-----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, GHkmeZGiH9F6EKTMeBP2blIDMraxd4ZtERtrRIsklxnHDUwVP184JFKV4sHu2RX8 yM3jSJm5/BqXCOwHWiQhKQ== 0000950152-99-008297.txt : 19991018 0000950152-99-008297.hdr.sgml : 19991018 ACCESSION NUMBER: 0000950152-99-008297 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19991015 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: S-3 SEC ACT: SEC FILE NUMBER: 333-89133 FILM NUMBER: 99729241 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 S-3 1 TRW, INC. S-3 1 As filed with the Securities and Exchange Commission on October 15, 1999 REGISTRATION NO. 333-_____ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 TRW INC. (Exact Name of Registrant as Specified in Its Charter) OHIO 3714 34-0575430 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification Number)
1900 RICHMOND ROAD CLEVELAND, OHIO 44124 (216) 291-7000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) WILLIAM B. LAWRENCE, ESQ. EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY TRW INC. 1900 RICHMOND ROAD CLEVELAND, OHIO 44124 (216) 291-7000 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Copies to: WILLIAM P. ROGERS, JR., ESQ. CRAVATH, SWAINE & MOORE WORLDWIDE PLAZA, 825 EIGHTH AVENUE NEW YORK, NEW YORK 10019 (212) 474-1270 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective as determined by market conditions and other factors. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM TITLE OF EACH CLASS AGGREGATE AMOUNT OF OF SECURITIES TO BE REGISTERED (1) OFFERING PRICE (1)(2)(3) REGISTRATION FEE ---------------------------------- ------------------------ ---------------- Debt Securities................................................ $1,659,000,000 $461,202 Debt Warrants.................................................. Common Stock (4) (5)........................................... Common Stock Warrants (5)...................................... Stock Purchase Contracts (6)................................... Stock Purchase Units (6)....................................... Total..........................................................
(1) Not specified as to each class of securities to be registered hereunder pursuant to General Instruction II.D of Form S-3 under the Securities Act of 1933 (the "Securities Act"). (2) In United States dollars or the equivalent thereof in any other currency, currency unit or units, or composite currency or currencies. (3) Estimated for the sole purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act and exclusive of accrued interest and dividends, if any. Reflects the proceeds, rather than the principal amount, of any debt securities sold initially at a discount. (4) Includes Preference Stock Purchase Rights ("Rights"). The Rights are associated with and trade with the Common Stock. See "Description of Capital Stock--Rights Agreement" in the Prospectus contained herein. The value, if any, attributable to the Rights is reflected in the market price of the Common Stock. (5) This Registration Statement includes an indeterminate amount of securities as may be issued upon conversion or exchange of any debt securities offered hereby or upon the exercise of the Debt Warrants or Common Stock Warrants registered hereunder. (6) Includes a currently indeterminate number of shares of Common Stock to be issuable by TRW Inc. upon settlement of the Stock Purchase Contracts or Stock Purchase Units issued by TRW Inc. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. 2 SUBJECT TO COMPLETION, DATED OCTOBER 15, 1999 PROSPECTUS [TRW Logo] TRW INC. $1,659,000,000 DEBT SECURITIES WARRANTS TO PURCHASE DEBT SECURITIES COMMON STOCK WARRANTS TO PURCHASE COMMON STOCK STOCK PURCHASE CONTRACTS STOCK PURCHASE UNITS TRW Inc. may offer and sell debt securities, including convertible debt securities, warrants to purchase debt securities, common stock, warrants to purchase common stock, stock purchase contracts and stock purchase units. We will provide specific terms of these securities in supplements to this prospectus. You should read this prospectus and any prospectus supplement carefully before you invest. Our common stock is listed on the New York, Chicago, Philadelphia, and Pacific Stock Exchanges under the symbol "TRW," and is also listed on the Frankfurt and London Stock Exchanges. If we decide to seek a listing of any debt securities, warrants to purchase debt securities, common stock, warrants to purchase common stock, stock purchase contracts or stock purchase units offered by this prospectus, the related prospectus supplement will disclose the exchange or market on which the securities will be listed or where we have made an application for listing. This prospectus may be used to offer and sell securities only if accompanied by the prospectus supplement for those securities. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is _______________, 1999 3 TABLE OF CONTENTS PAGE ---- Available Information...............................................2 Incorporation of Certain Documents by Reference.....................2 The Company.........................................................4 Use of Proceeds.....................................................4 Ratio of Earnings to Fixed Charges..................................5 Description of Debt Securities......................................5 Description of Capital Stock.......................................15 Description of Warrants............................................22 Description of Stock Purchase Contracts and Stock Purchase Units...24 Plan of Distribution...............................................24 Legal Opinions.....................................................25 Experts............................................................25 Independent Appraisal..............................................25 AVAILABLE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any materials we file with the SEC at the SEC's public reference rooms in Washington, DC, New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. Our common stock is listed on the New York, Chicago, Philadelphia, Pacific, Frankfurt and London Stock Exchanges. You may inspect information about TRW at the offices of the NYSE located at 20 Broad Street, New York, New York 10005. You should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you with different or additional information. We are not making an offer of these securities in any state or country where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front cover of this document or the documents incorporated by reference in this prospectus. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" into this prospectus some of the information that we file with the SEC, which means that we can disclose important information to you by referring you to information in those documents. The information incorporated by reference is an important part of this prospectus. The following documents, which we have filed with the SEC, are incorporated into and specifically made a part of this prospectus by this reference: - Annual Report on Form 10-K for the year ended December 31, 1998; - Quarterly Report on Form 10-Q for the quarter ended June 30, 1999; - Current Reports on Form 8-K filed on January 28, 1999; February 5, 1999; March 26, 1999, as amended on May 17, 1999; May 27, 1999 and June 21, 1999; and 2 4 - The description of our common stock and related preference stock purchase rights contained in Exhibit 4(a) to our Form 10-Q for the quarter ended March 31, 1996 and our Form 8-A dated April 25, 1996, including any amendments and reports filed for the purpose of updating those descriptions. In addition, (1) all documents filed by us with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and (2) all other documents filed by us with the SEC pursuant to the Exchange Act after the date of this prospectus and prior to the termination of the offering of the securities offered by this prospectus will be deemed to be incorporated by reference into this prospectus and will be a part of this prospectus from the date we file those documents with the SEC. Any statement contained in this prospectus or in a document incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. We have filed with the SEC a registration statement on Form S-3 under the Securities Act of 1933 with respect to the securities being offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. You should refer to the registration statement for more information. Statements contained in or incorporated by reference in this prospectus regarding the contents of any contract or other document referred to in this prospectus or in any incorporated document are presented in summary form. In each case, we refer you to the contract or other document filed as an exhibit to this prospectus or the documents incorporated by reference for complete terms of that document. The actual contract or document, not the statements in this prospectus, govern the matters set forth in those contracts and documents. This prospectus incorporates documents by reference that contain important business and financial information about TRW that is not included in or delivered with this document. Copies of those documents, other than exhibits to those documents that are not specifically incorporated by reference into the documents, are available without charge to any person to whom this prospectus is delivered, upon written or oral request to: TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124-2760 Attention: Financial Services (216) 291-7654. 3 5 THE COMPANY TRW is an international company that provides advanced technology products and services. The principal businesses of TRW and its subsidiaries are the design, manufacture and sale of products and the performance of systems engineering, research and technical services for private industry and the United States Government in the automotive and aerospace and information systems markets. Our principal products and services include: - automotive chassis systems; - automotive occupant safety systems; - automotive electronics and engineered fasteners; - automotive engine components and diesel systems; - spacecraft; - electronic systems, equipment and services; - software and systems engineering support services; - information technology; and - aeronautical systems, products and services. TRW was incorporated under the laws of Ohio on June 17, 1916. Our principal executive offices are at 1900 Richmond Road, Cleveland, Ohio 44124-2760. ACQUISITION OF LUCASVARITY On May 10, 1999, TRW closed the acquisition of LucasVarity plc for an aggregate cash purchase price of approximately $6.8 billion. LucasVarity designs, manufactures and supplies advanced technology systems, products and services in the world's automotive and aerospace industries. LucasVarity had sales of approximately $7.088 billion for the year ended January 31, 1999, and total assets of approximately $7.453 billion as of January 31, 1999. TRW unconditionally committed to purchase all LucasVarity shares tendered on or prior to March 25, 1999, and LucasVarity is included in TRW's financial statements subsequent to that date. USE OF PROCEEDS Unless we otherwise indicate in the applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by this prospectus and the applicable prospectus supplement for general corporate purposes. General corporate purposes include the repayment or refinancing of existing indebtedness, additions to working capital, capital expenditures and acquisitions. Any specific allocation of the net proceeds of an offering of securities to a specific purpose will be described in the related prospectus supplement. 4 6 RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) The following table shows the ratio of earnings to fixed charges of TRW and its subsidiaries. For purposes of this ratio, "earnings" consist of earnings from continuing operations before income taxes adjusted for minority interests in earnings of consolidated subsidiaries, plus fixed charges, less undistributed earnings of affiliates which are less than fifty percent owned by TRW. "Fixed charges" consist of interest on borrowed funds, amortization of debt discount and expense and one-third of rental expense which is representative of the interest factor.
YEAR ENDED DECEMBER 31, SIX MONTHS ------------------------------------------------ ENDED 1994 1995 1996 1997 1998 JUNE 30, 1999 ---- ---- ---- ---- ---- ------------- Ratio of earnings to fixed charges.......... 3.9x 5.4x 3.4x(a) 2.9x(b) 5.2x 1.9x(c)
(a) The 1996 earnings from continuing operations before income taxes of $302 million includes a charge of $385 million as a result of actions taken in the automotive and space and defense businesses. (b) The 1997 earnings from continuing operations before income taxes of $240 million includes a $548 million earnings charge for purchased in-process research and development related to the acquisition of BDM International, Inc. (c) The earnings from continuing operations before income taxes of $224 million for the six months ended June 30, 1999 includes an $85 million earnings charge for purchased in-process research and development related to the acquisition of LucasVarity. DESCRIPTION OF DEBT SECURITIES The debt securities will be issued under an indenture dated as of May 1, 1986, as supplemented, between TRW and The Chase Manhattan Bank, as successor trustee to Mellon Bank, N.A. The following description is a summary of the material provisions of the indenture. It does not restate the indenture in its entirety. A copy of the indenture has been filed as an exhibit to the registration statement of which this prospectus is a part. We urge you to read the indenture because it, and not this description, defines your rights as holders of the debt securities issued under the indenture. In this description, references to "TRW" mean TRW Inc., alone and not together with any of its subsidiaries. GENERAL The indenture does not limit the amount of debt securities which we can issue. We may issue debt securities up to an aggregate principal amount as we may authorize from time to time. You should consult the applicable prospectus supplement for the following terms of the debt securities being offered: - the type, total principal amount and authorized denominations of the debt securities; - the percentage of the principal amount at which the debt securities will be issued; - the date or dates on which the debt securities will mature; - the rate or rates per year, which may be fixed or floating, at which the debt securities will bear interest, if any, or the method of determining the rate or rates; 5 7 - the interest payment dates and the record dates related to those dates, if any; - sinking fund or redemption terms, if any; - the terms, if any, upon which the debt securities may be convertible into or exchanged for our or any other issuer's or obligor's common stock, preferred stock, other debt securities or warrants for common stock, preferred stock, indebtedness or other securities of any kind and the terms and conditions upon which such conversion or exchange shall be effected, including the initial conversion or exchange price or rate, the conversion or exchange period and any other additional provisions; - whether holders can require us to repurchase the debt securities; - the currency or currencies for payment of the principal of, premium, if any, and interest, if any, on the debt securities; - if the currency or currencies for payment of the principal of, premium, if any, and interest on the debt securities is at the purchaser's election, the manner in which that election may be made; - the securities exchange, if any, on which the debt securities will be listed; - whether the debt securities will be issued in the form of one or more global securities representing debt securities, and, if so, the identity of a depository for those global securities; - the conversion or exchange provisions, if any; and - any other terms of the debt securities, which terms will be consistent with the applicable indenture. The prospectus supplement will also describe any material United States Federal income tax consequences or other special considerations applicable to the series of debt securities to which that prospectus supplement relates, including those applicable to: - debt securities with respect to which payments of principal, premium or interest are determined with reference to an index or formula, including changes in prices of particular securities, currencies or commodities; - debt securities with respect to which principal or interest is payable in a foreign or composite currency; - debt securities that are issued at a discount below their stated principal amount, bearing no interest or interest at a rate that at the time of issuance is below market rates; and - variable rate debt securities that are exchangeable for fixed rate debt securities. For debt securities that are registered, the principal of, premium, if any, and interest on the debt securities may be paid at our option by check mailed to the address of the person entitled thereto as it appears in the register for those debt securities. Interest payments will be subject to applicable withholding taxes. 6 8 No service charge will be made for any transfer or exchange of the debt securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange. RANKING TRW currently intends to issue the debt securities as senior unsecured indebtedness of TRW, ranking equally with all other existing and future unsecured senior indebtedness of TRW. There are no restrictions on the incurrence of debt that ranks equally with the senior debt to be issued under the indenture. TRW Inc. cannot issue debt that ranks senior to any series of senior debt issued under the indenture without the consent of the holders of 66 2/3% in total principal amount of that series. This consent requirement is the only limitation in the indenture on the amount of indebtedness that TRW Inc. could issue that ranks senior to the senior debt issued under the indenture. If we decide to issue any or all of the debt securities as subordinated debt securities, the prospectus supplement will set forth the terms of any indenture that may apply and the rights of the holders of such subordinated debt securities. GLOBAL SECURITIES The debt securities of a series may be issued in whole or in part in the form of one or more global securities. A global security is a security that represents, and is denominated in an amount equal to, the aggregate principal amount of the debt securities, or a portion of those securities, in either case having the same terms as the securities that it represents. The global securities will be deposited with, or on behalf of, the depository identified in the prospectus supplement relating to such series. Unless and until it is exchanged in whole or in part for debt securities in definitive form, a global security may not be transferred except as a whole by or to the depository for that global security or its successor, or any nominee of the depository or successor depository. The specific terms of the depository arrangement with respect to any series of debt securities and the rights of and limitations on owners of beneficial interests in global securities representing debt securities will be described in the prospectus supplement relating to those debt securities. DEFINITIONS FROM THE INDENTURE The following are some of the terms defined in the indenture: "Attributable Debt" means, as to any particular lease under which any Person is liable at the time and at any date as of which the amount thereof is to be determined, the lesser of: (1) the fair value of the property subject to such lease, as determined by the Board of Directors; or (2) the total net amount of rent required to be paid by such Person under such lease during the remaining term thereof, discounted from the respective due dates thereof to such date at the actual interest factor included in such rent. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of the rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. 7 9 "Board of Directors" or "Board," when used with reference to TRW, shall mean the Board of Directors of TRW, or the Executive Committee of the Board or any other committee of the Board to the extent that the powers of the Board have lawfully been delegated. "Consolidated Funded Debt" means the Funded Debt of TRW and its Consolidated Subsidiaries consolidated in accordance with generally accepted accounting principles. "Consolidated Net Tangible Assets" means the total of all assets of TRW and its Consolidated Subsidiaries appearing on a consolidated balance sheet prepared in accordance with generally accepted accounting principles, including the equity in and the net amount of advances to other Subsidiaries, after deducting therefrom, without duplication of deductions, as shown on such balance sheet, the sum of: (1) intangible assets, including goodwill, cost of acquired businesses in excess of recorded net assets at acquisition dates, patents, licenses, trademarks, trade names, copyrights, unamortized debt discount and expense less unamortized debt premium, and corporate organization expense, but excluding deferred charges and prepaid expense; (2) any write-up of the book value of any assets, other than (a) equity in Subsidiaries which are not Consolidated Subsidiaries and (b) as a result of currency revaluations, resulting from the revaluation thereof subsequent to March 31, 1986; (3) all liabilities of TRW and its Consolidated Subsidiaries other than: (a) Funded Debt; (b) capital stock; (c) surplus; (d) surplus reserves; (e) reserves for deferred Federal income taxes arising from accelerated depreciation, investment and other tax credits, and similar provisions; and (f) contingency reserves not allocated for any particular purpose; (4) reserves for depreciation and amortization and other reserves, other than the reserves referred to in the preceding clause (3); and (5) any minority interest in the shares of stock and surplus of any Consolidated Subsidiary. "Consolidated Subsidiary" means each Subsidiary other than: (1) any Subsidiary the accounts of which (a) are not required by generally accepted accounting principles to be consolidated with those of TRW for financial reporting purposes and 8 10 (b) were not consolidated with those of TRW in TRW's then most recent annual report to shareholders and are not intended by TRW to be consolidated with those of TRW in its next annual report to shareholders; or (2) any Subsidiary the primary business of which consists of financing the sale or lease of merchandise, equipment or services by TRW or any Subsidiary or owning, leasing, dealing in or developing real property, or providing services directly related thereto, or which is otherwise primarily engaged in the business of a finance or real estate company. "Domestic Subsidiary" means each Consolidated Subsidiary other than: (1) any Consolidated Subsidiary which the Board of Directors reasonably determines not to be material to the business or financial condition of TRW; (2) any Consolidated Subsidiary the major portion of the assets of which are located, or the major portion of the business of which is carried on, outside the United States of America, its territories and possessions; (3) any Consolidated Subsidiary which, during the 12 most recent calendar months, or such shorter period as shall have elapsed since its organization, derived the major portion of its gross revenues from sources outside the United States of America; (4) any Consolidated Subsidiary the major portion of the assets of which consists of securities or obligations, or both, of one or more corporations, whether or not Consolidated Subsidiaries, of the types described in the preceding clauses (2) and (3); and (5) any Consolidated Subsidiary organized after March 31, 1986 which TRW intends shall be operated in such manner as to come within one or more of the preceding clauses (2), (3) and (4). "Exempted Indebtedness" means, as of any particular time, the sum of: (1) the aggregate principal amount of all then outstanding indebtedness for borrowed money of TRW and its Domestic Subsidiaries incurred after May 1, 1986, and secured by any mortgage, security interest, pledge or lien other than those permitted under any of clauses (1) through (5) under the heading "--Covenants--Limitation on Liens" below; and (2) all Attributable Debt pursuant to Sale and Leaseback Transactions incurred by TRW and its Domestic Subsidiaries after May 1, 1986, at that time outstanding other than that which is not prohibited by or is permitted pursuant to clause (1) or (2) under the heading "--Covenants--Limitation on Sale and Leaseback" below. "Funded Debt" means all indebtedness for money borrowed having a maturity (1) of more than 12 months from the date that indebtedness was incurred, or (2) of 12 months or less but by its terms being renewable or extendable beyond 12 months from the date that indebtedness was incurred at the option of the borrower. "Person" means any individual, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, joint venture, government or any agency or political subdivision thereof or other entity. 9 11 "Principal Property" means any single manufacturing plant, engineering facility or research facility owned or leased by TRW or a Domestic Subsidiary other than any such plant or facility or portion thereof which the Board of Directors reasonably determines not to be of material importance to TRW and its Subsidiaries taken as a whole. "Securities" means any debt securities authenticated and delivered under the indenture. "Subsidiary" means each corporation of which TRW, or TRW and one or more Subsidiaries, or any one or more Subsidiaries, directly or indirectly owns securities entitling the holders thereof to elect a majority of the directors, either at all times or so long as there is no default or contingency which permits the holders of any other class or classes of securities to vote for the election of one or more directors. As used in this definition, the term "corporation" includes comparable types of business organizations authorized under the laws of foreign countries and the term "directors" includes the members of the governing bodies of those business organizations. "Wholly Owned Domestic Subsidiary" means each Domestic Subsidiary all the outstanding shares of which, other than directors' qualifying shares, shall at the time be owned by TRW, or by TRW and one or more Wholly Owned Domestic Subsidiaries, or by one or more Wholly Owned Domestic Subsidiaries. COVENANTS We have agreed to some restrictions on our activities for the benefit of holders of the debt securities. The restrictive covenants described below will apply so long as any of the debt securities issued under the indenture are outstanding unless the holders of a particular series waive the covenant or the indenture is amended. The applicable prospectus supplement will describe any different or additional covenants. LIMITATION ON LIENS We have agreed that, so long as any debt securities remain outstanding under the indenture, we will not, and we will not cause or permit any Domestic Subsidiary to, directly or indirectly, create or assume any mortgage, encumbrance, lien, pledge or security interest of any kind upon or in (1) any of its interests in any Principal Property, or (2) any shares of capital stock or indebtedness of any Domestic Subsidiary, whether that interest, capital stock or indebtedness is now owned or hereafter acquired, if that mortgage secures or is intended to secure, directly or indirectly, the payment of any indebtedness for borrowed money evidenced by notes, bonds, debentures or other similar evidences of indebtedness ("Debt") without making effective provision, and TRW in that case will make or cause to be made effective provision, whereby all of the Securities shall be secured by that mortgage equally and ratably with any other Debt thereby secured. This restriction does not apply to: (1) mortgages on any Principal Property acquired, constructed or improved by TRW or any Domestic Subsidiary after the date of the indenture which are created or assumed contemporaneously with, or within 120 days after, that acquisition or completion of that construction or improvement to secure or provide for payment of any part of the purchase price of that Principal Property or the cost of that construction or improvement incurred after May 1, 1986, or, in addition to mortgages contemplated by clauses (2) and (3) below, mortgages on any such Principal Property existing at the time or placed thereon at the time of acquisition or leasing thereof by TRW or any Domestic Subsidiary, or conditional sales 10 12 agreements or other title retention agreements with respect to any Principal Property now owned or leased or hereafter acquired or leased by TRW or a Domestic Subsidiary; (2) mortgages on property, which includes shares of capital stock or indebtedness of a corporation, of a corporation existing (a) at the time that corporation becomes a Domestic Subsidiary or is merged or consolidated with TRW or a Domestic Subsidiary, or (b) at the time of a sale, lease or other disposition of the properties of that corporation, or a division thereof, or other Person as an entirety or substantially as an entirety, to TRW or a Domestic Subsidiary, provided that no such mortgage shall extend to any other Principal Property of TRW or any Domestic Subsidiary or to any shares of capital stock or any indebtedness of any Domestic Subsidiary; (3) mortgages created by TRW or a Domestic Subsidiary to secure indebtedness of TRW or a Domestic Subsidiary to TRW or to a Wholly Owned Domestic Subsidiary; (4) mortgages in favor of the United States of America or any state, territory or possession thereof, or any foreign country or any department, agency, instrumentality or political subdivision of any of such domestic or foreign jurisdictions to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any debt incurred for the purpose of financing all or part of the purchase price of, or the cost of constructing, the property subject to such mortgages; and (5) mortgages for the sole purpose of extending, renewing or replacing, or successively extending, renewing or replacing, in whole or in part any mortgage existing on May 1, 1986 or referred to in the foregoing clauses (1) to (4) inclusive or of any debt secured thereby; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of that extension, renewal or replacement, and that extension, renewal or replacement mortgage will be limited to all or a part of the property which secured the mortgage so extended, renewed or replaced, plus improvements on that property. Notwithstanding the foregoing provisions, TRW or any Domestic Subsidiary may, without equally and ratably securing all the Securities of each series, create or assume mortgages which would otherwise be subject to the foregoing restrictions if at the time of such creation or assumption, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of the date not more than 90 days prior thereto. LIMITATION ON SALE AND LEASEBACK TRW will not, and it will not permit any Domestic Subsidiary to, sell, lease or transfer any Principal Property owned by TRW or a Domestic Subsidiary as an entirety, or any substantial portion thereof, to anyone other than a Wholly Owned Domestic Subsidiary, or TRW or a Wholly Owned Domestic Subsidiary in the case of a Domestic Subsidiary, with the intention of taking back a lease of that property, a "Sale and Leaseback Transaction," except a lease for a period of not more than 36 months by the end of which it is intended that the use of that property by the lessee will be discontinued. Notwithstanding the foregoing, TRW or any Domestic Subsidiary may sell any such property and lease it back if the net proceeds of that sale are at least equal to the fair value, as determined by resolution adopted by the Board of Directors of TRW, of that property, and: 11 13 (1) TRW or such Domestic Subsidiary would be entitled, pursuant to clauses (1) through (5) of the foregoing Limitation on Liens covenant, to create Debt secured by a mortgage on the Principal Property to be leased in an amount equal to the Attributable Debt with respect to that Sale and Leaseback Transaction without equally and ratably securing all the debt securities issued under the indenture, or (2) if that sale or transfer does not come within the exception provided by the preceding clause, the net proceeds of that sale shall, and in any such case TRW covenants that they will, within 120 days after that sale, be applied, to the greatest extent possible, either (a) to the redemption of Securities subject to and in accordance with the provisions of the indenture and at the then applicable Redemption Price or to the acquisition and delivery to the trustee for cancellation of Securities, that acquisition to be at a price not exceeding the principal amount thereof plus accrued and unpaid interest and brokerage fees, or (b) to the retirement of other Consolidated Funded Debt of TRW ranking at least on a parity with the Securities of each series, or in part to one or more of such alternatives and in part to another; provided that, in lieu of applying all or any part of that net proceeds to that redemption, TRW may, within 90 days after that sale, deliver to the trustee for cancellation, or receive credit for theretofore delivered and cancelled, Securities previously authenticated and delivered by the trustee and not theretofore tendered for mandatory sinking fund purposes or called for the mandatory sinking fund and with respect to which credit under this Limitation on Sale and Leaseback section had not theretofore been received, and an officers' certificate stating that TRW elects to deliver such Securities in lieu of redeeming Securities as provided above. If TRW shall so deliver Securities to the trustee, or receive credit for Securities so delivered, the amount of cash which TRW shall be required to apply to the redemption of Securities under this Limitation on Sale and Leaseback section shall be reduced by an amount equal to the aggregate principal amount of such Securities. Notwithstanding the foregoing provisions, TRW or any Domestic Subsidiary may enter into Sale and Leaseback Transactions if, at the time of such entering into, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of a date not more than 90 days prior thereto. LEVERAGED TRANSACTIONS Other than the restrictions on liens and sale and leaseback transactions described above, or as may be set forth in the applicable prospectus supplement with respect to any series of debt securities, the indenture does not contain and the debt securities will not contain any covenants or other provisions designed to afford holders of the debt securities protection in the event of a highly leveraged transaction involving TRW. EVENTS OF DEFAULT The indenture defines an event of default with respect to any series of debt securities as any one of the following events, unless it is inapplicable: (1) failure of TRW for 60 days to pay interest on any debt security of that series; 12 14 (2) failure of TRW to pay principal or premium, if any, when due with respect to any debt securities of that series; (3) failure of TRW for 10 days to satisfy any sinking fund obligation with respect to any debt securities of that series; (4) failure of TRW for 75 days after appropriate notice to perform any other covenant or agreement in the indenture applicable to that series; or (5) events of bankruptcy, insolvency or reorganization specified in the indenture. The applicable prospectus supplement will describe any additional or different events of default. No event of default with respect to a particular series of debt securities necessarily constitutes an event of default with respect to any other series of debt securities. If an event of default shall occur and be continuing with respect to any series of debt securities, the trustee or the holders of not less than 25% of the total principal amount of the debt securities of that series then outstanding may declare the principal of that series, or a portion of the principal amount in the case of original issue discount securities, to be due and payable. Any event of default with respect to a particular series of debt securities, other than nonpayment of principal, premium, interest, or sinking fund installments, may be waived by the holders of a majority of the total principal amount of the outstanding debt securities of that series. The indenture requires TRW to file annually with the trustee a written statement of certain of our officers as to the existence of defaults in performance of any covenants contained in the indenture. The trustee may withhold notice to the holders of debt securities of a particular series of any default if the trustee determines in good faith that its withholding of notice is in the interest of the holders of those securities. However, the trustee may not withhold notice if our default is in the payment of principal, premium if any, interest, or in the making of any sinking fund payment. CONSOLIDATION, MERGER OR SALE The indenture provides that TRW may consolidate with, or sell or convey all or substantially all of its assets to, or merge into, any other entity, if: (1) the corporation formed by that consolidation or into which we are merged, or the entity which acquired all or substantially all of TRW's assets shall be organized and existing under the laws of the United States of America or any state thereof; (2) that entity expressly assumes the due and punctual payment of the principal of, and premium, if any, and interest on all the Securities and the due and punctual performance and observance of all of the covenants and conditions of the indenture to be performed, observed or satisfied by TRW; (3) immediately after that merger or consolidation, or that sale or conveyance, no event of default shall have occurred or be continuing; and (4) that entity shall not immediately thereafter have outstanding any secured indebtedness not permitted by the covenant described under "-Covenants--Limitation on Liens," unless that entity has secured the Securities equally and ratably with the debt secured by the mortgage securing that other indebtedness, if that entity could not create such other mortgage without violating that covenant. 13 15 DEFEASANCE The indenture provides that TRW, at its option, either: (1) will be discharged from any and all obligations with respect to any series of debt securities, except for certain obligations to register the transfer or exchange of the securities, replace stolen, lost or mutilated securities, maintain paying agencies and hold moneys for payment in trust, or (2) need not comply with the restrictive covenants of the indenture as described under "--Covenants--Limitation on Liens" and "--Covenants--Limitation on Sale and Leaseback" with respect to any series of Securities, upon the deposit with the trustee or, in the case of a discharge of obligations, 91 days after that deposit, in trust, of money or the equivalent in securities of the government that issued the currency in which the securities are denominated or government agencies backed by the full faith and credit of that government, or a combination thereof, which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal of, including any mandatory sinking fund payments, and interest on, and any repurchase obligations with respect to, that series of securities on the dates such payments are due in accordance with the terms of the securities. To exercise any such option, no event of default, or event which with notice or lapse of time would become an event of default, with respect to such series of securities shall have occurred and be continuing. TRW is required to deliver to the trustee an opinion of counsel to the effect that the deposit and related defeasance would not cause the holders of the securities to recognize income, gain or loss for United States Federal income tax purposes and, in the case of a discharge of obligations, accompanied by a ruling to that effect received from or published by the Internal Revenue Service. MODIFICATION OF THE INDENTURE We may, without the consent of any holder of debt securities issued under the indenture, enter into one or more supplemental indentures to, among other things, - cure any ambiguity - correct or supplement any provision that may be defective or inconsistent with any other provision, or - make such other provisions under the indenture as shall not adversely affect the interests of the holders of the debt securities issued under the indenture. In addition, our rights and obligations and the rights of the holders of the debt securities may be modified by us with the consent of the holders of not less than 66 2/3% in aggregate principal amount of the outstanding debt securities of each series to be affected. However, we may not, without the consent of the holders of all outstanding debt securities to be affected, make modifications that would, among other things: - change the maturity of any debt security; - reduce the principal amount of any debt security or any premium on any debt security; - reduce the rate or extend the time of payment of interest on any debt security; 14 16 - change the method of computing the amount of principal of any debt security on any date; or - reduce the percentage of outstanding debt securities of each series whose consent is needed to modify or alter the indenture. A supplemental indenture which changes or eliminates any covenant or other provision of the indenture which has expressly been included solely for the benefit of one or more particular series of debt securities, or which modifies the rights of the holders of debt securities of that series with respect to that covenant or other provision, shall be deemed not to affect the rights under the indenture of the holders of debt securities of any other series. THE TRUSTEE The Chase Manhattan Bank is the trustee under the indenture. The trustee is a depository for funds and performs other services for, and transacts other banking business with, TRW in the normal course of business. The holders of a majority of the total principal amount of all outstanding debt securities will have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee. If an event of default occurs and is not cured or waived, the trustee will be required to exercise the rights and powers under the indenture and to use the degree of care and skill in their exercise that a prudent man would exercise or use in the conduct of his own affairs. Other than this requirement, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any of the holders of the debt securities of any series, unless they have offered the trustee reasonable security or indemnity. GOVERNING LAW The indenture is governed by and construed in accordance with the laws of the State of New York. DESCRIPTION OF CAPITAL STOCK Our authorized capital stock consists of (1) 500,000,000 shares of common stock, (2) 99,536 shares of Serial Preference Stock, without par value, the "Serial Preference Stock," and (3) 5,000,000 shares of Serial Preference Stock II, without par value, the "Serial Preference Stock II" and, together with the Serial Preference Stock, the "Preference Stock." The following is a summary of the material provisions concerning our capital stock contained in our Amended Articles of Incorporation, our Regulations and the Rights Agreement, dated as of April 24, 1996, between us and National City Bank, as rights agent. This summary does not restate those documents in their entirety. We have filed the Articles, Regulations and Rights Agreement with the SEC. See "Available Information" and "Incorporation of Certain Documents by Reference" on page 2 of this prospectus for information on how to obtain a copy of those documents. We urge you to read the Articles, Regulations and 15 17 Rights Agreement, because those documents, and not this description, defines your rights as holders of our equity securities. COMMON STOCK As of October 1, 1999, there were 133,573,637 shares of common stock issued, 12,053,247 shares held in treasury and 121,520,390 shares outstanding and held of record by 25,525 shareholders. All outstanding shares of common stock are duly authorized, validly issued, fully paid and nonassessable. Holders of the shares of common stock have no preemptive or conversion rights. We are not entitled to make further calls or assessment on the common stock. Each share of common stock is entitled to one vote on the election of directors and all other matters on which shareholders are entitled to vote. The holders of common stock are not entitled to cumulative voting rights, except if requested pursuant to Ohio law. The outstanding shares of common stock are listed on the New York, Chicago, Philadelphia, Pacific, Frankfurt and London Stock Exchanges. Holders of common stock are entitled to receive dividends and other distributions when, as and if declared from time to time by our board of directors out of funds legally available for that purpose. These rights are subject to any preferential rights of, and sinking fund or redemption or purchase rights with respect to, outstanding shares of Preference Stock. We are not permitted to pay dividends to holders of common stock if we have not paid or provided for the dividends fixed with respect to the Preference Stock. If TRW were voluntarily or involuntarily liquidated, dissolved or wound up, the holders of outstanding shares of common stock would be entitled to share ratably in all assets remaining after payment of liabilities and after satisfaction of prior distribution rights and payment of any distributions owing to holders of shares of Preference Stock then outstanding. PREFERENCE STOCK Our board of directors has the authority, without further action by the shareholders, to issue Preference Stock. The board of directors may issue Preference Stock in one or more series and may fix the rights, designations, preferences, privileges, qualifications and restrictions thereof, including dividend rights, conversion rights, terms and rights of redemption, liquidation preferences and sinking fund terms, any or all of which may be greater than the rights of the common stock. Shares of Preference Stock rank, as to dividend and liquidation rights, senior to common stock and on a parity with each other. Dividends on Preference Stock are cumulative from the date of issuance or from such other date or dates as may be fixed for the series by the board of directors. The board of directors, without action of the shareholders, can issue shares of Preference Stock with conversion, voting and other rights that could adversely affect the rights of the holders of shares of common stock. SERIAL PREFERENCE STOCK As of the date of this prospectus, we have 99,536 authorized shares of Serial Preference Stock. As of the date of this prospectus, we have no shares of Serial Preference Stock outstanding. Rights Upon Liquidation. The holders of Serial Preference Stock are entitled to receive $100 per share in the event of any involuntary liquidation, dissolution or winding up of our affairs. Voting Rights. The holders of Serial Preference Stock are entitled to two votes per share. Holders of common stock, Serial Preference Stock II and Serial Preference Stock vote together as one class on all matters, except following certain defaults in the payment of dividends on the Preference Stock as specified in our Articles, or with respect to certain transactions or amendments to our Articles, which require holders of Serial Preference Stock II and Serial Preference Stock to vote separately as two classes. 16 18 SERIAL PREFERENCE STOCK II As of October 1, 1999, we have two series of Serial Preference Stock II outstanding: - Cumulative Preference Stock II, $4.40 Convertible Series 1, "Series 1;" and - Cumulative Serial Preference Stock II, $4.50 Convertible Series 3, "Series 3." As of October 1, 1999, TRW had 1,735,000 authorized shares of Series 1, of which 35,213 shares were outstanding, and 2,120,000 authorized shares of Series 3, of which 64,421 shares were outstanding. In addition, 1,145,000 shares of Cumulative Redeemable Serial Preference Stock II, Series 4, "Series 4" are authorized. As of October 1, 1999, no shares of Series 4 were outstanding. Dividends and Rights Upon Liquidation. The fixed annual dividend rates are $4.40 per share for Series 1 and $4.50 per share for Series 3. The quarterly dividend rate fixed for each share of Series 4 is the lesser of $100 or 100 times the aggregate per share dividend amounts declared on a share of common stock since the immediately preceding quarterly dividend payment date. The holders of outstanding shares of Series 1 are entitled to receive $104 per share and the holders of Series 3 are entitled to receive $40 per share, in case of any involuntary liquidation, dissolution or winding up of the affairs of TRW. These holders are entitled to receive an amount equal to the redemption price in effect on the distribution date in case of any voluntary liquidation, dissolution or winding up of the affairs of TRW. In the event of any liquidation, dissolution or winding up of the affairs of TRW, the holders of outstanding shares of Series 4 are entitled to receive an amount per share at least equal to the redemption price in effect on the distribution date. Voting Rights. Each share of Serial Preference Stock II is entitled to one vote per share. Holders of common stock, Serial Preference Stock II and Serial Preference Stock vote together as one class on all matters, except following certain defaults in the payment of dividends on the Preference Stock, or with respect to certain transactions or amendments to our Articles, which require holders of Serial Preference Stock II and Serial Preference Stock to vote separately as two classes. Conversion at the Option of the Holder. Each share of Series 1 is convertible into 8.8 shares of common stock, as adjusted, at the option of the holder at any time prior to redemption. Each share of Series 3 is convertible into 7.448 shares of common stock, as adjusted, at the option of the holder at any time prior to redemption. The Articles provide that these conversion ratios will be adjusted to reflect stock splits, stock dividends, combinations and certain issuances of securities and distributions. Shares of Series 4 are not convertible into shares of common stock. Redemption. We have the right to redeem all the outstanding shares of Serial Preference Stock II. Shares of Series 1 are redeemable at a price of $104 per share and shares of Series 3 are redeemable at a price of $100 per share. Shares of Series 4 are redeemable at a price of $30,000 per share, as that amount may be adjusted from time to time pursuant to the Rights Agreement. RIGHTS AGREEMENT Under the Rights Agreement, each outstanding share of common stock is accompanied by one-half of one right to purchase a share of Series 4 if a "distribution date" occurs. We describe the meaning of "distribution date" below. We refer to these purchase rights as the "rights". 17 19 Until a distribution date occurs, the rights can be transferred only with the common stock. The rights are not exercisable prior to a distribution date. Until a right is exercised, holding a right will not give the holder any rights as a shareholder of TRW, such as the right to vote or to receive dividends. DISTRIBUTION OF RIGHTS No right is exercisable at any time prior to a "distribution date." On the occurrence of a distribution date, the rights will separate from the common stock and become exercisable. A "distribution date" will occur upon the earliest of the close of business on: (1) the tenth business day after a public announcement that a person or group of affiliated or associated persons, an "acquiring person," has acquired or obtained the right to acquire beneficial ownership of 20% or more of the total voting rights of the outstanding shares of our capital stock which by its terms may be voted on all matters submitted to our shareholders generally. However, an acquiring person will not include (a) us, (b) any of our subsidiaries, (c) any of our employee benefit plans or any entity holding shares for or pursuant to any such plan, (d) any person who acquires voting securities from us in transactions approved by our board of directors, (e) any person who becomes the beneficial owner of 20% or more of the outstanding voting shares as a result of an acquisition of shares by us, so long as that person does not later acquire additional voting shares, or (f) any person whom our board of directors determines inadvertently became the owner of 20% of our voting shares and who promptly divests shares to fall below that level. (2) the tenth business day, or such later date as may be specified by a majority of our board of directors, after the date of the commencement of a tender or exchange offer the consummation of which would result in a person or group beneficially owning 20% or more of the outstanding shares of our capital stock that by its terms may be voted on all matters submitted to our shareholders generally; and (3) the tenth business day after a "flip-in" or "flip-over" event described below occurs, which results in the rights becoming exercisable to purchase shares of our common stock or common stock of another person. EXERCISE Following a distribution date, holders of rights will be entitled to purchase from us one one-hundredth of a share of Series 4 at a purchase price of $300 per one one-hundredth of a share of Series 4, subject to adjustment. Upon the occurrence of certain events described below, the rights will become exercisable to purchase shares of our common stock or common stock of another person instead of shares of Series 4. 18 20 If (1) an acquiring person merges into or combines with us where we are the surviving corporation or engages in one or more "self-dealing" transactions with us as described in our rights agreement, (2) during the time that there is an acquiring person, there is a reclassification of securities or other transaction that increases by more than 1% the amount of our securities owned by the acquiring person, (3) any person or group becomes an acquiring person, (4) our board of directors determines that a person is or intends to, or that a person has announced an intention to, become the owner of a what the board determines is a substantial amount of voting shares, which must be at least 5% of the outstanding voting shares, and that such ownership is causing or may reasonably be anticipated to cause a material adverse effect on our government contracting business; such a person, an "adverse person," or (5) our board of directors has established a specific percentage of voting shares as to any specific person that, if owned by that person, will result in that person being declared an adverse person in accordance with the criteria set forth in the preceding clause (4) and that person acquires that percentage of voting shares, then the rights will "flip-in". At the time that the rights "flip-in," the rights beneficially owned by any acquiring person or an adverse person will become null and void and the other holders of rights will be entitled to purchase, at the exercise price of the right, a number of shares of our common stock, or in some circumstances cash, property or other securities of TRW or any combination thereof, with a market value equal to twice the exercise price of the right. If, after any person has become an acquiring person, (1) we merge with or into any person and we are not the surviving corporation, (2) any person merges with or into us and we are the surviving corporation, but our common stock is changed or exchanged, or (3) 50% or more of our assets or earning power, including securities creating obligations of TRW, is sold to any person, then the rights will "flip-over." At the time that the rights "flip-over," each holder of a right, other than rights held by an acquiring person or an adverse person, will have the right to receive, upon exercise of the rights of the Series 4 purchase price, a number of shares of common stock, or in some circumstances, an economically equivalent security or securities, of such other person with a market value at the time of the transaction equal to twice the exercise price of the right. EXERCISE PRICE The purchase price payable on exercise of the rights, and the number of shares of Series 4 or other securities or property issuable upon exercise of the rights are subject to adjustment from time to time to prevent dilution. With certain exceptions, no adjustment in the purchase price will be required until cumulative adjustments require an adjustment in the purchase price of at least one percent. No fractional shares of Series 4 will be issued, other than fractions that are integral multiples of one one-hundredth of a 19 21 share of Series 4. Instead of issuing fractional shares, we will make a payment in cash based on the market price of the shares of Series 4 on the last trading day prior to the date of exercise. REDEMPTION OF RIGHTS The rights expire on April 24, 2006, unless our board of directors decides to redeem them before that time. The redemption price is $.01 per right, subject to adjustment. We may redeem the rights at the redemption price at any time prior to the earlier of (i) the close of business on the tenth business day after the first occurrence of a flip-in event or a flip-over event or (ii) April 24, 2006. If we redeem any of the rights, we must redeem them all. Our board of directors may not redeem the rights after they declare a person to be an adverse person. Once the board of directors elects to redeem the rights, the right to exercise the rights will terminate and the only right of holders of rights will be to receive the redemption price. We will give notice of any redemption to the holders of the then outstanding rights by mailing a notice to those holders at their addresses as they appear on the registry books of the rights agent. EXCHANGE RIGHT After a flip-in event or a flip-over event occurs, but before any person or group of affiliated or associated persons becomes the beneficial owner of 50% or more of the then outstanding shares of common stock, we may exchange all or part of the then outstanding and exercisable rights for shares of common stock at an exchange ratio of one share of common stock per right, as adjusted. Once the board of directors orders the exchange of any rights, the right to exercise those rights will terminate and the only right thereafter of a holder of those rights will be to receive the appropriate number of shares of common stock in exchange. We will give notice of any exchange by making a public announcement and by mailing notice of the exchange to all the holders of the affected rights at their addresses on the registry books of the rights agent. AMENDMENTS We may amend the rights agreement without the approval of any holders of rights in order to cure any ambiguity, to correct or supplement any defective or inconsistent provision, or to make any other provisions with respect to the rights as we may deem necessary or desirable. From and after the earlier of (i) the distribution date or (ii) the date on which the board of directors declare any person to be an adverse person, however, the rights agreement may not be amended in any manner that would adversely affect the interests of the holders of rights. We may at any time prior to that time amend the rights agreement to lower the ownership thresholds governing when a beneficial owner becomes an acquiring person, and therefore when the distribution date occurs, to not less than the greater of (a) the sum of .001% plus the largest percentage of outstanding shares of common stock then beneficially owned by any person other than us, any of our subsidiaries, any of our employee benefit plans or stock ownership plans or any person who acquires voting shares from us in transactions approved by our board of directors, or (b) 10%. PURPOSE AND EFFECT OF RIGHTS The rights are designed to protect our interests and the interests of our shareholders against coercive takeover tactics. The purpose of the rights is to encourage potential acquirers to negotiate with our board of directors before attempting a takeover and to provide the board of directors with leverage in negotiating the terms of any proposed takeover on behalf of all shareholders. The rights may have anti-takeover effects. The rights will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our board of directors. The rights should not interfere with any merger or other business combination approved by our board of directors since the board of directors may, at their option, 20 22 at any time until ten business days after the first occurrence of a flip-in event or a flip-over event, redeem all of the then outstanding rights at the applicable redemption price. OHIO LAW AND CERTAIN CHARTER PROVISIONS There are statutory provisions of Ohio law and provisions in our Articles and Regulations that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or changes in management of TRW, including transactions in which TRW shareholders might otherwise receive a premium over the then-current market prices for their shares. Our Articles and Regulations contain various provisions that may have the effect, either alone or in combination with each other, of making more difficult or discouraging a business combination or an attempt to obtain control of TRW that is not approved by the board of directors. These provisions include: (1) the right of the board of directors to issue unissued and unreserved shares of common stock without shareholder approval; (2) the right of the board of directors to issue shares of Preference Stock in one or more series and to designate the number of shares of those series and the relative rights and preferences of those series, including voting rights, redemption terms and prices and conversion rights, without further shareholder approval; (3) a board of directors divided into three classes such that directors are elected to serve for three-year staggered terms; (4) provisions prohibiting the removal of directors without cause except upon the vote of holders of two-thirds of the combined voting power represented by the outstanding shares of common stock, Serial Preference Stock and Serial Preference Stock II; and (5) provisions restricting the ability of shareholders to call a special meeting except upon the consent of shareholders representing 35% of the outstanding shares entitled to vote at that special meeting. Under Ohio law, any person who proposes to make a "control share acquisition" must provide written notice thereof to the target corporation and must obtain prior shareholder approval. A "control share acquisition" is the acquisition of shares in an "issuing public corporation" resulting in the person being able to exercise voting power in the election of directors of the issuing public corporation within three ranges: (i) one-fifth to one-third, (ii) one-third to one-half and (iii) more than one-half of that voting power. TRW is an "issuing public corporation." Further, Ohio law prohibits any person who owns 10% or more of an issuing public corporation's stock from engaging in mergers, consolidations, majority share acquisitions, asset sales, loans and other specified transactions with the corporation for a three-year period after acquiring the 10% ownership, unless approval is first obtained from the corporation's board of directors. After the three-year waiting period, the 10% shareholder can complete the transaction only if, among other things: (i) approval is received from two-thirds of all voting shares and from a majority of shares not held by the 10% shareholder or certain affiliated persons; or (ii) the transaction meets specified criteria designed to ensure fairness to all remaining shareholders. TRW is an issuing public corporation under this statute. TRANSFER AGENTS AND REGISTRARS The transfer agents for the common stock are TRW and National City Bank; the registrar is National City Bank. The rights agent is also National City Bank. These agents are located in Cleveland, Ohio. 21 23 AGREEMENTS TRW is, and from time to time will become, a party to agreements which may have the effect of restricting dividends and other distributions on, and the purchase, redemption or retirement of, our capital stock. DESCRIPTION OF WARRANTS TRW may issue debt warrants for the purchase of debt securities or common stock warrants for the purchase of common stock. Debt warrants and common stock warrants are referred to in this prospectus collectively as "Securities Warrants". Securities Warrants may be issued independently or together with any debt securities or common stock offered by any prospectus supplement and may be attached to or separate from those debt securities or common stock. Each series of Securities Warrants will be issued under a separate warrant agreement to be entered into between us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent in connection with warrant certificates evidencing the Securities Warrants. The warrant agent will not assume any obligation or relationship of agency or trust for or with any holders of warrant certificates or beneficial owners of Securities Warrants. This prospectus summarizes the material terms of the form of warrant agreements and warrant certificates which have been filed as exhibits to the registration statement. This summary does not restate those documents in their entirety. You should read the warrant agreement and warrant certificate for provisions summarized below and others that may be important to you. GENERAL The prospectus supplement relating to a particular series of warrants will include the specific forms of the series, including, where applicable, the following: - the title of the Securities Warrants; - the offering price; - the currency or currency units in which the purchase price for offered Securities Warrants may be payable; - the title, total principal amount, currency or currency units and other terms of debt securities purchasable upon exercise of debt warrants; - the number of shares of common stock purchasable upon the exercise of a common stock warrant; - the redemption or call provisions, if any, applicable to the Securities Warrants; - the designation and terms of the debt securities with which the offered debt warrants are issued and the number of debt warrants issued with each such debt security; - the date on and after which the Securities Warrants and the related debt securities or shares of common stock will be separately transferable; 22 24 - the price and currency or currency units at which the amount of debt securities or shares of common stock, as the case may be, may be purchased upon exercise; - the date on which the right to exercise the Securities Warrants begins and the date on which the right to exercise expires, the "expiration date;" - the minimum and maximum amount of Securities Warrants that may be exercised at any one time; - the antidilution provisions of the Securities Warrants, if any; - United States Federal income tax consequences applicable to that Securities Warrant; - whether the Securities Warrants represented by the warrant certificates will be issued in registered or bearer form; and - any other terms of the Securities Warrants, including terms, procedures and limitations relating to exchange and exercise of the Securities Warrants. TRANSFERS AND EXCHANGE Warrant certificates may be exchanged for new warrant certificates of different denominations, may, if in registered form, be presented for registration of transfer, and may be exercised at the corporate trust office of the warrant agent. We may specify other offices where these activities may be conducted in an applicable prospectus supplement. Before the exercise of any Securities Warrants, holders of the Securities Warrants will not have any of the rights of holders of the debt securities or common stock, as the case may be, purchasable upon exercise. This means holders of debt warrants will not have the right to receive payments of principal, premium, if any, or interest, if any, on the debt securities purchasable upon exercise or to enforce covenants in the indenture governing the underlying debt securities. Holders of common stock warrants will not have the right to receive payments of dividends, if any, on the common stock purchasable upon such exercise or to exercise any applicable right to vote. EXERCISE Each Securities Warrant will entitle the holder to purchase the principal amount of debt securities or the number of shares of common stock at the exercise price that is set forth in, or calculable from, an applicable prospectus supplement. Holders will be able to exercise Securities Warrants at any time up to the time on the expiration date set forth in an applicable prospectus supplement. After that time, or a later date to which such expiration date may be extended by us, unexercised Securities Warrants will become void. Holders will be able to exercise Securities Warrants by delivering to the warrant agent at its corporate trust office warrant certificates properly completed and payment of the exercise price. As soon as practicable after such delivery, we will issue and deliver to the indicated holder the debt securities or shares of common stock issuable upon that exercise. If fewer than all of the Securities Warrants represented by a warrant certificate are exercised, we will issue a new warrant certificate for the remaining number of Securities Warrants. 23 25 DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS The following description, together with applicable prospectus supplements, summarizes the material terms and provisions of the stock purchase contracts and stock purchase units that we may offer pursuant to this prospectus. We may issue stock purchase contracts representing contracts obligating holders to purchase from us, and obligating us to sell to the holders, a specified number of shares of common stock at a future date or dates. The price per share of common stock and number of shares of common stock may be fixed at the time the stock purchase contracts are issued or may be determined by reference to a specific formula set forth in the stock purchase contracts. The stock purchase contracts may be issued separately or as a part of stock purchase units consisting of a stock purchase contract and debt securities or debt obligations of third parties, including U.S. Treasury securities, securing the holders' obligations to purchase the common stock under the stock purchase contracts. The stock purchase contracts may require us to make periodic payments to the holders of the stock purchase units or vice-versa. These payments may be unsecured or prefunded on some basis that will be set forth in the applicable prospectus supplement. Holders may be required to secure their obligations under the stock purchase contracts in a manner specified in the applicable prospectus supplement. PLAN OF DISTRIBUTION We may sell the securities offered by this prospectus in any one or more, or in any combination, of the following ways: (a) directly to purchasers; (b) through agents; (c) through dealers; or (d) through underwriters. Agents or dealers may be deemed to be "underwriters" within the meaning of the Securities Act. We may solicit offers to purchase securities directly or through agents we designate and identify in the applicable prospectus supplement. We will name any agent and set forth any commissions payable by us to the agent in the applicable prospectus supplement. If we use underwriters or dealers in a sale, the securities will be acquired by the underwriters for their own account. The underwriters may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price, which may be changed, or at varying prices determined at the time of sale. Underwriters may offer the securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more underwriters. Unless otherwise indicated in the applicable prospectus supplement, the obligations of the underwriters to purchase securities will be subject to certain conditions, and the underwriters will be obligated to purchase all of such securities if any are purchased. The underwriters may change from time to time any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers. Agents, dealers and underwriters may be entitled under agreements between them and us to indemnification by us against certain liabilities, including liabilities under the Securities Act, or to contribution to payments which may be required to be made in respect thereof. Agents, dealers or underwriters that purchase securities offered hereby and by the applicable prospectus supplement may engage in transactions with or perform services for us in the ordinary course of business. We may authorize agents, underwriters or dealers to solicit offers by institutions to purchase securities from us pursuant to delayed delivery contracts providing for payment and delivery on the date stated in the applicable prospectus supplement. Institutions with whom delayed delivery contracts, when 24 26 authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions but will in all cases require our approval. Conditions to the consummation of delayed delivery contracts will be set forth in the applicable prospectus supplement. We will pay the commission indicated in a prospectus supplement to underwriters and agents soliciting purchases of securities pursuant to delayed delivery contracts accepted by us. The underwriters and persons soliciting delayed delivery contracts will have no responsibility for the validity or performance of any of those contracts. The place and time of delivery for the securities will be set forth in the applicable prospectus supplement. LEGAL OPINIONS William B. Lawrence, who is our Executive Vice President, General Counsel and Secretary, will issue an opinion about the legality of the offered securities for us. Cravath, Swaine & Moore of New York City, or such other counsel as may be identified in the applicable prospectus supplement, will issue such an opinion on behalf of any agent, underwriter or dealer. EXPERTS Ernst & Young LLP, independent auditors, have audited TRW's consolidated financial statements included in TRW's Annual Report on Form 10-K for the year ended December 31, 1998, as set forth in their report, which is incorporated by reference in this prospectus. TRW's consolidated financial statements are incorporated into this prospectus by reference in reliance on Ernst & Young LLP's report, given upon their authority as experts in accounting and auditing. The consolidated financial statements of LucasVarity as of January 31, 1999 and 1998, and for each of the years in the two-year period ended January 31, 1999, have been incorporated by reference into this prospectus in reliance upon the report of KPMG Audit Plc, independent auditors, incorporated into this prospectus by reference, upon the authority of said firm as experts in accounting and auditing. The consolidated financial statements of LucasVarity for the six month period ended January 31, 1997 have been incorporated by reference into this prospectus in reliance upon the joint report of KPMG Audit Plc and Ernst & Young, independent auditors, incorporated into this prospectus by reference, upon the authority of such firms as experts in accounting and auditing. Ernst & Young, independent auditors, have audited LucasVarity's consolidated financial statements for the year ended July 31, 1996 appearing in TRW's Current Report on Form 8-K/A dated May 17, 1999, as set forth in their report which is incorporated by reference in this prospectus. Those consolidated financial statements are incorporated into this prospectus by reference in reliance on Ernst & Young's report, upon their authority as experts in accounting and auditing. INDEPENDENT APPRAISAL Certain LucasVarity assets were appraised by American Appraisal Associates, Inc. These assets included inventories, fixed assets, identifiable intangibles and in-process research and development projects and have been included in TRW's unaudited consolidated balance sheets incorporated herein by reference based on their preliminary appraised values. 25 27 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is a list of the estimated expenses to be incurred by the Company in connection with the issuance and distribution of the securities being registered hereby, other than underwriting discounts and commissions. Securities and Exchange Commission Registration Fee........................... $ 461,202 Rating Agencies Fees*......................................................... 900,000 Trustee's Fees and Expenses*.................................................. 20,000 Legal Fees and Expenses*...................................................... 50,000 Accounting Fees and Expenses*................................................. 30,000 Printing Expenses*............................................................ 75,000 Miscellaneous*................................................................ 13,798 ------------ Total................................................................ $ 1,550,000 ============
------------------- * Estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Generally, a director of an Ohio corporation will not be found to have violated his fiduciary duties unless there is proof by clear and convincing evidence that the director has not acted in good faith, in a manner he reasonably believes to be in or not opposed to the best interests of the corporation, or with the care that an ordinarily prudent person in a like position would use under similar circumstances. In general, a director is liable for monetary damages for any action or omission as a director only if it is proved by clear and convincing evidence that such act or omission was undertaken either with deliberate intent to cause injury to the corporation or with reckless disregard for the best interests of the corporation. Under Ohio law, a corporation must indemnify its directors, as well as its officers, employees and agents, against expenses where any such person is successful on the merits or otherwise in defense of an action, suit or proceeding. A corporation may indemnify such persons in actions, suits and proceedings (including derivative suits) if the individual has acted in good faith and in a manner that he believes to be in or not opposed to the best interests of the corporation. In the case of a criminal proceeding, the individual must also have no reasonable cause to believe that his conduct was unlawful. Indemnification may be made only if ordered by a court or if authorized in a specific case upon a determination that the applicable standard of conduct has been met. Such a determination may be made by a majority of disinterested directors, by independent legal counsel or by the shareholders. In order to obtain reimbursement for expenses in advance of the final disposition of any action, the individual must provide an undertaking to repay the amount if it is ultimately determined that he is not entitled to be indemnified. In general, Ohio law requires that all expenses, including attorneys fees, incurred by a director in defending any action, suit or proceeding be paid by the corporation as they are incurred in advance of final disposition if the director agrees to repay such amounts if it is proved by clear and convincing evidence that his action or omission was undertaken with deliberate intent to cause injury to the corporation or with reckless disregard for the best interests of the corporation and if the director reasonably cooperates with the corporation concerning the action, suit or proceeding. The Company's Regulations provide for indemnification that is coextensive with that permitted under Ohio law. II-1 28 In addition, the Company maintains insurance indemnifying Directors and officers in certain cases and with certain deductible limitations. Reference is also made to the forms of underwriting agreements incorporated herein by reference as Exhibits 1(a) and 1(b) to the Registration Statement for provisions regarding indemnification of the Company, officers, directors and controlling persons against certain liabilities. ITEM 16. EXHIBITS 1(a) Form of Underwriting Agreement (Common Stock) (incorporated by reference to Exhibit 1(a) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 1(b) Form of Underwriting Agreement (Debt Securities) (incorporated by reference to Exhibit 1(b) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(a) Amended Articles of Incorporation as amended May 5, 1997 (incorporated by reference to Exhibit 3(a) to TRW Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997) (File No. 1-2384). 4(b) Regulations as amended April 30, 1980 (incorporated by reference to Exhibit 3(b) to TRW Inc.'s Annual Report on Form 10-K for the year ended December 31, 1980) (File No. 1-2384). 4(c) Rights Agreement dated as of April 24, 1996 between TRW Inc. and National City Bank, as Rights Agent (incorporated by reference to Exhibit 1 to TRW Inc.'s Form 8-A Registration Statement dated April 25, 1996) (File No. 1-2384). 4(d) Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of May 1, 1986 (incorporated by reference to Exhibit 2 to TRW Inc.'s Form 8-A Registration Statement dated July 3, 1986) (File No. 1-2384). 4(e) First Supplemental Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of August 24, 1989 (incorporated by reference to Exhibit 4(b) to TRW Inc.'s Form S-3 Registration Statement, File No. 33-30350). 4(f) Second Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(c) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(g) Third Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(d) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(h) Fourth Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(e) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(i) Fifth Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(f) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(j) Sixth Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 23, 1999 (incorporated by reference to Exhibit 4(g) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). II-2 29 4(k) Seventh Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 23, 1999. 4(l) Form of Warrant Agreement for Warrants attached to Debt Securities including Form of Warrant Certificate (incorporated by reference to Exhibit 4(f) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(m) Form of Warrant Agreement for Warrants not attached to Debt Securities including Form of Warrant Certificate (incorporated by reference to Exhibit 4(g) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(n) Form of Debt Security (incorporated by reference to Exhibit 4(h) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(o) Form of Warrant Agreement for Warrants attached to Common Stock including Form of Warrant Certificate (incorporated by reference to Exhibit 4(i) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(p) Form of Warrant Agreement for Warrants not attached to Common Stock including Form of Warrant Certificate (incorporated by reference to Exhibit 4(j) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(q) Form of Purchase Contract Agreement relating to Stock Purchase Contracts and Stock Purchase Units. 4(r) Form of Pledge Agreement for Stock Purchase Contracts and Stock Purchase Units. 5 Opinion of William B. Lawrence, Esq. as to the validity of the securities being registered. 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges (incorporated by reference to Exhibit 12 to TRW Inc.'s Quarterly Report on Form 10-Q for the Quarter ended June 30, 1999) (File No. 1-2384). 23(a) Consent of Ernst & Young LLP. 23(b) Consent of KPMG Audit Plc. 23(c) Consent of Ernst & Young and KPMG Audit Plc. 23(d) Consent of Ernst & Young. 23(e) Consent of William B. Lawrence, Esq. (included in his opinion filed as Exhibit 5). 23(f) Consent of American Appraisal Associates, Inc. 24 Power of Attorney of Directors and certain officers of TRW Inc. 25 Statement of Eligibility and Qualification on Form T-1 of The Chase Manhattan Bank to act as Trustee under the Indenture, as supplemented. II-3 30 ITEM 17. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of any employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted II-4 31 by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-5 32 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lyndhurst, State of Ohio on October 15, 1999. TRW INC. By: /s/ WILLIAM B. LAWRENCE William B. Lawrence Executive Vice President, General Counsel and Secretary Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE J. T. GORMAN* Chairman of the Board, Chief Executive Officer October 15, 1999 J. T. Gorman and Director C. G. MILLER* Executive Vice President and October 15, 1999 C. G. Miller Chief Financial Officer T. A. CONNELL* Vice President and Controller October 15, 1999 T. A. Connell M. H. ARMACOST* Director October 15, 1999 M. H. Armacost M. FELDSTEIN* Director October 15, 1999 M. Feldstein R. M. GATES* Director October 15, 1999 R. M. Gates G. H. HEILMEIER* Director October 15, 1999 G. H. Heilmeier K. N. HORN* Director October 15, 1999 K. N. Horn E. B. JONES* Director October 15, 1999 E. B. Jones W. S. KISER* Director October 15, 1999 W. S. Kiser D. B. LEWIS* Director October 15, 1999 D. B. Lewis
II-6 33 L. M. MARTIN* Director October 15, 1999 L. M. Martin J. D. ONG* Director October 15, 1999 J. D. Ong R. W. POGUE* Director October 15, 1999 R. W. Pogue
William B. Lawrence, by signing his name hereto, does hereby sign and execute this Registration Statement on behalf of each of the above-named officers and Directors of TRW Inc. pursuant to powers of attorney executed by each of such officers and Directors and filed with the Securities and Exchange Commission as an exhibit to this Registration Statement. *By /s/ WILLIAM B. LAWRENCE October 15, 1999 William B. Lawrence Attorney-in-Fact II-7 34 EXHIBIT INDEX EXHIBIT DESCRIPTION NO. 1(a) Form of Underwriting Agreement (Common Stock) (incorporated by reference to Exhibit 1(a) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 1(b) Form of Underwriting Agreement (Debt Securities) (incorporated by reference to Exhibit 1(b) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(a) Amended Articles of Incorporation as amended May 5, 1997 (incorporated by reference to Exhibit 3(a) to TRW Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997) (File No. 1-2384). 4(b) Regulations as amended April 30, 1980 (incorporated by reference to Exhibit 3(b) to TRW Inc.'s Annual Report on Form 10-K for the year ended December 31, 1980) (File No. 1-2384). 4(c) Rights Agreement dated as of April 24, 1996 between TRW Inc. and National City Bank, as Rights Agent (incorporated by reference to Exhibit 1 to TRW Inc.'s Form 8-A Registration Statement dated April 25, 1996) (File No. 1-2384). 4(d) Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of May 1, 1986 (incorporated by reference to Exhibit 2 to TRW Inc.'s Form 8-A Registration Statement dated July 3, 1986) (File No. 1-2384). 4(e) First Supplemental Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of August 24, 1989 (incorporated by reference to Exhibit 4(b) to TRW Inc.'s Form S-3 Registration Statement, File No. 33-30350). 4(f) Second Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(c) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(g) Third Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(d) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(h) Fourth Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(e) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(i) Fifth Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 2, 1999 (incorporated by reference to Exhibit 4(f) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(j) Sixth Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 23, 1999 (incorporated by reference to Exhibit 4(g) to TRW Inc.'s Form S-4 Registration Statement, File No. 333-83227). 4(k) Seventh Supplemental Indenture between TRW and The Chase Manhattan Bank, as successor Trustee, dated as of June 23, 1999. II-8 35 4(l) Form of Warrant Agreement for Warrants attached to Debt Securities including Form of Warrant Certificate (incorporated by reference to Exhibit 4(f) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(m) Form of Warrant Agreement for Warrants not attached to Debt Securities including Form of Warrant Certificate (incorporated by reference to Exhibit 4(g) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(n) Form of Debt Security (incorporated by reference to Exhibit 4(h) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(o) Form of Warrant Agreement for Warrants attached to Common Stock including Form of Warrant Certificate (incorporated by reference to Exhibit 4(i) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(p) Form of Warrant Agreement for Warrants not attached to Common Stock including Form of Warrant Certificate (incorporated by reference to Exhibit 4(j) to TRW Inc.'s Form S-3 Registration Statement, File No. 333-48443). 4(q) Form of Purchase Contract Agreement relating to Stock Purchase Contracts and Stock Purchase Units. 4(r) Form of Pledge Agreement for Stock Purchase Contracts and Stock Purchase Units. 5 Opinion of William B. Lawrence, Esq. as to the validity of the securities being registered. 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges (incorporated by reference to Exhibit 12 to TRW Inc.'s Quarterly Report on Form 10-Q for the Quarter ended June 30, 1999) (File No. 1-2384). 23(a) Consent of Ernst & Young LLP. 23(b) Consent of KPMG Audit Plc. 23(c) Consent of Ernst & Young and KPMG Audit Plc. 23(d) Consent of Ernst & Young. 23(e) Consent of William B. Lawrence, Esq. (included in his opinion filed as Exhibit 5). 23(f) Consent of American Appraisal Associates, Inc. 24 Power of Attorney of Directors and certain officers of TRW Inc. 25 Statement of Eligibility and Qualification on Form T-1 of The Chase Manhattan Bank to act as Trustee under the Indenture, as supplemented. II-9 EX-4.K 2 EXHIBIT 4(K) 1 Exhibit 4(k) TRW INC. And THE CHASE MANHATTAN BANK, as Trustee -------------------- Seventh Supplemental Indenture Dated as of June 23, 1999 Relating to the Floating Rate Notes due 2000 -------------------- 2 SEVENTH SUPPLEMENTAL INDENTURE (this "Seventh Supplemental Indenture") dated as of June 23, 1999, among TRW Inc., an Ohio corporation (the "Company"), and THE CHASE MANHATTAN BANK, a New York banking corporation, as successor trustee (the "Trustee") to Mellon Bank, N.A. WHEREAS the Company has executed and delivered to the Trustee an Indenture dated as of May 1, 1986 (the "Original Indenture"), as amended by the First Supplemental Indenture dated as of August 24, 1989, the Second Supplemental Indenture dated as of June 2, 1999, the Third Supplemental Indenture dated as of June 2, 1999, the Fourth Supplemental Indenture dated as June 2, 1999, the Fifth Supplemental Indenture dated as of June 2, 1999, the Sixth Supplemental Indenture dated as of June 23, 1999, and the Seventh Supplemental Indenture dated as of June 23, 1999, between the Company and the Trustee (collectively, the "Supplemental Indentures"; the Original Indenture, as amended by the Supplemental Indentures is herein called the "Indenture") providing for the issuance and sale by the Company from time to time of its senior debt securities (the "Securities"); WHEREAS Section 11.01(f) of the Indenture permits the Company, when authorized by a resolution of the Board of Directors of the Company, and the Trustee, at any time and from time to time, to enter into one or more indentures supplemental to the Indenture, in form satisfactory to the Trustee, for the purpose of establishing any form of Security, as provided in Section 2.02 of the Indenture, providing for the issuance of any additional series of Securities as provided in Section 3.01 of the Indenture and to set forth the terms thereof; WHEREAS the Company proposes in and by this Seventh Supplemental Indenture to supplement and amend the Indenture in certain respects to establish a series of Securities issued pursuant to the Indenture designated as the Floating Rate Notes due 2000 limited in aggregate principal amount to $575,000,000 (the "Notes"); and WHEREAS the Company has requested that the Trustee execute and deliver this Seventh Supplemental Indenture and have certified that all requirements necessary to make this Seventh Supplemental Indenture a valid instrument in accordance with its terms have been satisfied, and that the execution and delivery of this Seventh Supplemental Indenture has been duly authorized in all respects. NOW THEREFORE, the Company and the Trustee hereby agree that the following sections of this Seventh Supplemental Indenture supplement and amend the Indenture with respect to that series of Securities which consists of the Notes: SECTION 1. DEFINITIONS. (a) Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture. (b) Section 1.01 of Article One of the Indenture is hereby supplemented, solely with respect to that series of Securities which consists of Notes, to add the following definitions: "Agent Members" has the meaning provided in Section 2.06. 3 "Depository" means The Depository Trust Company, its nominees and their respective successors. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Foreign Holder" means a holder of a Note that is, for United States Federal income tax purposes (a) a non-resident alien individual, (b) a foreign corporation or (c) an estate or trust that is not a United States Holder. "Global Notes" has the meaning provided in Section 2.02. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Non-U.S. Person" means a Person who is not a "U.S. person" (as defined in Regulation S). "Notes Closing Date" means June 23, 1999. "Notes" means the series of Securities issued pursuant to this Indenture designated as the Floating Rate Notes due 2000 and limited in aggregate principal amount to $575,000,000. "Physical Notes" has the meaning provided in Section 2.02. "Private Placement Legend" means the legend initially set forth on the Notes in the form set forth in Section 2.05(a). "Purchase Agreement" means with respect to the Initial Notes, the Purchase Agreement dated June 18, 1999, between the Company and Goldman, Sachs & Co., as representative of the Initial Purchasers. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Regulation S" means Regulation S under the Securities Act. "Rule 144A" means rule 144A under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Transfer Restricted Notes" means Notes that bear or are required to bear the legend set forth in Section 2.05(a) hereto. "United States Holder" means a holder of a Note that is, for United States Federal income tax purposes, (1) a citizen or resident of the United States; (2) a corporation or other entity taxable as a corporation created or organized under United States law (Federal or state); or 2 4 (3) an estate or trust whose world-wide income is subject to United States Federal income tax. SECTION 2. CREATION OF SERIES OF SECURITIES. Pursuant to Section 3.01 of the Indenture, there is hereby created a new series of Securities designated as the "Floating Rate Notes due 2000" limited in aggregate principal amount to $575,000,000. SECTION 3. AMENDMENTS TO ARTICLE TWO. (a) The Notes are being offered and sold by the Company pursuant to the Purchase Agreement. Section 2.02 of Article Two of the Indenture is hereby supplemented and amended, solely with respect to that series of Securities which consists of Notes, by adding thereto at the end thereof the following: "The Notes shall be substantially in the form annexed hereto as Exhibit A. The terms and provisions contained in the form of the Notes annexed hereto as Exhibit A shall constitute, and are hereby expressly made, a part of this Indenture. To the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby." Notes offered and sold in reliance on Rule 144A as provided in the Purchase Agreement shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form without interest coupons with the global securities legend set forth in Section 2.05(b) and the restricted securities legend set forth in Section 2.05(a), (each, a "GLOBAL NOTE"), which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its New York Office, as custodian for the Depository (or such other custodian as the Depository may direct), duly executed by the Company and authenticated by the Trustee as herein provided. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee, as hereinafter provided. Notes issued pursuant to Section 2.06 in exchange for interests in the Global Notes shall be issued in the form of certificated Notes in definitive, fully registered form without interest coupons with the restricted securities legend set forth in Section 2.05(a) hereto (the "PHYSICAL NOTES"). (b) Article Two of the Indenture is hereby supplemented and amended, solely with respect to that series of Securities which consists of Notes, by adding thereto at the end thereof the following new Section 2.05: "Section 2.05. RESTRICTIVE LEGENDS. (a)(i) Except as permitted by the following paragraph (ii), each Note certificate (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form: "THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE 3 5 ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) AND (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES." (ii) Upon any sale or transfer of a Transfer Restricted Note (including any Transfer Restricted Note represented by a Global Note) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Note for a Note that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Note, if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144. (b) Each Global Note (other than Physical Notes), shall also bear the following legend on the face thereof: "UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.07 OF THE INDENTURE." 4 6 (c) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF NOTES. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Physical Notes and Global Notes at the Registrar's request. (ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes other than exchanges pursuant to Sections 3.04, 4.07 or 11.04 not involving any transfer. (iii) The Company shall not be required to (A) to issue, register, register the transfer of or exchange any Note during a period of 15 days preceding the selection of Notes for redemption, or (B) register the transfer of or exchange of any Physical Note selected for redemption in whole or in part pursuant to Article 3 of this Indenture, except in the case of any Physical Note to be redeemed in part, the portion thereof not to be redeemed. (iv) Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, the Paying Agent, the Registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary. (v) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange. (d) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners. 5 7 (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depository participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof." (c) Article Two of the Indenture is hereby supplemented and amended, solely with respect to that series of Securities which consists of Notes, by adding thereto at the end thereof the following new Section 2.06: "Section 2.06. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES. (a) This Section 2.06(a) shall apply only to a Global Note deposited with or on behalf of the Depository. The Company shall execute and the Trustee shall, in accordance with this Section 2.06, authenticate and deliver initially one or more Global Notes that (i) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository, (ii) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by the Trustee as custodian for the Depository and (iii) bear legends as set forth in Section 2.05(b). Members of, or participants in, the Depository (the "AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Note and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depository, its successor or their respective nominees. Interests of beneficial owners in a Global Note may be transferred in accordance with the rules and procedures of the Depository and the provisions of Section 2.07. In addition, Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in the Global Notes if (i) the Depository notifies the Company in writing that it (or its nominee) is unwilling or unable to continue to act as Depository for the Global Notes under the Exchange Act and a successor depository registered as a clearing agency under the Exchange Act is not appointed by the Company within 90 days of such notice or (ii) at any time if the Company determines that the Global Notes (in whole but not in part) should be exchanged for Physical Notes. In addition to the foregoing, during the continuance of an Event of Default holders of book-entry interests will be entitled to request and receive Physical Notes. Such Physical Notes will be issued to and registered in the name of, or as directed by, that person only upon the request in writing made through a Depository participant. 6 8 (c) In connection with any transfer of a portion of the beneficial interests in a Global Note to beneficial owners pursuant to paragraph (b) of this Section, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Global Notes in an amount equal to the principal amount of the beneficial interest in such Global Notes to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Physical Notes of like tenor and amount. (d) In connection with the transfer of the entire Global Note to beneficial owners pursuant to clauses (i) or (ii) of paragraph (b) of this Section, the Global Note shall be deemed to be surrendered to the Trustee for cancelation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the Global Note an equal aggregate principal amount of Physical Notes of authorized denominations. (e) Any Physical Note delivered in exchange for an interest in the Global Note pursuant to paragraph (b) or (d) of this Section shall, except as otherwise provided by paragraph (a) of Section 2.05, bear the legend regarding transfer restrictions applicable to the Physical Note set forth in Section 2.05. (f) The registered holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. (g) Beneficial owners of interests in a Global Note may receive Physical Notes (which shall bear the Private Placement Legend if required by Section 2.05) in accordance with the procedures of the Depository. In connection with the execution, authentication and delivery of such Physical Notes, the Registrar shall reflect on its books and records a decrease in the principal amount of the Global Note equal to the principal amount of such Physical Notes and the Company shall execute and the Trustee shall authenticate and deliver one or more Physical Notes having an equal aggregate principal amount. (i) CANCELLATION OR ADJUSTMENT OF GLOBAL NOTE. At such time as all beneficial interests in a Global Note have either been exchanged for Physical Notes, redeemed, repurchased or canceled, such Global Note shall be returned to the Depository for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Physical Notes, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee with respect to such Global Note, by the Trustee to reflect such reduction." (d) Article Two of the Indenture is hereby supplemented and amended, solely with respect to that series of Securities which consists of Notes, by adding thereto at the end thereof the following new Section 2.07: "Section 2.07. TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. (i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures 7 9 of the Depository therefor. A transferor of a beneficial interest in a Global Note shall deliver to the Registrar a written order given in accordance with the Depository's procedures containing information regarding the participant account of the Depository to credited with a beneficial interest in the Global Note. The Registrar shall, in accordance with such instructions, instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Note and to debit the account of the Person making the transfer the beneficial interest in the Global Note being transferred. (ii) Notwithstanding any other provisions of this Supplemental Indenture (other than the provisions set forth in Section 2.06(b)), a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (iii) In the event that a Global Note is exchanged for Physical Notes pursuant to Section 2.06(b), such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.07 (including the certification requirements set forth on the reverse of the Notes intended to ensure that such transfers comply with Rule 144A, Regulation D or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company. (b) GENERAL. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions on transfer of such Note set forth in this Indenture. In connection with any transfer of Notes, each Holder agrees by its acceptance of the Notes to furnish the Registrar or the Company such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine (but may conclusively rely on a determination made by the Company with respect to) the sufficiency of any such certifications, legal opinions or other information. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 2.07 in accordance with its customary procedures. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar." SECTION 4. AMENDMENT TO ARTICLE THREE. The third paragraph of Section 3.05 of Article Three of the Indenture is hereby supplemented and amended, solely with respect to that series of Securities which consists of Notes, to read in its entirety as follows: "Subject to Sections 2.06 and 2.07, at the option of the Holder, Securities of any series may be exchanged for other Securities of such series of any 8 10 authorized denominations, of a like aggregate principal amount and Stated Maturity and of like tenor and terms, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Securityholder making the exchange is entitled to receive." SECTION 5. THIS SEVENTH SUPPLEMENTAL INDENTURE. This Seventh Supplemental Indenture and the Exhibits hereto shall be construed as supplemental to the Indenture and shall form a part of it, and the Indenture is hereby incorporated by reference herein and each is hereby ratified, approved and confirmed. SECTION 6. GOVERNING LAW. THIS SEVENTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 7. COUNTERPARTS. This Seventh Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 8. HEADINGS. The headings of this Seventh Supplemental Indenture are for reference only and shall not limit or otherwise affect the meaning hereof. SECTION 9. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals herein contained are made by the Company, and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Seventh Supplemental Indenture. SECTION 10. SEVERABILITY. In case any one or more of the provisions contained in this Seventh Supplemental Indenture or in the Securities shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of the Seventh Supplemental Indenture or of the Securities, but this Seventh Supplemental Indenture and the Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. 9 11 IN WITNESS WHEREOF, the parties hereto have caused this Seventh Supplemental Indenture to be duly executed by their respective authorized officers as of the date first written above. TRW Inc., by /s/ Ronald P. Vargo ----------------------------------- Name: Ronald P. Vargo Title: Vice President and Treasurer THE CHASE MANHATTAN BANK, as Trustee, by /s/ R.J. Halleran ------------------------------------ Name: R.J. Halleran Title: Second Vice President 10 12 Exhibit A --------- [FORM OF FACE OF NOTE] [INSERT APPROPRIATE LEGEND] TRW INC. Floating Rate Notes due 2000 [CUSIP] No. $[ ] TRW INC., an Ohio corporation (the "Company", which term includes any successor under the Indenture hereinafter referred to), for value received, promises to pay to [ ], or its registered assigns, the principal sum of [ ] Dollars ($[ ]) on June 28, 2000. Interest Payment Dates: September 28, 1999, December 28, 1999, March 28, 2000, and at the Stated Maturity. Regular Record Dates: September 13, December 13, and March 13. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture dated as of May 1, 1986 (the "Original Indenture"), as supplemented and amended by the First Supplemental Indenture, dated as of August 24, 1989, the Second Supplemental Indenture dated as of June 2, 1999, the Third Supplemental Indenture dated as of June 2, 1999, the Fourth Supplemental Indenture dated as of June 2, 1999, the Fifth Supplemental Indenture dated as of June 2, 1999, the Sixth Supplemental Indenture dated as of June 23, 1999, and the Seventh Supplemental Indenture dated as of June as of 23, 1999 (collectively, the "Supplemental Indentures"; the Original Indenture, as amended by the Supplemental Indentures is hereinafter referred to as the "Indenture"). This Note is one of the series of Securities of the Company issued pursuant to the Indenture and is designated as the Floating Rate Notes due 2000 (hereinafter referred to as the "Notes"), limited in aggregate principal amount to $575,000,000. 13 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers under its corporate seal. Date: TRW INC. By: _________________________ [SEAL] Attest: Assistant Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. THE CHASE MANHATTAN BANK, as Trustee By: ______________________ 14 [FORM OF REVERSE SIDE OF NOTE] TRW INC. Floating Rate Notes due 2000 1. Principal and Interest. - -------------------------- TRW Inc., a corporation duly organized and existing under the laws of the State of Ohio (herein called the "Company", which term includes any successor Person under the Indenture herein after referred to), for value received, hereby promises to pay __________, or its registered assigns, the principal sum of $ Dollars [($ )] (the "Principal Amount"), on June 28, 2000, and to pay interest on the Principal Amount at a floating rate per annum (the "Specified Rate"). The Company will pay interest quarterly in arrears on September 28, 1999, December 28, 1999, and March 28, 2000 (each such date, subject to adjustment as provided below, an "Interest Payment Date"), and on the date of the Stated Maturity. If any of the quarterly interest payment dates listed above falls on a day that is not a business day, the Company will postpone the Interest Payment Date to the next succeeding business day. However, if that business day is in the next succeeding calendar month, the Interest Payment Date will be the immediately preceding business day. Interest will be computed on the basis of a 360-day year for the actual number of days elapsed. Interest on the Notes shall accrue from, and including, June 23, 1999, to, and excluding, the first Interest Payment Date and then from, and including, the immediately preceding Interest Payment Date to which interest has been paid or duly provided for to, but excluding, the next Interest Payment Date or the date of the Stated Maturity, as the case may be. Each of these periods is referred to herein as an "interest period." The amount of accrued interest that the Company will pay on this Note for any interest period can be calculated by multiplying the face amount of this Note by an accrued interest factor. This accrued interest factor is computed by adding the interest factor calculated for each date from June 23, 1999, or from the last date the Company paid interest to the Securityholders, to the date for which accrued interest is being calculated. The interest factor for each day is computed by dividing the interest rate applicable to that day by 360. If the date of the Stated Maturity of the Notes falls on a day that is not a business day, the Company will pay principal and interest on the next succeeding business day, but will consider that payment as being made on the date that the payment was due to the Securityholders. Accordingly, no interest will accrue on the payment for the period from and after the date of the Stated Maturity to the date the Company makes the payment to the Securityholders on the next succeeding business day. The Company shall pay interest on the Notes (except defaulted interest) on any Interest Payment Date to Persons in whose name the Notes are registered as the close of business on the fifteenth calendar day, whether or not a business day, immediately preceding the Interest Payment Date (the "Regular Record Date") on the register kept by or on behalf of the Company for that purpose, even if the Notes are canceled after such record date and on or before the Interest Payment Date. However, interest that the Company pays on the date of the Stated Maturity will be paid to the person to whom the principal will be payable. 15 The term "business day" means any day except a Saturday, a Sunday or a legal holiday in the City of New York or the City of London on which banking institutions are authorized or required by law, regulation or executive order to close. "London business day" means any day on which dealings in U.S. dollars are transacted in the London interbank market. The interest rate on the Notes will be calculated by The Chase Manhattan Bank, as the calculation agent (the "Calculation Agent"), and will be equal to LIBOR plus 0.42%, except that the interest rate in effect for the period from June 23, 1999 to September 28, 1999, the initial interest reset date, will be established by the Company as the rate for deposits in U.S. dollars having a maturity of three months commencing on June 23, 1999, that appears on Telerate Page 3750 as of 11:00 a.m., London time, on June 21, 1999, plus 0.42%. If no rate appears on Telerate Page 3750 as of 11:00 a.m., London time, on June 21, 1999, LIBOR for the period from and including June 23, 1999, to the initial interest reset date will be determined by the Company in the manner described in clause (ii) below, except that the banks referred to in such clause shall be selected by the Company rather than the Calculation Agent. The Calculation Agent will reset the interest rate on each Interest Payment Date, each of which is referred to as an "interest reset date." The second London business day preceding an interest reset date will be the "interest determination date" for that interest reset date. The interest rate in effect on each date that is not an interest reset date will be the interest rate determined as of the interest determination date pertaining to the immediately preceding interest reset date. The interest rate in effect on any day that is an interest reset date will be the interest rate determined as of the interest determination date pertaining to that interest reset date, except that the interest rate in effect for the period from and including June 23, 1999 to the first interest reset date will be the initial interest rate. "LIBOR" will be determined by the Calculation Agent in accordance with the following provisions: (i) With respect to any interest determination date, LIBOR will be the rate for deposits in U.S. dollars having a maturity of three months commencing on the first day of the applicable interest period that appears on Telerate Page 3750 as of 11:00 a.m., London time, on that interest determination date. If no rate appears on that interest determination date, LIBOR, in respect to that interest determination date, will be determined in accordance with the provisions described in (ii) bellow. (ii) With respect to an interest determination date on which no rate appears on Telerate Page 3750, as specified in (i) above, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in U.S. dollars for the period of three months, commencing on the first day of the applicable interest period, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on that interest determination date and in a principal amount that is representative for a single transaction in U.S. dollars in that market at that time. If at least two quotations are provided, then LIBOR on that interest determination date will be the arithmetic mean of those quotations. If fewer than two quotations are provided, then LIBOR on the interest determination date will be the arithmetic mean (rounded, if necessary, to the nearest one-hundred- 16 thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards) of the rates quoted at approximately 11:00 a.m., New York City time, on the interest determination date by three major banks in New York City selected by the Calculation Agent for loans in U.S. dollars to leading European banks, having a three-month maturity and in a principal amount that is representative for a single transaction in U.S. dollars in that market at that time; PROVIDED, HOWEVER, that if the banks selected by the Calculation Agent are not providing quotations in the manner described by this sentence, LIBOR for the interest period commencing on the interest reset date following the interest determination date will be LIBOR in effect on that interest determination date. "Telerate Page 3750" means the display designated as "Page 3750" on Dow Jones Market Service or any successor service, for the purpose of displaying the London interbank offered rates for U.S. dollar deposits. If the Principal Amount of, and any accrued interest on, the Notes is declared due and payable as provided in Section 8, the Company shall pay interest on the overdue Principal Amount at a rate per annum equal to the Specified Rate, and it shall pay interest on overdue installments of interest at the same rate (to the extent that payment of such interest shall be legally enforceable). Such interest shall accrue from the date such overdue amount was due to the date payment of such amount, including interest thereon, has been made or duly provided for. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent that the payment of such interest shall be legally enforceable), any interest payable on the defaulted interest, to the persons who are Holders on a subsequent Special Record Date. Such date shall be at least ten (10), and no more than fifteen (15) days before the payment date. The Company shall fix or cause to be fixed the Special Record Date and the payment date. At least ten (10) calendar days before the special record date, the Company shall mail or cause to be mailed to each Holder a notice that states the Special Record Date, the payment date and the amount of defaulted interest to be paid. Holders must surrender Notes to the Trustee (or as otherwise specified in the notice given by the Company as provided in the Indenture) to collect principal payments. 2. PAYING AGENT AND REGISTRAR. Initially, the Trustee will be the Paying Agent and the Registrar with respect to this Note. The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent or Registrar, to appoint additional or other Paying Agents and other Registrars and to approve any change in the office through which any Paying Agent or Registrar acts; provided that there will at all times be a Paying Agent in The City of New York. 3. INDENTURE; LIMITATIONS. This Note is one of the duly authorized issue of senior Notes, notes, bonds or other evidences of indebtedness of the Company, of the series herein specified, all issued or to be issued under and pursuant to the Indenture, to which reference is hereby 17 made for a statement of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee and any agent of the Trustee, any Paying Agent, the Company and the Holders of the Securities and the terms upon which the Securities are issued and are to be authenticated and delivered. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may have different conversion prices or exchange provisions (if any), may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subject to different covenants and Events of Default and may otherwise vary as provided or permitted in the Indenture. This Note is one of the series of Securities of the Company issued pursuant to the Indenture and is designated as the Floating Rate Notes due 2000, limited in aggregate principal amount to $575,000,000. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, and the Securities Act of 1933, as amended. The Notes are subject to all such terms and Holders are referred to the Indenture and the Trust Indenture Act of 1939, as amended, for a statement of those terms. Capitalized terms used but not defined in the Notes have the meanings ascribed to them in the Indenture. 4. REDEMPTION. The Notes may not be redeemed. 5. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are issuable in registered form without coupons, in denominations of $1,000 and integral multiples thereof. Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations at the office or agency of the Company in the Borough of Manhattan, The City of New York, and in the manner and subject to the limitations provided in the Indenture. Upon due presentment for registration of transfer of this Note at the office or agency of the Company in the Borough of Manhattan, The City of New York, a new Note or Notes of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture. No service charge shall be made for any such transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax, assessment or other governmental charge payable in connection therewith. Subject to the provisions of the Indenture, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 18 6. DEFEASANCE. As provided in the Indenture and subject to the satisfaction of certain conditions set forth therein, at the Company's option, either (i) the Company shall be deemed to have paid and discharged the entire indebtedness represented by, and the obligations under, the Securities of any series and to have satisfied all the obligations (with certain exceptions) under the Indenture relating to the Securities of such series or (ii) the Company shall cease to be under any obligation to comply with any term, provision or condition of certain restrictive covenants under the Indenture or of any provisions set forth, with respect to the Securities of such series, in any additions or changes to or deletions from the covenants and Events of Default under the Indenture in the Board Resolutions or supplemental indenture with respect to the Securities of such series. 7. AMENDMENT; SUPPLEMENT; WAIVER. The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee to enter into supplemental indentures to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the Holders of the Securities of each series under the Indenture with the consent of the Holders of not less than 66_% in aggregate principal amount of the Securities at the time Outstanding of each series to be affected thereby on behalf of the Holders of all Securities of such series. 8. DEFAULTS AND REMEDIES. If an Event of Default with respect to the Notes shall have occurred and be continuing, the Principal Amount of the Notes and all accrued and unpaid interest thereon may be declared due and payable in the manner and with the effect provided in the Indenture. 9. AUTHENTICATION. Unless the certificate of authentication on any Notes has been manually executed by or on behalf of the Trustee under the Indenture, such Notes shall not be entitled to any benefits under the Indenture or be valid or obligatory for any purpose. 10. OBLIGATION TO PAY INTEREST ABSOLUTE. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal Amount and any premium of and any interest on the Notes at the place, rate and respective times and in the coin or currency prescribed herein and in the Indenture. 11. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. 19 12. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to TRW Inc., 1900 Richmond Road, Cleveland, Ohio 44124, Attention of Secretary. 20 [FORM OF TRANSFER NOTICE] - ------------------------------------------------------------ To assign this Note, fill in the form below: I or we assign and transfer this Note to ----------------------------------------------------- (Print or type assignee's name, address and zip code) ----------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint ______________________agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: ________________ Your Signature: _____________________ - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Note. In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that without utilizing any general solicitation or general advertising such Notes are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) - to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (2) - outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; (3) - inside the United States to an institutional "accredited investor" (as defined in Rule 501(a)(i), (2), (3) or (7) of Regulation D under the Securities Act) that purchases for its own account or for one or 21 more accounts (each of which is an institutional "accredited investor") as to each of which it exercises sole investment discretion; or (4) - pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (2), (3) or (4) is checked, the Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. -------------------------- Signature -------------------------- Signature - ------------------------------------------------------------ TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer 22 TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and/or any such account falls within the definition of the term non-U.S. person set forth in Regulation S of the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Regulation S. The undersigned further represents and warrants that the transfer of this Note was made in an offshore transaction within the meaning of Regulation S. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is an institutional "accredited investor" within the meaning of Rule 501(a)(i), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on the safe harbor provision set forth in Regulation D and acknowledges that it has such knowledge and experience in financial and business matters a to be capable of evaluating the merits and risks of its investment in the Notes and any accounts for which it is acting are each able to bear the economic risk of its or their investment and that it is aware that the transfer or is relying upon the undersigned's foregoing representations. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer EX-4.Q 3 EXHIBIT 4(Q) 1 EXHIBIT 4(q) - -------------------------------------------------------------------------------- TRW INC. and ---------------------------------------, as Purchase Contract Agent ----------------- PURCHASE CONTRACT AGREEMENT ----------------- Dated as of ____________, ____ - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS Page PARTIES................................................................ 1 RECITALS............................................................... 1 ARTICLE ONE Definitions and Other Provisions of General Application Section 101. Definitions.............................................. 1 Act............................................................. 1 Affiliate....................................................... 1 Agent........................................................... 2 Agreement....................................................... 2 Applicable Market Value......................................... 2 Board of Directors.............................................. 2 Board Resolution................................................ 2 Business Day.................................................... 2 Closing Price................................................... 2 Collateral Agent................................................ 2 Common Stock.................................................... 2 Company......................................................... 2 Contract Fee.................................................... 2 Corporate Trust Office.......................................... 3 Applicable Market Price......................................... 3 Depositary...................................................... 3 Early Settlement................................................ 3 Early Settlement Amount......................................... 3 Early Settlement Date........................................... 3 Early Settlement Rate........................................... 3 Exchange Act.................................................... 3 Excess Underlying Securities.................................... 3 Expiration Date................................................. 3 Expiration Time................................................. 3 Final Settlement Date........................................... 3 Final Settlement Fund........................................... 3 Global Security Certificate..................................... 3 Holder.......................................................... 3 Issuer Order.................................................... 3 Issuer Request.................................................. 3 NYSE............................................................ 4 Officers' Certificate........................................... 4 Opinion of Counsel.............................................. 4 i 3 Outstanding Securities.......................................... 4 Outstanding Security Certificates............................... 4 Payment Date.................................................... 5 Person.......................................................... 5 Pledge.......................................................... 5 Pledge Agreement................................................ 5 Predecessor Security Certificate................................ 5 Purchase Contract............................................... 5 Purchased Shares................................................ 5 Record Date..................................................... 5 Reorganization Event............................................ 5 Responsible Officer............................................. 5 Security........................................................ 5 Security Certificate............................................ 5 Security Register............................................... 5 Security Registrar.............................................. 6 Settlement Rate................................................. 6 Stated Amount................................................... 6 Termination Date................................................ 6 Termination Event............................................... 6 Threshold Appreciation Price.................................... 6 TIA............................................................. 6 Trading Day..................................................... 6 Underlying Securities........................................... 6 Underwriting Agreement.......................................... 6 Vice President.................................................. 6 Section 102. Compliance Certificates and Opinions.................... 7 Section 103. Form of Documents Delivered to Agent.................... 7 Section 104. Acts of Holders; Record Dates........................... 8 Section 105. Notices, etc., to Agent and the Company................. 9 Section 106. Notice to Holders; Waiver...............................10 Section 107. Effect of Headings and Table of Contents................10 Section 108. Successors and Assigns..................................10 Section 109. Separability Clause.....................................10 Section 110. Benefits of Agreement...................................10 Section 111. Governing Law...........................................10 Section 112. Legal Holidays..........................................11 Section 113. Counterparts............................................11 Section 114. Inspection of Agreement.................................11 ARTICLE TWO Security Certificate Forms Section 201. Forms of Security Certificates Generally................11 Section 202. Form of Agent's Certificate of Authentication...........12 ii 4 ARTICLE THREE The Securities Section 301. Title and Terms; Denominations..........................12 Section 302. Rights and Obligations Evidenced by the Security Certificates.........................................12 Section 303. Execution, Authentication, Delivery and Dating..........13 Section 304. Temporary Security Certificates.........................13 Section 305. Registration; Registration of Transfer and Exchange.....14 Section 306. Mutilated, Destroyed, Lost and Stolen Security Certificates.........................................16 Section 307. Persons Deemed Owners...................................17 Section 308. Cancellation............................................17 Section 309. Securities Not Separable................................18 ARTICLE FOUR The Underlying Securities Section 401. Payment of Interest; Interest Rights Preserved..........18 Section 402. Transfer of Underlying Securities Upon Occurrence of Termination Event...................................19 ARTICLE FIVE The Purchase Contracts Section 501. Purchase of Shares of Common Stock......................20 Section 502. Contract Fees...........................................21 Section 503. Deferral of Payment Dates For Contract Fee..............22 Section 504. Payment of Purchase Price...............................22 Section 505. Issuance of Shares of Common Stock......................22 Section 506. Adjustment of Settlement Rate...........................23 Section 507. Notice of Adjustments and Certain Other Events..........29 Section 508. Termination Event; Notice...............................30 Section 509. Early Settlement........................................30 Section 510. No Fractional Shares....................................31 Section 511. Charges and Taxes.......................................32 ARTICLE SIX Remedies Section 601. Unconditional Right of Holders to Receive Contract Fees and to Purchase Common Stock........................32 Section 602. Restoration of Rights and Remedies......................32 Section 603. Rights and Remedies Cumulative..........................33 Section 604. Delay or Omission Not Waiver............................33 Section 605. Undertaking for Costs...................................33 Section 606. Waiver of Stay or Extension Laws........................33 iii 5 ARTICLE SEVEN The Agent Section 701. Certain Duties and Responsibilities.....................34 Section 702. Notice of Default.......................................35 Section 703. Certain Rights of Agent.................................35 Section 704. Not Responsible for Recitals or Issuance of Securities..36 Section 705. May Hold Securities.....................................36 Section 706. Money Held in Trust.....................................36 Section 707. Compensation and Reimbursement..........................36 Section 708. Corporate Agent Required; Eligibility...................36 Section 709. Resignation and Removal; Appointment of Successor.......37 Section 710. Acceptance of Appointment by Successor..................38 Section 711. Merger, Conversion, Consolidation or Succession to Business.............................................38 Section 712. Preservation of Information; Communications to Holders..39 Section 713. No Obligations of Agent.................................39 Section 714. Tax Compliance..........................................39 ARTICLE EIGHT Supplemental Agreements Section 801. Supplemental Agreements Without Consent of Holders......40 Section 802. Supplemental Agreements with Consent of Holders.........40 Section 803. Execution of Supplemental Agreements....................41 Section 804. Effect of Supplemental Agreements.......................41 Section 805. Reference to Supplemental Agreements....................42 ARTICLE NINE Consolidation, Merger, Sale or Conveyance Section 901. Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions.....42 Section 902. Rights and Duties of Successor Corporation..............42 Section 903. Opinion of Counsel to Agent.............................43 ARTICLE TEN Covenants Section 1001. Performance Under Purchase Contracts....................43 Section 1002. Maintenance of Office or Agency.........................43 Section 1003. Company to Reserve Common Stock.........................44 Section 1004. Covenants as to Common Stock............................44 Section 1005. Statements of Officers of the Company as to Default.....44 TESTIMONIUM............................................................44 iv 6 SIGNATURES.............................................................44 EXHIBIT A Form of Security Certificate.................................45 v 7 PURCHASE CONTRACT AGREEMENT, dated as of __________________, ____, between TRW INC., an Ohio corporation (the "Company"), and __________________________, acting as purchase contract agent for the Holders of Securities from time to time (the "Agent"). RECITALS The Company has duly authorized the execution and delivery of this Agreement and the Security Certificates evidencing the Securities. All things necessary to make the Company's obligations under the Securities, when the Security Certificates are executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent, as in this Agreement provided, the valid obligations of the Company, and to constitute these presents a valid agreement of the Company, in accordance with its terms, have been done. WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed as follows: ARTICLE ONE Definitions and Other Provisions of General Application ------------------------------------------------------- Section 101. DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; and nouns and pronouns of the masculine gender include the feminine and neuter genders; and (2) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. "Act" when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of 1 8 such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means the Person named as the "Agent" in the first paragraph of this instrument until a successor Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter "Agent" shall mean the Person who is then the Agent hereunder. "Agreement" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof. "Applicable Market Value" has the meaning specified in Section 501. "Board of Directors" means the board of directors of the Company or a duly authorized committee of that board. "Board Resolution" means one or more resolutions of the Board of Directors, a copy of which has been certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Agent. "Business Day" means any day that is not a Saturday, Sunday or a day on which the NYSE or banking institutions or trust companies in The City of New York are authorized or obligated by law or executive order to be closed. "Closing Price" has the meaning specified in Section 501. "Collateral Agent" means ________________________, as Collateral Agent under the Pledge Agreement until a successor Collateral Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person who is then the Collateral Agent thereunder. "Common Stock" means the Common Stock, par value $0.625 per share, of the Company. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor shall have become such, and thereafter "Company" shall mean such successor. "Contract Fee" means the fee payable by the Company in respect of each Purchase Contract, equal to ___% per annum of the Stated Amount, accruing from __________, _______, computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be, plus any additional fees accrued pursuant to Section 503. 2 9 "Corporate Trust Office" means the principal office of the Agent in the Borough of Manhattan, The City of New York, at which at any particular time its corporate trust business shall be administered, which office at the date hereof is located at __________________, New York, New York _____. "Current Market Price" has the meaning specified in Section 506(a)(8). "Depositary" means a clearing agency registered under the Exchange Act that is designated to act as Depositary for the Securities as contemplated by Section 305. "Early Settlement" has the meaning specified in Section 509(a). "Early Settlement Amount" has the meaning specified in Section 509(a). "Early Settlement Date" has the meaning specified in Section 509(a). "Early Settlement Rate" has the meaning specified in Section 509(b). "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder. "Excess Underlying Securities" has the meaning specified in Section 402. "Expiration Date" has the meaning specified in Section 104. "Expiration Time" has the meaning specified in Section 506(a)(6). "Final Settlement Date" means __________, ______. "Final Settlement Fund" has the meaning specified in Section 505. "Global Security Certificate" means a Security Certificate that evidences all or part of the Securities and is registered in the name of a Depositary or a nominee thereof. "Holder," when used with respect to a Security Certificate (or a Security), means a Person in whose name the Security evidenced by such Security Certificate (or the Security Certificate evidencing such Security) is registered in the Security Register. "Issuer Order" or "Issuer Request" means a written order or request signed in the name of the Company by its Chief Executive Officer, its President or a Vice President and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Agent. 3 10 "NYSE" has the meaning specified in Section 501. "Officers' Certificate" means a certificate signed by the Chief Executive Officer, the President or any Vice President and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company and delivered to the Agent. "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company. "Outstanding Securities" means, as of the date of determination, all Securities evidenced by then Outstanding Security Certificates, except: (i) If a Termination Event has occurred, Securities for which the Underlying Securities have been theretofore deposited with the Agent in trust for the Holders of such Securities; and (ii) On and after the applicable Early Settlement Date, Securities as to which the Holder has elected to effect Early Termination of the related Purchase Contracts; provided, however, that in determining whether the Holders of the requisite number of Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, in determining whether the Agent shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Agent knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Agent the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any Affiliate of the Company. "Outstanding Security Certificates" means, as of the date of determination, all Security Certificates theretofore authenticated, executed and delivered under this Agreement, except: (i) Security Certificates theretofore cancelled by the Agent or delivered to the Agent for cancellation; and (ii) Security Certificates in exchange for or in lieu of which other Security Certificates have been authenticated, executed on behalf of the Holder and delivered pursuant to this Agreement, other than any such Security Certificate in respect of which there shall have been presented to the Agent proof satisfactory to it that such Security Certificate is held by a bona fide purchaser in whose hands the Securities evidenced by such Security Certificate are valid obligations of the Company. 4 11 "Payment Date" means each __________ and __________, commencing __________, _____. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Pledge" means the pledge under the Pledge Agreement of the Underlying Securities constituting a part of the Securities. "Pledge Agreement" means the Pledge Agreement, dated as of the date hereof, among the Company, the Collateral Agent and the Agent, on its own behalf and as attorney-in-fact for the Holders from time to time of the Securities. "Predecessor Security Certificate" of any particular Security Certificate means every previous Security Certificate evidencing all or a portion of the rights and obligations of the Holder under the Securities evidenced thereby; and, for the purposes of this definition, any Security Certificate authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security Certificate shall be deemed to evidence the same rights and obligations of the Holder as the mutilated, destroyed, lost or stolen Security Certificate. "Purchase Contract," when used with respect to any Security, means the contract obligating the Company to sell and the Holder of such Security to purchase Common Stock on the terms and subject to the conditions set forth in Article Five hereof. "Purchased Shares" has the meaning specified in Section 506(a)(6). "Record Date" for the interest and Contract Fees payable on any Payment Date means the ______ or _______ (whether or not a Business Day), as the case may be, next preceding such Payment Date. "Reorganization Event" has the meaning specified in Section 506(b). "Responsible Officer," when used with respect to the Agent, means any officer of the Agent assigned by the Agent to administer its corporate trust matters. "Security" means the collective rights and obligations of a Holder of a Security Certificate in respect of Underlying Securities with a principal amount equal to the Stated Amount, subject to the Pledge thereof, and a Purchase Contract. "Security Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Securities specified on such certificate. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. 5 12 "Settlement Rate" has the meaning specified in Section 501. "Stated Amount" means $____________. "Termination Date" means the date, if any, on which a Termination Event occurs. "Termination Event" means the occurrence of any of the following events: (i) at any time on or prior to the Final Settlement Date, a decree or order by a court having jurisdiction in the premises shall have been entered adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company under the United States Bankruptcy Code or any other similar applicable Federal or State law, and, unless such decree or order shall have been entered within 60 days prior to the Final Settlement Date, such decree or order shall have continued undischarged and unstayed for a period of 60 days; or (ii) a decree or order of a court having jurisdiction in the premises for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding up or liquidation of its affairs, shall have been entered, and, unless such decree or order shall have been entered within 60 days prior to the Final Settlement Date, such decree or order shall have continued undischarged and unstayed for a period of 60 days, or (iii) at any time on or prior to the Final Settlement Date the Company shall institute proceedings to be adjudicated a bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under the United States Bankruptcy Code or any other similar applicable Federal or State law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due. "Threshold Appreciation Price" has the meaning specified in Section 501. "TIA" means the Trust Indenture Act of 1939, as amended, or any successor statute. "Trading Day" has the meaning specified in Section 501. "Underlying Securities" means the [type and description of underlying securities] pledged to the Collateral Agent pursuant to the Pledge. "Underwriting Agreement" means the Underwriting Agreement dated __________, ______ between the Company and ______________________________, as representatives of the several Underwriters named therein. "Vice President" means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." 6 13 Section 102. COMPLIANCE CERTIFICATES AND OPINIONS. Except as otherwise expressly provided by this Agreement, upon any application or request by the Company to the Agent to take any action under any provision of this Agreement, the Company shall furnish to the Agent an Officers' Certificate stating that all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 103. FORM OF DOCUMENTS DELIVERED TO AGENT. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate of, or representations by, counsel or an Opinion of Counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate of, or representations by, counsel or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such 7 14 factual matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 104. ACTS OF HOLDERS; RECORD DATES. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Agent and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and (subject to Section 701) conclusive in favor of the Agent and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Agent deems sufficient. (c) The ownership of Securities shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security Certificate evidencing such Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security Certificate. (e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action 8 15 provided or permitted by this Agreement to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite number of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite number of Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Agent in writing and to each Holder of Securities in the manner set forth in Section 106. With respect to any record date set pursuant to this Section, the Company may designate any date as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Agent in writing, and to each Holder of Securities in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the Company shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. Section 105. NOTICES, ETC., TO AGENT AND THE COMPANY. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, (1) the Agent by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered or mailed, first-class postage prepaid, to the Agent at [Address], Attention: _________________________, or at any other address previously furnished in writing by the Agent to the Holders and the Company, or (2) The Company by the Agent or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered or mailed, first-class postage prepaid, to the Company at TRW Inc., 1900 Richmond 9 16 Road, Cleveland, Ohio 44124 Attention: ____________, or at any other address previously furnished in writing to the Agent by the Company. Section 106. NOTICE TO HOLDERS; WAIVER. Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Agent shall constitute a sufficient notification for every purpose hereunder. Section 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 108. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Agreement by the Company shall bind its successors and assigns, whether so expressed or not. Section 109. SEPARABILITY CLAUSE. In case any provision in this Agreement or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof and thereof shall not in any way be affected or impaired thereby. Section 110. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and, to the extent provided hereby, the Holders, any benefits or any legal or equitable right, remedy or claim under this Agreement. The Holders from time to time shall be beneficiaries of this Agreement and shall be bound by all of the terms and conditions hereof and of the Securities evidenced by their Security Certificates by their acceptance of delivery thereof. Section 111. GOVERNING LAW. This Agreement and the Securities shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws provisions thereof. 10 17 Section 112. LEGAL HOLIDAYS. In any case where any Payment Date, any Early Settlement Date or the Final Settlement Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or of the Securities) payment in respect of interest on Underlying Securities or Contract Fees shall not be made, Purchase Contracts shall not be performed and Early Settlement shall not be effected on such date, but such payments shall be made, or the Purchase Contracts shall be performed or Early Settlement shall be effected, as applicable, on the next succeeding Business Day with the same force and effect as if made on such Payment Date, Early Settlement Date or Final Settlement Date, as the case may be; provided, that no interest shall accrue or be payable by the Company or any Holder for the period from and after any such Payment Date, Early Settlement Date or Final Settlement Date, as the case may be, except that, if such next succeeding Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day with the same force and effect as if made on such Payment Date, Early Settlement Date or Final Settlement Date, as the case may be. Section 113. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall together constitute one and the same instrument. Section 114. INSPECTION OF AGREEMENT. A copy of this Agreement shall be available at all reasonable times at the Corporate Trust Office for inspection by any Holder. ARTICLE TWO Security Certificate Forms -------------------------- Section 201. FORMS OF SECURITY CERTIFICATES GENERALLY. The Security Certificates (including the form of Purchase Contracts forming part of the Securities evidenced thereby) shall be in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Securities are listed or any Depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Security Certificates, as evidenced by their execution of the Security Certificates. The definitive Security Certificates shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing the Security Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. Every Global Security Certificate authenticated, executed on behalf of the Holders and delivered hereunder shall bear a legend in substantially the following form: 11 18 THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS SECURITY CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT. Section 202. FORM OF AGENT'S CERTIFICATE OF AUTHENTICATION. The form of the Agent's certificate of authentication of the Securities shall be in substantially the form set forth on the form of the Security Certificates. ARTICLE THREE The Securities -------------- Section 301. TITLE AND TERMS; DENOMINATIONS. The aggregate number of Securities evidenced by Security Certificates authenticated, executed on behalf of the Holders and delivered hereunder is limited to __________ [(subject to increase up to a maximum of _________ to the extent the over-allotment option of the underwriters under the Underwriting Agreement is exercised)], except for Security Certificates authenticated, executed and delivered upon registration of transfer of, in exchange for, or in lieu of, other Security Certificates pursuant to Section 304, 305, 306, 509 or 805. The Security Certificates shall be issuable only in registered form and only in denominations of a single Security and any integral multiple thereof. Section 302. RIGHTS AND OBLIGATIONS EVIDENCED BY THE SECURITY CERTIFICATES. Each Security Certificate shall evidence the number of Securities specified therein, with each such Security representing the ownership by the Holder thereof of Underlying Securities with a principal amount equal to the Stated Amount, subject to the Pledge of such Underlying Securities by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder under one Purchase Contract. Prior to the purchase, if any, of shares of Common Stock under the Purchase Contracts, the Securities shall not entitle the Holders to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as stockholders in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as stockholders, of the Company, except to the extent otherwise expressly provided in this Agreement. 12 19 Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. Upon the execution and delivery of this Agreement, and at any time and from time to time thereafter, the Company may deliver Security Certificates executed by the Company to the Agent for authentication, execution on behalf of the Holders and delivery, together with its Issuer Order for authentication of such Security Certificates, and the Agent in accordance with such Issuer Order shall authenticate, execute on behalf of the Holder and deliver such Security Certificates. The Security Certificates shall be executed on behalf of the Company by its Chief Executive Officer, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Security Certificates may be manual or facsimile. Security Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Security Certificates or did not hold such offices at the date of such Security Certificates. No Purchase Contract underlying a Security evidenced by a Security Certificate shall be valid until such Security Certificate has been executed on behalf of the Holder by the manual signature of an authorized signatory of the Agent, as such Holder's attorney-in-fact. Such signature by an authorized signatory of the Agent shall be conclusive evidence that the Holder of such Security Certificate has entered into the Purchase Contracts underlying the Securities evidenced by such Security Certificate. Each Security Certificate shall be dated the date of its authentication. No Security Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose unless there appears on such Security Certificate a certificate of authentication substantially in the form provided for herein executed by an authorized signatory of the Agent by manual signature, and such certificate upon any Security Certificate shall be conclusive evidence, and the only evidence, that such Security Certificate has been duly authenticated and delivered hereunder. Section 304. TEMPORARY SECURITY CERTIFICATES. Pending the preparation of definitive Security Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holders, and deliver, in lieu of such definitive Security Certificates, temporary Security Certificates which are in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Securities are listed, or as may, consistently herewith, be determined by the officers of the Company executing such Security Certificates, as evidenced by their execution of the Security Certificates. 13 20 If temporary Security Certificates are issued, the Company will cause definitive Security Certificates to be prepared without unreasonable delay. After the preparation of definitive Security Certificates, the temporary Security Certificates shall be exchangeable for definitive Security Certificates upon surrender of the temporary Security Certificates at the Corporate Trust Office, at the expense of the Company and without charge to the Holder. Upon surrender for cancellation of any one or more temporary Security Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, one or more definitive Security Certificates of authorized denominations and evidencing a like number of Securities as the temporary Security Certificate or Security Certificates so surrendered. Until so exchanged, the temporary Security Certificates shall in all respects evidence the same benefits and the same obligations with respect to the Securities evidenced thereby as definitive Security Certificates. Section 305. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The Agent shall keep at the Corporate Trust Office a register (the register maintained in such office being herein referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of Security Certificates and of transfers of Security Certificates (the Agent, in such capacity, the "Security Registrar"). Upon surrender for registration of transfer of any Security Certificate at the Corporate Trust Office, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the designated transferee or transferees, and deliver, in the name of the designated transferee or transferees, one or more new Security Certificates of any authorized denominations and evidencing a like number of Securities. At the option of the Holder, Security Certificates may be exchanged for other Security Certificates, of any authorized denominations and evidencing a like number of Securities, upon surrender of the Security Certificates to be exchanged at the Corporate Trust Office. Whenever any Security Certificates are so surrendered for exchange, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver the Security Certificates which the Holder making the exchange is entitled to receive. All Security Certificates issued upon any registration of transfer or exchange of a Security Certificate shall evidence the ownership of the same number of Securities and be entitled to the same benefits and subject to the same obligations, under this Agreement as the Securities evidenced by the Security Certificate surrendered upon such registration of transfer or exchange. Every Security Certificate presented or surrendered for registration of transfer or for exchange shall (if so required by the Agent) be duly endorsed, or be accompanied 14 21 by a written instrument of transfer in form satisfactory to the Company and the Agent duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of a Security Certificate, but the Company and the Agent may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Security Certificates, other than any exchanges pursuant to Sections 306 and 805 not involving any transfer. Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Agent, and the Agent shall not be obligated to authenticate, execute on behalf of the Holder and deliver any Security Certificate presented or surrendered for registration of transfer or for exchange on or after the Final Settlement Date or the Termination Date. In lieu of delivery of a new Security Certificate, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, the Agent shall (i) if the Final Settlement Date has occurred, deliver the shares of Common Stock issuable in respect of the Purchase Contracts forming a part of the Securities evidenced by such Security Certificate, or (ii) if a Termination Event shall have occurred prior to the Final Settlement Date, transfer the principal amount of the Underlying Securities evidenced thereby, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article Five hereof. The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Security Certificates: (1) Each Global Security Certificate authenticated and executed on behalf of the Holders under this Agreement shall be registered in the name of the Depositary designated for such Global Security Certificate or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security Certificate shall constitute a single Security Certificate for all purposes of this Agreement. (2) Notwithstanding any other provision in this Agreement, no Global Security Certificate may be exchanged in whole or in part for Security Certificates registered, and no transfer of a Global Security Certificate in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security Certificate or a nominee thereof unless (a) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security Certificate or (ii) has ceased to be a clearing agency registered under the Exchange Act or (b) there shall have occurred and be continuing a default by the Company in respect to its obligations under one or more Purchase Contracts. 15 22 (3) Subject to Clause (2) above, any exchange of a Global Security Certificate for other Security Certificates may be made in whole or in part, and all Security Certificates issued in exchange for a Global Security Certificate or any portion thereof shall be registered in such names as the Depositary for such Global Security Certificate shall direct. (4) Every Security Certificate authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security Certificate or any portion thereof, whether pursuant to this Section, Section 304, 306, 509 or 805 or otherwise, shall be authenticated, executed on behalf of the Holders and delivered in the form of, and shall be, a Global Security Certificate, unless such Security Certificate is registered in the name of a Person other than the Depositary for such Global Security Certificate or a nominee thereof. Section 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITY CERTIFICATES. If any mutilated Security Certificate is surrendered to the Agent, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, a new Security Certificate, evidencing the same number of Securities and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Agent (i) evidence to their satisfaction of the destruction, loss or theft of any Security Certificate, and (ii) such security or indemnity as may be required by them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Company or the Agent that such Security Certificate has been acquired by a bona fide purchaser, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver to the Holder, in lieu of any such destroyed, lost or stolen Security Certificate, a new Security Certificate, evidencing the same number of Securities and bearing a number not contemporaneously outstanding. Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Agent, and the Agent shall not be obligated to authenticate, execute on behalf of the Holder, and deliver to the Holder, a Security Certificate on or after the Final Settlement Date or the Termination Date. In lieu of delivery of a new Security Certificate, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, the Agent shall (i) if the Final Settlement Date has occurred, deliver the shares of Common Stock issuable in respect of the Purchase Contracts forming a part of the Securities evidenced by such Security Certificate, or (ii) if a Termination Event shall have occurred prior to the Final Settlement Date, transfer the principal amount of the Underlying Securities evidenced thereby, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article Five hereof. Upon the issuance of any new Security Certificate under this Section, the Company and the Agent may require the payment of a sum sufficient to cover any tax or 16 23 other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Agent) connected therewith. Every new Security Certificate issued pursuant to this Section in lieu of any destroyed, lost or stolen Security Certificate shall constitute an original additional contractual obligation of the Company and of the Holder in respect of the Security evidenced thereby, whether or not the destroyed, lost or stolen Security Certificate shall be at any time enforceable by anyone, and shall be entitled to all the benefits and be subject to all the obligations of this Agreement equally and proportionately with any and all other Security Certificates delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or settlement of mutilated, destroyed, lost or stolen Security Certificates. Section 307. PERSONS DEEMED OWNERS. Prior to due presentment of a Security Certificate for registration of transfer, the Company and the Agent, and any agent of the Company or the Agent, may treat the Person in whose name such Security Certificate is registered as the owner of the Securities evidenced thereby, for the purpose of receiving payments of interest on the Underlying Securities, receiving payments of Contract Fees, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not the payment of interest on the Underlying Securities or any Contract Fee payable in respect of the Purchase Contracts constituting a part of the Securities evidenced thereby shall be overdue and notwithstanding any notice to the contrary, and neither the Company nor the Agent, nor any agent of the Company or the Agent, shall be affected by notice to the contrary. Notwithstanding the foregoing, with respect to any Global Security Certificate, nothing herein shall prevent the Company, the Agent or any agent of the Company or the Agent, from giving effect to any written certification, proxy or other authorization furnished by any Depositary (or its nominee), as a Holder, with respect to such Global Security Certificate or impair, as between such Depositary and owners of beneficial interests in such Global Security Certificate, the operation of customary practices governing the exercise of rights of such Depositary (or its nominee) as Holder of such Global Security Certificate. Section 308. CANCELLATION. All Security Certificates surrendered for delivery of shares of Common Stock on or after the Final Settlement Date, transfer of Underlying Securities after the occurrence of a Termination Event or pursuant to an Early Settlement or registration of transfer or exchange shall, if surrendered to any Person other than the Agent, be delivered to the Agent and, if not already cancelled, shall be promptly cancelled by it. The Company may at any time deliver to the Agent for cancellation any Security Certificates previously authenticated, executed and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Security Certificates so delivered shall, upon Issuer Order, be promptly cancelled by the Agent. No Security Certificates shall be authenticated, executed on behalf of the Holder 17 24 and delivered in lieu of or in exchange for any Security Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Security Certificates held by the Agent shall be disposed of as directed by Issuer Order. If the Company or any Affiliate of the Company shall acquire any Security Certificate, such acquisition shall not operate as a cancellation of such Security Certificate unless and until such Security Certificate is delivered to the Agent cancelled or for cancellation. Section 309. SECURITIES NOT SEPARABLE. Notwithstanding anything contained herein or in the Security Certificates to the contrary, for so long as the Purchase Contract underlying a Security remains in effect such Security shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Security in respect of the Underlying Securities and Purchase Contracts constituting such Security may be acquired, and may be transferred and exchanged, only as a Security. Other than a Security Certificate evidencing a Security, no Holder of a Security, or any transferee thereof, shall be entitled to receive a certificate evidencing the ownership of Underlying Securities or the rights and obligations of the Holder and the Company under a Purchase Contract for so long as the Purchase Contract underlying the Security remains in effect. ARTICLE FOUR The Underlying Securities ------------------------- Section 401. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest on any Underlying Security which is paid on any Payment Date shall, subject to receipt thereof by the Agent from the Collateral Agent as provided by the terms of the Pledge Agreement, be paid to the Person in whose name the Security Certificate (or one or more Predecessor Security Certificates) of which such Underlying Security is a part is registered at the close of business on the Record Date next preceding such Payment Date. Each Security Certificate evidencing Underlying Securities delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Security Certificate shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by the Underlying Securities underlying such other Security Certificate. In the case of any Security with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date after any Record Date and on or prior to the next succeeding Payment Date, interest on the Underlying Securities underlying such Security otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Early Settlement, and such interest shall, subject to receipt thereof by the Agent, be paid to the Person in whose name the Security Certificate (or one or more Predecessor Security Certificates) is 18 25 registered at the close of business on the Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date, interest on the related Underlying Securities that would otherwise be payable after the Early Settlement Date shall not be payable hereunder to the Holder of such Security. Section 402. TRANSFER OF UNDERLYING SECURITIES UPON OCCURRENCE OF TERMINATION EVENT. Upon the occurrence of a Termination Event and the transfer to the Agent of the Underlying Securities underlying such Securities pursuant to the terms of the Pledge Agreement, the Agent shall request transfer instructions with respect to such Underlying Securities from each Holder of Securities by written request mailed to such Holder at his address as it appears in the Security Register, in respect of the Underlying Securities underlying the Security Certificate held by such Holder. Upon surrender to the Agent of a Security Certificate with such transfer instructions in proper form for transfer of the Underlying Securities by Federal Reserve Bank-Wire or other appropriate procedure, the Agent shall transfer the Underlying Securities evidenced by such Security Certificate to such Holder in accordance with such instructions. If a Security Certificate is not duly surrendered to the Agent with appropriate transfer instructions, the Agent shall hold the Underlying Securities evidenced by such Security Certificate as custodian for the Holder of such Security Certificate. Underlying Securities shall be transferred only in denominations of $1,000 and integral multiples thereof. As promptly as practicable following the occurrence of a Termination Event, the Agent shall determine the excess of (i) the aggregate principal amount of Underlying Securities underlying the Outstanding Securities over (ii) the aggregate principal amount of Underlying Securities in denominations of $1,000 and integral multiples thereof transferrable to Holders of record on the date of such Termination Event (such excess being herein referred to as the "Excess Underlying Securities"). As soon as practicable after transfer to the Agent of the Underlying Securities underlying the Outstanding Securities as provided in the Pledge Agreement, the Agent shall sell the Excess Underlying Securities to or through one or more U.S. Government securities dealers at then prevailing prices. The Agent shall deduct from the proceeds of such sales all commissions and other out-of-pocket transaction costs incurred in connection with such sales of Excess Underlying Securities and, until the net proceeds of such sale or sales have been distributed to Holders of the Securities, the Agent shall hold such proceeds in trust for the Holders of Securities. Each Holder shall be entitled to receive a portion, if any, of such net proceeds in lieu of Underlying Securities with a principal amount of less than $1,000 determined by multiplying the aggregate amount of such net proceeds by a fraction, the numerator of which is the fraction of $1,000 in principal amount of Underlying Securities to which such Holder would otherwise be entitled (after taking into account all Securities then held by such Holder) and the denominator of which is the aggregate principal amount of Excess Underlying Securities. 19 26 ARTICLE FIVE The Purchase Contracts ---------------------- Section 501. PURCHASE OF SHARES OF COMMON STOCK. Each Purchase Contract shall obligate the Holder of the related Security to purchase, and the Company to sell, on the Final Settlement Date at a price equal to the Stated Amount, a number of shares of Common Stock equal to the Settlement Rate, unless, on or prior to the Final Settlement Date, there shall have occurred a Termination Event or an Early Settlement with respect to the Security of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is greater than $_____ (the "Threshold Appreciation Price"), _____ of a share of Common Stock per Purchase Contract, (b) if the Applicable Market Value is less than or equal to the Threshold Appreciation Price but is greater than the Stated Amount, a fractional share of Common Stock per Purchase Contract equal to the Stated Amount divided by the Applicable Market Value (rounded upward or downward to the nearest 1/10,000th of a share) and (c) if the Applicable Market Value is less than or equal to the Stated Amount, one share of Common Stock per Purchase Contract, in each case subject to adjustment as provided in Section 506. As provided in Section 510, no fractional shares of Common Stock will be issued upon settlement of Purchase Contracts. The "Applicable Market Value" means the average of the Closing Price per share of Common Stock on each of the twenty consecutive Trading Days ending on the last Trading Day immediately preceding the Final Settlement Date. The "Closing Price" of the Common Stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, or if the Common Stock is not so listed on a United States national or regional securities exchange, as reported by Nasdaq, or, if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Common Stock on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company. A "Trading Day" means a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock. Each Holder of a Security Certificate evidencing Securities, by his acceptance thereof, irrevocably authorizes the Agent to enter into and perform the related Purchase Contracts on his behalf as his attorney-in-fact, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform his obligations under such Purchase Contracts, consents to the provisions hereof, irrevocably authorizes the Agent 20 27 as his attorney-in-fact to enter into and perform the Pledge Agreement on his behalf as his attorney-in-fact, and consents to and agrees to be bound by the Pledge of the Underlying Securities underlying such Security Certificate pursuant to the Pledge Agreement; provided, that upon a Termination Event, the rights of the Holder of such Security under the Purchase Contract may be enforced without regard to any other rights or obligations. Each Holder of a Security, by his acceptance thereof, further irrevocably covenants and agrees, that, to the extent and in the manner provided in Section 504 and the Pledge Agreement, but subject to the terms thereof, payments in respect of principal of the Underlying Securities on the Final Settlement Date shall be paid by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. Upon registration of transfer of a Security Certificate evidencing Purchase Contracts, the transferee shall be bound (without the necessity of any other action on the part of such transferee), under the terms of this Agreement, the Purchase Contracts evidenced thereby and the Pledge Agreement and the transferor shall be released from the obligations under the Purchase Contracts evidenced by the Security Certificates so transferred. The Company covenants and agrees, and each Holder of a Security Certificate, by his acceptance thereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. Section 502. CONTRACT FEES. Subject to Section 503, the Company shall pay, on each Payment Date, the Contract Fees payable in respect of each Purchase Contract to the Person in whose name the Security Certificate (or one or more Predecessor Security Certificates) evidencing such Purchase Contract is registered at the close of business on the Record Date next preceding such Payment Date. The Contract Fees will be payable at the office of the Agent in The City of New York maintained for that purpose or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Security Register. Upon the occurrence of a Termination Event, the Company's obligation to pay Contract Fees (including any accrued or deferred Contract Fees) shall cease. Each Security Certificate delivered under this Agreement upon registration of transfer of, or in exchange for, or in lieu of, any other Security Certificate shall carry the rights to Contract Fees accrued and unpaid, and to accrue, which were carried by the Purchase Contracts evidenced by such other Security Certificate. Subject to Section 509, in the case of any Security with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date after any Record Date and on or prior to the next succeeding Payment Date, Contract Fees, if any, otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Early Settlement, and such Contract Fees shall be paid to the Person in whose name the Security Certificate evidencing such Security (or one or more Predecessor Security Certificates) is registered at the close of business on 21 28 such Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date, Contract Fees that would otherwise be payable after the Early Settlement Date with respect to the Purchase Contract underlying such Security shall not be payable. Section 503. DEFERRAL OF PAYMENT DATES FOR CONTRACT FEE. The Company shall have the right, at any time prior to the Final Settlement Date, to defer the payment of any or all of the Contract Fees otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Agent written notice of its election to defer such payment (specifying the amount to be deferred) at least ten Business Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the date the Company is required to give notice of the Record or Payment Date with respect to payment of such Contract Fees to the New York Stock Exchange or other applicable self-regulatory organization or to Holders of the Securities, but in any event not less than one Business Day prior to such Record Date. Any Contract Fees so deferred shall bear additional Contract Fees thereon at the rate of _____% annum (computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be), compounding on each succeeding Payment Date, until paid in full. Deferred Contract Fees (and additional Contract Fees accrued thereon) shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to this Section. No Contract Fees may be deferred to a date that is after the Final Settlement Date or, with respect to any particular Purchase Contract, Early Settlement thereof. If the Purchase Contracts are terminated upon the occurrence of a Termination Event, the Holder's right to receive Contract Fees or deferred Contract Fees (and additional Contract Fees accrued thereon) will terminate. Section 504. PAYMENT OF PURCHASE PRICE. The purchase price for the shares of Common Stock purchased pursuant to a Purchase Contract shall be paid by application of payments received by the Company on the Final Settlement Date from the Collateral Agent pursuant to the Pledge Agreement in respect of the principal of the Underlying Securities pledged to secure the obligations of the relevant Holder under such Purchase Contract. Such application shall satisfy in full the obligations under such Purchase Contract of the Holder of the Security of which such Purchase Contract is a part. The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate purchase price for the shares of Common Stock to be purchased thereunder in the manner herein set forth. Section 505. ISSUANCE OF SHARES OF COMMON STOCK. Unless a Termination Event shall have occurred on or prior to the Final Settlement Date or an Early Settlement shall have occurred, on the Final Settlement Date, upon its receipt of payment in full of the purchase price for the shares of Common Stock purchased by the Holders pursuant to the foregoing provisions of this Article, and subject to Section 506(b), the Company shall issue and deposit with the Agent, for the benefit of the Holders of the Outstanding Securities, one or more certificates representing the shares 22 29 of Common Stock registered in the name of the Agent (or its nominee) as custodian for the Holders (such certificates for shares of Common Stock, together with any dividends or distributions for which a record date and payment date for such dividend or distribution has occurred after the Final Settlement Date, being hereinafter referred to as the "Final Settlement Fund") to which the Holders are entitled hereunder. Subject to the foregoing, upon surrender of a Security Certificate to the Agent on or after the Final Settlement Date, together with settlement instructions thereon duly completed and executed, the Holder of such Security Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Common Stock which such Holder is entitled to receive pursuant to the provisions of this Article Five (after taking into account all Securities then held by such Holder) together with cash in lieu of fractional shares as provided in Section 510 and any dividends or distributions with respect to such shares constituting part of the Final Settlement Fund, but without any interest thereon, and the Security Certificate so surrendered shall forthwith be cancelled. Such shares shall be registered in the name of the Holder or the Holder's designee as specified in the settlement instructions on the Security Certificate. If any shares of Common Stock issued in respect of a Purchase Contract are to be registered to a Person other than the Person in whose name the Security Certificate evidencing such Purchase Contract is registered, no such registration shall be made unless the Person requesting such registration has paid any transfer and other taxes required by reason of such registration in a name other than that of the registered Holder of the Security Certificate evidencing such Purchase Contract or has established to the satisfaction of the Company that such tax either has been paid or is not payable. Section 506. ADJUSTMENT OF SETTLEMENT RATE. (a) Adjustments for Dividends, Distributions, Stock Splits, Etc. (1) In case the Company shall pay or make a dividend or other distribution on any class of Common Stock of the Company in Common Stock, the Settlement Rate in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by dividing such Settlement Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. 23 30 (2) In case the Company shall issue rights, options or warrants to all holders of its Common Stock (not being available on an equivalent basis to Holders of the Securities upon settlement of the Purchase Contracts underlying such Securities) entitling them, for a period expiring within 45 days after the record date for the determination of stockholders entitled to receive such rights, options or warrants, to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants (other than pursuant to a dividend reinvestment plan), the Settlement Rate in effect at the opening of business on the day following the date fixed for such determination shall be increased by dividing such Settlement Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company shall not issue any such rights, options or warrants in respect of shares of Common Stock held in the treasury of the Company. (3) In case outstanding shares of Common Stock shall be subdivided or split into a greater number of shares of Common Stock, the Settlement Rate in effect at the opening of business on the day following the day upon which such subdivision or split becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Settlement Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision, split or combination becomes effective. (4) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness or assets 24 31 (including securities, but excluding any rights or warrants referred to in paragraph (2) of this Section, any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in paragraph (1) of this Section), the Settlement Rate shall be adjusted so that the same shall equal the rate determined by dividing the Settlement Rate in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the date fixed for such determination less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution filed with the Agent) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of stock holders entitled to receive such distribution. In any case in which this paragraph (4) is applicable, paragraph (2) of this Section shall not be applicable. (5) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding any cash that is distributed in a Reorganization Event to which Section 506(b) applies or as part of a distribution referred to in paragraph (4) of this Section) in an aggregate amount that, combined together with (I) the aggregate amount of any other distributions to all holders of its Common Stock made exclusively in cash within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (5) or paragraph (6) of this Section has been made and (II) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of any non-cash consideration payable in respect of any tender or exchange offer by the Company or any of its subsidiaries for all or any portion of the Common Stock concluded within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (5) or paragraph (6) of this Section has been made, exceeds 15% of the product of the Current Market Price per share of the Common Stock on the date for the determination of holders of shares of Common Stock entitled to receive such distribution times the number of shares of Common Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date for determination, the Settlement Rate shall be increased so that the same shall equal the rate determined by dividing the Settlement Rate In effect immediately prior to the close of business on the date fixed for determination of the stockholders entitled to receive such distribution by a fraction (i) the numerator of which shall be 25 32 equal to the Current Market Price per share of the Common Stock on the date fixed for such determination less an amount equal to the quotient of (x) the excess of such combined amount over such 15% and (y) the number of shares of Common Stock outstanding on such date for determination and (ii) the denominator of which shall be equal to the Current Market Price per share of the Common Stock on such date for determination. (6) In case a tender or exchange offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) that combined together with (I) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of the applicable tender or exchange offer, of any non-cash consideration payable in respect of any other tender or exchange offer, by the Company or any subsidiary of the Company for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to paragraph (5) of this Section or this paragraph (6) has been made and (II) the aggregate amount of any distributions to all holders of the Company's Common Stock made exclusively in cash within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to paragraph (5) of this Section or this paragraph (6) has been made, exceeds 15% of the product of the Current Market Price per share of the Common Stock as of the last time (the "Expiration Time") tenders could have been made pursuant to such tender or exchange offer (as it may be amended) times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Settlement Rate shall be adjusted so that the same shall equal the rate determined by dividing the Settlement Rate immediately prior to the close of business on the date of the Expiration Time by a fraction (i) the numerator of which shall be equal to (A) the product of (I) the Current Market Price per share of the Common Stock on the date of the Expiration Time and (II) the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time less (B) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate [non-cash] consideration payable to stockholders pursuant to such tender or exchange offer, and (ii) the denominator of which shall be equal to the product of (A) the Current Market Price per share of the Common Stock as of the Expiration Time 26 33 and (B) the number of shares of Common Stock outstanding (including any tendered shares) as of the Expiration Time less the number of all shares accepted for payment pursuant to such tender or exchange offer (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares"). (7) The reclassification of Common Stock into securities including securities other than Common Stock (other than any reclassification upon a Reorganization Event to which Section 506(b) applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of stockholders entitled to receive such distribution" and the "date fixed for such determination" within the meaning of paragraph (4) of this Section), and (b) a subdivision, split or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision or split becomes effective" or "the day upon which such combination becomes effective", as the case may be, and "the day upon which such subdivision, split or combination becomes effective" within the meaning of paragraph (3) of this Section). (8) The "Current Market Price" per share of Common Stock on any day means the average of the daily Closing Prices for the 5 consecutive Trading Days selected by the Company commencing not more than 30 Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex" date with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term "'ex' date", when used with respect to any issuance or distribution, shall mean the first date on which the Common Stock trades regular way on such exchange or in such market without the right to receive such issuance or distribution. (9) All adjustments to the Settlement Rate shall be calculated to the nearest 1/10,000th of a share of Common Stock (or if there is not a nearest 1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment in the Settlement Rate shall be required unless such adjustment would require an increase or decrease of at least one percent therein; provided, however, that any adjustments which by reason of this subparagraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment. If an adjustment is made to the Settlement Rate pursuant to paragraphs (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 506(a), an adjustment shall also be made to the Applicable Market Value solely to determine which of clauses (a), (b) 27 34 or (c) of the definition of Settlement Rate in Section 501 will apply on the Final Settlement Date. Such adjustment shall be made by multiplying the Applicable Market Value by a fraction of which the numerator shall be the Settlement Rate immediately after such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 506(a) and the denominator shall be the Settlement Rate immediately before such adjustment; provided, however, that if such adjustment to the Settlement Rate is required to be made pursuant to the occurrence of any of the events contemplated by paragraphs (1), (2), (3), (4), (5), (7) or (10) of this Section 506(a) during the period taken into consideration for determining the Applicable Market Value, appropriate and customary adjustments shall be made to the Settlement Rate. (10) The Company may make such increases in the Settlement Rate, in addition to those required by this Section, as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reasons. (b) ADJUSTMENT FOR CONSOLIDATION, MERGER OR OTHER REORGANIZATION EVENT. In the event of (i) any consolidation or merger of the Company, with or into another Person (other than a merger or consolidation in which the Company is the continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or other property of the Company or another corporation), (ii) any sale, transfer, lease or conveyance to another Person of the property of the Company as an entirety or substantially as an entirety, (iii) any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition) or (iv) any liquidation, dissolution or winding up of the Company other than as a result of or after the occurrence of a Termination Event (any such event, a "Reorganization Event"), the Settlement Rate will be adjusted to provide that each Holder of Securities will receive on the Final Settlement Date with respect to each Purchase Contract forming a part thereof, the kind and amount of securities, cash and other property receivable upon such Reorganization Event (without any interest thereon, and without any right to dividends or distributions thereon which have a record date that is prior to the Final Settlement Date) by a Holder of the number of shares of Common Stock issuable on account of each Purchase Contract if the Final Settlement Date had occurred immediately prior to such Reorganization Event, assuming such Holder of Common Stock is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be ("constituent Person"), or an Affiliate of a constituent Person (to the extent such Reorganization Event provides for different treatment of Common Stock held by Affiliates of the Company and non-Affiliates), and such Holder failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property 28 35 receivable upon such Reorganization Event (provided that if the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of Common Stock held immediately prior to such Reorganization Event by other than a constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this Section the kind and amount of securities, cash and other property receivable upon such Reorganization Event by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). In the event of such a Reorganization Event, the Person formed by such consolidation, merger or exchange or the Person which acquires the assets of the Company or, in the event of a liquidation or dissolution of the Company, the Company or a liquidating trust created in connection therewith, shall execute and deliver to the Agent an agreement supplemental hereto providing that the Holders of each Outstanding Security shall have the rights provided by this Section 506. Such supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section. The above provisions of this Section shall similarly apply to successive Reorganization Events. Section 507. NOTICE OF ADJUSTMENTS AND CERTAIN OTHER EVENTS. (a) Whenever the Settlement Rate is adjusted as herein provided, the Company shall: (i) forthwith compute the adjusted Settlement Rate in accordance with Section 506 and prepare and transmit to the Agent an Officers' Certificate setting forth the Settlement Rate, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and (ii) within 10 Business Days following the occurrence of an event that permits or requires an adjustment to the Settlement Rate pursuant to Section 506 (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), provide a written notice to the Holders of the Securities of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the Settlement Rate was determined and setting forth the adjusted Settlement Rate. (b) The Agent shall not at any time be under any duty or responsibility to any holder of Securities to determine whether any facts exist which may require any adjustment of the Settlement Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at the time be issued or delivered with respect to any Purchase Contract; and the Agent makes no representation with respect thereto. The Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of 29 36 Common Stock pursuant to a Purchase Contract or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Section 508. TERMINATION EVENT; NOTICE. The Purchase Contracts and the obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay any Contract Fees or deferred Contract Fees, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Final Settlement Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall give written notice to the Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Security Register. Upon and after the occurrence of a Termination Event, the Securities shall thereafter represent the right to receive the Underlying Securities forming a part of such Securities in accordance with the provisions of Section 402 and the Pledge Agreement. Section 509. EARLY SETTLEMENT. (a) Subject to and upon compliance with the provisions of this Section 509 at the option of the Holder thereof, any Purchase Contracts underlying Securities having an aggregate Stated Amount equal to $[1,000] or an integral multiple thereof may be settled early ("Early Settlement") as provided herein. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts, the Holder of the Security Certificate evidencing such Purchase Contracts shall deliver such Security Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early on the reverse thereof duly completed and accompanied by payment in the form of a certified or cashier's check payable to the Company in immediately available funds in an amount (the "Early Settlement Amount") equal to (i) the product of (A) the Stated Amount times (B) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement minus (ii) the aggregate amount of Contract Fees, if any, otherwise payable on or prior to the immediately preceding Payment Date deferred at the option of the Company pursuant to Section 503 and remaining unpaid as of such immediately preceding Payment Date plus (iii) if such delivery is made with respect to any Purchase Contracts during the period from the close of business on any Record Date next preceding any Payment Date to the opening of business on such Payment Date, an amount equal to the sum of (x) the Contract Fees payable on such Payment Date with respect to such Purchase Contracts plus (y) the interest on the related Underlying Securities payable on such Payment Date. Except as provided in the immediately preceding sentence and subject to the [last] paragraph of Section 502, no payment or adjustment shall be made upon Early Settlement of any Purchase Contract on account of any Contract Fees accrued on such Purchase Contract or on account of any dividends on the Common Stock issued upon such Early Settlement. If the foregoing requirements are first satisfied with respect to Purchase Contracts underlying any Securities at or prior to 5:00 p.m., New York City time, on a Business Day, such day shall be the "Early Settlement Date" with respect to such Securities and if such requirements are first satisfied after 5:00 p.m., New York City time, on a Business Day or on a day that is not a Business Day, the "Early 30 37 Settlement Date" with respect to such Securities shall be the next succeeding Business Day. (b) Upon Early Settlement of Purchase Contracts by a Holder of the related Securities, the Company shall issue, and the Holder shall be entitled to receive, a number of shares of Common Stock on account of each Purchase Contract as to which Early Settlement is effected equal to the Early Settlement Rate; provided, however, that upon the Early Settlement of the Purchase Contracts, the Holder of such related Securities will forfeit the right to receive any deferred Contract Fees. The Early Settlement Rate shall initially be equal to __________ and shall be adjusted in the same manner and at the same time as the Settlement Rate is adjusted. As promptly as practicable after Early Settlement of Purchase Contracts in accordance with the provisions of this Section 509, the Company shall issue and shall deliver to the Agent at the Corporate Trust Office a certificate or certificates for the full number of shares of Common Stock issuable upon such Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 510. (c) The Company shall cause the shares of Common Stock issuable, and Underlying Securities deliverable, upon Early Settlement of Purchase Contracts to be issued and delivered, in the case of such shares of Common Stock, and released from the Pledge by the Collateral Agent and transferred, in the case of such Underlying Securities, to the Purchase Contract Agent, for delivery to the Holder thereof or its designee, no later than the third Business Day after the applicable Early Settlement Date. (d) Upon Early Settlement of any Purchase Contracts, and subject to receipt thereof from the Company or the Collateral Agent, as applicable, the Agent shall, in accordance with the instructions provided by the Holder thereof on the applicable form of Election to Settle Early on the reverse of the Security Certificate evidencing the related Securities, (i) transfer the Underlying Securities forming a part of such Securities and (ii) deliver to the Holder a certificate or certificates for the full number of shares of Common Stock issuable upon such Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 510. (e) In the event that Early Settlement is effected with respect to Purchase Contracts underlying less than all the Securities evidenced by a Security Certificate, upon such Early Settlement the Company shall execute and the Agent shall authenticate, countersign and deliver to the Holder thereof, at the expense of the Company, a Security Certificate evidencing the Securities as to which Early Settlement was not effected. Section 510. NO FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares of Common Stock shall be issued or delivered upon settlement on the Final Settlement Date or upon Early Settlement of any Purchase Contracts. If Security Certificates evidencing more than one Purchase Contract shall be surrendered for settlement at one time by the same Holder, the number of full shares of Common Stock 31 38 which shall be delivered upon settlement shall be computed on the basis of the aggregate number of Purchase Contracts evidenced by the Security Certificates so surrendered. Instead of any fractional share of Common Stock which would otherwise be deliverable upon settlement of any Purchase Contracts on the Final Settlement Date or upon Early Settlement, the Company, through the Agent, shall make a cash payment in respect of such fractional interest in an amount equal to the value of such fractional shares at the Closing Price per share on the Trading Day immediately preceding the Final Settlement Date or the related Early Settlement Date, respectively. The Company shall provide the Agent from time to time with sufficient funds to permit the Agent to make all cash payments required by this Section 510 in a timely manner. Section 511. CHARGES AND TAXES. The Company will pay all stock transfer and similar taxes attributable to the initial issuance and delivery of the shares of Common Stock pursuant to the Purchase Contracts and in payment of any deferred Contract Fees; provided, however, that the Company shall not be required to pay any such tax or taxes which may be payable in respect of any exchange of or substitution for a Security Certificate evidencing a Purchase Contract or any issuance of a share of Common Stock in a name other than that of the registered Holder of a Security Certificate surrendered in respect of the Purchase Contracts evidenced thereby, other than in the name of the Agent, as custodian for such Holder, and the Company shall not be required to issue or deliver such share certificates or Security Certificates unless or until the Person or Persons requesting the transfer or issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. ARTICLE SIX Remedies -------- Section 601. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE CONTRACT FEES AND TO PURCHASE COMMON STOCK. Notwithstanding any other provision in this Agreement, the Holder of any Security shall have the right, which is absolute and unconditional (subject to the right of the Company to defer payment thereof pursuant to Section 503), to receive payment of each installment of the Contract Fees with respect to the Purchase Contract constituting a part of such Security on the respective Payment Date for such Security and to purchase Common Stock pursuant to such Purchase Contract and, in each such case, to institute suit for the enforcement of any such payment and right to purchase Common Stock, and such rights shall not be impaired without the consent of such Holder. Section 602. RESTORATION OF RIGHTS AND REMEDIES. If any Holder of Securities has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then and in every such case, subject to any determination in such proceeding, the Company and such Holder shall be restored 32 39 severally and respectively to their former positions hereunder and thereafter all rights and remedies of such Holder shall continue as though no such proceeding had been instituted. Section 603. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement of mutilated, destroyed, lost or stolen Security Certificates in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Holders of Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 604. DELAY OR OMISSION NOT WAIVER. No delay or omission of any Holder to exercise any right or remedy upon a default shall impair any such right or remedy or constitute a waiver of any such right. Every right and remedy given by this Article or by law to the Holders may be exercised from time to time, and as often as may be deemed expedient, by such Holders. Section 605. UNDERTAKING FOR COSTS. All parties to this Agreement agree, and each Holder of any Security by his acceptance of the Security Certificate evidencing such Security shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Agent for any action taken, suffered or omitted by it as Agent, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Agent, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the interest on any Underlying Security or the Contract Fees, if any, on any Purchase Contract on or after the respective Payment Date therefor constituting a part of the Securities held by such Holder, or for enforcement of the right to purchase shares of Common Stock under the Purchase Contracts constituting a part of the Securities held by such Holder. Section 606. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein 33 40 granted to the Agent or the Holders, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SEVEN The Agent --------- Section 701. CERTAIN DUTIES AND RESPONSIBILITIES. (a) (1) The Agent undertakes to perform, with respect to the Securities, such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Agent; and (2) in the absence of bad faith or negligence on its part, the Agent may, with respect to the Securities, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Agent and conforming to the requirements of this Agreement, but in the case of any certificates or opinions which by any provision hereof are specifically required to be furnished to the Agent, the Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. (b) No provision of this Agreement shall be construed to relieve the Agent from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Agent was negligent in ascertaining the pertinent facts; and (3) no provision of this Agreement shall require the Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if adequate indemnity is not provided to it. (c) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Agent shall be subject to the provisions of this Section. 34 41 Section 702. NOTICE OF DEFAULT. Within 90 days after the occurrence of any default by the Company hereunder, of which a Responsible Officer of the Agent has actual knowledge, the Agent shall transmit by mail to all Holders of Securities, as their names and addresses appear in the Security Register, notice of such default hereunder, unless such default shall have been cured or waived. Section 703. CERTAIN RIGHTS OF AGENT. Subject to the provisions of Section 701: (a) the Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer Request, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Agreement the Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company; (d) the Agent may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Agent, in its discretion, may make reasonable further inquiry or investigation into such facts or matters related to the issuance of the Securities and the execution, delivery and performance of the Purchase Contracts as it may see fit, and, if the Agent shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and promises of the Company, personally or by agent or attorney; and (f) the Agent may execute any of its powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. 35 42 Section 704. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained herein and in the Security Certificates shall be taken as the statements of the Company and the Agent assumes no responsibility for their correctness. The Agent makes no representations as to the validity or sufficiency of this Agreement or of the Securities. The Agent shall not be accountable for the use or application by the Company of the proceeds in respect of the Purchase Contracts. Section 705. MAY HOLD SECURITIES. Any Security Registrar or any other agent of the Company, or the Agent, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Security Registrar or such other agent, or the Agent. Section 706. MONEY HELD IN TRUST. Money held by the Agent in trust hereunder need not be segregated from the other funds except to the extent required by law. The Agent shall be under no obligation to invest or pay interest on any money received by it hereunder except as otherwise agreed with the Company. Section 707. COMPENSATION AND REIMBURSEMENT. The Company agrees: (1) to pay to the Agent from time to time reasonable compensation for all services rendered by it hereunder; (2) except as otherwise expressly provided herein, to reimburse the Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Agent in accordance with any provision of this Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Agent and any predecessor Agent for, and to hold each of them harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. Section 708. CORPORATE AGENT REQUIRED; ELIGIBILITY. There shall at all times be an Agent hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having (or being a member of a bank holding company having) a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority and having a Corporate Trust Office in the Borough of Manhattan, The City of New York, if there be such a corporation in the Borough of Manhattan, The City of New York 36 43 qualified and eligible under this Article and willing to act on reasonable terms. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 709. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Agent and no appointment of a successor Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Agent in accordance with the applicable requirements of Section 710. (b) The Agent may resign at any time by giving written notice thereof to the Company 60 days prior to the effective date of such resignation. If the instrument of acceptance by a successor Agent required by Section 710 shall not have been delivered to the Agent within 30 days after the giving of such notice of resignation, the resigning Agent may petition any court of competent jurisdiction for the appointment of a successor Agent. (c) The Agent may be removed at any time by Act of the Holders of a majority in number of the Outstanding Securities delivered to the Agent and the Company. (d) If at any time (1) the Agent fails to comply with Section 310(b) of the TIA, as if the Agent were an indenture trustee under an indenture qualified under the TIA, after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Agent shall cease to be eligible under Section 708 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Agent shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Agent or of its property shall be appointed or any public officer shall take charge or control of the Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the agent, or (ii) any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of 37 44 competent jurisdiction for the removal of the Agent and the appointment of a successor Agent. (e) If the Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Agent for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Agent and shall comply with the applicable requirements of Section 710. If no successor Agent shall have been so appointed by the Company and accepted appointment in the manner required by Section 710, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Agent. (f) The Company shall give, or shall cause such successor Agent to give, notice of each resignation and each removal of the Agent and each appointment of a successor Agent by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Agent and the address of its Corporate Trust Office. Section 710. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In case of the appointment hereunder of a successor Agent, every such successor Agent so appointed shall execute, acknowledge and deliver to the Company and to the retiring Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Agent shall become effective and such successor Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, agencies and duties of the retiring Agent; but, on the request of the Company or the successor Agent, such retiring Agent shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Agent all the rights, powers and trusts of the retiring Agent and shall duly assign, transfer and deliver to such successor Agent all property and money held by such retiring Agent hereunder. (b) Upon request of any such successor Agent, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Agent all such rights, powers and agencies referred to in paragraph (a) of this Section. (c) No successor Agent shall accept its appointment unless at the time of such acceptance such successor Agent shall be qualified and eligible under this Article. Section 711. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Agent shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Agent, shall be the successor of the Agent hereunder, provided such corporation shall be otherwise qualified and eligible 38 45 under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Security Certificates shall have been authenticated and executed on behalf of the Holders, but not delivered, by the Agent then in office, any successor by merger, conversion or consolidation to such Agent may adopt such authentication and execution and deliver the Security Certificates so authenticated and executed with the same effect as if such successor Agent had itself authenticated and executed such Securities. Section 712. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS. (a) The Agent shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders received by the Agent in its capacity as Security Registrar. (b) If three or more Holders (herein referred to as "applicants") apply in writing to the Agent, and furnish to the Agent reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Agreement or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Agent shall, within five Business Days after the receipt of such application, afford such applicants access to the information preserved at the time by the Agent in accordance with Section 712(a). (c) Every Holder of Securities, by receiving and holding the Security Certificates evidencing the same, agrees with the Company and the Agent that none of the Company, the Agent nor any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 712(b), regardless of the source from which such information was derived. Section 713. NO OBLIGATIONS OF AGENT. Except to the extent otherwise provided in this Agreement, the Agent assumes no obligations and shall not be subject to any liability under this Agreement or any Purchase Contract in respect of the obligations of the Holder of any Security thereunder. The Company agrees, and each Holder of a Security Certificate, by his acceptance thereof, shall be deemed to have agreed, that the Agent's execution of the Security Certificates on behalf of the Holders shall be solely as agent and attorney-in-fact for the Holders, and that the Agent shall have no obligation to perform such Purchase Contracts on behalf of the Holders, except to the extent expressly provided in Article Five hereof. Section 714. TAX COMPLIANCE. (a) The Agent, on its own behalf and on behalf of the Company, will comply with all applicable certification, information reporting and withholding (including "backup" withholding) requirements imposed by applicable tax laws, regulations or administrative practice with respect to (i) any payments made with respect to the Securities or (ii) the issuance, delivery, holding, transfer, redemption or exercise of rights under the Securities. Such compliance shall include, without limitation, the preparation and timely filing of required returns and the timely payment of 39 46 all amounts required to be withheld to the appropriate taxing authority or its designated agent. (b) The Agent shall comply with any direction received from the Company with respect to the application of such requirements to particular payments or Holders or in other particular circumstances, and may for purposes of this Agreement rely on any such direction in accordance with the provisions of Section 701(a)(2) hereof. (c) The Agent shall maintain all appropriate records documenting compliance with such requirements, and shall make such records available on request to the Company or to its authorized representative. ARTICLE EIGHT Supplemental Agreements ----------------------- Section 801. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Company and the Agent, at any time and from time to time, may enter into one or more agreements supplemental hereto, in form satisfactory to the Company and the Agent, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Security Certificates; or (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to evidence and provide for the acceptance of appointment hereunder by a successor Agent; or (4) to make provision with respect to the rights of Holders pursuant to the requirements of Section 506(b); or (5) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders. Section 802. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority of the Outstanding Securities, by Act of said Holders delivered to the Company and the Agent, the Company when authorized by a Board Resolution, and the Agent may enter into an agreement or agreements supplemental hereto for the purpose of modifying in any manner the terms of the 40 47 Securities, or the provisions of this Agreement or the rights of the Holders in respect of the Securities; provided, however, that no such supplemental agreement shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change any Payment Date; (2) change the amount or type of Underlying Securities underlying a Security, impair the right of the Holder of any Security to receive interest payments on the underlying Underlying Securities or otherwise adversely affect the Holder's rights in or to such Underlying Securities; (3) reduce any Contract Fees or change any place where, or the coin or currency in which, any Contract Fees are payable; (4) impair the right to institute suit for the enforcement of any Purchase Contract; (5) reduce the number of shares of Common Stock to be purchased pursuant to any Purchase Contract, increase the price to purchase shares of Common Stock upon settlement of any Purchase Contract, change the Final Settlement Date or otherwise adversely affect the Holder's rights under any Purchase Contract; or (6) reduce the percentage of the Outstanding Securities the consent of whose Holders is required for any such supplemental agreement. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such Act shall approve the substance thereof. Section 803. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or accepting the additional agencies created by, any supplemental agreement permitted by this Article or the modifications thereby of the agencies created by this Agreement, the Agent shall be entitled to receive and (subject to Section 701) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. The Agent may, but shall not be obligated to, enter into any such supplemental agreement which affects the Agent's own rights, duties or immunities under this Agreement or otherwise. Section 804. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Holder of Security Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered hereunder shall be bound thereby. 41 48 Section 805. REFERENCE TO SUPPLEMENTAL AGREEMENTS. Security Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any supplemental agreement pursuant to this Article may, and shall if required by the Agent, bear a notation in form approved by the Agent as to any matter provided for in such supplemental agreement. If the Company shall so determine, new Security Certificates so modified as to conform, in the opinion of the Agent and the Company, to any such supplemental agreement may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent in exchange for Outstanding Security Certificates. ARTICLE NINE Consolidation, Merger, Sale or Conveyance ----------------------------------------- Section 901. COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY PROPERTY EXCEPT UNDER CERTAIN CONDITIONS. The Company covenants that it will not merge or consolidate with any other Person or sell or convey all or substantially all of its assets to any Person, except that the Company may merge or consolidate with, or sell or convey all or substantially all of its assets to, any other Person, provided that (i) the Company shall be the continuing corporation, or the successor (if other than the Company) shall be a corporation organized and existing under the laws of the United States of America or a State thereof and such corporation shall assume the obligations of the Company under the Purchase Contracts, this Agreement and the Pledge Agreement by one or more supplemental agreements in form satisfactory to the Agent and the Collateral Agent, executed and delivered to the Agent and the Collateral Agent by such corporation, and (ii) the Company or such successor corporation, as the case may be, shall not, immediately after such merger of consolidation, or such sale or conveyance, be in default in the performance of any covenant or condition hereunder, under any of the Securities or under the Pledge Agreement. Section 902. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation in accordance with Section 901, such successor corporation shall succeed to and be substituted for the Company with the same effect as if it had been named herein as the Company. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of TRW Inc., any or all of the Security Certificates evidencing Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Agent; and, upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Agreement prescribed, the Agent shall authenticate and execute on behalf of the Holders and deliver any Security Certificates which previously shall have been signed and delivered by the officers of the Company to the Agent for authentication and execution, and any Security Certificate evidencing Securities which such successor corporation thereafter shall cause to be signed and delivered to the Agent for that purpose. All the Security Certificates so issued shall in all respects have the same legal rank and benefit under this Agreement as the Security 42 49 Certificates theretofore or thereafter issued in accordance with the terms of this Agreement as though all of such Security Certificates had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale or conveyance such change in phraseology and form (but not in substance) may be made in the Security Certificates evidencing Securities thereafter to be issued as may be appropriate. Section 903. OPINION OF COUNSEL TO AGENT. The Agent, subject to Sections 701 and 703, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Article and that all conditions precedent to the consummation of any such consolidation, merger, sale, assignment, transfer, lease or conveyance have been met. ARTICLE TEN Covenants --------- Section 1001. PERFORMANCE UNDER PURCHASE CONTRACTS. The Company covenants and agrees for the benefit of the Holders from time to time of the Securities that it will duly and punctually perform its obligations under the Purchase Contracts in accordance with the terms of the Purchase Contracts and this Agreement. Section 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in the Borough of Manhattan, The City of New York an office or agency where Security Certificates may be presented or surrendered for acquisition of shares of Common Stock upon settlement or Early Settlement and for transfer of Underlying Securities upon occurrence of a Termination Event, where Security Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Agreement may be served. The Company will give prompt written notice to the Agent of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Agent with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Agent as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where Security Certificates may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Agent of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates as the place of 43 50 payment for the Securities the Corporate Trust Office and appoints the Agent at its Corporate Trust Office as paying agent in such city. Section 1003. COMPANY TO RESERVE COMMON STOCK. The Company shall at all times prior to the Final Settlement Date reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock the full number of shares of Common Stock issuable against tender of payment in respect of all Purchase Contracts constituting a part of the Securities evidenced by Outstanding Security Certificates. Section 1004. COVENANTS AS TO COMMON STOCK. The Company covenants that all shares of Common Stock which may be issued against tender of payment in respect of any Purchase Contract constituting a part of the Outstanding Securities will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable. Section 1005. STATEMENTS OF OFFICERS OF THE COMPANY AS TO DEFAULT. The Company will deliver to the Agent, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. TRW INC. Attested by By: - ----------------------- ------------------------- - ----------------------- as Agent Attested by By: - ----------------------- ------------------------- 44 51 EXHIBIT A TRW INC. [Title of Security] (Stated Amount $________ per Security) No. _________ Securities This Security Certificate certifies that ______________________ is the registered Holder of the number of Securities set forth above. Each Security represents ownership by the Holder of [type and description of underlying security] ("Underlying Securities") with a principal amount equal to the Stated Amount, subject to the Pledge of such Underlying Securities by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder under one Purchase Contract with TRW Inc., an Ohio corporation (the "Company"). Pursuant to the Pledge Agreement, the Underlying Securities constituting part of each Security evidenced hereby have been pledged to the Collateral Agent to secure the obligations of the Holder under the Purchase Contract constituting part of such Security. The Pledge Agreement provides that all payments of principal of, or interest on, any Underlying Securities constituting part of the Securities received by the Collateral Agent shall be paid by the Collateral Agent by wire transfer in same day funds no later than _____________, New York City time, on the Business Day such payment is received by the Collateral Agent (provided that in the event such payment is received by the Collateral Agent on a day that is not a Business Day or after ______________, New York City time, on a Business Day, then such payment shall be made no later than _____________, New York City time, on the next succeeding Business Day) (i) in the case of (A) interest payments and (B) any principal payments with respect to any Underlying Securities that have been released from the Pledge pursuant to the Pledge Agreement, to the Agent to the account designated by it for such purpose and (ii) in the case of principal payments on any Pledged Underlying Securities (as defined in the Pledge Agreement), to the Company, in full satisfaction of the respective obligations of the Holders of the Securities of which such Pledged Underlying Securities are a part under the Purchase Contracts forming a part of such Securities. Interest on any Underlying Security forming part of a Security evidenced hereby which is paid on any _______ or ________, commencing _____________, _____ (a "Payment Date"), shall, subject to receipt thereof by the Agent from the Collateral Agent, be paid to the Person in whose name this Security Certificate (or a Predecessor Security Certificate) is 45 52 registered at the close of business on the Record Date next preceding such Payment Date. Each Purchase Contract evidenced hereby obligates the Holder of this Security Certificate to purchase, and the Company to sell, on __________, ____ (the "Final Settlement Date"), at a price equal to $__________ (the "Stated Amount"), a number of shares of Common Stock, par value $0.625 per share ("Common Stock"), of the Company, equal to the Settlement Rate, unless on or prior to the Final Settlement Date there shall have occurred a Termination Event or Early Settlement with respect to the Security of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The purchase price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the Final Settlement Date by application of payment received in respect of the principal of the Underlying Securities pledged to secure the obligations under such Purchase Contract of the Holder of the Security of which such Purchase Contract is a part. The Company shall pay, on each Payment Date, in respect of each Purchase Contract forming part of a Security evidenced hereby a fee (the "Contract Fee") equal to _____% per annum of the Stated Amount, from __________, ____, computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be, subject to deferral at the option of the Company as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. Such Contract Fee shall be payable to the Person in whose name this Security Certificate (or a Predecessor Security Certificate) is registered at the close of business on the Record Date next preceding such Payment Date. Interest on the Underlying Securities and the Contract Fee will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Security Register. Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Agent by manual signature, this Security Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose. 46 53 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. TRW INC. By: _____________________________ Attest: ______________________ HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase Contracts evidenced hereby) By: ________________________, as Attorney-in-Fact of such Holder By:________________________________ Dated: This is one of the Security Certificates referred to in the within mentioned Purchase Contract Agreement. ______________________ as Agent By:________________________________ 47 54 [Form of Reverse of Security Certificate] Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of __________, ---- (the "Purchase Contract Agreement"), between the Company and ___________________, as Agent (herein called the "Agent"), to which Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Agent, the Company, and the Holders and of the terms upon which the Security Certificates are, and are to be, executed and delivered. Each Purchase Contract evidenced hereby obligates the Holder of this Security Certificate to purchase, and the Company to sell, on the Final Settlement Date at a price equal to the Stated Amount, a number of shares of Common Stock of the Company equal to the Settlement Rate, unless, on or prior to the Final Settlement Date, there shall have occurred a Termination Event or an Early Settlement with respect to the Security of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is greater than $_____ (the "Threshold Appreciation Price"), _____ shares of Common Stock per Purchase Contract, (b) if the Applicable Market Value is less than or equal to the Threshold Appreciation Price but is greater than the Stated Amount, a fractional share of Common Stock per Purchase Contract equal to the Stated Amount divided by the Applicable Market Value and (c) if the Applicable Market Amount is less than or equal to the Stated Amount, one share of Common Stock per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract. No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. The "Applicable Market Value" means the average of the Closing Prices per share of Common Stock on each of the twenty consecutive Trading Days ending on the last Trading Day immediately preceding the Final Settlement Date. The "Closing Price" of the Common Stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, or if the Common Stock is not so listed on a United States national or regional securities exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Common Stock on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company. A "Trading Day" means as a day on which the Common Stock (A) is not suspended from trading on any national or 48 55 regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock. The purchase price for the shares of Common Stock purchased pursuant to each Purchase Contract shall be paid by application of payments received by the Company on the Final Settlement Date from the Collateral Agent pursuant to the Pledge Agreement in respect of the principal of the Underlying Securities Pledged to secure the obligations of the relevant Holder under such Purchase Contract. The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate purchase price for the shares of Common Stock to be purchased thereunder in the manner herein set forth. Subject to the next succeeding paragraph, the Company shall pay, on each Payment Date, the Contract Fee payable in respect of each Purchase Contract to the Person in whose name the Security Certificate evidencing such Purchase Contract is registered at the close of business on the Record Date next preceding such Payment Date. Contract Fees will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Security Register. The Company shall have the right, at any time prior to the Final Settlement Date, to defer the payment of any or all of the Contract Fees otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Agent written notice of its election to defer such payment (specifying the amount to be deferred) as provided in the Purchase Contract Agreement. Any Contract Fees so deferred shall bear additional Contract Fees thereon at the rate of _____ per annum (computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be), compounding on each succeeding Payment Date, until paid in full. Deferred Contract Fees (and additional Contract Fees accrued thereon) shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to the Purchase Contract Agreement. No Contract Fees may be deferred to a date that is after the Final Settlement Date. The Purchase Contracts and the obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay any Contract Fee, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Final Settlement Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall give written notice to the Agent and to the Holders, at their addresses as they appear in the Security Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Underlying Securities from the Pledge. The Securities shall thereafter represent the right to receive the Underlying Securities forming a part of 49 56 such Securities in accordance with the provisions of the Purchase Contract Agreement and the Pledge Agreement. Subject to and upon compliance with the provisions of the Purchase Contract Agreement at the option of the Holder thereof, Purchase Contracts underlying Securities having an aggregate Stated Amount equal to $__________ or an integral multiple thereof may be settled early ("Early Settlement") as provided in the Purchase Contract Agreement. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts evidenced by this Security Certificate, the Holder of this Security Certificate shall deliver this Security Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early set forth below duly completed and accompanied by payment in the form of a certified or cashier's check payable to the order of the Company in immediately available funds in an amount (the "Early Settlement Amount") equal to (i) the product of (A) the Stated Amount times (B) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement minus (ii) the aggregate amount of Contract Fees, if any, otherwise payable on or prior to the immediately preceding Payment Date deferred at the option of the Company pursuant to the Purchase Contract Agreement and remaining unpaid as of such immediately preceding Payment Date plus (iii) if such delivery is made with respect to any Purchase Contracts during the period from the close of business on any Record Date next preceding any Payment Date to the opening of business on such Payment Date, an amount equal to the sum of (x) the Contract Fees payable on such Payment Date with respect to such Purchase Contracts plus (y) the interest with respect to the related Underlying Securities payable on such Payment Date. Upon Early Settlement of Purchase Contracts by a Holder of the related Securities, the Underlying Securities underlying such Securities shall be released from the Pledge as provided in the Pledge Agreement and the Holder shall be entitled to receive, a number of shares of Common Stock on account of each Purchase Contract forming part of a Security as to which Early Settlement is effected equal to the Early Settlement Rate. The Early Settlement Rate shall initially be equal to __________ and shall be adjusted in the same manner and at the same time as the Settlement Rate is adjusted as provided in the Purchase Contract Agreement. The Security Certificates are issuable only in registered form and only in denominations of a single Security and any integral multiple thereof. The transfer of any Security Certificate will be registered and Security Certificates may be exchanged as provided in the Purchase Contract Agreement. The Security Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange, but the Company and the Agent may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. For so long as the Purchase Contract underlying a Security remains in effect, such Security shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Security in respect of the Underlying Securities and Purchase Contract constituting such Security may be transferred and exchanged only as a Security. 50 57 Upon registration of transfer of this Security Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Agent pursuant to the Purchase Contract Agreement), under the terms of the Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the transferor shall be released from the obligations under the Purchase Contracts evidenced by this Security Certificate. The Company covenants and agrees, and the Holder, by his acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Security Certificate, by his acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Securities evidenced hereby on his behalf as his attorney-in-fact, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform his obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, authorizes the Agent to enter into and perform the Pledge Agreement on his behalf as his attorney-in-fact, and consents to the Pledge of the Underlying Securities underlying this Security Certificate pursuant to the Pledge Agreement. The Holder further covenants and agrees, that, to the extent and in the manner provided in the Purchase Contract Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect of principal of the Underlying Securities on the Final Settlement Date shall be paid by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of at least a majority of the Outstanding Securities. All terms used herein which are defined in the Purchase Contract Agreement have the meanings set forth therein. The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. The Company, the Agent and any agent of the Company or the Agent may treat the Person in whose name this Security Certificate is registered as the owner of the Securities evidenced hereby for the purpose of receiving payments of interest on the Underlying Securities, receiving payments of Contract Fees, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not any payments in respect thereof be overdue and notwithstanding any notice to the contrary, and neither the Company, the Agent nor any such agent shall be affected by notice to the contrary. The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of shares of Common Stock. 51 58 A copy of the Purchase Contract Agreement is available for inspection at the offices of the Agent. Settlement Instructions ----------------------- The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon settlement on or after the Final Settlement Date of the Purchase Contracts underlying the number of Securities evidenced by this Security Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: _____________________ _________________________ Signature If shares are to be registered in the REGISTERED HOLDER name of and delivered to a Person other than the Holder, please print such Person's name and address: Please print name and address of Registered Holder: - --------------------------- -------------------------- Name Name - --------------------------- -------------------------- Address Address - --------------------------- -------------------------- - --------------------------- -------------------------- Social Security or other Taxpayer Identification Number, if any Election to Settle Early ------------------------ The undersigned Holder of this Security Certificate hereby irrevocably exercises the option to effect Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Securities evidenced by this Security Certificate specified below. The option to effect 52 59 Early Settlement may be exercised only with respect to Purchase Contracts underlying Securities with an aggregate Stated Amount equal to $________ or an integral multiple thereof. The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon such Early Settlement be registered in the name of, and delivered, together with a check in payment for any fractional share and any Security Certificate representing any Securities evidenced hereby as to which Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. Underlying Securities deliverable upon such Early Settlement will be transferred in accordance with the transfer instructions set forth below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: _________________ _________________________ Signature Number of Securities evidenced hereby as to which Early Settlement of the related Purchase Contracts is being elected: __________. If shares or Security Certificates are REGISTERED HOLDER to be registered in the name of and delivered to and Underlying Securities are to be transferred to a Person other than the Holder, please Please print name and address print such Person's name and address: of Registered Holder: - --------------------------- ----------------------------- Name Name - --------------------------- ----------------------------- Address Address - --------------------------- ----------------------------- - --------------------------- ----------------------------- Social Security or other Taxpayer Identification Number, if any 53 60 Transfer Instructions for Underlying Securities Transferable Upon Early Settlement or a Termination Event: - ---------------------------------------- - ---------------------------------------- - ---------------------------------------- 54 EX-4.R 4 EXHIBIT 4(R) 1 EXHIBIT 4(r) PLEDGE AGREEMENT ---------------- PLEDGE AGREEMENT, dated as of __________, ____ (this "Agreement"), among TRW Inc., an Ohio corporation (the "Company"), _______________________, as collateral agent (in such capacity, together with its successors in such capacity, the "Collateral Agent"), and _______________________________________, as Purchase Contract Agent and as attorney-in-fact of the Holders (as hereinafter defined) from time to time of the Securities (as hereinafter defined) (in such capacity, together with its successors in such capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement (as hereinafter defined). RECITALS The Company and the Purchase Contract Agent are parties to the Purchase Contract Agreement, dated as of the date hereof (as modified and supplemented and in effect from time to time, the "Purchase Contract Agreement"), pursuant to which there will be issued [title of securities] (the "Securities"). Each Security consists of (a) one Purchase Contract (as hereinafter defined) and (b) [type and description of underlying securities] ("Underlying Securities") having a principal amount equal to $__________ (the "Stated Amount") and maturing on __________, ____ (the "Final Settlement Date"), subject to the pledge of such Underlying Securities created hereby. Pursuant to the terms of the Purchase Contract Agreement and the Purchase Contracts, the Holders (as defined in the Purchase Contract Agreement) from time to time of the Securities have irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such Holders, among other things to execute and deliver this Agreement on behalf of such Holders and to grant the pledge provided hereby of the Underlying Securities constituting part of such Securities as provided herein and subject to the terms hereof. Accordingly, the Company, the Collateral Agent and the Purchase Contract Agent, on its own behalf and as attorney-in-fact of the Holders from time to time of the Securities, agree as follows: Section 1. DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; and 2 (2) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. "Act" has the meaning specified in the Purchase Contract Agreement. "Agreement" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof. "Applicable Treasury Regulations" means Subpart O-Book-Entry Procedure of Title 31 of the Code of Federal Regulations (31 CFR (S) 306.115 et. seq.) and any other regulations of the United States Treasury Department from time to time applicable to the transfer or pledge of book-entry U.S. Treasury Securities. "Business Day" means any day that is not a Saturday, a Sunday or a day on which the New York Stock Exchange or banking institutions or trust companies in The City of New York are authorized or obligated by law or executive order to be closed. "Collateral Agent" has the meaning specified in the first paragraph of this instrument. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor shall have become such, and thereafter "Company" shall mean such successor. "Early Settlement" has the meaning specified in the Purchase Contract Agreement. "Early Settlement Amount" has the meaning specified in the Purchase Contract Agreement. "Final Settlement Date" has the meaning specified in the Recitals. "Holder" when used with respect to a Security, or a Purchase Contract constituting a part thereof, has the meaning specified in the Purchase Contract Agreement. "Opinion of Counsel" has the meaning specified in the Purchase Contract Agreement. "Outstanding Securities" has the meaning specified in the Purchase Contract Agreement. "Outstanding Security Certificates" has the meaning specified in the Purchase Contract Agreement. 2 3 "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Pledge" has the meaning specified in Section 2 hereof. "Pledged Underlying Securities" has the meaning specified in Section 2 hereof. "Purchase Contract" has the meaning specified in the Purchase Contract Agreement. "Purchase Contract Agent" has the meaning specified in the first paragraph of this instrument. "Security" has the meaning specified in the Recitals. "Security Certificate" has the meaning specified in the Purchase Contract Agreement. "Stated Amount" has the meaning specified in the Recitals. "Termination Event" has the meaning specified in the Purchase Contract Agreement. "Underlying Securities" has the meaning specified in the Recitals. Section 2. THE PLEDGE. As collateral security for the performance when due by the Holders from time to time of the Securities of their respective obligations under the Purchase Contracts constituting part of such Securities, such Holders acting through the Purchase Contract Agent, as their attorney-in-fact, hereby pledge and grant to the Collateral Agent, for the benefit of the Company, a security interest in all of the right, title and interest of such Holders in the Underlying Securities constituting a part of such Securities. Prior to or concurrently with the execution and delivery of this Agreement, the initial Holders shall (i) cause the Underlying Securities to be delivered to the Collateral Agent [by Federal Reserve Bank-Wire to the account of the Collateral Agent designated by it for such purpose] and (ii) [take appropriate action so that the applicable Federal Reserve Bank through which such Underlying Securities have been purchased will reflect such transfer and the Pledge by appropriate entries in its records in accordance with Applicable Treasury Regulations] [take appropriate action to reflect such transfer and the Pledge by appropriate entries in its records]. In addition, the execution and delivery hereof by the Purchase Contract Agent and the Collateral Agent shall constitute (i) the notification to the Collateral Agent (as bailee or otherwise) of the Pledge and (ii) an acknowledgment by the Collateral Agent (as third party in possession or otherwise) of the Pledge and of its holding of such Underlying Securities subject to the Pledge, in each case, for purposes of perfecting the Pledge under [Applicable 3 4 Treasury Regulations and other] applicable law, including, to the extent applicable, the Uniform Commercial Code as adopted and in effect in any applicable jurisdiction. The pledge provided in this Section 2 is herein referred to as the "Pledge" and the Underlying Securities subject to the Pledge, excluding any Underlying Securities released from the Pledge as provided in Section 4 hereof, are hereinafter referred to as the "Pledged Underlying Securities." Subject to the Pledge, the Holders from time to time of the Securities shall have full beneficial ownership of the Underlying Securities constituting a part of such Securities. Section 3. DISTRIBUTION OF PRINCIPAL AND INTEREST. All payments of principal of, or interest on, any Underlying Securities constituting part of the Securities received by the Collateral Agent shall be paid by the Collateral Agent by wire transfer in same day funds no later than ____________, New York City time on the Business Day such interest payment is received by the Collateral Agent (provided that in the event such interest payment is received by the Collateral Agent on a day that is not a Business Day or after ____________, New York City time, on a Business Day, then such payment shall be made no later than ____________, New York City time, on the next succeeding Business Day) (i) in the case of (A) interest payments and (B) any principal payments with respect to any Underlying Securities that have been released from the Pledge pursuant to Section 4 hereof, to the Purchase Contract Agent to the account designated by it for such purpose and (ii) in the case of principal payments on any Pledged Underlying Securities, to the Company, in full satisfaction of the respective obligations of the Holders of the Securities of which such Pledged Underlying Securities are a part under the Purchase Contracts forming a part of such Securities. All such payments received by the Purchase Contract Agent as provided herein shall be applied by the Purchase Contract Agent pursuant to the provisions of the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase Contract Agent shall receive any payments of principal on account of any Pledged Underlying Securities, the Purchase Contract Agent shall hold the same as trustee of an express trust for the benefit of the Company (and promptly deliver over to the Company) for application to the obligations of the Holders of the Securities of which such Underlying Securities are a part under the Purchase Contracts relating to the Securities of which such Underlying Securities are a part, and such Holders shall acquire no right, title or interest in any such payments of principal so received. Section 4. RELEASE OF PLEDGED UNDERLYING SECURITIES. (a) Upon notice to the Collateral Agent by the Company or the Purchase Contract Agent that there has occurred a Termination Event, the Collateral Agent shall release all Pledged Underlying Securities from the Pledge and shall transfer all such Underlying Securities, free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent. (b) Upon notice to the Collateral Agent by the Purchase Contract Agent that one or more Holders of Securities have elected to effect Early Settlement of their respective obligations under the Purchase Contracts forming a part of such Securities in accordance with the terms of the Purchase Contracts and the Purchase Contract 4 5 Agreement, and that the Purchase Contract Agent has received from such Holders, and paid to the Company, the related Early Settlement Amounts pursuant to the terms of the Purchase Contracts and the Purchase Contract Agreement and that all conditions to such Early Settlement have been satisfied, then the Collateral Agent shall release from the Pledge Pledged Underlying Securities with a principal amount equal to the product of (i) the Stated Amount times (ii) the number of such Purchase Contracts as to which such Holders have elected to effect Early Settlement. (c) Transfers of Underlying Securities pursuant to Section 4(a) or (b) shall be by Federal Reserve Bank-Wire or in another appropriate manner, (i) if the Collateral Agent shall have received such notification at or prior to ____________, New York City time, on a Business Day, then no later than ____________, New York City time, on such Business Day and (ii) if the Collateral Agent shall have received such notification on a day that is not a Business Day or after ____________, New York City time, on a Business Day, then no later than ____________, New York City time, on the next succeeding Business Day. Section 5. RIGHTS AND REMEDIES. (a) The Collateral Agent shall have all of the rights and remedies with respect to the Pledged Underlying Securities of a secured party under the Uniform Commercial Code as in effect in the State of New York (the "Code") (whether or not said Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted. (b) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, in the event the Collateral Agent is unable to make payments to the Company on account of principal payments of any Pledged Underlying Securities as provided in Section 3 hereof in satisfaction of the obligations of the Holder of the Securities of which such Pledged Underlying Securities are a part under the Purchase Contracts forming a part of such Securities, the Collateral Agent shall have and may exercise, with reference to such Pledged Underlying Securities and such obligations of such Holder, any and all of the rights and remedies available to a secured party under the Code after default by a debtor, and as otherwise granted herein or under any other law. (c) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably authorized to receive and collect all payments of principal of or interest on the Pledged Underlying Securities. (d) The Purchase Contract Agent agrees that, from time to time, upon the written request of the Collateral Agent, the Purchase Contract Agent shall execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request in order to maintain the Pledge, and the perfection and priority thereof, and to confirm the rights of the Collateral Agent hereunder. 5 6 Section 6. THE COLLATERAL AGENT. The Collateral Agent and the Company hereby agree between themselves as follows (it being understood and agreed that neither the Purchase Contract Agent nor any Holder of Securities shall have any rights under this Section 6): 6.01. APPOINTMENT, POWERS AND IMMUNITIES. The Collateral Agent shall act as agent for the Company hereunder with such powers as are specifically vested in the Collateral Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. The Collateral Agent: (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and no implied covenants or obligations shall be inferred from this Agreement against the Collateral Agent, nor shall the Collateral Agent be bound by the provisions of any agreement by any party hereto beyond the specific terms hereof; (b) shall not be responsible to the Company for any recitals contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by it under, this Agreement, the Securities or the Purchase Contract Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement (other than as against the Collateral Agent), the Securities or the Purchase Contract Agreement or any other document referred to or provided for herein or therein or for any failure by the Company or any other Person (except the Collateral Agent) to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder (except pursuant to directions furnished under Section 6.02 hereof); (d) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or in connection herewith or therewith, except for its own negligence; and (e) shall not be required to advise any party as to selling or retaining, or taking or refraining from taking any action with respect to, any securities or other property deposited hereunder. No provision of this Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. In no event shall the Collateral Agent be liable for any amount in excess of the value of the Pledged Underlying Securities. 6.02. INSTRUCTIONS OF THE COMPANY. The Company shall have the right, by one or more instruments in writing executed and delivered to the Collateral Agent, to direct the time, method and place of conducting any proceeding for any right or remedy available to the Collateral Agent, or of exercising any power conferred on the Collateral Agent, or to direct the taking or refraining from taking of any action authorized by this Agreement; provided, however, that (i) such direction shall not conflict with the provisions of any law or of this Agreement and (ii) the Collateral Agent shall be adequately indemnified as provided herein. Nothing in this Section 6.02 shall impair the right of the Collateral Agent in its discretion to take any action or omit to take any action which it deems proper and which is not inconsistent with such direction. 6 7 6.03. RELIANCE BY COLLATERAL AGENT. The Collateral Agent shall be entitled to rely upon any certification, order, judgment, opinion, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons (without being required to determine the correctness of any fact stated therein), and upon advice and statements of legal counsel and other experts selected by the Collateral Agent. As to any matters not expressly provided for by this Agreement, the Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions given by the Company in accordance with this Agreement. 6.04. RIGHTS IN OTHER CAPACITIES. The Collateral Agent and its affiliates may (without having to account therefor to the Company) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, trust or other business with the Purchase Contract Agent and any Holder of Securities (and any of their subsidiaries or affiliates) as if it were not acting as the Collateral Agent, and the Collateral Agent and its affiliates may accept fees and other consideration from the Purchase Contract Agent and any Holder of Securities without having to account for the same to the Company, provided that the Collateral Agent covenants and agrees with the Company that the Collateral Agent shall not accept, receive or permit there to be created in its favor any security interest, lien or other encumbrance of any kind in or upon the Pledged Underlying Securities. 6.05. NON-RELIANCE ON COLLATERAL AGENT. The Collateral Agent shall not be required to keep itself informed as to the performance or observance by the Purchase Contract Agent or any Holder of Securities of this Agreement, the Purchase Contract Agreement, the Securities or any other document referred to or provided for herein or therein or to inspect the properties or books of the Purchase Contract Agent or any Holder of Securities. The Collateral Agent shall not have any duty or responsibility to provide the Company with any credit or other information concerning the affairs, financial condition or business of the Purchase Contract Agent or any Holder of Securities (or any of their affiliates) that may come into the possession of the Collateral Agent or any of its affiliates. 6.06. COMPENSATION AND INDEMNITY. The Company agrees: (i) to pay the Collateral Agent from time to time reasonable compensation for all services rendered by it hereunder and (ii) to indemnify the Collateral Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of its powers and duties under this Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of such powers and duties. 6.07. FAILURE TO ACT. In the event of any ambiguity in the provisions of this Agreement or any dispute between or conflicting claims by or among the undersigned and/or any other person or entity with respect to any funds or property deposited 7 8 hereunder, the Collateral Agent shall be entitled, at its sole option, to refuse to comply with any and all claims, demands or instructions with respect to such property or funds so long as such dispute or conflict shall continue, and the Collateral Agent shall not be or become liable in any way to any of the undersigned for its failure or refusal to comply with such conflicting claims, demands or instructions. The Collateral Agent shall be entitled to refuse to act until either (i) such conflicting or adverse claims or demands shall have been finally determined by a court of competent jurisdiction or settled by agreement between the conflicting parties as evidenced in a writing, satisfactory to the Collateral Agent or (ii) the Collateral Agent shall have received security or an indemnity satisfactory to the Collateral Agent sufficient to save the Collateral Agent harmless from and against any and all loss, liability or expense which the Collateral Agent may incur by reason of its acting. The Collateral Agent may in addition elect to commence an interpleader action or seek other judicial relief or orders as the Collateral Agent may deem necessary. Notwithstanding anything contained herein to the contrary, the Collateral Agent shall not be required to take any action that is in its opinion contrary to law or to the terms of this Agreement, or which would in its opinion subject it or any of its officers, employees or directors to liability. 6.08. RESIGNATION OF COLLATERAL AGENT. Subject to the appointment and acceptance of a successor Collateral Agent as provided below, (a) the Collateral Agent may resign at any time by giving notice thereof to the Company and the Purchase Contract Agent, (b) the Collateral Agent may be removed at any time by the Company and (c) if the Collateral Agent fails to perform any of its material obligations hereunder in any material respect for a period of not less than 20 days after receiving notice of such failure by the Purchase Contract Agent and such failure shall be continuing, the Collateral Agent may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall promptly notify the Company of any removal of the Collateral Agent pursuant to clause (c) of the immediately preceding sentence. Upon any such resignation or removal, the Company shall have the right to appoint a successor Collateral Agent. If no successor Collateral Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Collateral Agent's giving of notice of resignation or such removal, then the retiring Collateral Agent may petition any court of competent jurisdiction for the appointment of a successor Collateral Agent. The Collateral Agent shall be a bank which has an office in New York, New York with a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall take all appropriate action to transfer any money and property held by it hereunder (including the Pledged Underlying Securities) to such successor Collateral Agent. The retiring Collateral Agent shall, upon such succession, be discharged from its duties and obligations as Collateral Agent hereunder. After any retiring Collateral Agent's resignation hereunder as Collateral Agent, the provisions of this Section 6 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Collateral Agent. 8 9 6.09. RIGHT TO APPOINT AGENT OR ADVISOR. The Collateral Agent shall have the right to appoint agents or advisors in connection with any of its duties hereunder, and the Collateral Agent shall not be liable for any action taken or omitted by such agents or advisors selected in good faith. The provisions of this Section 6 shall survive termination of this Agreement and the resignation or removal of the Collateral Agent. Section 7. AMENDMENT. 7.01. AMENDMENT WITHOUT CONSENT OF HOLDERS. Without the consent of any Holders, the Company, the Collateral Agent and the Purchase Contract Agent, at any time and from time to time, may amend this Agreement, in form satisfactory to the Company, the Collateral Agent and the Purchase Contract Agent, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company; or (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to evidence and provide for the acceptance of appointment hereunder by a successor Collateral Agent or Purchase Contract Agent; or (4) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other such provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders. 7.02. AMENDMENT WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority of the Outstanding Securities, by Act of said Holders delivered to the Company, the Agent and the Collateral Agent, the Company, when authorized by a Board Resolution, the Agent and the Collateral Agent may amend this Agreement for the purpose of modifying in any manner the provisions of this Agreement or the rights of the Holders in respect of the Securities; provided, however, that no such supplemental agreement shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the amount or type of Underlying Securities underlying a Security, impair the right of the Holder of any Security to receive interest payments on the Underlying Securities or otherwise adversely affect the Holder's rights in or to such Underlying Securities; or 9 10 (2) otherwise effect any action that would require the consent of the Holder of each Outstanding Security affected thereby pursuant to the Purchase Contract Agreement if such action were effected by an agreement supplemental thereto; or (3) reduce the percentage of Outstanding Securities the consent of whose Holders is required for any such amendment. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such Act shall approve the substance thereof. 7.03. EXECUTION OF AMENDMENTS. In executing any amendment permitted by this Section, the Collateral Agent and the Purchase Contract Agent shall be entitled to receive and (subject to Section 6.01 hereof, with respect to the Collateral Agent, and Section 701 of the Purchase Contract Agreement, with respect to the Purchase Contract Agent) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement. 7.04. EFFECT OF AMENDMENTS. Upon the execution of any amendment under this Section, this Agreement shall be modified in accordance therewith, and such amendment shall form a part of this Agreement for all purposes; and every Holder of Security Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered under the Purchase Contract Agreement shall be bound thereby. 7.05. REFERENCE TO AMENDMENTS. Security Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any amendment pursuant to this Section may, and shall if required by the Collateral Agent or the Purchase Contract Agent, bear a notation in form approved by the Purchase Contract Agent and the Collateral Agent as to any matter provided for in such amendment. If the Company shall so determine, new Security Certificates so modified as to conform, in the opinion of the Collateral Agent, the Purchase Contract Agent and the Company, to any such amendment may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent in accordance with the Purchase Contract Agreement in exchange for Outstanding Security Certificates. Section 8. MISCELLANEOUS. 8.01. NO WAIVER. No failure on the part of the Collateral Agent or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Collateral Agent or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law. 10 11 8.02. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Company, the Collateral Agent and the Holders from time to time of the Securities, acting through the Purchase Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company, the Collateral Agent and the Holders from time to time of the Securities, acting through the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 8.03. NOTICES. All notices, requests, consents and other communications provided for herein (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof or, as to any party, at such other address as shall be designated by such party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. 8.04. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Company, the Collateral Agent and the Purchase Contract Agent, and the Holders from time to time of the Securities, by their acceptance of the same, shall be deemed to have agreed to be bound by the provisions hereof and to have ratified the agreements of, and the grant of the Pledge hereunder by, the Purchase Contract Agent. 8.05. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. 8.06. SEVERABILITY. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction. 11 12 8.07. EXPENSES, ETC. The Company agrees to reimburse the Collateral Agent for: (a) all reasonable out-of-pocket costs and expenses of the Collateral Agent (including, without limitation, the reasonable fees and expenses of counsel to the Collateral Agent), in connection with (i) the negotiation, preparation, execution and delivery or performance of this Agreement and (ii) any modification, supplement or waiver of any of the terms of this Agreement; (b) all reasonable costs and expenses of the Collateral Agent (including, without limitation, reasonable fees and expenses of counsel) in connection with (i) any enforcement or proceedings resulting or incurred in connection with causing any Holder of Securities to satisfy its obligations under the Purchase Contracts forming a part of the Securities and (ii) the enforcement of this Section 8.07; and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any other document referred to herein and all costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated hereby. 8.08. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent and security interests hereunder, and all obligations of the Holders from time to time of the Securities hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of any provision of the Purchase Contracts or the Securities or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or any other term of, or any increase in the amount of, all or any of the obligations of Holders of Securities under the related Purchase Contracts, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Purchase Contract Agreement or any Purchase Contract or any other agreement or instrument relating thereto; or (c) any other circumstance which might otherwise constitute a defense available to, or discharge of, a borrower, a guarantor or a pledgor. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. TRW INC. By:________________________________ Name: Title: 12 13 Address for Notices: 1900 Richmond Road Cleveland, Ohio 44124 Attention: Telecopy: (216) ___-_____ ---------------------------------- as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Securities By:________________________________ Name: Title: Address for Notices: [Address] Attention: ----------------------------------, as Collateral Agent By:________________________________ Name: Title: Address for Notices: [Address] Attention: 13 EX-5 5 EXHIBIT 5 1 Exhibit 5 October 15, 1999 TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124 Re: Registration Statement on Form S-3 Ladies and Gentlemen: I am General Counsel of TRW Inc. (the "Company") and have acted in that capacity in connection with the proposed issuance by the Company of (i) shares of its common stock, par value $0.625 per share (the "Shares"), (ii) debt securities ("Debt Securities"), (iii) warrants to purchase Common Stock ("Common Stock Warrants"), (iv) warrants to purchase Debt Securities (the "Debt Warrants" and, together with the Common Stock Warrants, the "Warrants"), (v) stock purchase contacts ("Stock Purchase Contracts") and (vi) stock purchase units ("Stock Purchase Units") providing aggregate gross proceeds of up to $1,659,000,000 in one or more public offerings being registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement on Form S-3 (the "Registration Statement"). The Shares, the Debt Securities, the Warrants, the Stock Purchase Contracts and the Stock Purchase Units are referred to herein as the "Offered Securities". The Offered Securities will be offered and sold pursuant to Rule 415 under the Securities Act from time to time on terms to be determined at the time of sale. In my capacity as General Counsel, I am familiar with the proceedings, corporate and other, relating to the authorization and issuance of the Offered Securities. I have examined, or caused to be examined, such statutes, instruments relating to the Company, corporate records of the Company, agreements and other instruments and documents, and I have made or caused to be made such investigation of law, as I have deemed appropriate as a basis for the opinions expressed below. 2 October 15, 1999 Page 2 Based upon the foregoing, I am of the opinion that: 1. Any Shares offered and sold as contemplated in the Registration Statement (including Shares issuable upon exercise of Common Stock Warrants, upon the conversion or exchange of any Debt Securities that are convertible or exchangeable into Shares or pursuant to Stock Purchase Contracts or Stock Purchase Units) are duly authorized and, when issued and sold for legal consideration in accordance with the resolutions of the Board of Directors authorizing the offer, issuance and sale of the Offered Securities (the "Authorizing Resolutions") and, if applicable, the terms of the Common Stock Warrant, Debt Security, Stock Purchase Contract, or Stock Purchase Unit related thereto, will be validly issued, fully paid and nonassessable. 2. Under the laws of the State of New York (which govern the Indenture under which the Debt Securities will be issued) where appropriate and otherwise under Ohio law, any Debt Securities offered and sold as contemplated in the Registration Statement (including Debt Securities issuable upon exercise of Debt Warrants), when issued and sold in accordance with the Authorizing Resolutions and the Indenture, and, if applicable, the terms of the Debt Warrant related thereto, will be duly and validly authorized and issued and will be valid and binding obligations of the Company. 3. Any Warrants offered and sold as contemplated in the Registration Statement, when issued and sold in accordance with the Authorizing Resolutions, will be duly and validly authorized and issued and will be valid and binding obligations of the Company. 4. Any Stock Purchase Contracts offered and sold as contemplated in the Registration Statement, when issued and sold in accordance with the Authorizing Resolutions, will be duly and validly authorized and issued and will be valid and binding obligations of the Company. 5. Any Stock Purchase Units offered and sold as contemplated in the Registration Statement, when issued and sold in accordance with the Authorizing Resolutions, will be duly and validly authorized and issued and will be valid and binding obligations of the Company. 3 October 15, 1999 Page 3 The opinions set forth in paragraphs 2 through 5 above are subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to my name under the caption "Legal Opinions" in the Prospectus included as part of the Registration Statement. Very truly yours, /s/ William B. Lawrence William B. Lawrence EX-23.A 6 EXHIBIT 23(A) 1 EXHIBIT 23(a) CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement on Form S-3 and related Prospectus of TRW Inc. for the registration of shares of Common Stock, Debt Securities, Common Stock Warrants, Debt Warrants, Stock Purchase Contracts and Stock Purchase Units, and to the incorporation by reference therein of our report dated January 19, 1999 with respect to the consolidated financial statements of TRW Inc. included in its Annual Report on Form 10-K for the year ended December 31, 1998, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP ERNST & YOUNG LLP Cleveland, Ohio October 15, 1999 EX-23.B 7 EXHIBIT 23(B) 1 Exhibit 23(b) CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our Firm under the caption "Experts" in the Registration Statement on Form S-3 and related Prospectus of TRW Inc. for the registration of shares of Common Stock, Debt Securities, Common Stock Warrants, Debt Warrants, Stock Purchase Contracts and Stock Purchase Units, and to the incorporation by reference therein of our report dated 24 March 1999, with respect to the consolidated balance sheets of LucasVarity plc and its subsidiaries as of January 31, 1999 and 1998, and related consolidated statements of income, total recognised gains and losses, changes in shareholders' equity and cash flows for each of the years in the two-year period ended January 31, 1999 and related schedule, which report appears in the Form 8-K/A of TRW Inc. dated May 17, 1999. /s/ KPMG Audit plc KPMG AUDIT PLC London, England October 14, 1999 EX-23.C 8 EXHIBIT 23(C) 1 EXHIBIT 23(c) CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firms under the caption "Experts" in the Registration Statement on Form S-3 and related Prospectus of TRW Inc. for the registration of shares of Common Stock, Debt Securities, Common Stock Warrants, Debt Warrants, Stock Purchase Contracts and Stock Purchase Units, and to the incorporation by reference therein of our report dated April 15, 1997, except for Note 2--Accounting Policies, Prior period financial information, as to which the date is May 14, 1999, with respect to the consolidated statements of income, total recognised gains and losses, changes in shareholders' equity and cash flows and related schedule of LucasVarity plc and its subsidiaries for the six months ended January 31, 1997, which report appears in the Form 8-K/A of TRW Inc. dated May 17, 1999. /s/ Ernst & Young /s/ KPMG Audit PLC ERNST & YOUNG KPMG AUDIT PLC London, England October 14, 1999 EX-23.D 9 EXHIBIT (D) 1 EXHIBIT 23(d) CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of TRW Inc. for the registration of shares of Common Stock, Debt Securities, Common Stock Warrants, Debt Warrants, Stock Purchase Contracts and Stock Purchase Units, and to the incorporation by reference therein of our report dated October 8, 1996, except for Note 2--Accounting Policies, Prior period financial information, as to which the date is May 14, 1999, with respect to the consolidated financial statements and schedule of LucasVarity plc for the year ended July 31, 1996, included in the current report on Form 8-K/A of TRW Inc. dated May 17, 1999. /s/ Ernst & Young ERNST & YOUNG London, England October 14, 1999 EX-23.F 10 EXHIBIT 23(F) 1 EXHIBIT 23(f) CONSENT OF INDEPENDENT APPRAISER We consent to the references made to us and/or our appraisal under the caption "Independent Appraisal" in the Registration Statement on Form S-3 and related Prospectus of TRW Inc. for the registration of shares of Common Stock, Debt Securities, Common Stock Warrants, Debt Warrants, Stock Purchase Contracts and Stock Purchase Units. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission. AMERICAN APPRAISAL ASSOCIATES, INC. By: /s/ Ronald M. Goergen ------------------------- Ronald M. Goergen President Milwaukee, Wisconsin October 15, 1999 EX-24 11 EXHIBIT 24 1 EXHIBIT 24 POWER OF ATTORNEY Directors and Certain Officers of TRW Inc. THE UNDERSIGNED Directors and Officers of TRW Inc., an Ohio corporation (the "Corporation"), which anticipates filing with the Securities and Exchange Commission, Washington, D.C. (the "Commission"), under the provisions of the Securities Act of 1933, as amended (the "Securities Act"), a Registration Statement for the purpose of registering under the Securities Act debt securities, common stock, warrants to purchase debt securities or common stock of the Corporation, stock purchase contracts and/or stock purchase units in an aggregate initial offering price (including, in the case of warrants for which separate consideration is payable upon issuance of underlying securities, the price of securities issued upon exercise of warrants) which shall not exceed U.S.$2.5 billion (or the equivalent thereof in foreign currencies or any combination thereof), hereby constitute and appoint D. B. Goldston, W. B. Lawrence, D. F. Menz, K. C. Syrvalin, K. A. Weigand and J. L. Manning, Jr., and each of them, as attorneys for the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, to prepare or cause to be prepared, to execute, file and register such Registration Statement and any and all supplements, amendments (including post-effective amendments) and exhibits thereto and any and all applications and other documents to be filed with the Commission or elsewhere pertaining to the registration of such securities, including, without limitation, any reports to be filed under the Securities Exchange Act of 1934, as amended, with full power and authority to do and perform any and all acts and things and execute any and all documents and instruments which such attorneys may deem necessary and appropriate in connection with the registration. EXECUTED the dates set forth below. /s/ J. T. Gorman /s/ C. G. Miller /s/ Thomas A. Connell - ----------------------------- ------------------------------ --------------------- J. T. Gorman, C. G. Miller, T. A. Connell, Vice President Chairman of the Board, Executive Vice President and Controller Chief Executive Officer and Chief Financial Officer July 28, 1999 and Director July 28, 1999 July 28, 1999 /s/ Michael H. Armacost /s/ M. Feldstein /s/ Robert M. Gates - ----------------------------- ------------------------------ --------------------- M. H. Armacost, Director M. Feldstein, Director R. M. Gates, Director July 28, 1999 July 28, 1999 July 28, 1999 /s/ George H. Heilmeier /s/ K. N. Horn /s/ E. B. Jones - ----------------------------- ------------------------------ --------------------- G. H. Heilmeier, Director K. N. Horn, Director E. B. Jones, Director July 28, 1999 July 28, 1999 July 28, 1999 /s/ W. S. Kiser /s/ D. B. Lewis /s/ L. M. Martin - ----------------------------- ------------------------------ --------------------- W. S. Kiser, Director D. B. Lewis, Director L. M. Martin, Director July 28, 1999 July 28, 1999 July 28, 1999 /S/ J. D. Ong /S/ Richard W. Pogue - ----------------------------- ------------------------------ J. D. Ong, Director R. W. Pogue, Director July 28, 1999 July 28, 1999
EX-25 12 EXHIBIT 25 1 Exhibit 25 ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) -------------------------------------------- TRW INC. (Exact name of obligor as specified in its charter) OHIO 34-0575430 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 1900 RICHMOND ROAD CLEVELAND, OHIO (216)291-7522 44124 (Address of principal executive offices) (Zip Code) -------------------------------------------- DEBT SECURITIES (Title of the indenture securities) ----------------------------------------------------- 2 GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 2 3 Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-76439, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 12th day of October, 1999. THE CHASE MANHATTAN BANK By /s/ Ronald J. Halleran ---------------------------- Ronald J. Halleran Second Vice President 3 4 Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 1999, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS ASSETS IN MILLIONS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin .................................................. $ 13,119 Interest-bearing balances........................................... 6,761 Securities: Held to maturity securities.............................................. 892 Available for sale securities............................................ 42,965 Federal funds sold and securities purchased under agreements to resell................................................ 32,277 Loans and lease financing receivables: Loans and leases, net of unearned income 130,602 Less: Allowance for loan and lease losses 2,551 Less: Allocated transfer risk reserve 0 Loans and leases, net of unearned income, ------- allowance, and reserve.............................................. 128,051 Trading Assets........................................................... 41,426 Premises and fixed assets (including capitalized leases)............................................................. 3,190 Other real estate owned ................................................. 28 Investments in unconsolidated subsidiaries and associated companies................................................ 182 Customers' liability to this bank on acceptances outstanding......................................................... 901 Intangible assets........................................................ 2,010 Other assets............................................................. 14,567 -------- TOTAL ASSETS $286,369 ========
4 5
LIABILITIES Deposits In domestic offices................................................. $ 101,979 Noninterest-bearing ...................$42,241 Interest-bearing ...................... 59,738 In foreign offices, Edge and Agreement ------- subsidiaries and IBF's.............................................. 76,395 Noninterest-bearing....................$ 4,645 Interest-bearing ...................... 71,750 ------- Federal funds purchased and securities sold under agree- ments to repurchase...................................................... 36,604 Demand notes issued to the U.S. Treasury................................. 1,001 Trading liabilities...................................................... 30,287 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less ...................... 3,606 With a remaining maturity of more than one year . through three years................................................. 14 With a remaining maturity of more than three years....................... 91 Bank's liability on acceptances executed and outstanding................. 901 Subordinated notes and debentures ....................................... 5,427 Other liabilities........................................................ 11,247 TOTAL LIABILITIES ....................................................... 267,552 --------- EQUITY CAPITAL Perpetual preferred stock and related surplus............................ 0 Common stock............................................................. 1,211 Surplus (exclude all surplus related to preferred stock)................ 11,016 Undivided profits and capital reserves................................... 7,317 Net unrealized holding gains (losses) on available-for-sale securities ........................................ (743) Accumulated net gains (losses) on cash flow hedges....................... 0 Cumulative foreign currency translation adjustments...................... 16 TOTAL EQUITY CAPITAL 18,817 --------- TOTAL LIABILITIES AND EQUITY CAPITAL..................................... $ 286,369 =========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) WILLIAM B. HARRISON, JR. ) DIRECTORS FRANK A. BENNACK, JR. ) 5 -----END PRIVACY-ENHANCED MESSAGE-----