 02110 Telefax: (617) 951-1295 Attention: Charles W. Robins If to TRW, to: TRW Inc. 1900 Richmond Road Cleveland, OH 44124 Telefax: (216) 291-7070 Attention: Secretary provided, however, that if either party will have designated a different address by notice to the other given as provided above, then to the last address so designated. 11.7 DISPUTE RESOLUTION: Except as provided in Section 2.8 hereof concerning the Adjustment, if, after the Closing, the parties should have any dispute among each other arising out of or relating to this Agreement or the parties' respective rights and duties hereunder, then the parties will attempt to resolve such dispute in the following manner: 57 65 (a) NOTICE: Either party may at any time deliver to the other a written dispute notice setting forth a brief description of the issue for which such notice initiates the dispute resolution mechanism contemplated by this Section 11.7. (b) NEGOTIATION: During the ninety (90) day period following the delivery of the notice described in Section 11.7(a) above, appropriate representatives of the parties will meet and seek to resolve the disputed issue through negotiation. (c) REFERRAL: If representatives of the parties are unable to resolve the disputed issue through negotiation within the first sixty (60) days of the period described in Section 11.7(b) hereof, the parties will refer the issue to an officer or executive officer of each party or a neutral person or persons satisfactory to both parties ("Referral Committee"). The procedures to be followed for presentation of each party's position with respect to the disputed issue and the method by which the Referral Committee will consider the issue and attempt to reach a decision will be determined by agreement of the parties at the time the matter is referred. Unless the parties have otherwise agreed in advance in writing, a decision of the Referral Committee pursuant to this Section 11.7 will not be binding upon the parties. (d) STAY: No party will bring any action against another with respect to such dispute until expiration of such ninety (90) day period, unless the party bringing an action determines, based upon written advice of legal counsel, that an applicable statute of limitation may expire prior to the expiration of such ninety (90) day period. Nothing in this Section 11.7 will preclude any party from taking interim measures of protection in the form of seeking preliminary or temporary equitable relief. 11.8 EXCLUSIVE REMEDY: The parties agree, to the fullest extent permitted by law, that after the Closing none of them or any of their directors, officers, employees, affiliates, controlling persons, agents, successors, permitted assigns, or representatives will have any liability or responsibility whatsoever to the other or such other's directors, officers, employees, affiliates, controlling persons, agents, successors, permitted assigns, or representatives on any basis (including, without limitation, in contract or tort, under federal or state securities laws or otherwise) based upon any information provided or made available, or statements made, to Purchaser or the members of the TRW Group or their respective directors, officers, employees, affiliates, controlling persons, agents, successors, permitted assigns, or representatives (or any omissions therefrom), including, without limitation, information provided or statements made in the specific representations and warranties set forth in this Agreement, except as and only to the extent expressly set forth herein with respect to such representations and warranties, 58 66 covenants and rights to indemnification and subject to the limitations and restrictions contained herein or to the extent any such liability or responsibility is based upon a fraudulent representation or claim. 11.9 ASSIGNMENT: This Agreement will be binding upon and inure to the benefit of the successors of each of the parties hereto, but will not be assignable by either party without the prior written consent of the other; provided, however, that Purchaser may (i) assign its rights and delegate its duties hereunder, in whole or in part, to Holdings pursuant to the Merger, (ii) assign its rights and delegate its duties hereunder, in whole or in part, to one or more of its subsidiaries, provided that Purchaser gives TRW prior written notice of such assignment and unconditionally guarantees performance by Purchaser's assignee, (iii) assign its rights hereunder, but subject to all limitations contained hereunder including, without limitation, the provisions of Article IX and Section 11.8 hereof, to one or more lenders of Operating Company to secure obligations to such lender or lenders, or (iv) assign its rights and delegate its duties hereunder, but subject to all limitations contained hereunder including, without limitation, the provisions of Article IX and Section 11.8 hereof, to the purchaser or purchasers of all or substantially all of the Business (whether through a sale of assets or stock, merger or otherwise). 11.10 NO THIRD PARTIES: Neither this Agreement nor any provision set forth herein is intended to, or will, create any rights in or confer any benefit upon any person other than Lusk and the parties hereto and their successors and permitted assigns. 11.11 INCORPORATION BY REFERENCE: The Appendices to this Agreement constitute integral parts of this Agreement and are hereby incorporated into this Agreement by this reference. 11.12 GOVERNING LAW: This Agreement will be governed by and construed in accordance with the internal substantive laws of the State of New York, except where the substantive laws of another jurisdiction mandatorily apply. 11.13 COUNTERPARTS: More than one counterpart of this Agreement may be executed by the parties hereto, and each fully executed counterpart will be deemed an original without production of the others. 11.14 COMPLETE AGREEMENT: This sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior letters of intent, agreements, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of either party relating thereto. 59 67 11.15 CONSENT TO JURISDICTION: Each of the parties agrees that all actions, suits or proceedings arising out of or based upon this Agreement or the Other Agreements or the subject matter hereof or thereof will be brought and maintained exclusively in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, county of New York. Each of the parties hereto by execution hereof (i) hereby irrevocably submits to the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, county of New York for the purpose of any action, suit or proceeding arising out of or based upon this Agreement or the Other Agreements or the subject matter hereof or thereof and (ii) hereby waives, as a defense or otherwise, in any such action, suit or proceeding, any claim that he or it is not subject personally to the jurisdiction of the above-named courts, that he or it is immune from extraterritorial injunctive relief or other injunctive relief, that his or its property is exempt or immune from attachment or execution, that any such action, suit or proceeding may not be brought or maintained in one of the above-named courts, that any such action, suit or proceeding brought or maintained in one of the above-named courts should be dismissed on grounds of FORUM NON CONVENIENS, should be transferred to any court other than one of the above-named courts, should be stayed by virtue of the pendency of any other action, suit or proceeding in any court other than one of the above-named courts, or that this Agreement, the Other Agreements or the subject matter hereof or thereof may not be enforced in or by any of the above-named courts. Each of the parties hereto hereby consents to service of process in any such suit, action or proceeding in any manner permitted by the Federal Rules of Civil Procedure or the Civil Practice Laws and Rules of New York, agrees that service of process by registered or certified mail, return receipt requested, at the address specified in or pursuant to Section 11.6 is reasonably calculated to give actual notice and waives and agrees not to assert by way of motion, as a defense or otherwise, in any such action, suit or proceeding any claim that service of process made in accordance with Section 11.6 hereof does not constitute good and sufficient service of process. The provisions of this Section 11.15 will not restrict the ability of any party to enforce in any court any judgment obtained in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, county of New York. 11.16 WAIVER OF JURY TRIAL: To the extent not prohibited by applicable law which cannot be waived, each of the parties hereto hereby waives, and covenants that he or it will not assert (whether as plaintiff, defendant, or otherwise), any right to trial by jury in any forum in respect of any issue, claim, demand, cause of action, action, suit or proceeding arising out of or based upon this Agreement, the Other Agreements or the subject matter hereof or thereof, in each case whether now existing or hereafter arising and whether in contract to tort or otherwise. Any of the parties hereto may file an original counterpart or a copy of this Section 11.15 with any court as written evidence of the consent of each of the parties hereto to the waiver of his or its right to trial by jury. 60 68 IN WITNESS WHEREOF, the parties have each caused this Agreement to be executed by their respective duly authorized officers as of the date first above written. IS&S ACQUISITION CORP. By: /s/ Mark E. Nunnelly -------------------------------- Authorized Officer By: /s/ Scott M. Sperling -------------------------------- Authorized Officer ATTEST: TRW INC. James C. Diggs By: /s/ William B. Lawrence - ----------------------- -------------------------------- Authorized Officer By: /s/ William C. Seeger, Jr. -------------------------------- Authorized Officer TRW IS&S INTERNATIONAL, INC. By: /s/ Jean M. Schmidt -------------------------------- Authorized Officer TRW MICROWAVE INC. By: /s/ Jean M. Schmidt -------------------------------- Authorized Officer TARGET MARKETING SERVICES, INC. By: /s/ Jean M. Schmidt -------------------------------- Authorized Officer TRW ENVIRONMENTAL MANAGEMENT COMPANY By: /s/ Robert S. Ottinger -------------------------------- Authorized Officer TRW HOTEL COMPANY INC. By: /s/ Jean M. Schmidt -------------------------------- Authorized Officer 61 69 APPENDIX A CERTAIN DEFINITIONS The following terms have the meanings set forth below where used in the Agreement and identified with initial capital letters:
Acquired Assets As defined in Section 2.2 of the Agreement. Activated Activated means that he Copernicus System has been placed in service and produces substantially all consumer credit reports sold by the Business. Additional Excluded Assets As defined in Appendix C. Additional Excluded Liabilities As defined in Appendix C. Adjustment As determined under Section 2.8 of the Agreement. Agreement As defined in the Preamble to the Agreement. Approved Investments As defined in Section 2.8(a) of the Agreement. Assumed Liabilities As defined in Section 2.4 of the Agreement. Assurances of Discontinuance State of Vermont, Washington County Superior Court, Docket No. S-790-92 Assurance of Discontinuance dated December 16, 1992 between TRW and the State of Vermont; and State of Vermont, Washington County Superior Court, Docket No.__________________, Assurance of Discontinuance dated September 14, 1995 between TRW and the State of Vermont. Auditors As defined in Section 2.8(c) of the Agreement. Auditors' Report As defined in Section 2.8(c) of the Agreement. Business As defined in Recital A of the Agreement.
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Business Facility As defined in Section 3.2(e) of the Agreement. CCB Shares The 10,000 shares of Consumer Credit Bureau (Japan) Common Stock owned by TRW. Certificate of Merger As defined in Section 2.6(d) of the Agreement. Claim As defined in Section 9.3(a) of the Agreement. Claimant As defined in Section 9.3 of the Agreement. Closing As defined in Section 2.6(b) of the Agreement. Closing Date As defined in Section 2.6(c) of the Agreement. Closing Date Net Working Capital Deficiency As defined in Section 2.8(b) of the Agreement. Closing Date Net Working Capital Excess As defined in Section 2.8(b) of the Agreement. Code As defined in Recital D of the Agreement. Confidential Information As defined in Section 7.6(a) of the Agreement. Confidentiality Agreement As defined in Section 11.2 of the Agreement. Consent Orders The Consent Order dated December 10, 1991 in the case of Federal Trade Commission v. TRW INC. U.S. District Court for the Northern District of Texas, Civil Action No. 3-91CV2661-H, as amended by Agreed Order Amending Consent Order dated January 14, 1993; and the Consent Order dated December 10, 1991 in the case of TRW INC. v. Dan Morales, Attorney General of the State of Texas, et al, U.S. District Court for the Northern District of Texas, Civil Action No. 3-91-1340-H.
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Contractual Obligations As to any person, any written contract, agreement, deed, mortgage, lease, license, commitment, undertaking or arrangement, including, without limitation, any document or instrument evidencing or otherwise relating to any indebtedness to which or by which such person is subject or bound or, to the knowledge of such person, to which or by which any property or right of such person is subject or bound, specifically excluding, however, all leases of real or personal property. Databases Any and all proprietary and original compilation of data. Default An occurrence which constitutes a breach or default under a contract, order, or other commitment, after the expiration of any grace period provided, without cure. Defending Party As defined in Section 9.3(b) of the Agreement. Demand Note As defined in Recital D of the Agreement. Disclosure Package As defined in Section 3.2 of the Agreement. Effective Time As defined in Section 2.6(e) of the Agreement. Elsevier As defined in Recital D of the Agreement. Elsevier Partnership Interest As defined in Section 3.2(o) of the Agreement. Employee Pension Benefit Plan As defined in Section 3.2(k) of the Agreement. Employee Welfare Benefit Plan As defined in Section 3.2(k) of the Agreement. Encumbrance Any encumbrance or lien, including, without limitation, any mortgage, judgment lien, materialman's lien, mechanic's lien, security interest, encroachment, easement, or other restriction, in each case having a material adverse effect on the thing or right so encumbered.
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Environmental Claim Any claim, written notice or written request for information by a governmental body or agency or by any other third party, whether based upon violation of statute or regulation, strict liability, tort or otherwise, with respect to an Environmental Condition. Environmental Condition Any condition affecting the environment or natural resources arising out of the conduct of the Business or the use of the Acquired Assets based upon the generation, management, handling, transportation, treatment, storage, disposal, delivery, discharge, release or emission of any waste, pollutant, toxic or other hazardous substance; provided, however, for the purposes of Section 2.5(a) of the Agreement "Environmental Condition" means any condition affecting the environment or natural resources based upon the generation, management, handling, transportation, treatment, storage, disposal, delivery, discharge, release or emission of any waste, pollutant, toxic or other hazardous substance. Equity Investors As defined in Recital D of the Agreement. ERISA Employee Retirement Income Security Act of 1974, as amended. Exceptions As defined in Section 2.12(a) of the Agreement. Excluded Assets As defined in Section 2.3 of the Agreement. Excluded Liabilities As defined in Section 2.5 of the Agreement. FCRA Fair Credit Reporting Act, as amended, 15 United States Code Sections 1681 et seq. Hired Employees As defined in Section 8.1 of the Agreement. Holdings As defined in the Preamble to the Agreement.
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Holdings Shares All issued and outstanding shares of common stock in Holdings. HSR Act The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indemnitor As defined in Section 9.3 of the Agreement. Intellectual Property All rights with respect to patents, trademarks, service marks, trade names, copyrights (and applications for registration of any of the foregoing), computer software, computerized data and information (including without limitation databases), trade secrets, know-how, inventions, product designs, processes and techniques, testing and quality control processes and techniques, drawings and customer lists. IS&S Intellectual Property All rights with respect to the Proprietary Software, Non-Proprietary Software and other Intellectual Property held or used by the TRW Group in the conduct of the Business as currently conducted or as proposed to be conducted in connection with present plans for the Copernicus/File One system under development as such Intellectual Property may exist as of Closing, as well as all claims against other persons arising out of such rights. IS&S International As defined in the Preamble of the Agreement. IS&S Significant Intellectual Property All IS&S Intellectual Property, the absence of which or inability to use, individually or in the aggregate, is likely to have a Material Adverse Effect. Losses As defined in Section 9.3(c) of the Agreement. Lusk Lusk - TRW REDI, Inc., a District of Columbia corporation.
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Material Adverse Effect An event which has, or is likely to have, a material adverse effect on the business, assets, results of operations, condition (financial or otherwise) of the Business taken as a whole as the same is currently conducted by TRW and the Partnership. Material Event Any event, condition, circumstance or occurrence which has had a Material Adverse Effect on the Business. Merger As defined in Recital D of the Agreement. Merger Consideration As defined in Section 2.6(e) of the Agreement. Mexican Investments All of IS&S International's equity interests in Comcred, S.A. de C.V., a corporation organized under the laws of Mexico, and Servicred, S.A. de C.V., a corporation organized under the laws of Mexico, and all of IS&S International's rights, title and interests under the agreements and instruments set forth in Part B-1-3 and Part B-1-4 of Appendix F to the Agreement, including, without limitation, the promissory notes set forth therein. Microwave As defined in the Preamble to the Agreement. Net Working Capital As defined in Section 2.8(b) of the Agreement. Non-Proprietary Software All computer software and programs licensed or leased from third parties including, without limitation, all existing versions, drafts and component modules of source code or object code or natural language code currently provided under license, whether recorded on paper, magnetic media or other electronic device, all existing descriptions, flow-charts and such other writings currently provided under license, including without limitation, documentation, manuals, catalogs, leaflets and training materials relating to the foregoing.
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Noncompetition Agreement An agreement to be dated the Closing Date between Holdings, Operating Company and TRW relating to TRW's post-Closing participation in activities competitive with the Business, such agreement to be substantially in the form of Appendix H to the Agreement. Operating Company As defined in the Preamble to the Agreement. Ordinary Course of Business The ordinary course of business consistent with past custom and practice (including, without limitation, with respect to quantity, timing and frequency). Other Agreements Collectively, the Transition Agreement, the Noncompetition Agreement, the Trademark Agreement, the Shared Liabilities Agreement, and such other agreements relating to the transactions contemplated hereby as the parties may hereafter execute and deliver. Ownership Such ownership as confers upon a person having it, good and marketable title to and control over the thing or right owned, free and clear of any and all Encumbrances except permitted encumbrances. Partnership As defined in Recital B of the Agreement. Partnership Employees All persons actively employed by the Partnership who are (i) on the payroll of the Partnership as active employees immediately prior to the Closing or (ii) on leave for medical or other reasons as of the Closing at such time as such person is released to return to work, but excluding those persons who are listed on Appendix M. Partnership Interests As defined in Section 3.2(o) of the Agreement. Partnership Plan As defined in Section 8.8 of the Agreement. Pension Plan As defined in Section 8.4 of the Agreement.
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Plan An employee benefit plan within the meaning of Section 3.3 of ERISA. Prime Rate The rate of interest publicly announced by National City Bank (Cleveland) from time to time as its prime or base rate for U.S. Dollar loans. Proprietary Software Any and all software other than Non-Proprietary Software owned as developed, expanded, or otherwise modified from time to time including, without limitation, all existing versions and component modules of source code or object code or natural language code therefor, whether recorded on paper, magnetic media or other electronic device, all existing descriptions, flow-charts and such other writings currently used to develop such software and all existing documentation, including, without limitation, manuals, catalogs, leaflets and training materials relating to the foregoing. Purchase Price As defined in Section 2.7 of the Agreement. Purchaser As defined in the Preamble to the Agreement, including any successor thereto by reason of merger or otherwise. Purchaser 401(k) Plan As defined in Section 8.8 of the Agreement. Recapitalization As defined in Recital D of the Agreement. Referral Committee As defined in Section 11.7(c) of the Agreement. REDI Trademark All of the right, title and interest of Elsevier in the Trademark and U.S. Trademark Registrations licensed to the Partnership under the trademark license agreement between Elsevier and the Partnership dated August 31, 1991. Responsible Party As defined in Section 10.4(c) of the Agreement.
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Retained Holdings Shares That number of Holdings Shares which will result in Microwave owning an aggregate of 5.56% of the issued and outstanding shares of common equity in Holdings immediately following the Closing. Review Period As defined in Section 2.8(d) of the Agreement. Section 338(h)(10) Election As defined in Section 6.5 of the Agreement. Shared Liabilities Agreement An Agreement to be dated the Closing Date between Holdings, Operating Company and TRW relating to the sharing of certain liabilities, such Agreement to be substantially in the form of Appendix L to the Agreement. Shares As defined in Section 3.2(c) of the Agreement. SSP As defined in Section 8.8 of the Agreement. Successor Plan A continuation of a predecessor Plan, as defined in Section 4021(a) of the ERISA. Tax Return Any federal, state, local and foreign return, declaration, report, claim for refund, amended return, declarations of estimated Tax or information return or statement relating to Taxes, and any schedule or attachment thereto, filed or maintained, or required to be filed or maintained in connection with the calculation, determination, assessment or collection of any Tax, and including any amendment thereof.
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Tax, Taxes, Taxable All federal, state and local and foreign taxes, levies, deficiencies or other assessments and other charges of whatever nature (including, without limitation, all net income, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, estimated, occupation, or property taxes) imposed by any taxing authority as well as any obligation to contribute to the payment of Taxes determined on a consolidated, combined or unitary basis with respect to TRW or any affiliate, together with any interest and any penalties, additions to tax or additional amounts relating thereto. Title Company As defined in Section 2.12(a) of the Agreement. Trademark Agreement An agreement to be dated the Closing Date between Operating Company and TRW relating to Operating Company's post-closing use of the TRW Trademark, such agreement to be substantially in the form of Appendix J to the Agreement. Transition Agreement An agreement to be dated the Closing Date between Holdings, Operating Company and TRW pursuant to which the parties will establish certain procedures for the orderly transfer of the Business, such agreement to be in the form of Appendix I to the Agreement, as modified by the provisions of Section 4.4 of the Agreement. Transaction Companies Holdings, Operating Company, TRW Hotel and Lusk. TRW As defined in the Preamble to the Agreement.
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TRW Employees All persons actively employed by TRW in TRW's conduct of the Business who are (i) on the payroll of the Business as active employees as of the Closing or (ii) on leave for medical or other reasons as of the Closing at such time as such person is released to return to work, but excluding those persons who are listed on Appendix M and any person who has qualified for benefits under TRW's Long Term Disability Plan as of the Closing. TRW Group TRW, IS&S International, Microwave, the Transaction Companies and the Partnership. TRW Hotel As defined in the Preamble to the Agreement. TRW Hotel Shares All issued and outstanding shares of capital stock of TRW Hotel. TRW Partnership Interest As defined in Section 3.2(o) of the Agreement. TRW's knowledge As defined in Section 1.3 of the Agreement. TRW Signatories TRW, Microwave, IS&S International, Holdings, Operating Company and TRW Hotel. WARN Worker Adjustment and Retaining Act of 1988, as amended.
11 EX-2.2 3 EXHIBIT 2.2 1 EXHIBIT 2.2 AMENDMENT NO. 1 TO RECAPITALIZATION AGREEMENT Dated as of June 17, 1996 TRW Inc., an Ohio corporation ("TRW"), IS&S International Inc. (f/k/a TRW IS&S International, Inc.), an Ohio corporation ("International"), IS&S Holdings, Inc. (f/k/a Target Marketing Services Inc.), a Delaware corporation ("Holdings"), TRW Hotel Company Inc., an Ohio corporation ("Hotel"), TRW Microwave Inc., a California corporation ("Microwave"), IS&S Holdings, Inc. (f/k/a TRW Environmental Management Company), an Ohio corporation ("Holdings" and together with TRW, International, Holdings, Hotel and Microwave, the "TRW Parties"), and IS&S Acquisition Corp., a Delaware corporation ("IS&S"), hereby agree as follows: 1. REFERENCE TO THE RECAPITALIZATION AGREEMENT; DEFINITIONS. Reference is made to the Recapitalization Agreement dated as of February 9, 1996, (as amended, the "Recapitalization Agreement"), among the TRW Parties and IS&S. Terms defined in the Recapitalization Agreement and not otherwise defined herein are used herein with the meanings so defined. 2. AMENDMENTS TO RECAPITALIZATION AGREEMENT. Subject to the terms and conditions hereof, effective on the date on which the condition set forth in Section 3 of this Amendment is satisfied (the "Effective Date of Amendment"), the Recapitalization Agreement is hereby amended as follows: a. AMENDMENT TO SECTION 5.2. Clause (k) of Section 5.2 is hereby amended to add as a concluding sentence the following: "The indemnity agreement to which reference is made in the preceding sentence shall be in the exact form of Appendix R hereto." b. AMENDMENT TO RECAPITALIZATION AGREEMENT. The Recapitalization Agreement is hereby amended by adding immediately after Appendix Q a new Appendix R which Appendix R is attached as Exhibit 2.2 to this Amendment. 3. CONDITIONS TO AMENDMENT. This Amendment shall become effective upon the execution of this Amendment by each of the TRW Parties and IS&S. 4. MISCELLANEOUS. Except to the extent specifically amended hereby, the provisions of the Recapitalization Agreement shall remain unmodified, and, subject to the conditions contained in this Amendment, the Recapitalization 2 Agreement is hereby confirmed as being in full force and effect. This Amendment may be executed in any number of counterparts which together shall constitute one instrument, shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws rules of any jurisdictions. In WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written. IS&S ACQUISITION CORP. By: /s/ Mark E. Nunnelly ___________________________________ Title: By: /s/ Scott M. Sperling ___________________________________ Title: TRW INC. By: /s/ James C. Diggs ___________________________________ Title: Assistant General Counsel and Assistant Secretary By: /s/ Carl G. Miller ___________________________________ Title: Executive Vice President and Chief Financial Officer IS&S INTERNATIONAL, INC. By: /s/ Jean M. Schmidt ___________________________________ Title: Assistant Secretary -2- 3 TRW MICROWAVE INC. By: /s/ Jean M. Schmidt _______________________________ Title: Assistant Secretary IS&S HOLDINGS, INC. By: /s/ Jean M. Schmidt _______________________________ Title: Assistant Secretary INFORMATION SYSTEMS AND SERVICES, INC. By: /s/ Jean M. Schmidt _______________________________ Title: Assistant Secretary TRW HOTEL COMPANY INC. By: /s/ Jean M. Schmidt _______________________________ Title: Assistant Secretary -3- EX-2.3 4 EXHIBIT 2.3 1 EXHIBIT 2.3 AMENDMENT NO. 2 TO RECAPITALIZATION AGREEMENT Dated as of August 13, 1996 TRW Inc., an Ohio corporation ("TRW"), TRW IS&S International, Inc., an Ohio corporation ("International"), IS&S Holdings, Inc. (f/k/a TRW Target Marketing Services Inc.), a Delaware corporation ("Holdings"), TRW Hotel Company Inc., an Ohio corporation ("Hotel"), TRW Microwave Inc., a California corporation ("Microwave"), Experian Information Solutions, Inc. (f/k/a TRW Environmental Management Company), an Ohio corporation ("Operating Company" and together with TRW, International, Holdings, Hotel and Microwave, the "TRW Parties"), and IS&S Acquisition Corp., a Delaware corporation ("IS&S"), hereby agree as follows: 1. REFERENCE TO THE RECAPITALIZATION AGREEMENT; DEFINITIONS. Reference is made to the Recapitalization Agreement dated as of February 9, 1996 (as amended, the "Recapitalization Agreement"), among the TRW Parties and IS&S. Terms defined in the Recapitalization Agreement and not otherwise defined herein are used herein with the meanings so defined. 2. AMENDMENTS TO RECAPITALIZATION AGREEMENT. Subject to the terms and conditions hereof, effective on the date on which the condition set forth in Section 3 of this Amendment is satisfied (the "Effective Date of Amendment"), Section 4.3(h) of the Recapitalization Agreement is hereby amended and restated to read as follows: h. make any single new commitment or increase any single previous commitment for capital expenditures which (i) will be an Assumed Liability, (ii) is not contained in TRW's approved capital expenditures budget for the Business, and (iii) is an amount exceeding Two Hundred Fifty Thousand Dollars ($250,000); 3. CONDITIONS TO AMENDMENT. This Amendment shall become effective as of April 1, 1996. 1 2 4. MISCELLANEOUS. Except to the extent specifically amended hereby, the provisions of the Recapitalization Agreement shall remain unmodified and, subject to the conditions contained in this Amendment, the Recapitalization Agreement is hereby confirmed as being in full force and effect. This Amendment may be executed in any number of counterparts which together shall constitute one instrument, shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws rules of any jurisdiction. IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written. IS&S Acquisition Corp. By: Mark E. Nunnelly ___________________________________________ Mark E. Nunnelly Vice President By: Scott M. Sperling ___________________________________________ Scott M. Sperling Vice President TRW Inc. By: William A. Lawrence ___________________________________________ William A. Lawrence Executive Vice President By: Martin A. Coyle ___________________________________________ Martin A. Coyle Executive Vice President and Secretary TRW IS&S International, Inc. By: James C. Diggs ___________________________________________ James C. Diggs Vice President TRW Microwave Inc. By: Kathleen A. Weigand ___________________________________________ Kathleen A. Weigand Vice President and Secretary 2 3 IS&S Holdings, Inc. By: /S/ David B. Goldston ___________________________________________ David B. Goldston Assistant Secretary Experian Information Solutions, inc. By: /S/ Mark E. Nunnelly ___________________________________________ Mark E. Nunnelly Vice President TRW Hotel Company Inc. By: /S/ Jean M. Schmidt ___________________________________________ Jean M. Schmidt Assistant Secretary 3 EX-2.4 5 EXHIBIT 2.4 1 EXHIBIT 2.4 AMENDMENT NO. 3 TO RECAPITALIZATION AGREEMENT Dated as of September 18, 1996 TRW Inc., an Ohio corporation ("TRW"), TRW IS&S International, Inc., an Ohio corporation ("International"), IS&S Holdings, Inc. (f/k/a Target Marketing Services Inc.), a Delaware corporation ("Holdings"), TRW Hotel Company Inc., an Ohio corporation ("Hotel"), TRW Microwave Inc., a California corporation ("Microwave"), Experian Information Solutions, Inc. (f/k/a TRW Environmental Management Company), an Ohio corporation ("Operating Company" and together with TRW, International, Holdings, Hotel and Microwave, the "TRW Parties"), and Experian Corporation (f/k/a IS&S Acquisition Corp.), a Delaware corporation ("Experian"), hereby agree as follows: 1. REFERENCE TO THE RECAPITALIZATION AGREEMENT; DEFINITIONS. Reference is made to the Recapitalization Agreement dated as of February 9, 1996, (as amended, the "Recapitalization Agreement"), among the TRW Parties and Experian. Terms defined in the Recapitalization Agreement and not otherwise defined herein are used herein with the meanings so defined. 2. AMENDMENTS TO RECAPITALIZATION AGREEMENT. Subject to the terms and conditions hereof, effective on the date on which the condition set forth in Section 3 of this Amendment is satisfied (the "Effective Date of Amendment"), the Recapitalization Agreement is hereby amended as follows: a. AMENDMENT TO RECITALS. Recital (D)(6) is hereby amended and restated in its entirety to read as follows: Operating Company will purchase from Microwave and assume, and Microwave will sell, assign and transfer to Operating Company, the Acquired Assets (including, without limitation, the Mexican Investments, all TRW Hotel Shares and an assignment of Microwave's rights and interests under the trademark agreement between TRW and Microwave referred to above) and the Assumed Liabilities for an aggregate consideration of One Billion Ninety-Nine Million Nine Hundred Ninety-Nine Thousand Five Hundred Dollars ($1,099,999,500), consisting of a Seven Hundred Sixty-One Million Three Hundred Thousand Dollar ($761,300,000) demand promissory note payable by Operating Company to Microwave (the "Demand Note") and shares of stock in 2 Operating Company with an aggregate issuance price of Three Hundred Thirty-Eight Million Six Hundred Ninety-Nine Thousand Five Hundred Dollars ($338,699,500). b. AMENDMENT TO RECITALS. Recital (D)(7) is hereby amended and restated in its entirety to read as follows: TRW will transfer to Microwave, as a capital contribution, all remaining outstanding shares of stock of Operating Company, which are valued at Five Hundred Dollars ($500). c. AMENDMENT TO RECITALS. Recital (D)(9) is hereby amended by deleting the amount "Three Hundred Forty-Five Million Dollars ($345,000,000)" and inserting in its place "Three Hundred Thirty-Eight Million Seven Hundred Thousand Dollars ($338,700,000)". d. AMENDMENT TO RECITALS. Recital (D)(11) is hereby amended by deleting the amount "Two Hundred Fifty-Five Million Dollars ($255,000,000)" and inserting in its place "Two Hundred Forty-Eight Million Seven Hundred Thousand Dollars ($248,700,000)". e. AMENDMENT TO RECITALS. Recital (D)(13) is hereby amended by deleting the amount "Two Hundred Fifty-Five Million Dollars ($255,000,000)" and inserting in its place "Two Hundred Forty-Eight Million Seven Hundred Thousand Dollars ($248,700,000)". f. AMENDMENT TO RECITALS. Recital (D)(14) is hereby amended by deleting the amount "Eight Hundred Five Million Dollars ($805,000,000)" and inserting in its place "Eight Hundred Eleven Million Three Hundred Thousand Dollars ($811,300,000)". g. AMENDMENT TO RECITALS. Recital (D)(15) is hereby amended by deleting the amount "Seven Hundred Fifty-Five Million Dollars ($755,000,000)" and inserting in its place "Seven Hundred Sixty-One Million Three Hundred Thousand Dollars ($761,300,000)". h. AMENDMENT TO SECTION 2.1. Clause (f ) of Section 2.1 is hereby amended by deleting the amount "Three Hundred Forty-Five Million Dollars ($345,000,000)" and inserting in its place "Three Hundred Thirty-Eight Million Six Hundred Ninety-Nine Thousand Five Hundred Dollars ($338,699,500)". -2- 3 i. AMENDMENT TO SECTION 2.1. Clause (g) of Section 2.1 is hereby amended and restated in its entirety to read as follows: TRW will transfer to Microwave, as a capital contribution, all remaining outstanding shares of stock of Operating Company, which are valued at Five Hundred Dollars ($500). j. AMENDMENT TO SECTION 2.1. Clause (i) of Section 2.1 is hereby amended by deleting the amount "Three Hundred Forty-Five Million Dollars ($345,000,000)" and inserting in its place "Three Hundred Thirty-Eight Million Seven Hundred Thousand Dollars ($338,700,000)". k. AMENDMENT TO SECTION 2.6. Clause (e)(v) of Section 2.6 is hereby amended by deleting the amount "Two Hundred Fifty-Five Million Dollars ($255,000,000)" and inserting in its place "Two Hundred Forty-Eight Million Seven Hundred Thousand Dollars ($248,700,000)". l. AMENDMENT TO SECTION 2.7. Clause (a) of Section 2.7 is hereby amended and restated in its entirety to read as follows: "the Seven Hundred Sixty-One Million Three Hundred Thousand Dollar ($761,300,000) original principal amount of the Demand Note plus". m. AMENDMENT TO SECTION 2.7. Clause (b) of Section 2.7 is hereby amended and restated in its entirety to read as follows: "the Two Hundred Forty-Eight Million Seven Hundred Thousand Dollars ($248,700,000) cash and Seventy-Five Million Dollars ($75,000,000) value of the Senior Convertible Preferred Stock constituting the Merger Consideration, plus". n. AMENDMENT TO SECTION 5.2. Clause (f) of Section 5.2 is hereby amended by deleting the amount "Two Hundred Fifty-Five Million Dollars ($255,000,000)" and inserting in its place "Two Hundred Forty-Eight Million Seven Hundred Thousand Dollars ($248,700,000)". o. AMENDMENT TO SECTION 5.2. Clause (g) of Section 5.2 is hereby amended by deleting the amount "Eight Hundred Five Million Dollars ($805,000,000)" and inserting in its place "Eight Hundred Eleven Million Three Hundred Thousand Dollars ($811,300,000)". p. AMENDMENT TO APPENDIX E-1. The Description of "Cash and Cash Equivalents" -- "Closing - Excluded Assets" shall be amended by inserting at the end of the second sentence thereof the following: "except -3- 4 the balances in the TRW REDI ESCROW BANK ACCOUNT - Wells Fargo Account No. 047-0041161 and the IS&S ORANGE COUNTY EMPLOYEE ASSOC BANK ACCOUNT - Wells Fargo Account No. 258508694". q. AMENDMENT TO APPENDIX E-2. The Description of "Cash and Cash Equivalents" -- "Closing - Excluded Assets" shall be amended by inserting at the end of the second sentence thereof the following: "except the balances in the TRW REDI ESCROW BANK ACCOUNT - Wells Fargo Account No. 047-0041161 and the IS&S ORANGE COUNTY EMPLOYEE ASSOC BANK ACCOUNT - Wells Fargo Account No. 258508694". r. SUPPLEMENT TO APPENDIX E-1. For purposes of the audit to be conducted pursuant to Section 2.8 of the Recapitalization Agreement, the Supplemental Accounting Principles described in Appendix E-1 shall be supplemented as follows: with respect to accounts payable and accrual expenses, the amounts attributable to the pre-Closing period and the post-Closing period shall be based on actual usage to the extent possible, and otherwise shall be based on TRW's standard 5-4-4 closing calendar method of allocation. s. SUPPLEMENT TO APPENDIX E-2. For purposes of the audit to be conducted pursuant to Section 2.8 of the Recapitalization Agreement, the Supplemental Accounting Principles described in Appendix E-2 shall be supplemented as follows: with respect to accounts payable and accrual expenses, the amounts attributable to the pre-Closing period and the post-Closing period shall be based on actual usage to the extent possible, and otherwise shall be based on TRW's standard 5-4-4 closing calendar method of allocation. 3. CONDITIONS TO AMENDMENT. This Amendment shall become effective upon the execution of this Amendment by each of the TRW Parties and Experian. 4. MISCELLANEOUS. Except to the extent specifically amended hereby, the provisions of the Recapitalization Agreement shall remain unmodified, and, subject to the conditions contained in this Amendment, the Recapitalization Agreement is hereby confirmed as being in full force and effect. This Amendment may be executed in any number of counterparts which together shall constitute one instrument, and shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws rules of any jurisdictions. -4- 5 In WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written. EXPERIAN CORPORATION (f/k/a IS&S Acquisition Corp.) By: /s/ Mark E. Nunnelly --------------------------------- Title: Vice President Mark E. Nunnelly By: /s/ Scott M. Sperling --------------------------------- Title: Vice President Scott M. Sperling TRW INC. By: /s/ William Lawrence --------------------------------- Title: Executive Vice President William A. Lawrence By: /s/ Martin A. Coyle --------------------------------- Title: Executive Vice President and Secretary Martin A. Coyle TRW IS&S INTERNATIONAL, INC. By: /s/ James C. Diggs --------------------------------- Title: Vice President James C. Diggs TRW MICROWAVE INC. By: /s/ Kathleen A. Weigand --------------------------------- Title: Vice President and Secretary Kathleen A. Weigand 6 IS&S HOLDINGS, INC. (f/k/a Target Marketing Services, Inc.) By: /s/ David B. Goldston --------------------------------- Title: Assistant Secretary David B. Goldston EXPERIAN INFORMATION SOLUTIONS, INC. By: /s/ Mark E. Nunnelly --------------------------------- Title: Vice President Mark E. Nunnelly TRW HOTEL COMPANY INC. By: /s/ Jean M. Schmidt --------------------------------- Title: Assistant Secretary Jean M. Schmidt EX-99.1 6 EXHIBIT 99.1 1 EXHIBIT 99.1 NEWS RELEASE TRW Inc. [LOGO] 1900 Richmond Road Cleveland, OH 44124 - -------------------------------------------------------------------------------- Contact FOR IMMEDIATE RELEASE Jay McCaffrey 216-291-7179 TRW COMPLETES SALE OF ITS INFORMATION SERVICES BUSINESS; PROCEEDS TO SPUR FURTHER GROWTH CLEVELAND, September 19, 1996 - TRW Inc. today announced that it has completed the sale of its information services business to an investor group lead by Bain Capital, Inc. and the Thomas H. Lee Company in a transaction valued at over $1 billion. At the closing, TRW received cash of $1.010 billion and stock in the company, to be named Experian Corporation, representing a continuing interest of about 16 percent. As previously announced, the proceeds will be used to fund investment opportunities in the automotive and space and defense industries and purchases under the company's ongoing share buyback program. "The sale of information services allows the company to sharpen the focus on its core automotive and space and defense businesses," said Joseph T. Gorman, chairman and chief executive officer. "The prospects for growth in both of these markets are excellent. "By unlocking the value of information services, we have increased shareholder value significantly. Since we first announced the sale, the improvement in TRW's market value confirms the market's confidence in our plans for the proceeds." In addition, TRW is expected to take certain charges and restructuring actions in its automotive and space and defense businesses which would offset the gain realized by the unit's sale. The actions under consideration are designed to enhance the company's competitive position in key global markets, provide resources for growth, and increase shareholder value. TRW provides advanced technology products and services for automotive and space and defense markets worldwide. The company's 1995 sales were approximately $10 billion. #### -----END PRIVACY-ENHANCED MESSAGE-----