EX-10.1: FORM OF MASTER DISTRIBUTION AGREEMENT



 


Exhibit 10.1












MASTER DISTRIBUTION AGREEMENT



between



TRW INC.



and



TRW AUTOMOTIVE INC.



Dated as of ______, 2002









 







 



TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	 	 	
ARTICLE I DEFINITIONS	 	 
	
	
	
	

	Section 1.1	 	
Definitions
	 	2
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
ARTICLE II RESTRUCTURING	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	Section 2.1	 	
Restructuring
	 	15
	
	
	
	

	Section 2.2	 	
Intercompany Arrangements
	 	17
	
	
	
	

	Section 2.3	 	
Guarantees
	 	18
	
	
	
	

	Section 2.4	 	
Cash Management
	 	19
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
ARTICLE III THE DISTRIBUTION	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	Section 3.1	 	
Cooperation Prior to the Distribution
	 	20
	
	
	
	

	Section 3.2	 	
TRW Board Action; Distribution Procedures
	 	22
	
	
	
	

	Section 3.3	 	
Conditions Precedent to the Distribution
	 	22
	
	
	
	

	Section 3.4	 	
The Distribution
	 	24
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
ARTICLE IV INDEMNIFICATION; MUTUAL RELEASE	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	Section 4.1	 	
Indemnification by TRW
	 	24
	
	
	
	

	Section 4.2	 	
Indemnification by TRW Automotive
	 	25
	
	
	
	

	Section 4.3	 	
Limitations on Indemnification Obligations
	 	27
	
	
	
	

	Section 4.4	 	
Procedures for Indemnification
	 	28
	
	
	
	

	Section 4.5	 	
Nature of Remedies
	 	28
	
	
	
	

	Section 4.6	 	
Survival of Indemnities
	 	29
	
	
	
	

	Section 4.7	 	
Right of Inquiry
	 	29
	
	
	
	

	Section 4.8	 	
Mutual Release
	 	30
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
ARTICLE V CERTAIN ADDITIONAL MATTERS AND COVENANTS	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	Section 5.1	 	
Use of Names; Intellectual Property Licenses
	 	30
	
	
	
	

	Section 5.2	 	
Further Assurances; Cooperation
	 	31
	
	
	
	

	Section 5.3	 	
Non-Competition
	 	32
	
	
	
	

	Section 5.4	 	
Access to Information
	 	32
	
	
	
	

	Section 5.5	 	
Production of Witnesses
	 	34
	
	
	
	

	Section 5.6	 	
Reimbursement
	 	34
	
	
	
	

	Section 5.7	 	
Retention of Records
	 	35
	
	
	
	

	Section 5.8	 	
Confidentiality
	 	35
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
ARTICLE VI TERMINATION	 	 



 i




	 	 	 	 	 	 	 



 







 




	 	 	 	 	 	 	 
	 	 	 	 	 	Page
	
	
	
	

	Section 6.1	 	
Termination
	 	 	35	 
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	
ARTICLE VII MISCELLANEOUS	 	 	 	 
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	Section 7.1	 	
Notices
	 	 	36	 
	
	
	
	

	Section 7.2	 	
Amendments and Waivers
	 	 	36	 
	
	
	
	

	Section 7.3	 	
Headings
	 	 	37	 
	
	
	
	

	Section 7.4	 	
Counterparts
	 	 	37	 
	
	
	
	

	Section 7.5	 	
Entire Agreement
	 	 	37	 
	
	
	
	

	Section 7.6	 	
Governing Law
	 	 	37	 
	
	
	
	

	Section 7.7	 	
Resolution of Disputes
	 	 	37	 
	
	
	
	

	Section 7.8	 	
Waiver of Jury Trial
	 	 	39	 
	
	
	
	

	Section 7.9	 	
Assignment
	 	 	39	 
	
	
	
	

	Section 7.10	 	
Fees and Expenses
	 	 	39	 
	
	
	
	

	Section 7.11	 	
Binding Nature; Third-Party Beneficiaries
	 	 	39	 
	
	
	
	

	Section 7.12	 	
Severability
	 	 	39	 
	
	
	
	

	Section 7.13	 	
No Right of Setoff
	 	 	40	 
	
	
	
	

	Section 7.14	 	
Currency
	 	 	40	 
	
	
	
	

	Section 7.15	 	
Specific Performance
	 	 	40	 
	
	
	
	

	Section 7.16	 	
Construction
	 	 	40	 



 ii



 







 



	 	 	 	 	 	 	 
	 
	 	 	
List of Schedules and Exhibits
	
	
	
	

	 
	Schedule A	 	
TRW Automotive Businesses
	
	
	
	

	Schedule B	 	
TRW Automotive U.S. Subsidiaries
	
	
	
	

	Schedule C	 	
TRW Automotive U.S. Divisions
	
	
	
	

	Schedule 1.1(a)	 	
TRW Divested and Discontinued Operations
	
	
	
	

	Schedule 1.1(b)	 	
TRW Entities
	
	
	
	

	Schedule 1.1(c)	 	
Specified TRW Liabilities
	
	
	
	

	Schedule 1.1(d)	 	
TRW Marks
	
	
	
	

	Schedule 1.1(e)	 	
TRW Automotive Divested and Discontinued Operations
	
	
	
	

	Schedule 1.1(f)	 	
TRW Automotive Entities
	
	
	
	

	Schedule 1.1(g)	 	
Specified TRW Automotive Liabilities
	
	
	
	

	Schedule 1.1(h)	 	
TRW Automotive Marks
	
	
	
	

	 	 	 
	
	
	
	

	 	 	 
	
	
	
	

	Exhibit A	 	
Restructuring Transactions
	
	
	
	

	Exhibit B	 	
Form of Employee Matters Agreement
	
	
	
	

	Exhibit C	 	
Form of Insurance Allocation Agreement
	
	
	
	

	Exhibit D	 	
Form of Intellectual Property License Agreements
	
	
	
	

	Exhibit E	 	
Form of Tax Sharing Agreement
	
	
	
	

	Exhibit F	 	
Form of Trademark License Agreement
	
	
	
	

	Exhibit G	 	
Form of Transition Services Agreement
	
	
	
	

	Exhibit H	 	
TRW Automotive Certificate of Incorporation
	
	
	
	

	Exhibit I	 	
TRW Automotive By-Laws
	
	
	
	

	Exhibit J	 	
Records Retention Policy



 iii



 







 


MASTER DISTRIBUTION AGREEMENT



         MASTER DISTRIBUTION AGREEMENT (this “Agreement”), dated as of      ,
2002, by and between TRW INC., an Ohio corporation (“TRW”), and
TRW AUTOMOTIVE INC., a Delaware corporation and a wholly owned subsidiary of TRW
(“TRW Automotive”).


         WHEREAS, TRW, acting directly and through certain Subsidiaries, and
by virtue of its equity interests in certain entities, is engaged worldwide in
the design, manufacture and sale of steering, suspension, braking, engine,
safety, electronic, engineered fastening and other components and systems for
passenger cars, light trucks and commercial vehicles, including inflatable
restraint, seat belt and steering wheel components and systems; braking
components systems and related products; steering and suspension systems and
components; chassis components modules and integrated vehicle control systems;
vehicle dynamic control systems and electronics; access, security and safety
electronics systems; display and heating, ventilating and air conditioning
electronics; engineered and plastic fasteners and precision plastic moldings
and assemblies; engine components and systems; commercial steering systems and
components; and aftermarket operations, including parts, service and technical
and diagnostic support, as such businesses are described on Schedule A which
references the Operating Unit Codes (collectively, the “TRW Automotive Business”);


         WHEREAS, the TRW Board has determined that it would be appropriate
and desirable to completely separate the TRW Automotive Business from TRW;


         WHEREAS, TRW has caused TRW Automotive to be incorporated in order to effect
such separation, TRW currently owns all of the issued and outstanding
shares of common stock, par value $0.001 per share, of TRW Automotive (the “TRW Automotive
Common Stock”), and TRW Automotive currently conducts no business operations and has no
significant assets or liabilities;


         WHEREAS, the TRW Board and the TRW Automotive Board have each determined that
it would be appropriate and desirable for TRW to contribute and transfer
to TRW Automotive, and for TRW Automotive to receive and assume, directly or indirectly,
substantially all of the assets and liabilities currently associated with the
TRW Automotive Business and the stock or similar interests currently held by TRW
in Subsidiaries and other entities that conduct the TRW Automotive Business (the
transactions described in this recital are referred to collectively as the
“Restructuring” and are currently contemplated to be effected in accordance
with Article II and Exhibit A);


         WHEREAS, TRW and TRW Automotive currently contemplate that, on or prior to
the Distribution Declaration Date, (i) TRW will enter into the ASG Sale
Agreement and consummate the ASG Sale, (ii) TRW Automotive and TAUK will enter into the
TRW Automotive Equity Sale Agreement and consummate the TRW Automotive Equity Sale and (iii)
TRW Automotive will consummate the Debt Financing;


 







 




         WHEREAS, it is the intention of the parties to this Agreement that the
Restructuring and the Distribution will qualify as transactions described in
Sections 351, Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code
of 1986, as amended (the “Code”); and


         WHEREAS, the parties intend in this Agreement and the Ancillary Agreements
to set forth the principal arrangements between them regarding the separation
of the TRW Automotive Business from TRW.


         NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements contained in this Agreement, the parties hereto agree as follows:


ARTICLE I



DEFINITIONS



         Section 1.1    Definitions. As used in this Agreement, the following terms
shall have the following meanings:


         “Action” shall mean any action, claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, grand jury or any
Governmental Entity.


         “Active TRW Employee” shall mean any individual who, immediately
after the Distribution Date, will be employed by a member of the TRW Group
pursuant to Section 2.1(a) of the Employee Matters Agreement.


         “Active TRW Automotive Employee” shall mean any individual who, immediately after
the Distribution Date, will be employed by a member of the TRW Automotive Group
pursuant to Section 2.1(b) of the Employee Matters Agreement.


         “Affiliate” shall mean, with respect to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, the term “control” as
applied to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management of that Person,
whether through ownership of voting securities or otherwise.


         “Agent” shall mean the distribution agent appointed by TRW to
distribute shares of TRW Automotive Common Stock pursuant to the Distribution.


         “Agreement” shall have the meaning ascribed to such term in the preamble
hereto.


         “Ancillary Agreements” shall mean all of the written agreements,
instruments, understandings, assignments or other arrangements entered into by
TRW and TRW Automotive in connection with the transactions contemplated hereby,
including


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the Conveyancing and Assumption Instruments, the Employee Matters
Agreement, the Insurance Allocation Agreement, the Intellectual Property
License Agreements, the Tax Sharing Agreement, the Trademark License Agreement
and the Transition Services Agreement.


         “ASG Business” shall mean the worldwide design, manufacture, sale and
distribution of aeronautical systems and equipment, and the provision of
services, in the product areas of flight control systems, cargo systems, hoists
and winches, power systems, engine systems and missile actuation systems.


         “ASG Purchaser” shall mean the purchaser of the ASG Business pursuant to
the terms and subject to the conditions contained in the ASG Sale Agreement.


         “ASG Sale” shall mean the sale to the ASG Purchaser of substantially all
of the assets and liabilities currently associated with the ASG Business and
the stock or similar interests currently held by TRW in Subsidiaries and
other entities that conduct the ASG Business, pursuant to the terms and subject
to the conditions contained in the ASG Sale Agreement.


         “ASG Sale Agreement” shall mean the master agreement of purchase and sale,
dated as of      , 2002, between the ASG Purchaser and TRW.


         “Assets” shall mean any and all assets, properties and rights, whether
tangible or intangible, whether real, personal or mixed, whether fixed,
contingent or otherwise, and wherever located, including:


         (a)  interests in real property of whatever nature, together with all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, systems, equipment and items of
personal property that are appurtenant thereto, all such items under
construction, and all easements, licenses, rights and appurtenances relating to
the foregoing;


         (b)  machinery, equipment, vehicles, furniture and fixtures, leasehold
improvements, supplies, repair parts, tools, plant, laboratory and office
equipment and other tangible personal property, including any and all leases
with respect thereto, together with any rights or claims arising out of the
breach of any express or implied warranty by the manufacturers or sellers of
any of such assets or any component part thereof;


         (c)  inventories, including raw materials, work-in-process, finished goods,
parts and accessories;


         (d)  cash, bank accounts, notes, loans and accounts receivable (whether
current or not current), interests as beneficiary under letters of credit,
advances and performance and surety bonds;


         (e)  banker’s acceptances, shares of stock, bonds, debentures, evidences of
indebtedness, certificates of interest or participation in profit-sharing
agreements,


3







 




collateral-trust certificates, investment contracts, voting trust
certificates, puts, calls, straddles, options, swaps, collars, caps and other
securities or hedging arrangements of any kind;


         (f)  financial, accounting and operating data and records, including books,
records, electronic data, notes, sales and sales promotional data, purchasing
materials and data, advertising materials, credit information, cost and pricing
information, customer and supplier lists, reference catalogs, payroll and
personnel records, facility blueprints and plant layouts, minute books, stock
ledgers, stock transfer records and other similar property, rights and
information;


         (g)  all Intellectual Property;


         (h)  agreements, leases, contracts, sale orders, purchase orders, open bids
and other commitments and all rights therein;


         (i)  prepaid expenses, deposits and retentions held by third parties;


         (j)  all claims, causes of action, chooses in action, rights under
insurance policies, rights under express or implied warranties, rights of
recovery, rights of set-off and rights of subrogation, whether known or
unknown, whenever arising;


         (k)  licenses, franchises, permits, authorizations, approvals and
qualifications; and


         (l)  goodwill and going concern value.


         “Business Day” shall mean any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in the city
of Cleveland, Ohio.


         “Code” shall mean the Internal Revenue Code of 1986, as amended.


         “Commission” shall mean the Securities and Exchange Commission.


         “Conveyancing and Assumption Instruments” shall mean, collectively, the
various bills of sale, agreements, instruments and other documents which may be
necessary or appropriate to effect the transfers of Assets and the assumptions
of Liabilities in connection with the Restructuring in the manner contemplated
by this Agreement (including Exhibit A) and the Ancillary Agreements.


         “CPR” shall have the meaning ascribed to such term in Section 7.7(b)(i).


         “Debt Financing” shall mean not less than $ billion of debt financing
to be incurred or assumed by TRW Automotive from one or more financial institutions
under one or more credit facilities and/or through the issuance of its debt
securities in one or more public offerings or private placements.


4







 


         “Disclosure Documents” shall mean, collectively, the Form S-1, the Proxy
Statement, any registration statement or prospectus or offering memorandum in
connection with the Debt Financing, the registration statement on Form 8-A to
register the TRW Automotive Common Stock under the Exchange Act, the Current Reports on
Form 8-K filed by either TRW or TRW Automotive in connection with the matters
contemplated by this Agreement or any Ancillary Agreement and the other reports
or filings made by TRW or TRW Automotive under the Securities Act or the Exchange
Act in connection with the matters contemplated by this Agreement or any of the
Ancillary Agreements.


         “Dispute” shall have the meaning ascribed to such term in Section 7.7.


         “Distribution” shall mean the distribution by TRW to the holders of
shares of TRW Common Stock on the Distribution Record Date of all of the
shares of TRW Automotive Common Stock held by TRW.


         “Distribution Date” shall mean the date to be determined by the TRW
Board in its sole and absolute discretion when the Distribution shall be
affected.


         “Distribution Declaration Date” shall mean the date to be determined by
the TRW Board in its sole and absolute discretion when (i) the TRW
Board shall formally declare the Distribution and set the Distribution Record
Date and the Distribution Date and (ii) the Restructuring shall be completed
(and is currently contemplated to occur on the last business day of the fiscal
month ending immediately prior to the Distribution).


         “Distribution Record Date” shall mean the date to be determined by the
TRW Board in its sole and absolute discretion as the record date for the
Distribution.


         “Employee Matters Agreement” shall mean the Employee Matters Agreement,
dated as of the date of this Agreement, between TRW and TRW Automotive, the form
of which is attached hereto as Exhibit B.


         “Environment” shall mean soils, surface water, sediments, groundwater, any
present or potential drinking water supply, the indoor or outdoor atmosphere or
any other environmental media.


         “Environmental Condition” shall mean the presence of Hazardous Substances
in the Environment or building materials, or the Release of Hazardous
Substances to the Environment or from building materials, including the
migration or movement of Hazardous Substances in or through the Environment.


         “Environmental Laws” shall mean all foreign, federal, state and local
laws, regulations, rules and ordinances, and any amendments now or hereafter
adopted, including common law, relating to pollution or protection of the
environment or human health and safety, including laws relating to releases or
threatened releases of Hazardous Substances into the indoor or outdoor
environment (including ambient air, surface water, groundwater, land, surface
and subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or


5







 




 handling of
Hazardous Substances and all laws and regulations with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances, and all laws relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural resources.


         “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.


         “Foreign Exchange Rate” shall mean, with respect to any currency other
than United States dollars as of any date of determination, the average of the
opening bid and asked rates on such date at which such currency may be
exchanged for United States dollars as quoted by      except that, with
respect to any Indemnifiable Loss covered by insurance, the Foreign Exchange
Rate for such currency shall be as set forth in Section 4.3(b)(ii).


         “Form S-1” shall mean the registration statement on Form S-1 to be filed
by TRW Automotive with the Commission to affect the registration of the TRW Automotive Common
Stock pursuant to the Securities Act, including all amendments thereto filed by
TRW Automotive with the Commission prior to the Distribution.


         “Governmental Entity” shall mean any federal, state, provincial, county,
municipal or local government in the United States, or any political
subdivision of any of the foregoing, or any non-U.S. entity of a type similar
to the foregoing, or any entity, authority, agency, ministry, commission,
tribunal, arbitral body, court or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of
or pertaining to government, including any authority or quasi-governmental
entity established to perform any of these functions.


         “Group” shall mean the TRW Automotive Group or the TRW Group, as applicable.


         “Hazardous Substances” shall mean any chemicals, materials or substances
defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “hazardous constituents”, restricted hazardous
materials”, “extremely hazardous substances”, “toxic substances”,
“contaminants”, “pollutants”, “toxic pollutants”, or words of similar meaning
and regulatory effect under any applicable Environmental Law, including oil,
waste oil and petroleum products, polychlorinated biphenyls or any other
chemicals, materials or substances defined or regulated as toxic or hazardous
or as a pollutant or contaminant under any applicable Environmental Law.


         “Indemnifiable Losses” shall have the meaning ascribed to such term in
Section 4.1(a).


         “Indemnified Party” shall mean a TRW Indemnified Party or a TRW Automotive
Indemnified Party, as the case may be.


         “Indemnifying Party” shall have the meaning ascribed to such term in
Section 4.4.


6







 


         “Information” shall have the meaning ascribed to such term in Section
5.4(a).


         “Insurance Allocation Agreement” shall mean the Insurance Allocation
Agreement, dated as of the date of this Agreement, between TRW Automotive and TRW,
the form of which is attached hereto as Exhibit C.


         “Intellectual Property” shall mean (i) all United States, international
and foreign patents and applications therefor and all reexaminations, reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures, trade secrets, proprietary information, and know how;
(iii) all copyrights, copyrights registrations and applications therefor, and
all other rights corresponding thereto throughout the world; (iv) all domain
names, uniform resource locators and other names and locators associated with
the Internet; (v) all computer software, including all source code, object
code, and firmware; and (vi) all trade names, logos, common law trademarks and
service marks, trademark and service mark registrations and applications
therefor throughout the world.


         “Intellectual Property License Agreements” shall mean the TRW
Intellectual Property License Agreement and the TRW Automotive Intellectual Property
License Agreement.


         “IRS” shall mean the U.S. Internal Revenue Service.


         “Liabilities” shall mean any and all debts, liabilities, commitments,
fines, penalties, forfeitures, guarantees and obligations, absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including those debts, liabilities and obligations
arising under any law, rule, regulation, Action, threatened Action, order or
consent decree of any Governmental Entity or any award of any arbitrator of any
kind, and those arising under any contract, commitment or undertaking.


         “Licensed Intellectual Property” shall mean the Intellectual Property to
be licensed either by TRW or another member of the TRW Group to
TRW Automotive or another member of the TRW Automotive Group pursuant to the TRW
Intellectual Property License Agreement (“TRW Licensed IP”) or by TRW Automotive
or another member of the
TRW Automotive Group to TRW or another member of the TRW Group pursuant
to the TRW Automotive Intellectual Property License Agreement (“TRW Automotive Licensed IP”).


         “Litigation Matters” shall have the meaning ascribed to such term in
Section 5.4(b)(i).


         “Net Debt” shall mean, with respect to any Operating Unit Code, the
aggregate indebtedness thereof (including interests in accounts receivables
transferred pursuant to off-balance sheet financing from accounts receivable
securitization activities) minus the sum of the cash and cash equivalents
thereof.


7







 


         “NYSE” shall mean New York Stock Exchange, Inc.


         “OGCL” shall mean the Ohio General Corporation Law, as amended.


         “Off-Site Location” shall mean any real property other than the real
property owned or leased on or prior to the Distribution Declaration Date by
TRW or its Subsidiaries.


         “Operating Unit Codes” shall mean the codes representing the operating
units of TRW and its Subsidiaries and Affiliates as of the Restructuring
Funding Date, which operating units submit periodic financial data to TRW.


         “Person” shall mean any individual, corporation, general partnership,
limited partnership, limited liability partnership, limited liability company,
joint stock company, unincorporated organization or association, trust, joint
venture or other organization or entity (including any Governmental Entity) as
well as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.


         “Privileged Information” shall have the meaning ascribed to such term in
Section 5.4(b)(i).


         “Proxy Statement” shall mean the proxy statement on Schedule 14A to be
sent to the holders of shares of TRW Common Stock in connection with the
Special Meeting.




         “Release” shall mean any release, threatened release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment
(including ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater or property.


         “Remediation” shall mean an action of any kind to address an Environmental
Condition, including the following activities: (i) monitoring, investigation,
assessment, treatment, cleanup, containment, removal, mitigation, response or
restoration work; (ii) obtaining any permits, consents, approvals or
authorizations of any Governmental Entity necessary to conduct any such
activity; (iii) preparing and implementing any plans or studies for any such
activity; (iv) obtaining a written notice from a Governmental Entity with
jurisdiction over the real property owned or leased on or prior to the
Distribution Declaration Date by TRW or its Subsidiaries or an Off-Site
Location under Environmental Laws that no material additional work is required
by such Governmental Entity; (v) the use, implementation, application,
installation, operation or maintenance of removal actions on the real property
owned or leased on or prior to the Distribution Declaration Date by TRW or
its Subsidiaries or an Off-Site Location, remedial technologies applied to the
surface or subsurface soils, excavation and


8







 




 treatment or disposal of soils at
real property owned or leased on or prior to the Distribution Declaration Date
by TRW or its Subsidiaries or an Off-Site Location, systems for short-term
and long-term treatment of surface water or groundwater, engineering controls
or institutional controls; and (vi) any other activities reasonably determined
to be necessary or appropriate or required under Environmental Laws to address
an Environmental Condition.


         “Restructuring” shall have the meaning ascribed to such term in the
recitals hereto.


         “Restructuring Funding Actual Amount” shall mean the aggregate Net Debt of
the Operating Unit Codes of the TRW Automotive Business (as set forth on Schedule A) as
of the Restructuring Funding Date (as submitted in the ordinary course to
TRW).


         “Restructuring Funding Date” shall mean the last business day of the
fiscal month on or immediately following the Distribution Declaration Date.


         “Restructuring Funding Target Amount” shall mean $     .


         “Ruling Request” shall mean the private letter ruling request filed by
TRW with the IRS, as supplemented and amended from time to time, with
respect to certain tax aspects of the Restructuring and the Distribution.


         “Securities Act” shall mean the Securities Act of 1933, as amended.


         “Special Meeting” shall mean the special meeting of shareholders of
TRW to consider the Distribution and certain related matters.


         “Special Meeting Record Date” shall mean the record date for shareholders
of TRW entitled to vote at the Special Meeting.



9









 



         “Subsidiary” shall mean, with respect to any Person, any corporation,
partnership, joint venture or other business entity in which such Person
directly or indirectly owns, in the aggregate, a majority of the equity
interest.



         “TAUK”
shall mean TRW Automotive UK Ltd., a company organized under the laws
of [England and Wales].



         “Tax Authority” shall mean any U.S., non-U.S., federal, national, state,
provincial, county or municipal or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental body
exercising any taxing authority or any other authority exercising tax
regulatory authority.


         “Tax Benefit” shall mean the present value of any refund, credit or
reduction in otherwise required Tax payments, including any interest payable
thereon, as and when such refund, credit or reduction is realized.


         “Tax Opinion” shall mean an opinion from PricewaterhouseCoopers LLP, tax
counsel to TRW, addressed and satisfactory to the TRW Board in its
sole discretion, with respect to certain tax aspects of the Restructuring and
the Distribution.


         “Taxes” shall mean any and all taxes, fees, levies duties, tariffs or
other charges of any kind (and all related interest, additions to tax and
penalties), imposed by any Governmental Entity, including income, profits
transfer, gains, gross receipts, excise, inventory, property (real, personal or
intangible), custom duty, sales, use, license, registration withholding,
payroll, employment social security, workers’ compensation, unemployment
compensation, net worth, capital stock, ad valorem, stamp, documentary,
value added and franchise taxes and similar charges whether computed on a
unitary, combined or any other basis.


         “Tax Sharing Agreement” shall mean the Tax Sharing Agreement, dated as of
the date of this Agreement, between TRW Automotive and TRW, the form of which is
attached hereto as Exhibit E.


         “Trademark License Agreement” shall mean the Trademark License Agreement,
dated as of the date of this Agreement, between TRW Automotive and TRW, the form
of which is attached hereto as Exhibit F.


         “Transition Services Agreement” shall mean the Transition Services
Agreement, dated as of the date of this Agreement, between TRW Automotive and TRW,
the form of which is attached hereto as Exhibit G.



         “TRW Assets” shall mean, collectively, (i) all Assets which are
expressly allocated to any member of the TRW Group pursuant to this
Agreement, the Employee Matters Agreement, the Insurance Allocation Agreement,
the Intellectual Property License Agreements, the Tax Sharing Agreement, the
Trademark License Agreement, the Transition Services Agreement or any other
Ancillary Agreement, (ii) all Assets (other than those described in paragraph
(i) of the definition of “TRW Automotive Assets”) which immediately prior to the
Distribution Declaration Date are owned by TRW or any of its Subsidiaries
(including members of the TRW Group) and which are used or held for use
primarily in the TRW Business, as the same shall exist as of such time,
and (iii) all other Assets of TRW and its Subsidiaries not otherwise
included in the TRW Automotive Assets.


         “TRW Automotive Assets” shall mean, collectively, (i) all Assets which are
expressly allocated to any member of the TRW Automotive Group pursuant to this
Agreement, the Employee Matters Agreement, the Insurance Allocation Agreement,
the Intellectual Property License Agreements, the Tax Sharing Agreement, the
Trademark License Agreement, the Transition Services Agreement or any other
Ancillary Agreement, (ii) all Assets (other than those described in paragraph
(i) of the definition of “TRW Assets”) which immediately prior to the
Distribution Declaration Date are owned by TRW or any of its Subsidiaries
(including members of the TRW Automotive Group) and which are used or held for use
primarily in the TRW Automotive Business, as the same shall exist as of such time.


10






 


         “TRW Automotive Bank Accounts” shall mean the bank accounts of TRW Automotive and the
other members of the TRW Automotive Group.


         “TRW Automotive Board” shall mean the board of directors of TRW Automotive.


         “TRW Automotive Business” shall have the meaning ascribed to such term in the
recitals hereto.


         “TRW Automotive By-Laws” shall mean the By-Laws of TRW Automotive, substantially in the
form of Exhibit I, to be in effect on the Distribution Date.


         “TRW Automotive Charter” shall mean the Certificate of Incorporation of TRW Automotive to
be in effect as of the Distribution Date, substantially in the form of Exhibit
H, to be in effect on the Distribution Date.


         “TRW Automotive Common Stock” shall have the meaning ascribed to such term in the
recitals hereto.


         “TRW Automotive Directors” shall mean the individuals contemplated by the Form S-1
to be members of the TRW Automotive Board immediately following the Distribution Date.


         “TRW Automotive Divested and Discontinued Operations Liabilities” shall mean any
Liabilities related to the businesses and operations divested or discontinued
from the TRW Automotive Business prior to the Distribution Declaration Date, including
any such Liabilities related to the divestitures and discontinuances set forth
on Schedule 1.1(e).


         “TRW Automotive Entities” shall mean the Persons listed on Schedule 1.1(f).


         “TRW Automotive Environmental Liabilities” shall mean all Actions, Liabilities or
requirements arising under, from or related to Environmental Law or Hazardous
Substances relating to or arising with respect to the TRW Automotive Assets or the
TRW Automotive Business, including the following: (i) any violation or alleged
violation of or non-compliance with Environmental Laws, whether or not such
violation or non-compliance commenced or occurred prior to the Distribution
Declaration Date or commences or occurs on or after the Distribution
Declaration Date, with respect to the ownership, lease, maintenance or
operation of the TRW Automotive Assets or the TRW Automotive Business, including any fines or
penalties and the costs associated with correcting any such violations or
non-compliance; (ii) loss of life, injury to Persons or property or damage to
natural resources (whether or not such loss, injury or damage arose or was made
manifest before the Distribution Declaration Date or arises or becomes manifest
on or after the Distribution Declaration Date) caused (or allegedly caused) by
any Environmental Condition at, on, in, under, migrating or discharged from or
in the vicinity of the TRW Automotive Assets, whether or not such Environmental
Condition arose or first became present prior to, on or after the Distribution
Declaration Date; (iii) any Remediation (whether or not such Remediation
commenced before the Distribution Declaration Date or commences on or after the
Distribution Declaration Date) of any Environmental Condition at, on, in,
under, migrating or discharged from or in the vicinity of the TRW Automotive Assets,
whether or not such Environmental Condition arose or first became present prior to, on or
after the Distribution Declaration Date; (iv) any loss of life, injury to
persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Distribution Declaration
Date or arises or becomes manifest on or after the Distribution Declaration
Date) caused (or allegedly caused) by Hazardous Substances that have been
generated in connection with the TRW Automotive Business and transported or allegedly
transported to any Off-Site Location or the arrangement for such activities,
prior to, on or after the Distribution Declaration Date; and (v) the
Remediation (whether or not such Remediation commenced before the Distribution
Declaration Date or commences on or after the Distribution Declaration Date) of
Environmental Conditions related to Hazardous Substances that have been
generated in connection with the TRW Automotive Business and transported or allegedly
transported to any Off-Site Location, or the arrangement for such activities,
prior to, on or after the Distribution Declaration Date.


11






 


         “TRW Automotive Equity Sale” shall mean the issuance by TRW Automotive, and the sale by
TAUK, of an aggregate of      shares of TRW Automotive Preferred Stock (representing
     % of the outstanding shares of TRW Automotive Common Stock to be outstanding
immediately following the TRW Automotive Equity Sale, assuming conversion of such
shares into TRW Automotive Common Stock) to the TRW Automotive Equity Sponsor, pursuant to the
terms and subject to the conditions contained in the TRW Automotive Equity Sale
Agreement.


         “TRW Automotive Equity Sale Agreement” shall mean the preferred stock purchase
agreement, dated as of      , 2002, by and among TRW Automotive, TAUK and the TRW Automotive
Equity Sponsor.


         “TRW Automotive Equity Sponsor” shall mean the purchaser of shares of TRW Automotive
Preferred Stock in the TRW Automotive Equity Sale.


         “TRW Automotive Group” shall mean TRW Automotive, each Subsidiary of TRW Automotive and each other
Person that is either controlled directly or indirectly by TRW Automotive after the
Distribution Declaration Date.


         “TRW Automotive Indemnified Parties” shall have the meaning ascribed to such term
in Section 4.1(a).


         “TRW Automotive Intellectual Property” shall mean all of the Intellectual Property
which immediately prior to the Distribution Declaration Date is owned by or, to
the extent assignable to TRW Automotive, licensed to TRW or any of its
Subsidiaries (including members of the TRW Automotive Group) and which is used or held
for use primarily in the TRW Automotive Business, as the same shall exist at such time,
including the TRW Automotive Marks (but specifically excluding the TRW Marks) and
the TRW Automotive Licensed IP.


         “TRW Automotive Intellectual Property License Agreement” shall mean the
intellectual property license agreement, dated as of the date of this
Agreement, between TRW Automotive and TRW, the form of which is attached hereto as
Exhibit D-2.


         “TRW Automotive Liabilities” shall mean, collectively, (i) all Liabilities for
which any member of the TRW Automotive Group is expressly made responsible pursuant to
this Agreement, the Employee Matters Agreement, the Insurance Allocation
Agreement, the Intellectual Property License Agreements, the Tax Sharing
Agreement, the Trademark License Agreement or the Transition Services
Agreement, (ii) all Liabilities (other than those described in paragraphs (i),
(iii) and (iv) of the definition of “TRW Liabilities”) of TRW or any
of its Subsidiaries (including members of the TRW Automotive Group) to the extent
resulting from or relating to the TRW Automotive Assets or the TRW Automotive Business, (iii)
the TRW Automotive Environmental Liabilities, (iv) the TRW Automotive Divested and Discontinued
Operations Liabilities and (v) the Liabilities specified on Schedule 1.1(g).


         “TRW Automotive Marks” shall mean the names listed on Schedule 1.1(h) and all
corporate symbols and logos related thereto and all derivatives thereof and any
other name, mark or symbol connoting such names or constituting a formative
thereof.


         “TRW Automotive Preferred Stock” shall mean the Series A Convertible Preferred
Stock, par value $0.001 per share, of TRW Automotive.



         “TRW Automotive Subsidiary” shall mean (i) on or prior to the Distribution
Declaration Date, each Subsidiary of TRW that is a TRW Automotive Entity or (ii)
following the Distribution Declaration Date, each Subsidiary of TRW Automotive.



         “TRW Bank Accounts” shall mean the bank accounts of TRW and the
other members of the TRW Group.


12






 


         “TRW Board” shall mean the board of directors of TRW.


         “TRW Business” shall mean: (i) the worldwide design, manufacture,
sale and distribution of products and services in the fields of systems
engineering, systems integration, software development, modeling and
simulation, testing and evaluation, training and information technology for
high technology systems, products and services in the fields of strategic
missiles; intelligence management and processing; command, control and
communications; missile and air defense; airborne reconnaissance; homeland
security; public safety and transportation; logistics and training; health and
human services; integrated supply chain; tax systems; and air traffic control;
(ii) the worldwide design, manufacture, sale and distribution of spacecraft
systems and subsystems; electronic systems, including communication systems for
space and defense; commercial telecommunications products; gallium arsenide and
indium phosphide advanced semiconductors for satellite and telecommunications
applications; digital broadband space payloads; space science instruments;
advanced avionics systems; high energy laser systems; and spacecraft products,
including solar arrays and reflectors; (iii) the ASG Business and (iv) all
other businesses (including the businesses and operations related to TRW
Assets) not otherwise included in the TRW Automotive Business.


         “TRW Common Stock” shall mean the common stock, par value $0.625 per
share, of TRW.


         “TRW Divested and Discontinued Operations Liabilities” shall mean,
any Liabilities related to the businesses and operations divested or
discontinued from the TRW Automotive Business prior to the Distribution Declaration
Date, including any such Liabilities related to the divestitures and
discontinuances set forth on Schedule 1.1(a).


         “TRW Entities” shall mean the Persons listed on Schedule 1.1(b).


         “TRW Group” shall mean TRW, each Subsidiary of TRW and each
other Person that is either controlled directly or indirectly by TRW after
the Distribution Declaration Date.


         “TRW Indemnified Parties” shall have the meaning ascribed to such
term in Section 4.2(a).


         “TRW Intellectual Property” shall mean all of the Intellectual
Property which immediately prior to the Distribution Declaration Date is owned
by or licensed to TRW or any of its Subsidiaries (including members of the
TRW Automotive Group) and which is used or held for use primarily in the TRW
Business, as the same shall exist at such time, including the TRW Marks
and TRW Licensed IP.


         “TRW Intellectual Property License Agreement” shall mean the
intellectual property license agreement, dated as of the date of this
Agreement, between TRW Automotive and TRW, the form of which is attached hereto as
Exhibit D-1.


13







 


         “TRW Liabilities” shall mean, collectively, (i) all Liabilities for
which any member of the TRW Group is expressly made responsible pursuant
to this Agreement, the Employee Matters Agreement, the Insurance Allocation
Agreement, the Intellectual Property License Agreements, the Tax Sharing
Agreement, the Trademark License Agreement or the Transition Services
Agreement, (ii) all Liabilities (other than those described in paragraphs (i),
(iii), (iv) and (v) of the definition of “TRW Automotive Liabilities”) of TRW or
any of its Subsidiaries (including members of the TRW Group) to the extent
resulting from or relating to the TRW Assets or the TRW Business,
(iii) the TRW Divested and Discontinued Operations Liabilities and (iv)
the Liabilities specified on Schedule 1.1(c).


         “TRW Marks” shall mean the names listed on Schedule 1.1(d) and all
corporate symbols and logos related thereto and all derivatives thereof and any
other name, mark or symbol connoting such names or constituting a formative
thereof.


         “TRW Series 1 Preferred Stock” shall mean the Cumulative Serial
Preference Stock II, $4.40 Convertible Series 1, of TRW.


         “TRW Series 3 Preferred Stock” shall mean the Cumulative Serial
Preference Stock II, $4.50 Convertible Series 3, of TRW.


         “TRW Subsidiary” shall mean each Subsidiary of TRW other than
TRW Automotive and any TRW Automotive Subsidiary.



14







 


ARTICLE II



RESTRUCTURING



         Section 2.1          Restructuring. On or prior to the Distribution Declaration
Date, TRW and TRW Automotive shall take, or cause to be taken, the following
actions more fully described in Exhibit A:


         (a)  Except as otherwise specifically contemplated by this Agreement
(including Exhibit A) and the Ancillary Agreements, TRW and each TRW
Subsidiary shall transfer, assign and convey, or cause to be transferred,
assigned or conveyed, to TRW Automotive or a TRW Automotive Subsidiary, as appropriate, all
right, title and interest of TRW and each of the TRW Subsidiaries in
the TRW Automotive Entities;


         (b)  Except as otherwise specifically contemplated by this Agreement
(including Exhibit A) and the Ancillary Agreements, TRW Automotive and each TRW Automotive
Subsidiary shall transfer, assign and convey, or cause to be transferred,
assigned or conveyed, to TRW or a TRW Subsidiary, as appropriate, any
and all right, title and interest of TRW Automotive and each of the TRW Automotive Subsidiaries
in the TRW Entities;


         (c)  Except as otherwise specifically contemplated by this Agreement
(including Exhibit A) and the Ancillary Agreements, TRW and each TRW
Subsidiary shall transfer, assign and convey, or cause to be transferred,
assigned or conveyed, to TRW Automotive or a TRW Automotive Subsidiary, as appropriate, any and
all right, title and interest of TRW and each of the TRW Subsidiaries
in the TRW Automotive Assets;


         (d)  Except as otherwise specifically contemplated by this Agreement
(including Exhibit A) and the Ancillary Agreements, TRW Automotive and each TRW Automotive
Subsidiary shall transfer, assign and convey, or cause to be transferred,
assigned or conveyed, to
TRW or a TRW Subsidiary, as appropriate, any and all right,
title and interest of TRW Automotive and each of the TRW Automotive Subsidiaries in the
TRW Assets;


         (e)  Except as otherwise specifically contemplated by this Agreement
(including Exhibit A) and the Ancillary Agreements, TRW Automotive or a TRW Automotive
Subsidiary, as appropriate, shall unconditionally assume and undertake to pay,
perform and discharge, in a timely manner and in accordance with the terms
thereof, all Liabilities of TRW and the TRW Subsidiaries that are
TRW Automotive Liabilities;


         (f)  Except as otherwise specifically contemplated by this Agreement
(including Exhibit A) and the Ancillary Agreements, TRW or a TRW
Subsidiary, as appropriate, shall unconditionally assume and undertake to pay,
perform and discharge, in a timely manner and in accordance with the terms
thereof, all Liabilities of TRW Automotive and the TRW Automotive Subsidiaries that are
TRW Liabilities.


         (g)  In the event that at any time or from time to time (whether prior to,
on or after the Distribution Declaration Date) either party (or any member of
such party’s respective Group) shall receive or otherwise possess any Asset
that is allocated to any other Person pursuant to this Agreement or any
Ancillary Agreement, such party shall


15







 




 promptly transfer, or cause to be
transferred, such Asset to the Person so entitled thereto. Prior to any such
transfer, the Person receiving or possessing such Asset shall hold such Asset
in trust for the benefit of the Person entitled thereto (at the expense of the
Person entitled thereto) without the payment of any consideration. Each party
shall reimburse the other party or make financial adjustments or other
adjustments to remedy any mistakes or omissions relating to any of the Assets
transferred (or to be transferred) hereunder.


         (h)  In the event that at any time or from time to time (whether prior to,
on or after the Distribution Declaration Date) either party determines that the
other party (or any member of such other party’s respective Group) shall not
have unconditionally assumed any Liabilities that are allocated to such other
party (or a member of such other party’s respective Group) pursuant to this
Agreement or any Ancillary Agreement, such other party shall promptly execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such actions as the
requesting party may reasonably request to unconditionally assume, or cause to
be unconditionally assumed, such Liabilities. Each party shall reimburse the
other party or make financial adjustments or other adjustments to remedy any
mistakes or omissions relating to any of the Liabilities assumed (or to be
assumed) hereunder.


         (i)  The parties hereto currently contemplate effecting the transactions
contemplated by this Section 2.1 in the manner more fully described in Exhibit
A. In connection with the transfers of Assets and the assumptions of
Liabilities contemplated by this Section 2.1 and Exhibit A, TRW and TRW Automotive
shall execute or cause to be executed by the appropriate entities the
Conveyance and Assumption Instruments. The transfers of capital stock
contemplated by this Section 2.1 and Exhibit A shall be effected by means of
delivery of stock certificates duly endorsed or accompanied by duly executed
stock powers and notation on the stock record books of the corporation or
other legal entities involved and, to the extent required by applicable law, by
notation on appropriate registries.


         (j)  Notwithstanding anything contained in this Agreement or in any
Ancillary Agreement to the contrary, nothing in this Agreement or in any
Ancillary Agreement shall be deemed to require the conveyance, assignment,
transfer or assumption of any Asset or Liability that by its terms or by
operation of applicable law cannot be freely conveyed, assigned, transferred or
assumed. To the extent the parties have been unable to obtain any governmental
or any third party consents or approvals required under applicable law for the
transfer of any Asset or Liability and to the extent not otherwise prohibited
by the terms of such Asset or Liability, TRW and the other members of the
TRW Group or TRW Automotive and the other members of the TRW Automotive Group, as the case
may be, shall continue to be bound by the terms of such applicable Asset or
Liability, and the other party shall pay, perform and discharge fully all of
the obligations of TRW and the other members of the TRW Group or
TRW Automotive and the other members of the TRW Automotive Group, as the case may be, under
such Assets (to the extent that the corresponding benefit is received) and
Liabilities from and after the Distribution Declaration Date. TRW or
TRW Automotive, as the case may be, shall, without consideration therefor, pay, assign
and remit to the other party promptly all monies, rights and other


16







 




consideration received in respect of such performance. TRW and the other
members of the TRW Group or TRW Automotive and the other members of the TRW Automotive
Group, as the case may be, shall exercise or exploit their rights in respect of
such Assets only as reasonably directed by the other party and at the other
party’s expense. For not more than 180 days following the Distribution
Declaration Date, each party hereto shall continue to use commercially
reasonable efforts to obtain all such unobtained consents or approvals required
to be obtained by it at the earliest practicable date. If and when any such
consents or approvals shall be obtained, TRW and the other members of the
TRW Group or TRW Automotive and the other members of the TRW Automotive Group, as the case
may be, shall promptly assign such Assets and Liabilities thereunder to the
other party without payment of consideration, and the other party shall,
without the payment of any consideration therefor, accept and assume such
Assets and Liabilities. Each party shall execute such good and sufficient
instruments as may be necessary to evidence such assignment and assumption.


         (k)  Each of TRW (on behalf of itself and each other member of the
TRW Group) and TRW Automotive (on behalf of itself and each other member of the
TRW Automotive Group) understands and agrees that, except as expressly set forth in any
Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or any
other agreement or document contemplated by this Agreement or any Ancillary
Agreement either has or is, in such agreement or otherwise, representing or
warranting in any way as to the Assets, Subsidiaries, businesses or Liabilities
retained, transferred or assumed as contemplated hereby or thereby, as to any
consents or approvals required in connection with the transactions contemplated
by this Agreement or any Ancillary Agreement, as to the value or freedom from
any lien of, or any other matter concerning, any Assets, Subsidiaries,
businesses or Liabilities of such party, or as to the absence of any defenses
or rights of
setoff or freedom from counterclaim with respect to any claim or other
Assets or Subsidiaries of any party, or as to the legal sufficiency of any
assignment, document or instrument delivered hereunder or thereunder to convey
title to any Asset, Subsidiary, business or Liability or thing of value upon
the execution, delivery or filing hereof or thereof. Except as may expressly
be set forth in this Agreement or any Ancillary Agreement, all Assets,
Subsidiaries, businesses and Liabilities being transferred, retained or assumed
as contemplated by this Agreement or Ancillary Agreement are being transferred,
retained or assumed, on an “as is”, “where is” basis (and, in the case of the
transfer of any real property, by means of a quitclaim or similar form deed or
conveyance) and the respective transferees shall bear the economic and legal
risks that any conveyance shall prove to be insufficient or that the title to
any Asset, Subsidiary, business or Liability shall be other than good and
marketable and free and clear of any lien. Notwithstanding the foregoing,
TRW and TRW Automotive shall each use commercially reasonable efforts and
cooperate at its own expense to resolve any problems with respect to title and
to remove liens.


         Section 2.2    Intercompany Arrangements.


         (a)  Except as otherwise contemplated by the transactions contemplated by
Exhibit A and the last sentence of this Section 2.2(a), TRW, on behalf of
itself and each other member of the TRW Group, and TRW Automotive, on behalf of


17







 




itself and each other member of the TRW Automotive Group, hereby settle and eliminate,
by cancellation or transfer to a member of the other Group (whether to cancel
or transfer and the manner thereof shall be determined by TRW), effective
as of the Distribution Declaration Date, all intercompany receivables, payables
and other balances (including intercompany cash management balances) existing
immediately prior to the Distribution Declaration Date between TRW and/or
any other member of the TRW Group, on the one hand, and TRW Automotive and/or any
other member of the TRW Automotive Group, on the other hand. The provisions of this
Section 2.2(a) shall not apply to any intercompany receivables, payables and
other balances arising under this Agreement or any Ancillary Agreement.


         (b)  Except as otherwise contemplated by the transactions contemplated by
Exhibit A and the last sentence of this Section 2.2(b), in furtherance of the
mutual release and other provisions of Section 4.8, TRW, on behalf of
itself and each other member of the TRW Group, and TRW Automotive, on behalf of
itself and each other member of the TRW Automotive Group, hereby terminate any and all
agreements, arrangements, commitments or understandings in existence as of the
Distribution Declaration Date, whether or not in writing, between or among
TRW and/or any other member of the TRW Group, on the one hand, and
TRW Automotive and/or any other member of the TRW Automotive Group, on the other hand. No such
terminated agreement, arrangement, commitment or understanding (including any
provision thereof which purports to survive termination) shall be of any
further force or effect after the Distribution Declaration Date. The
provisions of this Section 2.2(b) shall not apply to this Agreement or any
Ancillary
Agreement or any agreements, arrangements, commitments or understandings
to which any Person other than the parties hereto and their respective
Affiliates is a party.


         Section 2.3    Guarantees.


         (a)  Except as otherwise contemplated by the terms of this Agreement
(including Exhibit A), TRW and TRW Automotive shall cooperate, and shall cause the
members of their respective Groups to cooperate, to terminate, or to cause
TRW or another member of the TRW Group to be substituted in all
respects for TRW Automotive and the other members of the TRW Automotive Group in respect of,
all obligations of TRW Automotive and the other members of the TRW Automotive Group under any
loan, financing, lease, contract, or other obligation in existence as of the
Distribution Declaration Date pertaining to the TRW Business for which
TRW Automotive or any other member of the TRW Automotive Group may be liable, as guarantor,
original tenant, primary obligor or otherwise. If such a termination or
substitution is not effected by the Distribution Declaration Date, (i) TRW
shall indemnify and hold harmless the TRW Automotive Indemnified Parties for any
Indemnifiable Loss arising from or relating thereto (in accordance with the
provisions of Article IV) and (ii) without the prior written consent of TRW Automotive,
from and after the Distribution Declaration Date, TRW shall not, and shall
not permit any other member of the TRW Group to, renew or extend the term
of, increase its obligations under, or transfer to a third party, any loan,
guarantee, lease, contract or other obligation for which TRW Automotive or any other
member of the TRW Automotive Group is or may be liable unless all obligations of TRW Automotive
and the


18







 




other members of the TRW Automotive Group with respect thereto are thereupon
terminated by documentation reasonably satisfactory in form and substance to
TRW Automotive.


         (b)  Except as otherwise contemplated by the terms of this Agreement
(including Exhibit A), TRW and TRW Automotive shall cooperate, and shall cause the
members of their respective Groups to cooperate, to terminate, or to cause
TRW Automotive or another member of the TRW Automotive Group to be substituted in all respects
for TRW and the other members of the TRW Group in respect of, all
obligations of TRW and the other members of the TRW Group under any
loan, guarantee, financing, lease, contract or other obligation in existence as
of the Distribution Declaration Date pertaining to the TRW Automotive Business for
which TRW or any other member of the TRW Group may be liable, as
guarantor, original tenant, primary obligor or otherwise. If such a
termination or substitution is not effected by the Distribution Declaration
Date, (i) TRW Automotive shall indemnify and hold harmless the TRW Indemnified
Parties for any Indemnifiable Loss arising from or relating thereto (in
accordance with the provisions of Article IV) and (ii) without the prior
written consent of TRW, from and after the Distribution Declaration Date,
TRW Automotive shall not, and shall not permit any other member of the TRW Automotive Group to,
renew or extend the term of, increase its obligations under, or transfer to a
third party, any loan, guarantee, lease, contract or other obligation for which
TRW or any other member of the TRW Group is or may be liable unless
all obligations of TRW and the other members of the TRW Group with
respect
thereto are thereupon terminated by documentation reasonably satisfactory
in form and substance to TRW.


         Section 2.4          Cash Management.


         (a)  In the event that the aggregate Restructuring Funding Actual Amount
(i) exceeds the Restructuring Funding Target Amount, TRW shall pay to
TRW Automotive (by wire transfer of immediately available funds to an account
designated in advance by TRW Automotive), within five (5) Business Days after the
Restructuring Funding Date, an amount equal to such excess or (ii) is less than
the Restructuring Funding Target Amount, TRW Automotive shall pay to TRW (by wire
transfer of immediately available funds to an account designated in advance by
TRW), within five (5) Business Days after the Restructuring Funding Date,
an amount equal to such deficit.


         (b)  TRW Automotive shall, and shall cause each other member of the TRW Automotive Group
to, forward promptly to TRW (for the account of TRW or the applicable
member of the TRW Group) any payments in respect of TRW Assets
received by TRW Automotive or any member of the TRW Automotive Group after the Distribution
Declaration Date, whether received in lock boxes, via wire transfer or
otherwise. Such amounts shall be forwarded by wire transfer to an account
designated by TRW in advance in the case of payments received within 30
days after the Distribution Declaration Date and by check in the case of
payments received thereafter.


         (c)  TRW shall, and shall cause each other member of the TRW
Group to, forward promptly to TRW Automotive (for the account of TRW Automotive or the
applicable member of the TRW Automotive Group) any payments in respect of TRW Automotive Assets


19







 




received by TRW or any member of the TRW Group after the Distribution
Declaration Date, whether received in lock boxes, via wire transfer or
otherwise. Such amounts shall be forwarded by wire transfer to an account
designated by TRW Automotive in advance in the case of payments received within 30 days
after the Distribution Declaration Date and by check in the case of payments
received thereafter.


         (d)  TRW Automotive shall, or shall cause a member of the TRW Automotive Group to, fund all
amounts in respect of checks, electronic debits and other similar charges that
are outstanding immediately prior to the Distribution Declaration Date and
presented for payment on or after the Distribution Declaration Date from TRW Automotive
Bank Accounts. TRW shall, or shall cause a member of the TRW Group
to, fund all amounts in respect of checks, electronic debits and other similar
charges that are outstanding immediately prior to the Distribution Declaration
Date and presented for payment at or after the Distribution Declaration Date
from TRW Bank Accounts. Within five (5) Business Days following
TRW’s request, TRW Automotive shall reimburse TRW (by wire transfer to an
account designated by TRW in advance), for the account of TRW or the
applicable member of the TRW Group, for all such amounts funded by a
member of the TRW Group in respect of checks, electronic debits and other
similar
charges relating to the TRW Automotive Business or the TRW Automotive Liabilities that are
outstanding immediately prior to the Distribution Declaration Date and
presented for payment and funded on or after the Distribution Declaration Date
from TRW Bank Accounts. No checks, electronic debits and other similar
charges relating to the TRW Automotive Business or the TRW Automotive Liabilities shall be
issued on any TRW Bank Accounts on or after the Distribution Declaration
Date.


ARTICLE III



THE DISTRIBUTION



         Section 3.1    Cooperation Prior to the Distribution. Prior to the
Distribution, TRW and/or TRW Automotive, as applicable, shall take the following
actions (to the extent such actions shall not have been taken prior to the date
of this Agreement):


         (a)  TRW and TRW Automotive shall take any steps necessary to increase the
outstanding shares of TRW Automotive Common Stock so that, except as otherwise
contemplated by this Agreement or any Ancillary Agreement, the number of
outstanding shares of TRW Automotive Common Stock held by TRW immediately prior to
the Distribution shall equal the number of shares of TRW Common Stock
outstanding on the Distribution Record Date.


         (b)  TRW shall cause all of the TRW Automotive Directors and Active TRW Automotive
Employees who will not be directors or officers of TRW or any TRW
Entity following the Distribution to resign, effective as of the Distribution
Date, from all boards of directors or similar governing bodies of TRW and
the TRW Entities on which they serve, and from all positions as officers
of TRW and the TRW Entities in which they serve. TRW shall
cause all of its directors and the Active


20







 




TRW Employees who will not be
directors or officers of TRW Automotive or any TRW Automotive Entity following the Distribution
to resign, effective as of the Distribution Date, from all boards of directors
or similar governing bodies of TRW Automotive and the TRW Automotive Entities on which they
serve, and from all positions as officers of TRW Automotive and the TRW Automotive Entities in
which they serve.


         (c)  TRW and TRW Automotive shall take all actions which may be required to
elect or otherwise appoint the TRW Automotive Directors to constitute the TRW Automotive Board
as of the Distribution Date.


         (d)  (i) The TRW Automotive Board shall (A) approve the TRW Automotive Charter and shall
cause the same to be filed with the Secretary of State of the State of Delaware
and (B) adopt the TRW Automotive By-Laws, and (ii) TRW, as sole stockholder of
TRW Automotive, shall approve the TRW Automotive Charter.


         (e)  TRW and TRW Automotive shall prepare, and TRW Automotive shall file with the
Commission, the Form S-1 and the Proxy Statement, which documents shall set
forth appropriate disclosure concerning TRW Automotive, TRW, the Restructuring,
the TRW Automotive Equity Sale, the Distribution, the Special Meeting and other related
matters. TRW and TRW Automotive shall use their commercially reasonable efforts
to cause the Form S-1 and the Proxy Statement to be declared effective or
cleared (as the case may be) by the Commission.


         (f)  TRW and TRW Automotive shall prepare, and TRW shall mail to the
holders of shares of TRW Common Stock as of the Special Meeting Record
Date, the Proxy Statement.


         (g)  TRW and TRW Automotive shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereof which are appropriate to reflect the establishment of, or
amendments to, any employee benefit and other plans contemplated by the
Employee Matters Agreement or this Agreement.


         (h)  TRW and TRW Automotive shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other political
subdivisions of the United States in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements.


         (i)  TRW and TRW Automotive shall prepare, and TRW Automotive shall file and seek to
make effective, subject to official notice of issuance, an application to
permit the listing of TRW Automotive Common Stock on the NYSE.


         (j)  TRW and TRW Automotive shall use their commercially reasonable efforts to
obtain the rulings contemplated by the Ruling Request in form and substance
satisfactory to the TRW Board as advised by counsel.


         (k)  TRW and TRW Automotive shall use their commercially reasonable efforts to
secure for TRW Automotive the Debt Financing on or prior to the Distribution
Declaration


21







 




Date. In connection therewith, TRW and TRW Automotive shall enter
into such agreements and prepare (and file with the Commission if required)
such documents as may be required in connection with the Debt Financing.


         (l)  TRW and TRW Automotive shall use their commercially reasonable efforts to
consummate the TRW Automotive Equity Sale on or prior to the Distribution Declaration
Date. In connection therewith, TRW and TRW Automotive shall enter into the TRW Automotive
Equity Sale Agreement and such other agreements as may be required in
connection with the TRW Automotive Equity Sale.


         (m)  TRW shall redeem all outstanding shares of TRW Series 1
Preferred Stock and TRW Series 3 Preferred Stock in accordance with the
Amended Articles of Incorporation of TRW prior to Special Meeting Record
Date.


         Section 3.2          TRW Board Action; Distribution Procedures. Subject to
the satisfaction or waiver of the conditions set forth in Section 3.3, on the
Distribution Declaration Date, the TRW Board shall establish the
Distribution Record Date and the Distribution Date and any appropriate
procedures in connection with the Distribution. Prior to the Distribution,
TRW shall enter into an agreement with the Agent providing for, among
other things, the payment of the Distribution to the holders of TRW Common
Stock in accordance with this Article III (currently contemplated to be
effected through a book-entry system, subject to the right of holders of shares
of TRW Automotive Common Stock to request a physical certificate).


         Section 3.3          Conditions Precedent to the Distribution. In no event shall
the Distribution Declaration Date occur prior to such time as the following
conditions shall have been satisfied or waived:


         (a)  The rulings contemplated by the Ruling Request shall have been granted
in form and substance satisfactory to TRW in its sole discretion and such
rulings shall be in full force and effect, or, alternatively, the Tax Opinion
shall have been received by the TRW Board;


         (b)  all third party consents and approvals by Governmental Entities
required in connection with the transactions contemplated by this Agreement or
the Ancillary Agreements shall have been received, except where the failure to
obtain such consents or approvals would not have a material adverse effect on
either (A) the ability of the parties to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements or (B) the business,
financial condition or results of operations of TRW or TRW Automotive;


         (c)  the transactions contemplated by Article II and Exhibit A, including
the transfers and related transactions as provided in Section 2.1 and Exhibit
A, the settlement of intercompany arrangements as provided in Section 2.2 and
the termination of guaranties and similar agreements as provided by Section
2.3, shall have been consummated in all material respects, to the extent
required to be consummated prior to the Distribution;



22









 



         (d) 
TRW Automotive and the TRW Automotive Subsidiaries shall have no more than $     of
Net Debt in the aggregate;


         (e) 
TRW shall be satisfied in its sole discretion with the treatment
of the indebtedness of TRW and its Subsidiaries in connection with the
Restructuring and the Distribution, including the allocation of such
indebtedness between the TRW Group and the TRW Automotive Group;


         (f) 
the Debt Financing shall have been consummated;


         (g) 
the ASG Sale shall have been consummated in all material respects;


         (h) 
the TRW Automotive Common Stock shall have been authorized for listing on the
NYSE to the extent contemplated by this Agreement and by the Employee Matters
Agreement, subject to official notice of issuance;


         (i) 
the TRW Automotive Board, composed as contemplated by the Form S-1, shall have
been duly elected or appointed;


         (j)  the
Form S-1 shall have been declared effective by the Commission and
no stop order issued by the Commission with respect thereto shall be in effect;


         (k) 
the Proxy Statement shall have been cleared by the Commission;


         (l) 
the Distribution shall have been approved by the holders of shares of
TRW capital stock in accordance with the OGCL;


         (m) 
the applicable parties shall have entered into each of the Ancillary
Agreements and the transactions or actions contemplated by the Ancillary
Agreements to be completed prior to the Distribution, if any, shall have been
completed in all material respects;


         (n) 
the TRW Board shall have received an opinion, addressed and
satisfactory to the TRW Board in its sole discretion, from American
Appraisal
Associates, Inc. (or another independent solvency or appraisal firm
selected by the TRW Board), and the TRW Board shall be otherwise
satisfied in its sole discretion, as to matters relating to the solvency and
adequacy of capital of TRW and TRW Automotive after, and giving effect to, the
transactions contemplated by this Agreement, the ASG Agreement, the TRW Automotive
Equity Sale Agreement and the Ancillary Agreements, and as to the sufficiency
of TRW’s surplus to permit the Distribution under the OGCL; and


         (o) 
no Action shall have been commenced and be pending to restrain or
challenge the Distribution, and no inquiry shall have been received or threat
made that in the reasonable judgment of the TRW Board may lead to such an
Action.


23







 


         The
foregoing conditions are for the sole benefit of TRW and shall
not give rise to or create any duty on the part of TRW or the TRW
Board to waive or not to waive such conditions or in any way limit TRW’s
rights of termination set forth in this Agreement. Any determination made by
the TRW Board prior to the Distribution Declaration Date concerning the
satisfaction or waiver of any or all of the conditions set forth in this
Section 3.3 shall be conclusive.


         Section 3.4     The Distribution. On the Distribution Date, TRW shall
deliver to the Agent a share certificate representing all of the then
outstanding shares of TRW Automotive Common Stock owned by TRW and shall instruct
the Agent to distribute, on or as soon as practicable following the
Distribution Date, such shares of TRW Automotive Common Stock to the holders of record
of shares of TRW Common Stock on the Distribution Record Date. TRW Automotive
agrees to provide all share certificates and any information that the Agent
shall require in order to effect the Distribution (it being understood that the
Distribution is currently contemplated to be effected through a book-entry
system, subject to the right of holders of shares of TRW Automotive Common Stock to
request a physical certificate). All shares of TRW Automotive Common Stock issued in
the Distribution shall be duly authorized, validly issued, fully paid and
nonassessable.


ARTICLE IV



INDEMNIFICATION; MUTUAL RELEASE



         Section 4.1     Indemnification by TRW.


         (a) 
Except for all claims related to Taxes (which shall be governed solely
by the Tax Sharing Agreement) and subject to the other provisions of this
Article IV, from and after the Distribution Declaration Date, TRW shall
indemnify, defend and hold harmless TRW Automotive, each of its directors, officers,
employees, agents and Affiliates and each of the heirs, executors, successors,
assigns of, and persons, if any, who control (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange
Act), any of the foregoing (the “TRW Automotive Indemnified Parties”) from and
against the TRW Liabilities and any and all losses, claims and Liabilities
(including the costs and expenses of any and all Actions, threatened Actions,
demands, assessments, judgments, settlements and compromises relating thereto
and reasonable attorneys’ fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened Actions) (collectively, “Indemnifiable Losses”) of the TRW Automotive
Indemnified Parties arising out of or due to:



		
	 	          
   (i) the failure or alleged failure of TRW or any other
member of the TRW Group to pay, perform or otherwise
discharge in a timely manner any of the TRW Liabilities;
	 
	 	          
   (ii) the TRW Business; and



24







 







		
	 	          
   (iii) any material breach by TRW or any other member of
the TRW Group of this Agreement or any of the Ancillary
Agreements.



         (b) 
Subject to the other provisions of this Article IV, from and after the
Distribution Declaration Date, TRW shall indemnify, defend and hold
harmless each of the TRW Automotive Indemnified Parties from and against any and all
Indemnifiable Losses of the TRW Automotive Indemnified Parties arising out of or based
upon:



		
	 	          
   (i) any untrue statement of material fact or alleged untrue
statement of a material fact contained in any Disclosure Document
and any information provided in connection therewith, or the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made,
not misleading, except insofar as such Indemnifiable Losses are
caused by any such untrue statement or omission or alleged untrue
statement or omission (A) relating primarily to TRW Automotive or any
other member of the TRW Automotive Group or the TRW Automotive Business or (B)
based upon information that is furnished to TRW by TRW Automotive or
any other member of the TRW Automotive Group expressly for use therein;
and
	 
	 	          
   (ii) any untrue statement of material fact or alleged untrue
statement of a material fact contained in any document (other than
a Disclosure Document) filed by TRW or any other member of
the TRW Group with the Commission pursuant to the Securities
Act or the Exchange Act or filed with any other Governmental
Entity pursuant to applicable law, and any information provided in
connection therewith, or the omission or alleged omission to state
a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under
which they were made, not misleading, except insofar as such
Indemnifiable Losses are caused by any such untrue statement or
omission or alleged untrue statement or omission (A) relating
primarily to TRW Automotive or any other member of the TRW Automotive Group
or the TRW Automotive Business or (B) based upon information that is
either furnished to TRW by TRW Automotive or any other member of the
TRW Automotive Group expressly for use therein or incorporated by
reference by TRW from any filings made by TRW Automotive or any other
member of the TRW Automotive Group with the Commission under the
Securities Act or the Exchange Act or filed with any other
Governmental Entity pursuant to applicable law, if that statement
or omission was made or occurred on or after the Distribution
Date.



         Section 4.2     Indemnification by TRW Automotive.


         (a) 
Except for all claims related to Taxes (which, along with other
related matters, shall be governed solely by the Tax Sharing Agreement,
notwithstanding


25







 




anything contained in this Agreement) and subject to the other
provisions of this Article IV, from and after the Distribution Declaration
Date, TRW Automotive shall indemnify, defend and hold harmless TRW, each of its
directors, officers, employees, agents and Affiliates and each of the heirs,
executors, successors, assigns of, and persons, if any, who control (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act),
any of the foregoing (the “TRW Indemnified Parties”) from and against the
TRW Automotive Liabilities and any and all Indemnifiable Losses of the TRW
Indemnified Parties arising out of or due to:



		
	 	          
   (i) the failure or alleged failure of TRW Automotive or any other
member of the TRW Automotive Group to pay, perform or otherwise discharge
in a timely manner any of the TRW Automotive Liabilities;
	 
	 	          
   (ii) the TRW Automotive Business; and
	 
	 	          
   (iii) any material breach by TRW Automotive or any other member of
the TRW Automotive Group of this Agreement or any of the Ancillary
Agreements.



         (b) 
Subject to the other provisions of this Article IV, from and after the
Distribution Declaration Date, TRW Automotive shall indemnify, defend and hold harmless
each of the TRW Indemnified Parties from and against any and all
Indemnifiable Losses of the TRW Indemnified Parties arising out of or
based upon:



		
	 	        
     (i) any untrue statement of material fact or alleged untrue
statement of a material fact contained in any Disclosure Document
and any information provided in connection therewith, or the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the
extent, that such Indemnifiable Losses are caused by any such
untrue statement or omission or alleged untrue
statement or omission (A) relating primarily to TRW Automotive or any
other member of the TRW Automotive Group or the TRW Automotive Business or (B)
based upon information that is furnished to TRW by TRW Automotive or
any other member of the TRW Automotive Group expressly for use therein;
and
	 
	 	        
     (ii) any untrue statement of material fact or alleged untrue
statement of a material fact contained in any document (other than
a Disclosure Document) filed by TRW Automotive or any other member of the
TRW Automotive Group with the Commission pursuant to the Securities Act or
the Exchange Act or filed with any other Governmental Entity
pursuant to applicable law, and any information provided in
connection therewith, or the omission or alleged omission to state
a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under
which they were made, not misleading, except insofar as such
Indemnifiable Losses are caused by any such untrue 



26







 





		
	 	statement or
omission or alleged untrue statement or omission (A) relating
primarily to TRW or any other member of the TRW Group or
the TRW Business or (B) based upon information that is either
furnished to TRW Automotive by TRW or any other member of the
TRW Group expressly for use therein or incorporated by
reference by TRW Automotive from any filings made by TRW or any other
member of the TRW Group with the Commission under the
Securities Act or the Exchange Act or filed with any other
Governmental Entity pursuant to applicable law, if that statement
or omission was made or occurred on or after the Distribution
Date.



         Section 4.3     Limitations on Indemnification Obligations.


         (a) 
For purposes of this Agreement, Indemnifiable Losses shall be
calculated after giving effect to any related Tax Benefit and net of any
reserves and amounts recovered from third parties, including insurance proceeds
recovered under insurance policies with respect to such Indemnifiable Losses.
Any Indemnified Party having a claim under this Article IV shall make a good
faith effort to recover all losses, costs, damages and expenses from insurers
of such Indemnified Party under applicable Policies so as to reduce the amount
of any Indemnifiable Losses hereunder. No Indemnified Party shall, in any
event, be entitled to any punitive, incidental, indirect, special or
consequential damages resulting from or arising out of any claim under this
Article IV.


         (b) 
In the event that any indemnification payment required to be made
hereunder shall be denominated in a currency other than United States dollars,
the amount of such payment shall be translated into United States dollars using
the Foreign Exchange Rate for such currency determined in accordance with the
following rules:



		
	 	        
     (i) with respect to an Indemnifiable Loss arising from
payment by a financial institution under a guarantee, comfort
letter, letter of credit, foreign exchange contract or similar
instrument, the Foreign Exchange Rate for such currency shall be
determined as of the date on which such financial institution
shall have been reimbursed;
	 
	 	        
     (ii) with respect to an Indemnifiable Loss covered by
insurance, the Foreign Exchange Rate for such currency shall be
the Foreign Exchange Rate employed by the insurance company
providing such insurance in settling such Indemnifiable Loss with
the Indemnifying Party; and
	 
	 	        
     (iii) with respect to an Indemnifiable Loss not covered by
clauses (i) or (ii) above, the indemnification payment shall be
paid in the applicable local currency without any translation into
United States dollars.



27







 






         Section 4.4     Procedures for Indemnification. If an Indemnified
Party intends to seek indemnification pursuant to this Article IV, such
Indemnified Party shall promptly provide written notice to the party
from whom indemnification is being sought (the “Indemnifying Party”), in
writing in accordance with Section 7.1 of such claim describing such
claim in reasonable detail including the sections of this Agreement
which form the basis for such claim, copies of all material written
evidence thereof and the estimated amount of the Indemnifiable Losses
that have been or may be sustained by the Indemnified Party; provided,
that the failure to provide such notice shall not affect the obligations
of the Indemnifying Party unless it is actually materially prejudiced
thereby. In particular, in case of any investigation or audit for which
indemnification of an Indemnified Party under this Article IV is
reasonably likely, such Indemnified Party shall inform the Indemnifying
Party at the commencement of such investigation or audit, to the extent
practical, so that the Indemnifying Party may participate therein. In
the event that such claim involves a claim by a third party against the
Indemnified Party, the Indemnifying Party shall have 20 days after
receipt of such notice to decide whether it will undertake, conduct and
control, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and if it so decides, the Indemnified
Party shall cooperate with the Indemnifying Party in connection with the
settlement or defense of such claim; provided, however, that the
Indemnified Party may participate in such settlement or defense through
counsel chosen by it; provided, further, that the fees and expenses of
such counsel shall be borne by the Indemnified Party; provided, further,
that if there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the reasonable judgment of
the Indemnified Party for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party
shall be entitled to retain one law firm at the Indemnifying Party’s
expense. Notwithstanding anything in this Section 4.4 to the contrary,
the
Indemnifying Party may, without the consent of the Indemnified
Party, settle or compromise any action or consent to the entry of any
judgment which is solely for money damages, which includes as an
unconditional term thereof the delivery by the claimant or plaintiff to
the Indemnified Party of a duly executed written release of the
Indemnified Party from all liability in respect of such action, which
release shall be reasonably satisfactory in form and substance to
counsel for the Indemnified Party, and which does not involve an
admission of guilt or liability. So long as the Indemnifying Party has
agreed to undertake, conduct and control the settlement or defense of
any such claim and is contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim without the
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.


         Section 4.5     Nature of Remedies. The remedies set forth in this
Article IV shall be the sole and exclusive remedies of, and in lieu of any
other remedies that may be available to, the Indemnified Parties arising out of
or relating to, whether based on contract, tort or other claims, this
Agreement, the Ancillary Agreements or any other agreements or documents signed
or executed in relation to the transactions


28







 




contemplated hereby and thereby by
the parties to this Agreement or their Affiliates, except as otherwise
expressly provided in this Agreement, the Ancillary Agreements or such other
agreements or documents. If, for any reason, the indemnification provided in
Article IV is unavailable to any Indemnified Party, or insufficient to hold it
harmless, then the Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Indemnifiable Losses in
such proportion as is appropriate to reflect all relevant equitable
considerations.


         Section 4.6     Survival of Indemnities. The obligations of TRW Automotive and
TRW under this Article IV shall survive the Distribution Date and the sale
or other transfer by it of any Assets or businesses or the assignment by it of
any Liabilities, with respect to any Indemnifiable Loss of the other related to
such Assets, businesses or Liabilities. Such obligations shall be binding upon
the successors and assigns of the TRW Business or the TRW Automotive Business, as
the case may be, and upon any transferee of all or substantially all of the
assets (in one transaction or a series of related transactions) of the TRW
Business or the TRW Automotive Business, which transferee shall assume in writing such
obligations. If 25% or more of the Assets comprising the TRW Business or
the TRW Automotive Business immediately following the Distribution, as the case may be,
are spun off to the respective stockholders of TRW or TRW Automotive, such
spun-off entity shall assume in writing a proportionate share of the indemnity
obligation contained herein of TRW or TRW Automotive, as the case may be, based
upon the relative assets of such spun-off entity and the remaining assets in
its parent, and thereafter TRW or TRW Automotive, as the case may be, shall be
released from the proportionate share so assumed. The assumption of
obligations of a transferee or spun-off entity shall not apply with respect to
any transaction consummated after the twentieth anniversary of the date of this
Agreement.


         Section 4.7     Right of Inquiry.


         (a) 
In the event of a material adverse change after the Distribution
Declaration Date in the financial condition of TRW Automotive or TRW, which change
creates a substantial likelihood that TRW Automotive or TRW, as the case may be,
will not be able to satisfy or otherwise settle, when due, its indemnification
obligations to the other party under this Article IV, TRW or TRW Automotive, as
the case may be, shall have the right, subject to entering into an agreement
with the other party to preserve confidentiality and any applicable privilege
for the benefit of such other party, upon consultation with such other party,
to have limited access on reasonable prior notice to such other party’s
personnel in order to monitor the status of pending and anticipated Actions for
which TRW or TRW Automotive, as the case may be, could be contingently liable.
Such right of inquiry shall terminate at such time as there is no longer a
substantial likelihood that the applicable party will not be able to satisfy
its indemnification obligations under this Agreement and the Ancillary
Agreements. The inquiring party shall bear its own costs of such inquiry.


         (b) 
In addition to the provisions of Section 4.7(a), each of TRW and
TRW Automotive shall have the right on an annual basis and subject to reasonable prior
notice to meet with the General Counsel of the other party (or such corporate
officer or


29







 




employee designated by such General Counsel) and receive an oral
report, in a forum in which the requesting party may ask reasonable questions
regarding the status of material pending and threatened Actions for which the
requesting party may be contingently liable. For the avoidance of doubt, no
such right shall require TRW or TRW Automotive, as the case may be, to (i) provide
non-public written information, (ii) provide confidential information, (iii)
jeopardize the benefit of any applicable privilege or (iv) engage in lengthy or
burdensome meetings or discussions. In addition, each of TRW and TRW Automotive
shall have the further right to request one additional meeting per year in
connection with the public disclosure by the other party during such year of a
material adverse development in any pending or threatened Action for which the
requesting party may be contingently liable, such meeting otherwise to be on
the same terms as set forth in this Section 4.7(b). Each of TRW and
TRW Automotive shall bear its own cost of attendance at such meetings, which shall,
unless otherwise agreed, be held at the corporate offices of the non-requesting
party.



         Section 4.8     Mutual Release. Effective as of the Distribution Declaration
Date and except as otherwise specifically set forth in this Agreement or any
Ancillary Agreement, TRW, on behalf of itself and the other members of the
TRW Group, and TRW Automotive, on behalf of itself and the other members of the
TRW Automotive Group, hereby releases and forever discharges each TRW Automotive Indemnified
Party (in the case of the release by TRW) or TRW Indemnified Party
(in the case of the release by TRW Automotive), as the case may be, in their respective
capacities as such, of and from all debts, demands, Actions, accounts,
covenants, contracts, agreements, damages and Liabilities whatsoever of every
name and
nature, both in law and in equity, which the releasing party has or ever
had or ever will have, which arise out of or relate to events, circumstances or
actions taken by such other party occurring or failing to occur or any
conditions existing on or prior to the Distribution Declaration Date; provided,
however, that the foregoing general release shall not apply to (i) any
Liabilities or other obligations (including Liabilities with respect to
payment, reimbursement, indemnification or contribution) under this Agreement
or any Ancillary Agreement or assumed, transferred, assigned, allocated or
arising under this Agreement or any Ancillary Agreement (including any
Liability that the parties may have with respect to payment, performance,
reimbursement, indemnification or contribution pursuant to this Agreement or
any Ancillary Agreement for claims brought against the parties by third
parties) and the foregoing release will not affect any party’s right to enforce
this Agreement or any Ancillary Agreement in accordance with their terms.


ARTICLE V



CERTAIN ADDITIONAL MATTERS AND COVENANTS



         Section 5.1     Use of Names; Intellectual Property Licenses.


         (a) 
From and after the Distribution Declaration Date, subject to the next
sentence and Section 5.1(c), TRW or the other members of the TRW
Group shall own all rights of TRW or any of its Affiliates (including
members of the


30







 




TRW Automotive Group) in, and to the use of, the TRW Intellectual
Property and TRW Automotive or the other members of the TRW Automotive Group shall not use or
have any rights to the TRW Intellectual Property. Notwithstanding the
foregoing, the TRW Group agrees to grant to TRW Automotive and the other members
of the TRW Automotive Group a limited trademark license to use certain TRW Marks
solely in connection with the TRW Automotive Business in the form of, and under the
terms of, the Trademark License Agreement.



         (b) 
From and after the Distribution Declaration Date, subject to the next
sentence and Section 5.1(d), TRW Automotive or the other members of the TRW Automotive Group
shall own all rights of TRW or any of its Affiliates (including members of
the TRW Group) in, and to the use of, the TRW Automotive Intellectual Property,
and the TRW Group shall not use or have any rights to the TRW Automotive
Intellectual Property. Notwithstanding the foregoing, TRW and the other
members of the TRW Group shall have the right to grant to the ASG
Purchaser pursuant to the ASG Sale Agreement certain rights to use
the TRW Automotive Intellectual Property. Subject to the preceding sentence, TRW shall cease using the TRW Automotive Marks
as soon as practicable after the Distribution Declaration Date.



         (c) 
The parties shall enter into the TRW Intellectual Property
License Agreement whereby TRW or another member of the TRW Group
shall grant to TRW Automotive or another member of the TRW Automotive Group, effective from and
after the Distribution Declaration Date, in those jurisdictions where TRW
or any other member of the TRW Group has such rights, a non-exclusive license to the TRW Licensed IP,
and to use the foregoing, to make, have made, use and sell products and
processes solely in the field of the TRW Automotive Business.



         (d) 
The parties shall enter into the TRW Automotive Intellectual Property License
Agreement whereby TRW Automotive or another member of the TRW Automotive Group shall grant to
TRW or another member of the TRW Group, effective from and after the
Distribution Declaration Date, in those jurisdictions where TRW Automotive or any other
member of the TRW Automotive Group has such rights, a non-exclusive license to the TRW Automotive Licensed IP, and to use the
foregoing, to make, have made, use and sell products and processes solely in
the field of the TRW Business.


         Section 5.2     Further Assurances; Cooperation. Each of the parties hereto
promptly shall execute such documents and other instruments and take such



31







 






further actions as may be reasonably required or desirable to carry out the
provisions hereof and to consummate the transactions contemplated by this
Agreement and each of the Ancillary Agreements. The parties shall cooperate
with each other in all commercially reasonable respects to ensure the transfer
to TRW Automotive or the other members of the TRW Automotive Group of the TRW Automotive Business, the
TRW Automotive Assets and the TRW Automotive Liabilities, and the retention by TRW or of
the TRW Group of the TRW Business, the TRW Assets and the
TRW Liabilities, including (i) allocating rights and obligations under
contracts, agreements and other arrangements, if any, of TRW that relate
to both the TRW Business and the TRW Automotive Business, (ii) determining whether
to enter into any service or other sharing agreements (other than the Ancillary
Agreements) on a mutually acceptable arm’s-length basis that may be necessary
to assure a smooth and orderly transition, and (iii) obtaining any reasonably
necessary or appropriate third-party consents, licenses and permits in
connection with the Restructuring and the Distribution. In case at any time
after the Distribution Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary or desirable action.


         Section 5.3     
Non-Competition.


         (a) 
Notwithstanding anything to the contrary in this Section 5.3(a), for a
period of ten (10) years from and after the Distribution Declaration Date,
TRW Automotive shall not engage, directly or through any member of the TRW Automotive Group, in
any of the businesses comprising the TRW Business using as its trade name
any name containing the words “TRW”.


         (b) 
Notwithstanding anything to the contrary in this Section 5.3(b), for a
period of ten (10) years from and after the Distribution Declaration Date,
TRW shall not engage, directly or through any member of the TRW
Group, in any of the businesses comprising the TRW Automotive Business using as its
trade name any name containing the words “TRW Automotive”.


         (c) 
From and after the Distribution Declaration Date, TRW shall, and
shall cause the other members of the TRW Group to, comply with all
applicable non-competition obligations of TRW and the other members of the
TRW Group in effect as of the Distribution. From and after the
Distribution Declaration Date, TRW Automotive shall, and shall cause the other members
of the TRW Automotive Group to, comply with all applicable non-competition obligations
of TRW Automotive and the other members of the TRW Automotive Group in effect as of the
Distribution.


         Section 5.4     
Access to Information.


         (a) 
From and after the Distribution Declaration Date, TRW shall
afford to TRW Automotive and its authorized accountants, counsel and other designated
representatives reasonable access and duplicating rights during normal business
hours to all records, books, contracts, instruments, computer data and other
data and information


32







 




(collectively, “Information”) within TRW’s possession
insofar as such access is reasonably required by TRW Automotive, subject to appropriate
restrictions for classified and/or legally privileged information. Similarly,
from and after the Distribution Declaration Date, TRW Automotive shall afford to
TRW and its authorized accountants, counsel and other designated
representatives reasonable access and duplicating rights during normal business
hours to Information within TRW Automotive’s possession, insofar as such access is
reasonably required by TRW, subject to appropriate restrictions for
classified and/or legally privileged information. Information may be requested
under this Article VII for, without limitation, audit, accounting, claims,
litigation and tax purposes, as well as for purposes of fulfilling disclosure
and reporting obligations and for performing this Agreement and the
transactions contemplated hereby, subject to appropriate restrictions for
classified and/or legally privileged information. Neither TRW nor TRW Automotive
shall disclose Information pursuant to this Article VI to the extent such
disclosure requires an export license and such license has not been obtained.


         (b) 
In furtherance of the rights and obligations of the parties set forth
in Section 5.4(a):



		
	 	        
     (i) Each party hereto acknowledges that
(A) the members of
the TRW Group on the one hand, and the members of the TRW Automotive
Group, on the other hand, have or may obtain Information regarding
a member of the other Group, or any of its operations, employees,
Assets or Liabilities (whether in documents or stored in any other
form or known to its employees or agents) that is or may be
protected from disclosure pursuant to the attorney-client
privilege, the work product doctrine or other applicable
privileges (“Privileged Information”); (B) there are a number of
actual, threatened or future Actions that have been or may be
asserted by or against, or otherwise affect, each or both of
TRW and TRW Automotive (or members of either Group) (“Litigation
Matters”); (C) TRW and TRW Automotive have a common legal interest in
Litigation Matters, in the Privileged Information, and in the
preservation of the confidential status of the Privileged
Information, in each case relating to the TRW Business or the
TRW Automotive Business as it existed prior to the Distribution
Declaration Date or relating to or arising in connection with the
relationship between the members of the Groups on or prior to the
Distribution Declaration Date; and (D) TRW and TRW Automotive intend
that the transactions contemplated by this Agreement and the
Ancillary Agreements and any transfer of Privileged Information in
connection herewith or therewith shall not operate as a waiver of
any potentially applicable privilege.
	 
	 	       
      (ii) Each of TRW and
TRW Automotive agrees, on behalf of itself
and each member of its Group, not to disclose or otherwise waive
any privilege attaching to any Privileged Information relating to
the TRW Automotive Business or the TRW Business as it existed prior
to the Distribution Declaration Date, respectively, or relating to
or arising in connection with the relationship between the Groups
on or prior to the 



33







 





		
	 	Distribution Declaration Date, without
providing prompt written notice to and obtaining the prior written
consent of the other, which consent shall not be unreasonably
withheld or delayed and shall not be withheld or delayed if the
other party certifies that such disclosure is to be made in
response to a likely threat of suspension or debarment or similar
action; provided, however, that TRW and TRW Automotive may make such
disclosure or waiver with respect to Privileged Information if
such Privileged Information relates, in the case of TRW,
solely to the TRW Business as it existed prior to the
Distribution Declaration Date or, in the case of TRW Automotive, solely to
the TRW Automotive Business as it existed prior to the Distribution
Declaration Date. In the event of a disagreement between any
member of the TRW Group and any member of the TRW Automotive Group
concerning the reasonableness of withholding such consent, no
disclosure shall be made prior to a final, nonappealable
resolution of such disagreement by a court of competent
jurisdiction.
	 
	 	        
     (iii) Upon any member of the TRW
Group or any member of
the TRW Automotive Group receiving any subpoena or other
compulsory disclosure notice from a court, other Governmental
Entity or otherwise which requests disclosure of Privileged
Information, in each case relating to the TRW Automotive Business or the
TRW Business, respectively, as it existed prior to the
Distribution Declaration Date or relating to or arising in
connection with the relationship between the members of the Groups
on or prior to the Distribution Declaration Date, the recipient of
the notice shall promptly provide to TRW, in the case of
receipt by a member of the TRW Automotive Group, or TRW Automotive, in the case of
receipt by a member of the TRW Group, a copy of such notice,
the intended response, and all materials or information relating
to the other Group that might be disclosed. In the event of a
disagreement as to the intended response or disclosure, unless and
until the disagreement is resolved as provided in Section
5.4(b)(ii), TRW and TRW Automotive shall cooperate to assert all
defenses to disclosure claimed by either Group, at the cost and
expense of the Group claiming such defense to disclosure, and
shall not disclose any disputed documents or information until all
legal defenses and claims of privilege have been finally
determined.



         
Section 5.5     Production of Witnesses. At all times from and after the
Distribution Declaration Date, each of TRW Automotive and TRW shall use
commercially reasonable efforts to make available to the other upon written
request, the officers, directors, employees and agents of the members of its
Group as witnesses to the extent that such persons may reasonably be required
in connection with any Action in which the requesting party may from time to
time be involved.


         
Section 5.6     Reimbursement. Except to the extent otherwise contemplated
by any Ancillary Agreement, either party providing Information or witness
services to the other party under this Article VI shall be entitled to
receive from the recipient, upon the presentation of invoices therefor,
payments for such amounts,


34







 




relating to supplies, disbursements and other
out-of-pocket expenses and the salary costs of employees (based on the time
such employees spend providing Information or witness services pursuant to
this Section 5.6), as may be reasonably incurred in providing such
Information or witness services.


         
Section 5.7     Retention of Records. Except as otherwise required by law or
agreed to in writing, each of TRW and TRW Automotive may destroy or otherwise
dispose of any of the Information in accordance with the records retention
policy of TRW at the date of this Agreement as set forth on Exhibit J;
provided that, TRW and TRW Automotive shall have the right to request in writing
that the other party retain specified Information relating in any material
respect to the TRW Business or the TRW Automotive Business, respectively, for a
period of time beyond the period contemplated by such records retention policy
(or, alternatively,
deliver such Information to the requesting party prior to the destruction
or disposal thereof) and the other party shall use commercially reasonable
efforts to accommodate such request to the extent such request is reasonable
and at the requesting party’s expense.


         
Section 5.8     Confidentiality. Each of TRW and the other members of
the TRW Group, on the one hand, and TRW Automotive and the other members of the
TRW Automotive Group, on the other hand, shall hold, and shall cause its
representatives, consultants and advisors to hold, in strict confidence, all
Information concerning the other in its possession or furnished by the other or
the other’s representatives pursuant to this Agreement (except to the extent
that such Information has been (a) in the public domain through no fault of
such party or (b) later lawfully acquired from other sources by such party),
and each party shall not release or disclose such Information to any other
Person, except representatives, consultants and advisors, unless compelled to
disclose by judicial or administrative process or, as advised by its counsel,
by other requirements of law. If a party or any member of such party’s Group
becomes legally compelled to disclose any Information, such party shall
promptly notify the other party so that the other party may seek a protective
order or other remedy or waive such party’s compliance with this Section 5.8.
If no protective order or other remedy is obtained or waiver granted, such
party shall furnish only the portion of the Information that it is advised by
counsel is legally required and shall exercise commercially reasonable effort
to obtain reliable assurance that confidential treatment shall be accorded such
Information.


ARTICLE VI



TERMINATION



         
Section 6.1     Termination. Notwithstanding anything contained in this
Agreement or the Ancillary Agreements to the contrary, this Agreement may be
terminated and the Restructuring and the Distribution may be abandoned at any
time prior to the Distribution Declaration Date by and in the sole discretion
of the TRW Board without the approval of TRW Automotive or the shareholders of
TRW. In the event of


35







 




such termination, no party shall have any liability
of any kind to any other party on account of such termination.


ARTICLE VII



MISCELLANEOUS



         
Section 7.1     Notices. All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile transmission) and shall be given (i)
by personal delivery to the appropriate address as set forth below (or at such
other address for the party as shall have been previously specified in writing
to the other party), (ii) by reliable overnight courier service (with
confirmation) to the appropriate address as set forth below (or at such other
address for the party as shall have been previously specified in writing to the
other party), or (iii) by facsimile transmission (with confirmation) to the
appropriate facsimile number set forth below (or at such other facsimile number
for the party as shall have been previously specified in writing to the other
party) with follow-up copy by reliable overnight courier service the next
Business Day:


         
(a)  if to TRW Automotive, to:



	 	 	[

Attention: [

Telecopy: [	]

]

]



         
(b)  if to TRW, to:



	 	 	[

Attention: Secretary

Telecopy: [	]

 

]



         All
such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. (Cleveland, Ohio time) and such day is a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding Business Day in the place
of receipt.


         
Section 7.2     Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by an
authorized officer of each party. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by an authorized
officer of the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure.


36







 


         
Section 7.3     Headings. The table of contents and the article, section,
paragraph and other headings contained in this Agreement are inserted for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.


         
Section 7.4     Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.


         
Section 7.5     Entire Agreement. This Agreement, the Ancillary Agreements,
the Exhibits hereto and the Schedules hereto constitute the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersede and cancel all prior agreements, negotiations, correspondence,
undertakings, understandings and communications of the parties, oral and
written, with respect to the subject matter hereof.


         
Section 7.6     Governing Law. THIS AGREEMENT, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY
OTHER JURISDICTION OTHER THAN THE STATE OF OHIO APPLICABLE HERETO.


         
Section 7.7     Resolution of Disputes. All disputes arising out of or
relating to this Agreement or an Ancillary Agreement or the breach, termination
or validity thereof or the parties’ performance hereunder or thereunder
(“Dispute”) shall be resolved as provided by this Section 7.7.


         
(a)  Negotiation of Disputes.



		
	 	       
      (i) Any party shall give
the other party written notice of
any Dispute. The parties shall attempt to resolve such Dispute
promptly by negotiation between executive officers who have
authority to settle the Dispute and who are at a higher level of
management than the persons with direct responsibilities for
administration of this Agreement.
	 
	 	       
      (ii) Within 15 days after
delivery of the notice, the party
receiving the notice shall submit to the other a written response.
The notice and the response shall include: (A) a statement of
each party’s position and a summary of arguments supporting that
position and (B) the name and title of the executive officer who
will represent that party and of any other person who will
accompany the executive officer during the negotiations. Within
30 days after delivery of the disputing party’s notice, the
executive officers of both parties shall meet at a mutually
acceptable 



37







 





		
	 	time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the Dispute.



         (b)  Arbitration.



		
	 	       
      (i) If the Dispute has not
been resolved by executive officer
negotiation within 45 days of the disputing party’s notice
requesting negotiation, or if the parties fail to meet within 30
days from delivery of said notice, such Dispute shall on the
demand of any party, be finally settled under the Rules of
Arbitration of the Center for Public Resources (“CPR”) then in
effect, except as modified herein or by mutual agreement of the
parties.
	 
	 	       
      (ii) The arbitration shall be
held in Cleveland, Ohio. The
arbitration proceedings shall be conducted, and the award shall be
rendered, in the English language.
	 
	 	       
      (iii) There shall be three
arbitrators selected pursuant to
the CPR rules from the CPR the CPR national and regional panels.
All arbitrators shall be neutral, disinterested, independent and
impartial.
	 
	 	       
      (iv) In rendering an award,
the arbitral tribunal shall be
required to follow the substantive law of the jurisdiction
designated by the parties herein. This arbitration agreement and
any award rendered thereunder shall be governed by the United
Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, 1958, and the Federal Arbitration Act, 9 USC § 1
et seq. The arbitral tribunal shall not be empowered to award
damages in excess of compensatory damages except in the case of
fraud, and each party hereby irrevocably waives any right to
recover punitive, exemplary or similar damages with respect to any
dispute except in the case of fraud.
	 
	 	       
      (v) The award shall be final
and binding upon the parties and
shall be the sole and exclusive remedy between the parties with
regard to any claim or counterclaim submitted to the arbitral
tribunal. Judgment upon any award may be entered in any court
having jurisdiction thereof.
	 
	 	       
      (vi) By agreeing to arbitration,
the parties do not intend to
deprive any court of its jurisdiction to issue a pre-arbitral
injunction, pre-arbitral attachment or other order in aid of
arbitration proceedings and the enforcement of any award. Without
prejudice to such provisional remedies as may be available under
the jurisdiction of a national court, the arbitral tribunal shall
have full authority to grant provisional remedies or to order the
parties to request that a court modify or vacate any temporary or
preliminary relief issued by a such court, and to award damages
for the failure of any party to respect the arbitral 



38







 





		
	 	tribunal’s
orders to that effect. The parties hereby unconditionally and
irrevocably submit to the non-exclusive jurisdiction of the state
or federal courts located in Cleveland, Ohio for the purpose of
any preliminary relief
in aid of arbitration, or for enforcement of any award, and
hereby waive any objection to such jurisdiction including without
limitation objections by reason of lack of personal jurisdiction,
improper venue, or inconvenient forum.



         (c) 
Notwithstanding the foregoing, any Dispute regarding the following is
not required to be negotiated or arbitrated prior to seeking relief from a
court of competent jurisdiction: breach of any obligation of confidentiality,
infringement, misappropriation or misuse of any intellectual property right.
The parties acknowledge that their remedies at law for such a breach or
threatened breach would be inadequate and, in recognition of this fact, upon
such breach or threatened breach, either party, without posting any bond, and
in addition to all other remedies which may be available, shall be entitled to
immediately seek or obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available.


         
Section 7.8     Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.


         
Section 7.9     Assignment. This Agreement may not be assigned by either
party without the written consent of the other party. No such assignment shall
relieve either party of any of its rights and obligations hereunder.


         
Section 7.10     Fees and Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, TRW and TRW Automotive shall each
be responsible for one-half of the fees and expenses incurred by TRW and
TRW Automotive in connection with the transactions contemplated by this Agreement.


         
Section 7.11     Binding Nature; Third-Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their respective successors and permitted assigns. Except for the provisions
of Article IV of this Agreement which are intended for the benefit of, and to
be enforceable by, any of the applicable Indemnified Parties in their
respective capacities as such, nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person or Persons any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.


         
Section 7.12     Severability. This Agreement shall be deemed severable; the invalidity or
unenforceability of any term or provision of this Agreement shall not affect
the validity or enforceability of this Agreement or of any other term hereof,
which shall remain in full force and effect, for so long as the economic or
legal


39







 




substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, each party agrees that such restriction may
be enforced to the maximum extent permitted by law, and each party hereby
consents and agrees that such scope may be judicially modified accordingly in
any proceeding brought to enforce such restriction.


         
Section 7.13     No Right of Setoff. Neither party hereto nor any Affiliate
thereof may deduct from, set off, holdback or otherwise reduce in any manner
whatsoever against any amounts such Persons may owe to the other party hereto
or any of it Affiliates any amounts owed by such other party or its Affiliates
to the first party or its Affiliates.


         
Section 7.14     Currency. All monetary amounts mentioned or referred to
herein are in United States dollars unless otherwise indicated.


         
Section 7.15     Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.


         
Section 7.16     Construction.


         (a) 
For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires, (ii) the words “hereof,”
“herein,” and “herewith” and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including the
Schedules hereto and the Exhibits hereto) and not to any particular provision
of this Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, and exhibits and
schedules of this Agreement unless otherwise specified, (iii) the words
“including” and words of similar import when used in this Agreement shall mean
“including, without limitation,” unless otherwise specified, (iv) the word “or”
shall not be exclusive, (v) TRW Automotive and TRW will be referred to herein
individually as a “party” and collectively as “parties” (except where the
context otherwise requires) and (vi) the phrases “used primarily in” or “relate
primarily to” are to be determined in relation to the business of TRW and
its Affiliates collectively.


         (b) 
The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement. In the event of any conflict or inconsistency between the
provisions of this Agreement and the provisions of the Tax Sharing Agreement
(including with respect to indemnification), the provisions of the Tax Sharing
Agreement shall apply.


40







 


         (c)  Any reference to any federal, state, local or non-U.S. statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context otherwise requires.


41







 


         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.



	 	 	 	 	 
	 	 	TRW INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:

Title:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	TRW
AUTOMOTIVE INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:

Title: