<PAGE>
As filed with the Securities and Exchange Commission on April 19, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
______________________________
NORTHROP GRUMMAN CORPORATION
(Exact name of Registrant as specified in its charter)
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<CAPTION>
<S> <C> <C>
DELAWARE 3721 95-1055798
State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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1840 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(310) 553-6262
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
JAMES C. JOHNSON, CORPORATE VICE PRESIDENT AND SECRETARY
NORTHROP GRUMMAN CORPORATION
1840 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(310) 553-6262
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
__________________________________
copies to:
John D. Hussey, Esq.
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071-1448
(213) 620-1780
__________________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
__________________________________
If the securities registered on this form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
- --------------------------- ------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
7% NOTES DUE 2006 $400,000,000 100%
7 3/4% DEBENTURES DUE 2016 $300,000,000 100% $1,000,000,000 $344,827
7 7/8% DEBENTURES DUE 2026 $300,000,000 100%
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
CROSS-REFERENCE SHEET
LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY
ITEMS IN FORM S-4
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Item No. Caption Location In Prospectus
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Item 1 Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . . . . . . . Facing Page of Registration Statement;
Cross-Reference Sheet; Outside Front
and Inside Front Cover Page of Prospectus
Item 2 Inside Front and Outside Back Cover Pages of Prospectus. . Inside Front and Outside Back Cover
Pages of Prospectus
Item 3 Risk Factors, Ratio of Earnings to Fixed Charges, and
Other Information. . . . . . . . . . . . . . . . . . . . . Summary; The Company
Item 4 Terms of the Transaction . . . . . . . . . . . . . . . . . The Exchange Offer; Description of
New Securities; Certain Federal Tax
Considerations
Item 5 Pro Forma Financial Information. . . . . . . . . . . . . . Summary Historical and Pro Forma Financial
Data; Unaudited Pro Forma Condensed Combined
Financial Data
Item 6 Material Contacts With the Company Being Acquired. . . . . Not Applicable
Item 7 Additional Information Required for Reoffering by Persons
and Parties Deemed to be Underwriters. . . . . . . . . . . Plan of Distribution
Item 8 Interests of Named Experts and Counsel . . . . . . . . . . Not Applicable
Item 9 Disclosure of Commission Position on Indemnification for
Securities Act Liabilities . . . . . . . . . . . . . . . . Not Applicable
Item 10 Information with Respect to S-3 Registrants. . . . . . . . Incorporation of Certain Documents
by Reference; Summary; Capitalization;
Selected Consolidated Financial Data;
Unaudited Pro Forma Condensed Combined
Financial Data; The Company; Description
of New Securities; Description of Other
Senior Debt
Item 11 Incorporation of Certain Information by Reference. . . . . Incorporation of Certain Documents
by Reference
Item 12 Information With Respect to S-2 or S-3 Registrants . . . . Not Applicable
Item 13 Incorporation of Certain Information by Reference. . . . . Not Applicable
Item 14 Information With Respect to Registrants Other than S-3 or
S-2 Registrants. . . . . . . . . . . . . . . . . . . . . . Not Applicable
Item 15 Information With Respect to S-3 Companies. . . . . . . . . Not Applicable
Item 16 Information With Respect to S-2 or S-3 Companies . . . . . Not Applicable
Item 17 Information With Respect to Companies Other than S-2 or
S-3 Companies. . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Item 18 Information if Proxies, Consents or Authorizations Are to
be Solicited . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Item 19 Information if Proxies, Consents or Authorizations are Not
to be Solicited, or in an Exchange Offer . . . . . . . . . Incorporation of Certain Documents
by Reference; Summary; The Exchange
Offer; Description of New Securities;
Certain Federal Tax Considerations
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Subject to Completion, Dated April __, 1996
NORTHROP GRUMMAN CORPORATION
Offer to Exchange All Outstanding
7% Notes Due 2006
($400,000,000 principal amount outstanding)
For 7% Notes Due 2006
7 3/4% Debentures Due 2016
($300,000,000 principal amount outstanding)
For 7 3/4% Debentures Due 2016
7 7/8% Debentures Due 2026
($300,000,000 principal amount outstanding)
For 7 7/8% Debentures Due 2026
The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on ____________, 1996, unless extended.
Northrop Grumman Corporation (the "Company") hereby offers (the "Exchange
Offer"), upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal"), to exchange $1,000 in principal amount of its (i) 7% Notes Due
2006 (the "New Notes") for each $1,000 in principal amount of its outstanding 7%
Notes Due 2006 (the "Old Notes"), (ii) 7 3/4% Debentures Due 2016 (the "New 2016
Debentures") for each $1,000 in principal amount of its outstanding 7 3/4%
Debentures Due 2016 (the "Old 2016 Debentures"), and (iii) 7 7/8% Debentures Due
2026 (the "New 2026 Debentures") for each $1,000 in principal amount of its
outstanding 7 7/8% Debentures Due 2026 (the "Old 2026 Debentures") (the Old
Notes, the Old 2016 Debentures and the Old 2026 Debentures are collectively
referred to herein as the "Old Securities"; the New Notes, the New 2016
Debentures and the New 2026 Debentures are collectively referred to herein as
the "New Securities"; and the Old Securities and the New Securities are
collectively referred to herein as the "Securities"). An aggregate principal
amount of $400,000,000 of Old Notes is outstanding, an aggregate principal
amount of $300,000,000 of Old 2016 Debentures is outstanding, and an aggregate
principal amount of $300,000,000 of Old 2026 Debentures is outstanding. See
"The Exchange Offer." For purposes of the Exchange Offer, "Eligible Holder"
shall mean the registered owner of any Old Security as reflected on the records
of The Chase Manhattan Bank (National Association), as registrar of the Old
Securities (in such capacity, the "Registrar"), or any person whose Old Security
is held of record by the depository of the Old Securities.
The Company will accept for exchange any and all Old Securities that are
validly tendered prior to 5:00 p.m., New York City time, on __________, 1996 (as
such date may be extended, the "Expiration Date"). Tenders of Old Securities
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
principal amount of the Old Securities being tendered for exchange. However,
the Exchange Offer is subject to certain customary conditions, which may be
waived by the Company, and to the terms and provisions of the Registration
Rights Agreement dated as of March 1, 1996 (the "Registration Rights Agreement")
among the Company, CS First Boston Corporation, J.P. Morgan Securities Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc
(collectively, the "Initial Purchasers"). The Old Securities may be tendered
only in multiples of $1,000. See "The Exchange Offer."________________________
(continued on following page)
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
_________________________
The date of this Prospectus is _____________, 1996
<PAGE>
The Old Securities were issued in a transaction (the "Debt Offering")
pursuant to which the Company issued an aggregate of $1,000,000,000 principal
amount of the Old Securities to the Initial Purchasers on March 1, 1996 (the
"Closing Date") pursuant to a Purchase Agreement dated February 27, 1996 (the
"Purchase Agreement") among the Company and the Initial Purchasers. The
Initial Purchasers subsequently resold the Old Securities in reliance on Rule
144A under the Securities Act of 1933, as amended (the "Securities Act").
The Company and the Initial Purchasers also entered into the Registration
Rights Agreement pursuant to which the Company granted certain registration
rights for the benefit of the holders of the Old Securities. The Exchange
Offer is intended to satisfy certain of the Company's obligations under the
Registration Rights Agreement with respect to the Old Securities. See "The
Exchange Offer -- Purpose and Effect."
The Old Securities were issued under the Indenture, dated as of October 15,
1994 (the "Indenture"), among the Company and The Chase Manhattan Bank
(National Association), as trustee (in such capacity, the "Trustee"). The
New Securities will be issued under the Indenture. The New Notes, the New
2016 Debentures and the New 2026 Debentures shall constitute the same series
of Securities (as defined in the Indenture) as the Old Notes, the Old 2016
Debentures and the Old 2026 Debentures, respectively, under the Indenture
and, accordingly, will vote together, respectively, as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding principal amount thereof have taken certain actions or exercised
certain rights under the Indenture. The form and terms of the New Securities
will be identical in all material respects to the form and terms of the Old
Securities, except that (i) the New Securities have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof, (ii) holders of New Securities will not be entitled to Additional
Interest (as defined) otherwise payable under the terms of the Registration
Rights Agreement in respect of Old Securities held by such holders during any
period in which a Registration Default (as defined) is continuing and (iii)
holders of New Securities will not be, and upon the consummation of the
Exchange Offer, Eligible Holders of Old Securities will no longer be,
entitled to certain rights under the Registration Rights Agreement intended
for the holders of unregistered securities. The Exchange Offer shall be
deemed consummated upon the delivery by the Company to the Registrar under
the Indenture of New Securities in the same aggregate principal amount as the
aggregate principal amount of Old Securities of the corresponding series that
are validly tendered by holders thereof pursuant to the Exchange Offer. See
"The Exchange Offer -- Termination of Certain Rights" and "-- Book-Entry
Procedures for Tendering Old Securities" and "Description of New Securities."
The New Securities will bear interest from March 1, 1996. Eligible Holders
of Old Securities whose Old Securities are accepted for exchange will be deemed
to have waived the right to receive any payment in respect of interest on the
Old Securities accrued from March 1, 1996 to the date of the issuance of the New
Securities. Interest on the New Securities is payable semiannually on March 1
and September 1 of each year, commencing September 1, 1996 (each, an "Interest
Payment Date"), accruing from March 1, 1996 (i) with respect to the New Notes,
at a rate of 7% per annum, (ii) with respect to the New 2016 Debentures, at a
rate of 7 3/4% per annum, and (iii) with respect to the New 2026 Debentures, at
a rate of 7 7/8% per annum, to each person in whose name such New Security shall
have been registered at the close of business on the February 15 or August 15
(each, a "Regular Record Date") next preceding such Interest Payment Date. The
New Notes will mature on March 1, 2006, the New 2016 Debentures will mature on
March 1, 2016 and the New 2026 Debentures will mature on March 1, 2026. See
"Description of New Securities."
The New Securities will be unsecured and unsubordinated obligations of the
Company and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Company. The New Securities will not be
redeemable.
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, the Company believes that New Securities issued pursuant to the
Exchange Offer to an Eligible Holder in exchange for Old Securities of the
corresponding series may be offered for resale, resold and otherwise transferred
by such Eligible Holder (other than a broker-dealer who purchased Old Securities
directly from the Company for resale pursuant to Rule 144A under the Securities
Act or any other available exemption under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the Eligible Holder is not an affiliate of the
Company, is acquiring the New Securities in the ordinary course of business and
is not participating, and has no arrangement or understanding with any person to
participate, in the distribution of the New Securities. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company, as required
by the Registration Rights Agreement, that such conditions have been met. Each
broker-dealer that receives New Securities for its own account pursuant to the
Exchange Offer must acknowledge that it
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<PAGE>
will deliver a prospectus in connection with any resale of such New Securities.
"The Exchange Offer-Resales of the New Securities." This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Securities received in exchange for Old
Securities where such Old Securities were acquired by such broker-dealer as a
result of market-making or other trading activities.
As of March 1, 1996, Cede & Co. ("Cede"), as nominee for The Depository
Trust Company, New York, New York ("DTC"), was the sole registered holder of the
Old Securities. The Company believes that none of DTC's participants is an
affiliate (as such term is defined in Rule 405 of the Securities Act) of the
Company. There has previously been only a limited secondary market, and no
public market, for the Old Securities. In addition, the Initial Purchasers have
advised the Company that they currently intend to make a market in the New
Securities; however, the Initial Purchasers are not obligated to do so and any
market making activities may be discontinued by any of the Initial Purchasers at
any time. Therefore, there can be no assurance that an active market for the
New Securities will develop. If such a trading market develops for the New
Securities, future trading prices will depend on many factors, including, among
other things, prevailing interest rates, the Company's results of operations and
the market for similar securities. Depending on such factors, the New
Securities may trade at a discount from their face value.
The Old Securities were issued originally in global form (the "Global Old
Securities"). The Global Old Securities were deposited with, or on behalf of,
DTC, as the initial depository with respect to the Old Securities (in such
capacity, the "Depository"). The Global Old Securities are registered in the
name of Cede, as nominee of DTC, and beneficial interests in the Global Old
Securities are shown on, and transfers thereof are effected only through,
records maintained by the Depository and its participants. The use of the
Global Old Securities to represent certain of the Old Securities permits the
Depository's participants, and anyone holding a beneficial interest in an Old
Security registered in the name of such participant, to transfer interests in
the Old Securities electronically in accordance with the Depository's
established procedures without the need to transfer a physical certificate. The
New Securities will also be issued initially as notes in global form (the
"Global New Securities," and together with the Global Old Securities, the
"Global Securities") and deposited with, or on behalf of, the Depository. After
the initial issuance of the Global New Securities, New Securities in
certificated form will be issued in exchange for a holder's proportionate
interest in the Global New Securities only as set forth in the Indenture.
The Company will not receive any proceeds from this Exchange Offer.
Pursuant to the Registration Rights Agreement, the Company will bear certain
registration expenses.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD SECURITIES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST FROM JAMES C. JOHNSON, CORPORATE VICE PRESIDENT AND
SECRETARY. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY [5 DAYS PRIOR TO EXPIRATION DATE], 1996.
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<PAGE>
TABLE OF CONTENTS
Page
----
FORWARD LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . . 5
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
THE EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . 22
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA. . . . . . . . . . . . 23
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
DESCRIPTION OF NEW SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 31
DESCRIPTION OF OTHER SENIOR DEBT . . . . . . . . . . . . . . . . . . . . . . 37
CERTAIN FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 37
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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FORWARD LOOKING STATEMENTS
THE FORWARD LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS,
CONCERNING, AMONG OTHER THINGS, FUTURE RESULTS OF OPERATIONS, DELIVERIES,
TRENDS, CASH FLOWS, MARKETS AND PROGRAMS ARE PROJECTIONS AND ARE NECESSARILY
SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES. ACTUAL OUTCOMES ARE DEPENDENT UPON
THE COMPANY'S SUCCESSFUL PERFORMANCE OF INTERNAL PLANS, GOVERNMENT CUSTOMERS'
BUDGETARY RESTRAINTS, CUSTOMER CHANGES IN SHORT RANGE AND LONG RANGE PLANS,
DOMESTIC AND INTERNATIONAL COMPETITION IN BOTH THE DEFENSE AND COMMERCIAL AREAS,
PRODUCT PERFORMANCE, CONTINUED DEVELOPMENT AND ACCEPTANCE OF NEW PRODUCTS,
PERFORMANCE ISSUES WITH KEY SUPPLIERS AND SUBCONTRACTORS, GOVERNMENT IMPORT AND
EXPORT POLICIES, TERMINATION OF GOVERNMENT CONTRACTS, POLITICAL PROCESSES,
LEGAL, FINANCIAL AND GOVERNMENTAL RISKS RELATED TO INTERNATIONAL TRANSACTIONS
AND GLOBAL NEEDS FOR MILITARY AND COMMERCIAL AIRCRAFT AND ELECTRONIC SYSTEMS AND
SUPPORT, AS WELL AS OTHER ECONOMIC, POLITICAL AND TECHNOLOGICAL RISKS AND
UNCERTAINTIES.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents or information filed with the Commission:
(a) An Annual Report on Form 10-K for the year ended December 31, 1995;
(b) A Current Report on Form 8-K dated March 18, 1996; and
(c) All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act of 1934, as amended (the "Exchange Act") on or
after the date of this Prospectus and prior to the termination of the offering
made hereby.
Any statement contained herein or in any documents incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a subsequent
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
AVAILABLE INFORMATION
The Company has filed a registration statement on Form S-4 (together with
any amendments thereto, the "Registration Statement") with the Commission under
the Securities Act with respect to the New Securities. This Prospectus, which
constitutes a part of the Registration Statement, omits certain information
contained in the Registration Statement and reference is made to the
Registration Statement and the exhibits and schedules thereto for further
information with respect to the Company and the New Securities offered hereby.
This Prospectus contains summaries of the material terms and provisions of
certain documents and in each instance reference is made to the copy of such
document filed as an exhibit to the Registration Statement. Each such summary
is qualified in its entirety by such reference.
The Company is subject to the reporting requirements of the Exchange
Act, and in accordance therewith is required to file reports and other
information with the Commission.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the transactions to which this
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<PAGE>
Prospectus relates shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents. See
"Incorporation of Certain Documents by Reference." The Company will provide a
copy of any and all of such documents (exclusive of exhibits unless such
exhibits are specifically incorporated by reference therein) without charge to
each person to whom a copy of this Prospectus is delivered, upon written or oral
request to James C. Johnson, Corporate Vice President and Secretary, Northrop
Grumman Corporation, 1840 Century Park East, Los Angeles, California 90067,
(310) 553-6262.
The Registration Statement (including the exhibits and schedules thereto)
and the periodic reports and other information filed by the Company with the
Commission may be inspected without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at 7 World Trade Center,
13th Floor, New York, New York 10048, and Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and its public reference
facilities in New York, New York and Chicago, Illinois, at prescribed rates.
The Common Stock of the Company is traded under the symbol "NOC" on the New York
Stock Exchange. Proxy statements, reports and other information filed by the
Company with the Commission and other information can be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005; and the Pacific Stock Exchange, Inc., 233 South Beaudry Avenue,
Los Angeles, California 90012, and 301 Pine Street, San Francisco, California
94104.
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<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data (including
financial statements, pro forma financial data and the notes thereto) included
elsewhere in this Prospectus or incorporated herein by reference.
THE COMPANY
Northrop Grumman Corporation (the "Company") is an advanced technology
aerospace and defense company operating primarily in two business segments:
electronics and systems integration and military and commercial aircraft. Within
the electronics and systems integration segment, the Company is engaged in the
design, development and manufacture of a wide variety of complex electronic
products such as airborne radar, surveillance and battle management systems,
electronic countermeasures, precision weapons, antisubmarine warfare systems and
air traffic control systems. Within the military and commercial aircraft
segment, the Company is engaged in the design, development, manufacture and
modification of military aircraft and commercial aerostructures. The Company is
also engaged in the design, development, and manufacture of information systems,
marine propulsion and power generation systems and a variety of other products
and services. Approximately three-fourths of the Company's revenues in 1996 are
expected to be generated from the U.S. Department of Defense (the "DOD"), with
the balance provided by contracts with commercial aerospace manufacturers, other
U.S. government agencies and various foreign customers.
The Company has a balance of programs in both the production and
development phases. While production programs generally involve less risk and
generate greater cash flow than development programs, development programs are
essential for future growth opportunities. Based on its backlog and business
mix, the Company believes that its cash flow from operations as compared to its
investment requirements will result in significant cash flow available for debt
reduction, dividends and other uses over the next several years.
Many of the Company's programs are among the principal programs for the
various branches of the U.S. military. The Company is the prime contractor on
the B-2 Stealth Bomber, the only strategic bomber currently in production; the
principal subcontractor on the F/A-18C/D Hornet, the U.S. Navy's primary
strike/attack aircraft, as well as on the next generation F/A-18E/F Super
Hornet; the prime contractor on the E-2C Hawkeye, the U.S. Navy's principal
early warning, command and control aircraft; the prime contractor for the
E-8 Joint STARS aircraft radar system, which will be the primary airborne ground
surveillance and battle management system for the U.S. Air Force and Army; the
prime contractor on the BAT "Brilliant" self-guided submunition under
development for the U.S. Army; the supplier of the APG-68 Fire Control Radar
used on the F-16, one of the most widely used fighter aircraft in the world; the
supplier of the ARSR-4 Long Range Radar, a three-dimensional air traffic control
radar system used by the U.S. Air Force and the U.S. Federal Aviation
Administration; and the supplier of the AN/APY-1, 2 surveillance radar which
provides real-time, all-altitude and beyond-the-horizon target detection,
identification and tracking for the E-3 AWACS surveillance aircraft.
The Company is also one of the world's leading manufacturers of
commercial aerostructures and components. The Company manufactures major
portions of the Boeing 747, 757 and 767 jetliners as well as significant
subassemblies and components for other commercial aircraft, including the
Boeing 777 jetliner.
STRATEGY
The Company intends to strengthen its position as a leader in the
aerospace and defense industry by pursuing the following strategies:
(i) focusing on segments of defense markets that are growing and where the
Company has premier technological capabilities, particularly in electronics and
electronics systems integration; and (ii) leveraging its airframe design
expertise and manufacturing strengths to remain a key competitor in military
aircraft and commercial aerostructures. The Company has been pursuing these
strategies since 1992 through both internal initiatives and acquisitions and, as
a result, enjoys leading positions
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<PAGE>
in those market segments in which it chooses to compete. The Company's primary
objective in pursuit of these strategies is to maximize total return on
investment.
The Company is transforming itself from primarily an aircraft
designer/manufacturer to an electronics and systems integration company with a
leading airframe and aerostructures business. In early 1994, the Company
significantly expanded its electronics business with the acquisition of Grumman
Corporation ("Grumman"), a leading electronic systems integration company. In
March of 1996, the Company acquired the Electronics Systems Group of
Westinghouse Electric Corporation ("ESG"). ESG is a leading producer of
sophisticated electronics for defense, government and commercial applications.
As a result of these acquisitions, the Company expects that its electronics and
systems integration revenues will approximate 50% of total revenues in 1996 and
that this percentage will continue to increase in the future.
This strategic transformation positions the Company to meet the growing
needs of the DOD for more sophisticated electronics and integrated electronics
systems. Since the end of the Cold War, the DOD has recognized the necessity of
maintaining an effective fighting force with fewer defense dollars, thereby
placing a premium on sophisticated systems that provide long-range surveillance,
battle management and precision-strike capabilities. As military systems have
become more complex, integration of the electronic functions of the various
platforms, weapons and support systems has become increasingly important.
Budget constraints have also encouraged spending on program modifications,
upgrades and extensions rather than on new development programs, further
increasing demand for sophisticated electronics systems. As a technological
leader in designing, manufacturing and integrating the sophisticated electronics
systems that provide long-range surveillance, battle management and
precision-strike capabilities, the Company believes that it is well positioned
to serve the electronic systems market.
The Company has also strengthened its military and commercial aircraft
segment. In 1992, the Company acquired 49% of Vought Aircraft Company
("Vought"), a leading manufacturer of commercial and military aerostructures,
and in 1994 acquired the remaining 51% of Vought and the military aircraft
business of Grumman. These acquisitions and the Company's internal initiatives
have enabled the Company to establish a leading position in military aircraft
and commercial aerostructures. The Company believes that it will maintain this
leadership position as a result of its airframe design experience, including
stealth technology, as well as its cost-competitive manufacturing capabilities.
ACQUISITION OF ESG
On March 1, 1996, the Company completed the acquisition of ESG for
approximately $3 billion in cash (the "Acquisition"). For the year ended
December 31, 1995, ESG generated revenue of $2.6 billion. The Acquisition was
financed with a combination of bank borrowings and intermediate and long-term
notes and debentures. The business of ESG is now operated as the Company's new
Electronic Sensors and Systems Division ("ESSD").
ESSD is a leading supplier of electronic systems for defense, government
and commercial applications. It employs nearly 12,000 people worldwide at 15
operating locations, primarily in the United States. ESSD has a diversified
portfolio of programs with no single program accounting for more than 10% of
revenues in 1995. Approximately one-half of ESSD's 1995 revenues were
attributable to radar technology applied to surveillance, fire control, air
traffic control and other purposes. ESSD also designs and manufactures other
avionics products, electro-optical systems, undersea and marine products and
material handling systems.
The Acquisition represents a substantial step in the Company's continuing
transformation from an aircraft designer/manufacturer to a defense electronics
and systems integration company with a leading aircraft and aerostructures
business. The Acquisition enables the Company to serve a larger customer base,
domestically and internationally, and is expected to provide the opportunity to
achieve revenue growth and greater cash flow stability. The Acquisition will
also enable the Company to enhance its role on important programs such as E-8
Joint STARS and BAT, and to expand its business into the areas of air traffic
control and anti-submarine warfare systems.
-8-
<PAGE>
PROPOSED COMMON STOCK OFFERING
On April 12, 1996, the Company filed with the Commission a registration
statement on Form S-3 relating to the proposed offering of 7,000,000 shares of
Common Stock of the Company (the "Common Stock Offering"). As of the date
hereof, the Common Stock Offering is pending.
ISSUANCE OF THE OLD SECURITIES
The outstanding $400,000,000 principal amount of 7% Notes Due 2006 (the
"Old Notes"), $300,000,000 principal amount of 7 3/4% Debentures Due 2016 (the
"Old 2016 Debentures"), and $300,000,000 principal amount of 7 7/8% Debentures
Due 2026 (the "Old 2026 Debentures" and together with the Old Notes and Old 2016
Debentures, the "Old Securities") were sold by the Company to CS First Boston
Corporation, J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc (the "Initial Purchasers"), on March 1,
1996 (the "Closing Date") pursuant to a Purchase Agreement, dated February 27,
1996 (the "Purchase Agreement"), among the Company and the Initial Purchasers.
The Initial Purchasers subsequently resold the Securities in reliance on
Rule 144A under the Securities Act and other available exemptions under the
Securities Act (the "Debt Offering"). The Company and the Initial Purchasers
also entered into the Registration Rights Agreement, dated as of March 1, 1996
(the "Registration Rights Agreement"), pursuant to which the Company granted
certain registration rights for the benefit of the holders of the Old
Securities. The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement with respect to the Old
Securities. See "-- The Exchange Offer" and "The Exchange Offer--Purpose and
Effect."
THE EXCHANGE OFFER
The Exchange Offer . . . . . . . . . The Company is offering, upon the terms
and subject to the conditions set forth
herein and in the accompanying letter of
transmittal (the "Letter of
Transmittal"), to exchange (the
"Exchange Offer") $1,000 principal
amount of (i) New Notes for each $1,000
in principal amount of Old Notes,
(ii) New 2016 Debentures for each $1,000
in principal amount of Old 2016
Debentures, and (iii) New 2026
Debentures for each $1,000 in principal
amount of Old 2026 Debentures. As of
the date of this Prospectus,
$1,000,000,000 in aggregate principal
amount of the Old Securities is
outstanding. Cede is the sole
registered holder of the Old Securities.
The New Notes, the New 2016 Debentures
and the New 2026 Debentures shall
constitute the same series of Securities
(as defined in the Indenture) as the Old
Notes, the Old 2016 Debentures and the
Old 2026 Debentures, respectively. See
"The Exchange Offer -- Terms of the
Exchange Offer" and "Description of New
Securities -- General".
Expiration Date. . . . . . . . . . . 5:00 p.m., New York City time, on
_________, 1996, as the same may be
extended. See "The Exchange Offer --
Expiration Date; Extensions;
Amendments."
Conditions of the
Exchange Offer . . . . . . . . . . . The Exchange Offer is not conditioned
upon any minimum principal amount of Old
Securities being tendered for exchange.
However, the Exchange Offer is subject
to certain customary conditions,
including (i) no legal or governmental
action is
-9-
<PAGE>
pending or threatened with respect to
the Exchange Offer which, in the
judgment of the Company, would make it
inadvisable to proceed with the Exchange
Offer, (ii) no statute, rule or
regulation with respect to the Exchange
Offer has been enacted which, in the
judgment of the Company, would make it
inadvisable to proceed with the Exchange
Offer, (iii) no banking moratorium or
similar event or international calamity
involving the United States has
occurred, and (iv) no governmental
approval deemed necessary by the Company
to the Exchange Offer has been denied.
The Company expects that the foregoing
conditions will be satisfied. All such
conditions may be waived by the Company.
See "The Exchange Offer -- Conditions of
the Exchange Offer."
Termination of
Certain Rights . . . . . . . . . . . Pursuant to the Registration Rights
Agreement, Eligible Holders of Old
Securities (i) have rights to receive
Additional Interest during any period in
which a Registration Default is
continuing and (ii) have certain rights
intended for the holders of unregistered
securities. "Additional Interest"
means, during the period in which a
Registration Default is continuing
pursuant to the terms of the
Registration Rights Agreement, an
increase in the annual percentage rate
which the Old Securities bear equal to
0.50%. Holders of New Securities
generally will not be and, upon
consummation of the Exchange Offer,
Eligible Holders of Old Securities will
no longer be, entitled to (i) the right
to receive Additional Interest or
(ii) certain other rights under the
Registration Rights Agreement intended
for holders of unregistered securities.
See "The Exchange Offer -- Termination
of Certain Rights" and "Book-Entry
Procedures for Tendering Old
Securities."
Accrued Interest . . . . . . . . . . The New Notes will bear interest at a
rate equal to 7% per annum from March 1,
1996, the New 2016 Debentures will bear
interest at a rate equal to 7 3/4% per
annum from March 1, 1996, and the New
2026 Debentures will bear interest at a
rate equal to 7 7/8% per annum from
March 1, 1996. Eligible Holders whose
Old Securities are accepted for exchange
will be deemed to have waived the right
to receive any payment in respect of
interest on the Old Securities accrued
from March 1, 1996 to the date of
issuance of the New Securities.
Book-Entry Procedures
for Tendering
Old Securities . . . . . . . . . . . Each Eligible Holder of Old Securities
wishing to accept the Exchange Offer
must comply with the book-entry transfer
procedures as provided for herein for
effecting a tender of Old Securities and
complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in
accordance with the instructions
contained herein and therein, and mail
or otherwise deliver such Letter of
Transmittal, or such facsimile, together
with any other required documentation,
to The Chase Manhattan Bank (National
Association), as Exchange Agent, at the
address set forth herein and therein.
See "The Exchange Offer -- Book-Entry
Procedures for Tendering Old
Securities."
-10-
<PAGE>
By executing the Letter of Transmittal,
each Eligible Holder will represent to
the Company that, among other things,
(i) the New Securities to be acquired
in connection with the Exchange Offer
by the Eligible Holder of the Old
Securities are being acquired by the
Eligible Holder in the ordinary course
of business of the Eligible Holder,
(ii) the Eligible Holder is not
participating, does not intend to
participate, and has no arrangement or
understanding with any person to
participate, in the distribution of the
New Securities, and (iii) the Eligible
Holder is not an "affiliate", as defined
under Rule 405 of the Securities Act, of
the Company except as otherwise
disclosed to the Company in writing.
See "The Exchange Offer -- Book-Entry
Procedures for Tendering Old Securities."
Special Procedures for
Beneficial Owners. . . . . . . . . . Any beneficial owner whose Old
Securities are registered in the name of
a broker, dealer, commercial bank, trust
company or other nominee and who wishes
to tender such Old Securities in the
Exchange Offer should contact such
registered holder promptly and instruct
such registered holder to tender on such
beneficial owner's behalf. If such
beneficial owner wishes to tender on
such owner's own behalf, such owner
must, prior to completing and executing
the Letter of Transmittal and delivering
his Old Securities, either make
appropriate arrangements to register
ownership of the Old Securities in such
owner's name or obtain a properly
completed bond power from the registered
holder. The transfer of registered
ownership may take considerable time and
may not be able to be completed prior to
the Expiration Date.
Guaranteed Delivery
Procedures . . . . . . . . . . . . . Eligible Holders of Old Securities who
cannot deliver a Letter of Transmittal
or any documents required by the Letter
of Transmittal to the Exchange Agent
prior to the Expiration Date (or
complete the procedure for book-entry
transfer on a timely basis), may
undertake the foregoing according to the
guaranteed delivery procedures set forth
in the Letter of Transmittal. See "The
Exchange Offer -- Guaranteed Delivery
Procedures."
Acceptance of Old
Securities and Delivery
of New Securities. . . . . . . . . . Upon satisfaction or waiver of all
conditions of the Exchange Offer, the
Company will accept any and all Old
Securities that are properly tendered in
the Exchange Offer prior to 5:00 p.m.,
New York City time, on the Expiration
Date. The New Securities issued
pursuant to the Exchange Offer will be
delivered promptly after acceptance of
the Old Securities of the corresponding
series. See "The Exchange Offer --
Acceptance of Old Securities for
Exchange; Delivery of New Securities."
Withdrawal Rights. . . . . . . . . . Tenders of Old Securities may be
withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer -- Withdrawal Rights."
-11-
<PAGE>
The Exchange Agent . . . . . . . . . The Chase Manhattan Bank (National
Association) is the exchange agent (in
such capacity, the "Exchange Agent").
The address and telephone number of the
Exchange Agent are set forth in "The
Exchange Offer -- The Exchange Agent;
Assistance."
Fees and Expenses. . . . . . . . . . All expenses incident to the Company's
consummation of the Exchange Offer and
compliance with the Registration Rights
Agreement will be borne by the Company.
See "The Exchange Offer -- Fees and
Expenses."
Resale of the
New Securities . . . . . . . . . . . Based on interpretations by the staff of
the Commission set forth in no-action
letters issued to third parties, the
Company believes that New Securities
issued pursuant to the Exchange Offer to
an Eligible Holder in exchange for Old
Securities of the corresponding series
may be offered for resale, resold and
otherwise transferred by such Eligible
Holder (other than (i) a broker-dealer
who purchased the Old Securities
directly from the Company for resale
pursuant to Rule 144A under the
Securities Act or any other available
exemption under the Securities Act, or
(ii) a person that is an affiliate of
the Company within the meaning of
Rule 405 under the Securities Act),
without compliance with the registration
and prospectus delivery provisions of
the Securities Act, provided that the
Eligible Holder is acquiring the New
Securities in the ordinary course of
business and is not participating, and
has no arrangement or understanding with
any person to participate, in a
distribution of the New Securities.
Each broker-dealer that receives New
Securities for its own account in
exchange for Old Securities, where such
Old Securities were acquired by such
broker-dealer as a result of market
making or other trading activities, must
acknowledge that it will deliver a
prospectus in connection with any resale
of such New Securities. See "The
Exchange Offer -- Resale of the New
Securities" and "Plan of Distribution."
Certain Federal Tax
Considerations . . . . . . . . . . . The exchange pursuant to the Exchange
Offer will generally not be a taxable
event for federal income tax purposes.
See "Certain Federal Tax
Considerations."
Use of Proceeds. . . . . . . . . . . There will be no cash proceeds payable
to the Company from the issuance of the
New Securities pursuant to the Exchange
Offer. The net proceeds to the Company
from the sale of the Old Securities were
approximately $982.8 million. Such
proceeds were used to pay a portion of
the cash purchase price for the
Acquisition.
Rights of Dissenting
Holders of Old
Securities . . . . . . . . . . . . . Holders of Old Securities do not have
any appraisal or dissenters' rights
under the Delaware General Corporation
Law in connection with the Exchange
Offer.
-12-
<PAGE>
Federal and State
Regulatory
Requirements . . . . . . . . . . . . Other than compliance with state
securities or "blue sky" laws, there are
no federal or state regulatory
requirements that must be met prior to
consummation of the Exchange Offer.
Certain Consequences of
Failure to Exchange
Old Securities . . . . . . . . . . . Upon consummation of the Exchange Offer,
holders of Old Securities which remain
outstanding will not be entitled to any
rights to have such Old Securities
registered under the Securities Act or
to any similar rights under the
Registration Rights Agreement (subject
to certain limited exceptions). The
Company currently does not intend to
register under the Securities Act any
Old Securities which remain outstanding
after consummation of the Exchange Offer
(subject to such limited exceptions, if
applicable). The New Notes, the New
2016 Debentures and the New 2026
Debentures shall constitute the same
series of securities as the Old Notes,
the Old 2016 Debentures and the Old 2026
Debentures, respectively, under the
Indenture and, accordingly, will vote
together, respectively, as a single class
for purposes of determining whether
holders of the requisite percentage in
outstanding principal amount thereof
have taken certain actions or exercised
certain rights under the Indenture. See
"Description of the New Securities --
General." The Registration Rights
Agreement provides, among other things,
that if the Exchange Offer is not
consummated within 30 business days
after a registration statement with
respect to the Exchange Offer is first
declared effective by the Commission,
the interest rate borne by the Old
Securities will increase by 0.50% per
annum until the Exchange Offer is
consummated. See "The Exchange Offer --
Termination of Certain Rights".
Following consummation of the Exchange
Offer, the Old Securities will not be
entitled to any increase in the interest
rate thereon. The New Securities will
not be entitled to any such increase in
the interest rate thereon.
-13-
<PAGE>
DESCRIPTION OF NEW SECURITIES
The form and terms of each series of the New Securities will be identical
in all material respects to the form and terms of the Old Securities of the
corresponding series, except that (i) the New Securities have been registered
under the Securities Act and, therefore, will not bear legends restricting the
transfer thereof, (ii) holders of the New Securities will not be entitled to
Additional Interest and (iii) holders of the New Securities will not be, and
upon consummation of the Exchange Offer, Eligible Holders of the Old Securities
will no longer be, entitled to certain rights under the Registration Rights
Agreement intended for the holders of unregistered securities, except in limited
circumstances. See "Exchange Offer -- Termination of Certain Rights." The
Exchange Offer shall be deemed consummated upon the occurrence of the delivery
by the Company to the Registrar under the Indenture of the New Securities in the
same aggregate principal amount as the aggregate principal amount of Old
Securities of the corresponding series that are tendered by holders thereof
pursuant to the Exchange Offer. See "The Exchange Offer -- Termination of
Certain Rights" and "Procedures for Tendering Old Securities," and "Description
of New Securities."
Maturity . . . . . . . . . . . . . . New Notes - March 1, 2006
New 2016 Debentures - March 1, 2016
New 2026 Debentures - March 1, 2026
Interest . . . . . . . . . . . . . . 7% Notes Due 2006 - 7% per annum
7 3/4% Debentures Due 2016 - 7 3/4% per
annum
7 7/8% Debentures Due 2026 - 7 7/8% per
annum
Interest on the New Securities is
payable semi-annually in arrears,
calculated on the basis of a 360-day
year consisting of twelve 30-day months
Interest Payment Dates . . . . . . . March 1 and September 1, commencing on
September 1, 1996.
Redemption . . . . . . . . . . . . . The New Securities are not redeemable.
Ranking. . . . . . . . . . . . . . . The New Securities will be unsecured and
unsubordinated obligations of the
Company and will rank equally and
ratably with all other unsecured and
unsubordinated indebtedness of the
Company.
Certain Covenants. . . . . . . . . . The Indenture under which the New
Securities will be issued will contain
certain covenants with respect to the
Company and its subsidiaries, including,
among other things, limitations on
liens, sale and leaseback arrangements
and debt of the Company's subsidiaries.
Absence of a Public Market
for the New Securities . . . . . . . The New Securities are new issues of
securities with no established market.
Accordingly, there can be no assurance
as to the development or liquidity of
any market for the New Securities. The
Initial Purchasers have advised the
Company that they currently intend to
make a market in the New Securities.
However, none of the Initial Purchasers
is obligated to do so, and any market
making with respect to the New
Securities may be discontinued at any
time without notice. The Company does
not intend to apply for listing of the
New Securities on a securities exchange.
-14-
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following summary historical financial data insofar as it relates
to the five years ended December 31, 1995, have been derived from and are
qualified by reference to the audited consolidated financial statements and
notes thereto filed by the Company with the Commission which are incorporated
herein by reference and should be read in conjunction with "Selected
Consolidated Financial Data" included or incorporated by reference herein.
The summary pro forma data for December 31, 1995 and the year then ended have
been derived from the "Unaudited Pro Forma Condensed Combined Financial Data"
included herein which are based upon the historical consolidated financial
statements of the Company and the historical combined financial statements of
ESG which are also incorporated herein by reference, adjusted to give effect
to the Acquisition using the purchase method of accounting. The pro forma
Operating Data gives effect to the Acquisition as if it had occurred as of
January 1, 1995. The pro forma Balance Sheet Data information gives effect
to the Acquisition as if it had occurred on December 31, 1995. See also
"Available Information," "Incorporation of Certain Documents by Reference"
and "Unaudited Pro Forma Condensed Combined Financial Data."
<TABLE>
<CAPTION>
PRO FORMA FOR FISCAL YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
($ IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Operating Data:
Net sales. . . . . . . . . . . . . . . . . . $9,158 $6,818 $6,711 $5,063 $5,550 $5,694
Cost of Sales
Operating costs. . . . . . . . . . . . . . 7,230 5,319 5,477 4,385 4,877 4,817
Administrative and general expenses. . . . 1,283 963 753 485 455 531
Special termination benefits . . . . . . . 282
Restructuring charges. . . . . . . . . . . 51
------ ------ ------ ------ ------ ------
Operating margin . . . . . . . . . . . . . . 594 536 199 193 218 346
Other, net . . . . . . . . . . . . . . . . . (5) 9 (31) 13 5
Interest expense, net. . . . . . . . . . . . (346) (136) (103) (36) (43) (69)
------ ------ ------ ------ ------ ------
Income before income taxes and cumulative
effect of accounting principle changes . . 243 409 65 170 180 277
Federal and foreign income taxes . . . . . . 107 157 30 74 59 9
------ ------ ------ ------ ------ ------
Income before accounting principle changes . 136 252 35 96 121 268
Cumulative effect of accounting principle
changes. . . . . . . . . . . . . . . . . . (67)
------ ------ ------ ------ ------ ------
Net income . . . . . . . . . . . . . . . . . $ 136 $ 252 $ 35 $ 96 $ 121 $ 201
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Earnings per share before cumulative
effect of accounting principle changes . . $2.75 $5.11 $.72 $1.99 $2.56 $5.69
Cumulative effect of accounting principle
changes, per share . . . . . . . . . . . . (1.43)
------ ------ ------ ------ ------ ------
Earnings per share . . . . . . . . . . . . . $ 2.75 $ 5.11 $ .72 $ 1.99 $ 2.56 $ 4.26
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . $9,646 $5,455 $6,047 $2,939 $3,162 $3,128
Net working capital. . . . . . . . . . . . 321 357 467 481 354 611
Total debt . . . . . . . . . . . . . . . . 4,344 1,372 1,934 160 510 550
Shareholders' equity . . . . . . . . . . . 1,459 1,459 1,290 1,322 1,254 1,182
Other Data:
Capital expenditures . . . . . . . . . . . $188 $133 $134 $135 $123 $118
Depreciation and amortization. . . . . . . 471 283 269 214 160 171
Funded order backlog . . . . . . . . . . . 13,433 9,947 12,173 6,919 7,175 8,561
Ratio of Earnings to Fixed Charges . . . . 1.6 3.5 1.5 4.2 3.8 3.8
Dividends per share. . . . . . . . . . . . $1.60 $1.60 $1.60 $1.60 $1.20 $1.20
Weighted average shares
outstanding (in millions) . . . . . . . 49.4 49.4 49.2 48.1 47.2 47.1
</TABLE>
-15-
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Securities were sold by the Company to the Initial Purchasers on
March 1, 1996, pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Old Securities in reliance on Rule 144A and other
available exemptions under the Securities Act. The Company and the Initial
Purchasers also entered into the Registration Rights Agreement, pursuant to
which the Company agreed, with respect to the Old Securities and subject to the
Company's determination that the Exchange Offer is permitted under applicable
law, to (i) cause to be filed, on or prior to May 15, 1996, a registration
statement with the Commission under the Securities Act concerning the Exchange
Offer, and (ii) use all reasonable efforts (a) to cause such registration
statement to be declared effective by the Commission as soon as practicable and
(b) to cause the Exchange Offer to remain open for a period of not less than the
minimum period required under applicable federal and state securities laws, but
in no event less than 20 Business Days (as defined). This Exchange Offer is
intended to satisfy the Company's exchange offer obligations under the
Registration Rights Agreement.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions
set forth herein and in the accompanying Letter of Transmittal, to exchange
$1,000 in principal amount of (i) New Notes for each $1,000 in principal amount
of Old Notes, (ii) New 2016 Debentures for each $1,000 in principal amount of
Old 2016 Debentures, and (iii) New 2026 Debentures for each $1,000 in principal
amount of Old 2026 Debentures. The Company will accept for exchange any and all
Old Securities that are validly tendered on or prior to 5:00 p.m. New York City
time, on the Expiration Date. The Exchange Offer is not conditioned upon any
minimum principal amount of Old Securities being tendered for exchange.
However, the Exchange Offer is subject to certain customary conditions which may
be waived by the Company, and to the terms and provisions of the Registration
Rights Agreement. See "-- Conditions of the Exchange Offer."
Old Securities may be tendered only in multiples of $1,000. Subject to
the foregoing, Eligible Holders may tender less than the aggregate principal
amount represented by the Old Securities held by them, provided that they
appropriately indicate this fact pursuant to the procedures for book-entry
transfer.
As of the date of this Prospectus, $1,000,000,000 in aggregate principal
amount of the Old Securities is outstanding. Cede is the sole registered holder
of the Old Securities. The Company has fixed the close of business on
____________, 1996, as the record date (the "Record Date") for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially. Only an Eligible Holder of the Old Securities (or
such Eligible Holder's legal representative or attorney-in-fact) may participate
in the Exchange Offer. There will be no fixed record date for determining
Eligible Holders of the Old Securities entitled to participate in the Exchange
Offer. The Company believes that, as of the date of this Prospectus, no such
Eligible Holder is an affiliate (as defined in Rule 405 under the Securities
Act) of the Company.
The Company shall be deemed to have accepted validly tendered Old
Securities when, as and if the Company has given oral or written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
Eligible Holders of Old Securities and for the purposes of receiving the New
Securities from the Company.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date shall be _________, 1996 at 5:00 p.m., New York City
time, unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the Expiration Date shall be the latest date and time to which the
Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the
Exchange Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
-16-
<PAGE>
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Securities, (ii) to extend the Exchange Offer, (iii) if any of
the conditions set forth below under "Conditions of the Exchange Offer" shall
not have been satisfied, to terminate the Exchange Offer, by giving oral or
written notice of such delay, extension, or termination to the Exchange Agent,
and (iv) to amend the terms of the Exchange Offer in any manner. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, the Company will promptly disclose such amendments by means of
a prospectus supplement that will be distributed to the registered holders of
the Old Securities.
CONDITIONS OF THE EXCHANGE OFFER
The Exchange Offer is not conditioned upon any minimum principal amount
of the Old Securities being tendered for exchange. However, notwithstanding any
other provisions of the Exchange Offer, the Company shall not be required to
accept for exchange, or to issue the New Securities in exchange for, any Old
Securities, if any of the following events shall occur, which occurrence, in the
sole judgment of the Company and regardless of the circumstances (including any
action by the Company) giving rise to any such events, makes it inadvisable to
proceed with the Exchange Offer:
(i) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission (a) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof or (b) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Old Securities pursuant to the Exchange Offer or which, in the judgment
of the Company, might result in the holders of the New Securities having
obligations with respect to resales and transfers of New Securities that
are greater than those described in "-- Resales of the New Securities" or
which would otherwise in the judgment of the Company make it inadvisable to
proceed with the Exchange Offer; provided, however, that the Company will
use reasonable efforts to modify or amend the Exchange Offer or to take
such other reasonable steps in order to effectuate the Exchange Offer;
(ii) any statute, rule, regulation, order or injunction shall be
sought, proposed, introduced, enacted, promulgated or deemed applicable to
the Exchange Offer or any of the transactions contemplated by the Exchange
Offer by any domestic or foreign government or governmental authority, or
any action shall have been taken, proposed or threatened by any domestic or
foregoing government or governmental authority that, in the judgment of the
Company, might directly or indirectly result in any of the consequences
referred to in clauses (i)(a) or (i)(b) above or which, in the judgment of
the Company, might result in the holders of the New Securities having
obligations with respect to resales and transfers of New Securities that
are greater than those described in "-- Resales of the New Securities" or
which would otherwise in the judgment of the Company make it inadvisable to
proceed with the Exchange Offer, provided, however, that the Company will
use reasonable efforts to modify or amend the Exchange Offer or to take
such other reasonable steps in order to effectuate the Exchange Offer;
(iii) there shall have occurred (a) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States or any limitation by any governmental agency or authority
which adversely affects the extension of credit or (b) a commencement of
wars, armed hostilities or other similar international calamity directly or
indirectly involving the United States, or, in the event any of the
foregoing exist at the time of the commencement of the Exchange Offer, a
material acceleration or worsening thereof; or
(iv) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
set forth above are not satisfied, the Company may (i) refuse to accept any Old
Securities theretofore or thereafter tendered by the tendering holders,
(ii) extend the Exchange Offer and retain all Old Securities tendered prior to
the Expiration Date, subject however, to the rights of Eligible Holders to
withdraw such Old Securities as described in "--Withdrawal Rights", or
(iii) waive such unsatisfied conditions with respect to the Exchange
-17-
<PAGE>
Offer and accept all validly tendered Old Securities which have not been
withdrawn. If such waiver constitutes a material change to the Exchange Offer,
the Company will promptly disclose such waiver by means of a public announcement
and a prospectus supplement that will be distributed to the registered holders.
The Company expects that the foregoing conditions will be satisfied. The
foregoing conditions are for the sole benefit of the Company and may be waived
by the Company in whole or in part at any time and from time to time in its sole
discretion. The failure by the Company at any time to exercise any of the
foregoing rights shall not be deemed a waiver of such rights and each such right
shall be deemed an ongoing right which may be asserted at any time and from time
to time. Any determination by the Company concerning the events described above
will be final and binding upon all parties.
TERMINATION OF CERTAIN RIGHTS
The Registration Rights Agreement provides that in the event of
Registration Default (as defined below), Eligible Holders of Old Securities are
entitled to receive Additional Interest (as defined below). A "Registration
Default" with respect to the Exchange Offer shall occur if (i) a registration
statement with respect to the Exchange Offer has not been filed with the
Commission by May 15, 1996 or any shelf registration statement required by the
Registration Rights Agreement is not filed with the Commission on or prior to
the date specified in the Registration Rights Agreement, (ii) a registration
statement with respect to the Exchange Offer is not declared effective by the
Commission by July 1, 1996 or any shelf registration statement required by the
Registration Rights Agreement is not declared effective by the Commission on or
prior to the date specified in the Registration Rights Agreement, (iii) the
Company has not consummated the Exchange Offer within 30 Business Days after the
registration statement with respect thereto is first declared effective by the
Commission, or (iv) a shelf registration statement or registration statement
with respect to the Exchange Offer, as specified in the Registration Rights
Agreement, is declared effective but thereafter ceases to be effective or usable
for its intended purpose during the periods specified in the Registration Rights
Agreement without being succeeded immediately by a post-effective amendment to
such registration statement that cures such failure and that is itself declared
effective immediately. "Additional Interest" means an increase in the annual
percentage rate which the Old Securities bear equal to 0.50%. The Exchange Offer
shall be deemed consummated upon the delivery by the Company to the Registrar
under the Indenture of New Securities in the same aggregate principal amount as
the aggregate principal amount of Old Securities of the corresponding series
that are validly tendered by holders thereof pursuant to the Exchange Offer.
ACCRUED INTEREST ON THE OLD SECURITIES
The New Securities will bear interest from March 1, 1996. Eligible Holders
of Old Securities whose Old Securities are accepted for exchange will be deemed
to have waived the right to receive any payment in respect of interest on the
Old Securities accrued from March 1, 1996 to the date of the issuance of the New
Securities. Interest on the New Securities is payable semiannually on each
Interest Payment Date, commencing September 1, 1996, accruing from March 1, 1996
(i) with respect to the New Notes, at a rate of 7% per annum, (ii) with respect
to the New 2016 Debentures, at a rate of 7 3/4% per annum, and (iii) with
respect to the New 2026 Debentures, at a rate of 7 7/8% per annum, to each
person in whose name such New Security shall have been registered at the close
of business on the each Regular Record Date next preceding such Interest Payment
Date.
BOOK-ENTRY PROCEDURES FOR TENDERING OLD SECURITIES
The tender of an Eligible Holder's Old Securities as set forth below and
the acceptance thereof by the Company will constitute a binding agreement
between the tendering Eligible Holder and the Company upon the terms and subject
to the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. The Exchange Agent will establish an account with respect to the
Old Securities at The Depository Trust Company ("Book-Entry Transfer Facility")
for purposes of the Exchange Offer within two business days after the date of
this Prospectus. Any financial institution that is a participant in the Book-
Entry Transfer Facility's system may make book-entry delivery of the Old
Securities by causing such facility to transfer Old Securities into the Exchange
Agent's account in accordance with such facility's procedure for such transfer.
Even though delivery of Old Securities may be effected through book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility,
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with any required signature guarantees, or an Agent's
Message (as defined below) in connection with a book-entry transfer, and other
documents required by the Letter of Transmittal, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth on
the back cover of this Prospectus before the Expiration Date, or the guaranteed
delivery
-18-
<PAGE>
procedure set forth below must be followed. Delivery of the Letter of
Transmittal and any other required documents to the Book-Entry Transfer Facility
does not constitute delivery to the Exchange Agent. The term "Agent's Message"
means a message transmitted by the Book-Entry Transfer Facility to, and received
by, the Exchange Agent and forming a part of a book-entry confirmation, which
states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Old Securities that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Company may enforce
such agreement against such participant.
THE METHOD OF DELIVERY OF OLD SECURITIES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE ELIGIBLE HOLDER. IF
SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL,
IT IS RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
In the event that a signature on a Letter of Transmittal or a notice of
withdrawal, as the case may be, is required to be guaranteed, such guarantee
must be by a firm which is a member of a registered national securities exchange
or the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or
otherwise be an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act (collectively, "Eligible Institutions").
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and unless waived by the
Company, proper evidence satisfactory to the Company, in its sole discretion, of
such person's authority to so act must be submitted.
Any beneficial owner of the Old Securities (a "Beneficial Owner") whose Old
Securities are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to tender Old Securities in the
Exchange Offer should contact such registered holder promptly and instruct such
registered holder to tender on such Beneficial Owner's behalf. If such
Beneficial Owner wishes to tender directly, such Beneficial Owner must, prior to
completing and executing the Letter of Transmittal and tendering Old Securities,
make appropriate arrangements to register ownership of the Old Securities in
such Beneficial Owner's name. Beneficial Owners should be aware that the
transfer of registered ownership may take considerable time.
In connection with each book-entry transfer, each participant will
represent to the Company that, among other things (i) the New Securities to be
acquired in connection with the Exchange Offer by such participant are being
acquired by such participant in the ordinary course of business of such
participant (ii) such participant is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the New Securities, (iii) such participant
acknowledges and agrees that any person participating in the Exchange Offer for
the purpose of distributing the New Securities must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Securities acquired by such person and
cannot rely on the position of the staff of the Commission set forth in
no-action letters that are discussed herein under "-- Resales of New
Securities," (iv) that if such participant is a broker-dealer that acquired Old
Securities as a result of market making or other trading activities, it will
deliver a prospectus in connection with any resale of New Securities acquired in
the Exchange Offer, (v) such participant understands that a secondary resale
transaction described in clause (iii) above should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 of Regulation S-K of the Commission, and (vi) such
participant is not an "affiliate", as defined under Rule 405 of the Securities
Act, of the Company except as otherwise disclosed to the Company in writing.
GUARANTEED DELIVERY PROCEDURES
Eligible Holders who cannot deliver Letters of Transmittal or any other
documents required by the Letter of Transmittal to the Exchange Agent prior to
the Expiration Date (or complete the procedure for book-entry transfer on a
timely basis), may undertake the foregoing according to the guaranteed delivery
-19-
<PAGE>
procedures set forth in the Letter of Transmittal. Pursuant to such procedures:
(i) such delivery must be made by or through an Eligible Institution and a
Notice of Guaranteed Delivery (as defined in the Letter of Transmittal) must be
signed by such Eligible Holder, (ii) on or prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Holder and the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Eligible Holder, stating that the delivery is being made thereby
and guaranteeing that, within three (3) business days after the date of delivery
of the Notice of Guaranteed Delivery, the duly executed Letter of Transmittal
and any other required documents will be deposited by the Eligible Institution
with the Exchange Agent, and (iii) such properly completed and executed
documents required by the Letter of Transmittal in proper form for transfer (or
confirmation of a book-entry transfer of such Old Securities into the Exchange
Agent's account at DTC) must be received by the Exchange Agent within three (3)
business days after the Expiration Date. Any Eligible Holder who wishes to
comply with the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery and Letter of
Transmittal prior to 5:00 p.m., New York City time, on the Expiration Date.
ACCEPTANCE OF OLD SECURITIES FOR EXCHANGE; DELIVERY OF NEW SECURITIES
Upon satisfaction or waiver of all the conditions to the Exchange Offer,
the Company will accept any and all Old Securities that are properly tendered in
the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration
Date. The New Securities issued pursuant to the Exchange Offer will be
delivered promptly after acceptance of the Old Securities of the corresponding
series. For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Securities, when, as, and if the Company has given
oral or written notice thereof to the Exchange Agent.
In all cases, issuances of New Securities for Old Securities that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of confirmation of a book-entry transfer of
such Old Securities into the Exchange Agent's account at the Depository, a
properly completed and duly executed Letter of Transmittal and all other
required documents; provided, however, that the Company reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange
Offer.
WITHDRAWAL RIGHTS
Tenders of the Old Securities may be withdrawn by delivery of a written
notice to the Exchange Agent, at its address set forth on the back cover page of
this Prospectus, at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) identify the Old
Securities to be withdrawn, and (ii) specify the name and number of the account
at the Depository to be credited with the withdrawn Old Securities and otherwise
comply with the procedures of the Depository. Any questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, in its sole discretion. The Old Securities so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Securities which have been tendered by
book-entry transfer into the Exchange Agent's account at the Depository pursuant
to the book-entry transfer procedures described above will be credited to an
account maintained with the Depository for the Old Securities as soon as
practicable after such withdrawal. Properly withdrawn Old Securities may be
retendered by following one of the procedures described under "The Exchange
Offer -- Book-Entry Procedures for Tendering Old Securities" at any time on or
prior to the Expiration Date.
THE EXCHANGE AGENT; ASSISTANCE
The Chase Manhattan Bank (National Association) is the Exchange Agent. All
executed Letters of Transmittal and other related documents should be directed
to the Exchange Agent. Questions and requests for assistance and requests for
additional copies of the Prospectus, the Letter of Transmittal and other related
documents should be addressed to the Exchange Agent as follows:
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<PAGE>
BY HAND, REGISTERED OR CERTIFIED MAIL OR OVERNIGHT COURIER:
The Chase Manhattan Bank (National Association)
Institutional Trust Group
Chase MetroTech Center
3rd Floor
Brooklyn, New York 11245
BY FACSIMILE:
(718) 242-5885
BY TELEPHONE:
(718) 242-7287
FEES AND EXPENSES
All expenses incident to the Company's consummation of the Exchange Offer
and compliance with the Registration Rights Agreement will be borne by the
Company, including, without limitation: (i) all registration and filing fees
(including, without limitation, fees and expenses of compliance with state
securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for the New Securities in a form
eligible for deposit with DTC and of printing Prospectuses), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) reasonable fees and disbursements of not more than one counsel for
the Eligible Holders of a majority in principal amount of Old Securities,
(vi) fees and disbursements of independent certified public accountants and
(vii) internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees of the Company performing legal
or accounting duties).
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
ACCOUNTING TREATMENT
The New Securities will be recorded at the same carrying value as the Old
Securities, as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss will be recognized by the Company for
accounting purposes. The expenses of the Exchange Offer will be amortized over
the term of the New Securities.
RESALES OF THE NEW SECURITIES
Based on interpretations by the staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that the New
Securities issued pursuant to the Exchange Offer to an Eligible Holder in
exchange for Old Securities may be offered for resale, resold and otherwise
transferred by such Eligible Holder (other than (i) a broker-dealer who
purchased Old Securities directly from the Company for resale pursuant to
Rule 144A under the Securities Act or any other available exemption under the
Securities Act, or (ii) a person that is an affiliate of the Company (within the
meaning of Rule 405 under the Securities Act)) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the Eligible Holder is acquiring the New Securities in the ordinary course
of business and is not participating, and has no arrangement or understanding
with any person to participate, in the distribution of the New Securities. The
Company has not requested or obtained an interpretive letter from the Commission
staff with respect to this Exchange Offer, and the Company and the Eligible
Holders are not entitled to rely on interpretive advice provided by the staff to
other persons, which advice was based on the facts and conditions represented in
such letters. However, the Exchange Offer is being conducted in a manner
intended to be consistent with the facts and conditions represented in such
letters. If any Eligible Holder acquires New Securities in the Exchange Offer
for the purpose of distributing or participating in a distribution of the New
Securities, such Eligible Holder cannot rely on the position of the staff of the
Commission enunciated in MORGAN STANLEY & CO., INCORPORATED (available June 5,
1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), or
interpreted in the Commission's letter to SHEARMAN AND STERLING (available
July 2, 1993), or similar no-action or interpretive letters and must comply with
the
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<PAGE>
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless an exemption from
registration is otherwise available. Each broker-dealer that receives New
Securities for its own account in exchange for Old Securities, where such Old
Securities were acquired by such broker-dealer as a result of market making or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. See "Plan of Distribution."
-22-
<PAGE>
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as at
December 31, 1995 and (ii) the capitalization as adjusted to reflect the
Acquisition, the Debt Offering and the amended bank credit facilities.
<TABLE>
<CAPTION>
As of December 31, 1995
-------------------------
Actual As Adjusted
------ -----------
($ in millions)
<S> <C> <C>
Notes payable to banks . . . . . . . . . . . . . . . . . . . $ 65 $ 0
Current portion of long-term debt (a). . . . . . . . . . . . 144 332
Long term debt:
Bank term loans and revolving credit facility (b) . . . . 563 2,412(b)
8 5/8% Notes due 2004 . . . . . . . . . . . . . . . . . . 350 350
7% Notes due 2006 . . . . . . . . . . . . . . . . . . . . 400
7 3/4% Debentures due 2016. . . . . . . . . . . . . . . . 300
9 3/8% Debentures due 2024. . . . . . . . . . . . . . . . 250 250
7 7/8% Debentures due 2026. . . . . . . . . . . . . . . . 300
------ ------
Total long-term debt . . . . . . . . . . . . . . . . . 1,163 4,012
------ ------
Total debt . . . . . . . . . . . . . . . . . . . . . . 1,372 4,344
Shareholders' equity:
Preferred stock, 10,000,000 shares authorized;
none issued
Common stock (c), 200,000,000 shares authorized;
49,462,615 shares issued; 56,462,615 shares
issued as further adjusted (d) . . . . . . . . . . . . 272 272
Retained earnings . . . . . . . . . . . . . . . . . . . . 1,199 1,199
Unfunded pension losses, net of taxes . . . . . . . . . . (12) (12)
------ ------
Total shareholders' equity . . . . . . . . . . . . . . 1,459 1,459
------ ------
Total capitalization. . . . . . . . . . . . . . . . $2,831 $5,803
------ ------
------ ------
</TABLE>
_____________________
(a) Includes $143 million of notes due 1999 redeemed in January 1996.
(b) The bank term loan at December 31, 1995, was refinanced by an amended bank
credit facility consisting of a $1.8 billion revolving credit facility
expiring in March 2002 and two term loan facilities aggregating $2 billion
($500 million due March 1998 and $1.5 billion due in quarterly installments
of $62.5 million through March 2002), the proceeds of which, together with
$1 billion of institutionally placed notes and debentures, were utilized to
finance the Acquisition.
(c) Includes an equal number of Common Stock Purchase Rights.
(d) Excludes 3,989,907 shares of Common Stock reserved for issuance pursuant to
outstanding options and rights granted under the Company's stock plans.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated financial data
for the Company for each of the periods indicated which have been derived from,
and are qualified by reference to, the audited consolidated financial statements
and notes thereto filed by the Company with the Commission which are
incorporated herein by reference. This data does not give effect to the
Acquisition. See also "Available Information," "Incorporation of Certain
Documents by Reference" and "Unaudited Pro Forma Condensed Combined Financial
Data."
<TABLE>
<CAPTION>
For Fiscal Year Ended December 31,
------------------------------------------------------
1995 1994(a) 1993 1992 1991
---- ------- ---- ---- ----
($ in millions, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . $6,818 $ 6,711 $5,063 $5,550 $5,694
Cost of Sales
Operating costs . . . . . . . . . . . . . . . . . . . 5,319 5,477 4,385 4,877 4,817
Administrative and general expenses . . . . . . . . . 963 753 485 455 531
Special termination benefits. . . . . . . . . . . . . 282
------ ------- ------ ------ ------
Operating margin . . . . . . . . . . . . . . . . . . . . . . 536 199 193 218 346
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 9 (31) 13 5
Interest expense, net . . . .. . . . . . . . . . . . . . . . (136) (103) (36) (43) (69)
------ ------- ------ ------ ------
Income before income taxes and cumulative
effect of accounting principle changes. . . . . . . . . 409 65(b) 170 180 277
Federal and foreign taxes . .. . . . . . . . . . . . . . . . 157 30 74 59 9
------ ------- ------ ------ ------
Income before accounting principal changes . . . . . . . . . 252 35 96 121 268
Cumulative effect of accounting principle changes. . . . . . (67)(b)
------ ------- ------ ------ ------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . $ 252 $ 35 $ 96 $ 121 $ 201
------ ------- ------ ------ ------
------ ------- ------ ------ ------
Earnings per share before cumulative effect
of accounting principle changes . . . . . . . . . . . . $ 5.11 $ .72 $ 1.99 $ 2.56 $ 5.69
Cumulative effect of accounting principle
changes, per share. . . . . . . . . . . . . . . . . . . (1.43)(b)
------ ------- ------ ------ ------
Earnings per share . . . . . . . . . . . . . . . . . . . . . $ 5.11 $ .72 $ 1.99 $ 2.56 $ 4.26
------ ------- ------ ------ ------
------ ------- ------ ------ ------
Balance Sheet Data:
Total assets. . . . . . . . . . . . . . . . . . . . . . $5,455 $ 6,047 $2,939 $3,162 $3,128
Net working capital . . . . . . . . . . . . . . . . . . 357 467 481 354 611
Total debt (c). . . . . . . . . . . . . . . . . . . . . 1,372 1,934 160 510 550
Shareholders' equity. . . . . . . . . . . . . . . . . . 1,459 1,290 1,322 1,254 1,182
Other Data:
Net cash provided by operating activities . . . . . . . $ 744 $ 441 $380 $284 $609
Capital expenditures. . . . . . . . . . . . . . . . . . 133 134 135 123 118
Depreciation and amortization . . . . . . . . . . . . . 283 269 214 160 171
Funded order backlog. . . . . . . . . . . . . . . . . . 9,947 12,173 6,919 7,175 8,561
Ratio of Earnings to Fixed Charges (d). . . . . . . . . 3.5 1.5 4.2 3.8 3.8
Dividends per share . . . . . . . . . . . . . . . . . . $ 1.60 $ 1.60 $ 1.60 $ 1.20 $ 1.20
Weighted average shares outstanding (in millions) . . . 49.4 49.2 48.1 47.2 47.1
</TABLE>
-24-
<PAGE>
- --------------------
(a) Includes Grumman Corporation data from April 1994 and Vought Aircraft
Company data from August 1994.
(b) The Financial Accounting Standards Board's (FASB) accounting standard
No. 106 EMPLOYER'S ACCOUNTING FOR POST-RETIREMENT BENEFITS OTHER THAN
PENSIONS was adopted by the Company in 1991. The liability representing
previously unrecognized costs of $145 million for all years prior to 1991
was recorded as of January 1, 1991, with an after-tax effect on earnings of
$88 million. In 1991 the Company adopted the FASB standard No. 109
ACCOUNTING FOR INCOME TAXES and recorded, as of January 1, 1991, a benefit
of $21 million.
(c) Total debt includes long-term, short-term and current portion of long-term
debt.
(d) The ratio of earnings to fixed charges has been computed by dividing
earnings by fixed charges. Earnings consist of income before income taxes,
and in 1991, the net cumulative effect of changes in accounting principles,
plus fixed charges. Fixed charges consist of interest on all indebtedness,
amortization of debt issuance costs and other fees and the portion of
rental expense deemed to be representative of interest.
-25-
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined financial statements
reflect the ESG acquisition and are based upon the historical financial
statements of the Company and ESG for the period indicated, combined and
adjusted to give effect to the ESG acquisition using the purchase method of
accounting. The unaudited pro forma condensed combined statement of financial
position gives effect to the ESG acquisition as if it had occurred on December
31, 1995. The unaudited pro forma condensed combined statement of income gives
effect to the ESG acquisition as if it had occurred on January 1, 1995. The pro
forma adjustments are described in the accompanying notes.
The purchase price has been allocated to the assets and liabilities
acquired based upon preliminary estimates of their respective fair values. The
unaudited pro forma financial information does not give effect to any synergies
or cost savings that the Company may realize as a result of the ESG acquisition.
The Company is compiling data to determine those business areas and facilities
that do not fit in its long-term strategy and intends to complete this process
by December 31, 1996. During the remainder of 1996, the estimates of fair value
for other assets and liabilities will be refined and changes, if any, will be
reflected in the Company's periodic Exchange Act filings for 1996.
The unaudited pro forma condensed combined financial statements are not
necessarily indicative of the results of operations or financial position of the
combined company that would have occurred had the ESG acquisition occurred on
the dates indicated above, nor are they necessarily indicative of future
operating results or financial position.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the audited consolidated financial statements,
including the notes thereto, of the Company in its Annual Report on Form 10-K
for the year ended December 31, 1995 and of ESG contained in the Company's
Current Report on Form 8-K filed March 18, 1996, both of which are incorporated
herein by reference. See "Available Information" and "Incorporation of Certain
Documents by Reference."
-26-
<PAGE>
PRO FORMA CONDENSED COMBINED
STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
Northrop Pro Forma Pro Forma
Grumman ESG Adjustments Combined
------- --- ----------- --------
($ in millions)
<S> <C> <C> <C> <C>
Cash and cash equivalents . . . . . . . .. . . . . . . . . . $18 $4 $ $22
Accounts receivable. . . . . . . . . . . . . . . . . . . . . 1,197 462 66 (c) 1,725
Inventoried costs. . . . . . . . . . . . . . . . . . . . . . 771 182 (85)(a)(c) 868
Deferred income taxes. . . . . . . . . . . . . . . . . . . . 25 136 (121)(a) 40
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 61 14 75
------ ------ ------ ------
Total current assets . . . . . . . . . . . . . . . . . . . . 2,072 798 (140) 2,730
Property, plant and equipment, net . . . . . . . . . . . . . 1,176 404 112 (a) 1,692
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . 1,403 119 1,946 (a) 3,468
Other purchased intangibles. . . . . . . . . . . . . . . . . 356 646 (a) 1,002
Prepaid pension cost, intangible pension
asset and benefit trust fund. . . . . . . . . . . . . . . 99 19 (19)(b) 99
Deferred income taxes. . . . . . . . . . . . . . . . . . . . 255 173 76 (a)(b) 504
Investments in and advances to affiliates
and sundry assets. . . . . . . . . . . . . . . . . . . . 94 12 45 (a) 151
------ ------ ------ ------
$5,455 $1,525 $2,666 $9,646
------ ------ ------ ------
------ ------ ------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . $65 $ $ (65)(a) $0
Current portion of long-term debt. . . . . . . . . . . . . . 144 188 (a) 332
Trade accounts payable . . . . . . . . . . . . . . . . . . . 360 105 465
Accrued employees' compensation. . . . . . . . . . . . . . . 203 203
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . 528 528
Other current liabilities. . . . . . . . . . . . . . . . . . 415 443 23 (a) 881
------ ------ ------ ------
Total current liabilities. . . . . . . . . . . . . . . . . . 1,715 548 146 2,409
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . 1,163 2,849 (a) 4,012
Accrued retiree benefits . . . . . . . . . . . . . . . . . . 1,048 648 (40)(b) 1,656
Deferred income taxes. . . . . . . . . . . . . . . . . . . . 31 31
Other liabilities and deferred gain. . . . . . . . . . . . . 39 15 25 (a) 79
Shareholders' equity
Common stock . . . . . . . . . . . . . . . . . . . . . . 272 272
Retained earnings. . . . . . . . . . . . . . . . . . . . 1,187 314 (314)(a) 1,187
------ ------ ------ ------
1,459 314 (314) 1,459
------ ------ ------ ------
$5,455 $1,525 $2,666 $9,646
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
-27-
<PAGE>
PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Northrop Pro Forma Pro Forma
Grumman ESG Adjustments Combined
-------- --- ----------- ---------
($ in millions, except per share data)
<S> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . $6,818 $2,554 $(214)(c) $9,158
Cost of Sales
Operating costs. . . . . . . . . . . . . . . . . . . . . . 5,319 1,997 (86)(c)(d) 7,230
Administrative and general expenses. . . . . . . . . . . . 963 320 1,283
Restructuring charges. . . . . . . . . . . . . . . . . . . 51 51
------ ------ ------ ------
Operating margin . . . . . . . . . . . . . . . . . . . . . . 536 186 (128) 594
Interest expense, net. . . . . . . . . . . . . . . . . . . . (136) (210)(e) (346)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 9 (14) (5)
------ ------ ------ ------
Income before income taxes . . . . . . . . . . . . . . . . . 409 172 (338) 243
Federal and foreign income taxes . . . . . . . . . . . . . . 157 65 (115)(f) 107
------ ------ ------ ------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . $252 $107 $(223) $136
------ ------ ------ ------
------ ------ ------ ------
Earnings per share . . . . . . . . . . . . . . . . . . . . . $5.11 $2.75
------ ------
------ ------
Weighted average shares outstanding
(in millions). . . . . . . . . . . . . . . . . . . . . . . . 49.4 49.4
</TABLE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(a) Adjustments to record $3 billion in loans obtained to finance the
acquisition of ESG, and to assign the purchase price to assets acquired and
liabilities assumed. The allocation of the purchase price to assets and
liabilities is based upon preliminary estimates of their respective fair
values. The Company is compiling data to determine the final allocation of
the purchase price, which process will be completed by December 31, 1996.
(b) Adjustment to record the preliminary estimate of ESG retiree benefits
liabilities in excess of the market value of related assets at December 31,
1995. The Company is reviewing the actuarial data relative to the ESG
retiree benefit plans and based on the results of the review the liability
may be adjusted.
(c) Adjustment to reflect change in method of recognizing revenue on certain
long-term contracts applied by ESG to conform with the Company's revenue
recognition policy and to eliminate ESG's intercompany sales.
(d) Adjustment to amortize goodwill over a 40-year period on a straight-line
basis and other purchased intangibles on a straight-line basis over periods
ranging from 1 to 10 years, with a combined weighted average life of 33
years which results in a first-year amortization of $121 million.
(e) Adjustment to record interest expense on $3 billion of borrowings incurred
in connection with the acquisition of ESG at an average annual effective
interest rate of 7%. A change of 1/8% in the assumed annual interest rate
on the variable rate debt of approximately $2 billion would change the
annual interest expense by approximately $2.5 million.
(f) Adjustment to record the income tax effects of pretax pro forma
adjustments.
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<PAGE>
THE COMPANY
GENERAL
Northrop Grumman Corporation (the "Company") is an advanced technology
aerospace and defense company operating primarily in two business segments:
electronics and systems integration and military and commercial aircraft. Within
the electronics and systems integration segment, the Company is engaged in the
design, development and manufacture of a wide variety of complex electronic
products such as airborne radar, surveillance and battle management systems,
electronic countermeasures, precision weapons, antisubmarine warfare systems and
air traffic control systems. Within the military and commercial aircraft
segment, the Company is engaged in the design, development, manufacture and
modification of military aircraft and commercial aerostructures. The Company is
also engaged in the design, development and manufacture of information systems,
marine propulsion and power generation systems and a variety of other products
and services. Approximately three-fourths of the Company's revenues in 1996 are
expected to be generated from the U.S. Department of Defense (the "DOD"), with
the balance provided by contracts with commercial aerospace manufacturers, other
U.S. government agencies and various foreign customers.
On March 1, 1996, the Company completed the acquisition of the Electronic
Systems Group of Westinghouse Electric Corporation which is now the Company's
Electronic Sensors and Systems Division ("ESSD"). ESSD is a leading supplier of
electronics systems for defense, government and commercial applications. This
acquisition further enhances the Company's electronics and systems integration
capabilities, broadens the Company's product offerings and provides growth
opportunities in key defense and commercial markets. See "-- Acquisition of
ESG" and "-- Divisions -- Electronic Sensors and Systems Division."
In 1992 the Company acquired a 49% interest in Vought Aircraft Company
("Vought"), a leading manufacturer of commercial and military aerostructures. In
1994 the Company acquired Grumman Corporation ("Grumman") and the remaining
portion of Vought. With Grumman, the Company acquired a premier supplier of
electronic surveillance and electronic systems integration products as well as
military aircraft.
The Company has a balance of programs in both the production and
development phases. While production programs generally involve less risk and
generate greater cash flow than development programs, development programs are
essential for future growth opportunities. Based on its backlog and business
mix, the Company believes that its cash flow from operations as compared to its
investment requirements will result in significant cash flow available for debt
reduction, dividends and other uses over the next several years.
Many of the Company's programs are among the principal programs for the
various branches of the U.S. military. The Company is the prime contractor on
the B-2 Stealth Bomber, the only strategic bomber currently in production; the
principal subcontractor on the F/A-18C/D Hornet, the U.S. Navy's primary
strike/attack aircraft, as well as on the next generation F/A-18E/F Super
Hornet; the prime contractor on the E-2C Hawkeye, the U.S. Navy's principal
early warning, command and control aircraft; the prime contractor for the E-8
Joint STARS aircraft radar system, which will be the primary airborne ground
surveillance and battle management system for the U.S. Air Force and Army; the
prime contractor on the BAT "Brilliant" self-guided submunition under
development for the U.S. Army; the supplier of the APG-68 Fire Control Radar
used on the F-16, one of the most widely used fighter aircraft in the world; the
supplier of the ARSR-4 Long Range Radar, a three- dimensional air traffic
control radar system used by the U.S. Air Force and the U.S. Federal Aviation
Administration; and the supplier of the AN/APY-1, 2 surveillance radar which
provides real-time, all-altitude and beyond-the-horizon target detection,
identification and tracking for the E-3 AWACS surveillance aircraft.
The Company is also one of the world's leading manufacturers of
commercial aerostructures and components. The Company manufactures major
portions of the Boeing 747, 757 and 767 jetliners, as well as significant
subassemblies and components for other commercial aircraft, including the
Boeing 777 jetliner.
The Company was founded in 1939 and reincorporated in 1985 in Delaware.
The Company's executive offices are located at 1840 Century Park East, Los
Angeles, California 90067 and its telephone number is (310) 553-6262.
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<PAGE>
STRATEGY
The Company intends to strengthen its position as a leader in the
aerospace and defense industry by pursuing the following strategies:
(i) focusing on segments of defense markets that are growing and where the
Company has premier technological capabilities, particularly in electronics and
electronics systems integration; and (ii) leveraging its airframe design
expertise and manufacturing strengths to remain a key competitor in military
aircraft and commercial aerostructures. The Company has been pursuing these
strategies since 1992 through both internal initiatives and acquisitions and, as
a result, enjoys leading positions in those market segments in which it chooses
to compete. The Company's primary objective in pursuit of these strategies is
to maximize total return on investment.
The Company is transforming itself from being primarily an aircraft
designer/manufacturer to an electronics and systems integration company with a
leading airframe and aerostructures business. In early 1994, the Company
significantly expanded its electronics business with the acquisition of Grumman.
In March of 1996, the Company acquired ESG, a leading producer of sophisticated
electronics for defense, government and commercial applications. As a result of
these acquisitions, the Company expects that its electronics and systems
integration revenues will approximate nearly 50% of total revenues in 1996 and
that this percentage will continue to increase in the future.
This strategic transformation positions the Company to meet the growing
needs of the DOD for more sophisticated electronics and integrated electronics
systems. Since the end of the Cold War, the DOD has recognized the necessity of
maintaining an effective fighting force with fewer defense dollars, thereby
placing a premium on sophisticated systems that provide long-range surveillance,
battle management and precision-strike capabilities. As military systems have
become more complex, integration of the electronic functions of the various
platforms, weapons and support systems has become increasingly important.
Budget constraints have also encouraged spending on program modifications,
upgrades and extensions rather than on new development programs, further
increasing demand for sophisticated electronics systems. As a technological
leader in designing, manufacturing and integrating the sophisticated electronics
systems that provide long-range surveillance, battle management and
precision-strike capabilities, the Company believes that it is well positioned
to serve the electronic systems market.
The Company has also strengthened its military and commercial aircraft
segment. In 1992, the Company acquired 49% of Vought and in 1994 acquired
Grumman and the remaining 51% of Vought. These acquisitions and the Company's
internal initiatives have enabled the Company to establish a leading position in
military aircraft and commercial aerostructures. The Company believes that it
will maintain this leadership position as a result of its airframe design
experience, including stealth technology, as well as its cost-competitive
manufacturing capabilities.
ACQUISITION OF ESG
On March 1, 1996, the Company completed the acquisition of ESG for
approximately $3 billion in cash (the "Acquisition"). For the year ended
December 31, 1995, ESG generated revenue of $2.6 billion. The Acquisition was
financed with a combination of bank borrowings and intermediate and long-term
notes and debentures. The business of ESG is now operated as the Company's new
Electronic Sensors and Systems Division ("ESSD").
ESSD is a leading supplier of electronic systems for defense, government
and commercial applications. It employs nearly 12,000 people worldwide at 15
operating locations, primarily in the United States. ESSD has a diversified
portfolio of programs with no single program accounting for more than 10% of
revenues in 1995. Approximately one-half of ESSD's 1995 revenues were
attributable to radar technology applied to surveillance, fire control, air
traffic control and other purposes. ESSD also designs and manufactures other
avionics products, electro-optical systems, undersea and marine products and
material handling systems.
The Acquisition represents a substantial step in the Company's continuing
transformation from an aircraft designer/manufacturer to an electronics and
systems integration company with a leading aircraft and aerostructures business.
The Acquisition enables the Company to serve a larger customer base,
domestically and internationally, and is expected to provide the opportunity to
achieve revenue growth and greater cash flow stability. The Acquisition will
also enable the Company to enhance its role on important programs such
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<PAGE>
as E-8 Joint STARS and BAT, and to expand its business into the areas of air
traffic control and anti-submarine warfare systems.
DIVISIONS
The Company is organized into five operating divisions: Military Aircraft
Systems Division; Electronic Sensors and Systems Division; Electronics and
Systems Integration Division; Commercial Aircraft Division; and Data Systems and
Services Division. In addition, the Company's Advanced Technology and
Development Center provides product development and technology functions for all
of the operating divisions, drawing on technologies and skills in each of the
divisions.
MILITARY AIRCRAFT SYSTEMS DIVISION
The Military Aircraft Systems Division is responsible for the development
and manufacture of several types of military aircraft. The Company is the prime
contractor for the B-2, a strategic, long-range, large payload bomber with
advanced stealth technology that is capable of operating at both high and low
altitudes. The B-2 is able to penetrate the most sophisticated air-defenses and
is capable of responding more quickly, from greater distances and with more
accurate firepower than any other U.S. aircraft.
The Company is currently under contract to provide 20 operational and one
test B-2 aircraft. All 21 aircraft are fully funded. To date, the Company has
delivered six test aircraft and 11 of 15 production aircraft. At least five out
of the six test aircraft will be refurbished to an operational configuration and
delivered to the U.S. Air Force. The Clinton Administration has announced its
intent, and the Company has been asked to provide a proposal, to refurbish the
remaining test aircraft for subsequent delivery to the U.S. Air Force as an
operational vehicle. The U.S. Air Force currently operates a squadron of 10 B-2s
at Whiteman Air Force Base in Missouri. In addition, the B-2 program is
expected to generate maintenance and support revenues upon completion of
production. While the Company continues to seek funding for additional B-2s,
there is no assurance that such funding will be available.
The Company is the prime or principal subcontractor on all of the U.S.
Navy's carrier-based fighter, attack and early warning aircraft, including the
F/A-18. For more than two decades the Company has been teamed with prime
contractor McDonnell Douglas on the F/A-18 program. The F/A-18C/D Hornet is the
U.S. Navy's primary strike/attack aircraft and is deployed by the Navy from
aircraft carriers and by the Marines from air bases. In total, more than 1,300
F/A-18 Hornets have been delivered to the U.S. and to certain foreign
governments. The Company produces approximately 40% of each F/A-18C/D Hornet,
including the center and aft fuselage, twin vertical tails and all associated
subsystems. The Company is also the principal subcontractor on the U.S. Navy's
newest combat aircraft, the F/A-18E/F Super Hornet, which successfully completed
its first test flight in November 1995. The F/A-18E/F Super Hornet has greater
range and payload, more powerful engines and more advanced avionics and weapon
systems than the F/A-18C/D Hornet. The Company will also produce approximately
40% of each F/A-18E/F Super Hornet. The first production deliveries are
scheduled to begin in 1999, with initial operating capability expected in 2001.
Modification and enhancement of existing airborne platforms has become an
important part of the military aircraft market. With U.S. and foreign defense
planners seeking modern systems at affordable costs, upgrading existing aircraft
can be an attractive alternative to the purchase of new aircraft. The Company
provides a broad array of aircraft upgrade, modification, overhaul and support
services for several operational aircraft, including the F-5, T-38, F-14, C-2
and A-10. The Company is also responsible for remanufacturing Boeing 707
aircraft as the platform for the Company's E-8 Joint STARS program, for
structural enhancements of the EA-6B Prowler and for airframe upgrades of the E-
2C Hawkeye.
ELECTRONIC SENSORS AND SYSTEMS DIVISION
The Electronic Sensors and Systems Division ("ESSD") represents the
acquired business of ESG. ESSD has a diversified portfolio of programs with no
single program accounting for more than 10% of revenues in 1995. Approximately
one-half of ESSD's 1995 revenues were attributable to radar technology applied
to surveillance, fire control, air traffic control and other purposes. ESSD
also designs and manufactures other avionics products, electro-optical systems,
underseas and marine products and material handling systems.
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<PAGE>
With its state-of-the-art surveillance and imaging technologies, ESSD has
gained significant positions on a wide variety of high priority platforms for
the DOD and certain foreign governments. ESSD produces radars and electronics
for military aircraft and battlespace management systems, including those for
the F-16 fighter, Apache Longbow helicopter, B-1B bomber, C-130 transport and E-
3 AWACS and E-8 Joint STARS surveillance aircraft.
ESSD's products are also present on numerous development programs such as
the F-22 fighter and the Comanche helicopter. Should budget pressures force the
stretch-out of these next generation programs, ESSD is expected to benefit from
an increased demand for electronic upgrades and retrofits to existing aircraft.
For example, ESSD is currently providing mid-life fire control radar upgrades
for the F-16.
ESSD is also a leading supplier of air traffic control radars to the U.S.
Federal Aviation Administration and to countries in Europe, the Middle East,
Africa, Asia and South America. ESSD is the prime contractor on the ASR-9
terminal radar system which detects and displays aircraft and weather conditions
simultaneously, helping air traffic controllers guide aircraft through
traffic-dense regions surrounding airports. The international air traffic
control market is expected to increase significantly, due in large part to the
growth of international air traffic and infrastructure development in Asia and
Eastern Europe. The Company believes that ESSD is well positioned to benefit
from this anticipated growth in the international air traffic control market.
ESSD also develops electronic countermeasures, tactical communication equipment,
space products and underseas and marine technologies, including anti-submarine
combat systems, surface ship propulsion and power generation equipment.
International sales are also an increasingly important component of
ESSD's military electronics business. The F-16 radar system, ESSD's longest
running program, is installed in the F-16s of 23 countries. In addition to the
F-16, many other DOD weapon systems with ESSD subsystems, such as the E-3 AWACS
surveillance aircraft and the AH-64 Apache helicopter, have been sold
internationally.
ELECTRONICS AND SYSTEMS INTEGRATION DIVISION
The Electronics and Systems Integration Division manages major
electronics systems programs. The Company is the overall systems integrator and
prime contractor for the E-8 Joint STARS, the U.S. military's primary airborne
radar system which is designed to provide real-time detection, location,
classification and tracking of hostile moving and stationary ground targets. The
surveillance capabilities of the E-8 Joint STARS will enable it to be a critical
part of future battle management systems. The E-8 Joint STARS program is in
limited production and funding has been approved for the first six E-8 Joint
STARS production aircraft (designated the E-8C). One aircraft has been
delivered, a second is expected to be delivered in 1996 and the remaining four
aircraft are scheduled to be delivered in 1997 and 1998. The Company believes
that U.S. government support for the E-8 Joint STARS program is strong, due in
part to successful tests and operational activity of prototype aircraft in
combat conditions in the Persian Gulf and Bosnia. The U.S. government has
approved the sale of E-8 Joint STARS aircraft to NATO, although no such
purchases have been committed to or funded.
The Company is the prime contractor for the E-2C Hawkeye, the U.S. Navy's
principal early warning, command and control aircraft. The E-2C Hawkeye is
designed for missions such as air defense, strike control, air traffic control
and search and rescue. The U.S. Navy recently received approval for a program
of 36 E-2C aircraft, of which seven are under contract for delivery during 1997
and 1998. The Company is also involved with the Navy's upgrade program for
existing E-2C aircraft. In response to upgraded threat capabilities, the U.S.
Navy continues to plan additional E-2C avionics improvements including data
processing and capacity increases, passive detection systems, radar anti-jamming
improvements, tactical program updates and jam resistant communication systems.
The Company is the prime contractor on the BAT "Brilliant" self-guided
submunition program under development for the U.S. Army. This weapon may be
carried by a variety of air vehicles and is designed to autonomously locate,
attack and destroy tanks, armored vehicles and other mobile targets by using
acoustic and infrared sensors working in combination with a high speed onboard
computer. Prototype manufacture began in 1992, and the BAT is now in a testing
phase to verify that the system meets all established requirements.
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<PAGE>
COMMERCIAL AIRCRAFT DIVISION
The Commercial Aircraft Division is one of the world's leading suppliers
of aerostructures, as well as a major supplier of aircraft components for
commercial and military use. The Company manufactures the fuselage and the tail
section for the Boeing 747, the tail section for the Boeing 757 and 767, various
other components for the Boeing 757, 767 and 777 and major subassemblies
(including the tail section) for the McDonnell Douglas C-17 military transport.
In April 1995, the Company entered into an agreement with Boeing to continue
production of the major sections of the 747, 757 and 767 aircraft into the next
century. The Company also produces wings for the new Gulfstream V ("G-V")
business jet program and components for other aircraft. The G-V's first flight
was in November 1995, and aircraft deliveries to customers are expected to begin
in January 1997.
While the Company's commercial aircraft deliveries declined in 1995
compared to 1994, the three leading jet-airliner manufacturers collectively
recorded substantially increased orders for new aircraft in 1995 compared to
1994. Boeing, the Company's largest customer for commercial aerostructures,
announced in December 1995 and March 1996, planned increases in production rates
for 1996 and 1997 for its 747, 767 and 777 models and a return to current levels
of production in the second quarter of 1997 for its 757 model following a
reduction in the fourth quarter of 1996. The Boeing labor strike, settled in
January 1996, will cause some deliveries scheduled for 1996 to be made in 1997.
The Company has made substantial investments in productivity improvements and
capital equipment to further improve its competitive position in the growing
commercial aerostructure marketplace.
DATA SYSTEMS AND SERVICES DIVISION
The Data Systems and Services Division provides data processing system
services for external customers as well as the Company's various divisions.
Included among these services are space station program support services, flight
simulator maintenance services and the development of data processing systems
for a wide variety of U.S. Government entities and applications. The Division
also provides operational and support services to U.S. Air Force bases, an area
of potential growth if the U.S. Government increases the outsourcing of
maintenance and support activities.
RECENT DEVELOPMENT
In the first quarter of 1996, a jury trial commenced with respect to the
remaining issues in the litigation described in the Company's Annual Report on
Form 10-K for 1995 entitled U.S. EX REL DAVID PETERSON AND JEFF KNOLL V.
NORTHROP CORPORATION. The government has asserted three separate claims
totalling approximately $13.5 million, including a claim for alleged mischarging
of approximately $12 million in violation of the False Claims Act. Damages
awarded under the False Claims Act are subject to doubling or trebling and
possible additional penalties including disallowance of attorneys' fees. The
Company denies the material allegations of the claims and is vigorously
defending the action.
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<PAGE>
DESCRIPTION OF NEW SECURITIES
The Old Securities were issued and the New Securities will be issued under
the Indenture, dated as of October 15, 1994 (the "Indenture"), between the
Company and The Chase Manhattan Bank (National Association), as trustee (the
"Trustee"), a copy of which will be made available to prospective purchasers of
the New Securities upon request. Upon the issuance of the New Securities, the
Indenture will be subject to and governed by the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The following summary of the material
provisions of the Indenture does not purport to be complete and is subject to,
and qualified in its entirety by, reference to the provisions of the Indenture,
including the definitions of certain terms contained therein and those terms
made part of the Indenture by reference to the Trust Indenture Act.
GENERAL
The New Securities will be issued pursuant to the Indenture and will be
limited to an aggregate principal amount of $1,000,000,000, consisting of
$400,000,000 principal amount of New Notes, $300,000,000 principal amount of
New 2016 Debentures and $300,000,000 principal amount of New 2026 Debentures.
The New Notes, the New 2016 Debentures and the New 2026 Debentures shall
constitute the same series of Securities (as defined in the Indenture) as the
Old Notes, the Old 2016 Debentures and the Old 2026 Debentures, respectively,
under the Indenture and, accordingly, will vote together, respectively, as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding principal amount thereof have taken certain actions
or exercised certain rights under the Indenture. The New Securities will
bear interest from March 1, 1996. Eligible Holders of Old Securities whose
Old Securities are accepted for exchange will be deemed to have waived the
right to receive any payment in respect of interest on the Old Notes accrued
from March 1, 1996 to the date of the issuance of the New Securities.
Interest on the New Securities is payable semiannually on each Interest
Payment Date, commencing September 1, 1996, accruing from March 1, 1996 (i)
with respect to the New Notes, at a rate of 7% per annum, (ii) with respect
to the New 2016 Debentures, at a rate of 7 3/4% per annum, and (iii) with
respect to the New 2026 Debentures, at a rate of 7 7/8% per annum, to each
person in whose name such New Security shall have been registered at the
close of business on the each Regular Record Date next preceding such
Interest Payment Date. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months. The New Notes will mature on March
1, 2006, the New 2016 Debentures will mature on March 1, 2016 and the New
2026 Debentures will mature on March 1, 2026. The New Securities will be
issued in fully registered form, without coupons, in denominations of $1,000
and any integral multiple of $1,000 in excess thereof.
The Indenture does not limit the aggregate principal amount of debt
securities that may be issued thereunder, and the Indenture provides that debt
securities, including the New Securities, may be issued thereunder from time to
time in one or more series. The Indenture does not contain any provisions that
would limit the ability of the Company to incur indebtedness or require the
maintenance of financial ratios or specified levels of net worth or liquidity.
However, the provisions of the Indenture do (i) provide that neither the Company
nor any Restricted Subsidiary (as defined) will subject certain of its property
or assets to any mortgage or other encumbrance unless the debt securities,
including the New Securities, issued under the Indenture are secured equally and
ratably with such other indebtedness thereby secured, (ii) contain certain
limitations on the entry into certain sale and leaseback arrangements and
(iii) contain certain limitations on the issuance of certain indebtedness by
Restricted Subsidiaries. In addition, the Indenture does not contain any
provisions which would require the Company to repurchase or redeem or otherwise
modify the terms of any of the New Securities upon a change in control or other
events involving the Company which may adversely affect the creditworthiness of
the New Securities. See "-- Certain Covenants."
SINKING FUND
The New Securities will not be entitled to the benefit of any sinking fund.
REDEMPTION
The New Securities may not be redeemed prior to maturity.
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BOOK-ENTRY, DELIVERY AND FORM
Each series of New Securities will be issued in the form of a Global
Security (a "Global Security"). Each Global Security will be deposited with, or
on behalf of, The Depository Trust Company (the "Depositary") and registered in
the name of the Depositary or its nominee. Except as set forth below, each
Global Security may be transferred, in whole or in part, only to the Depositary
or another nominee of the Depositary. Investors may hold their beneficial
interest in a Global Security directly through the Depositary if they are
participants in such system or indirectly through organizations which are
participants in such system.
The Depositary has advised the Company as follows: the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
was created to hold securities of its participating organizations
("participants") and to facilitate the clearance and settlement of securities
transactions, such as transfers and pledges, among its participants in such
securities through electronic computerized book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
dealers (which may include the Initial Purchasers), banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representative) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodian relationship with a
participant, either directly or indirectly. The Depositary agrees with and
represents to its participants that it will administer its book-entry system in
accordance with its rules and by-laws and requirements of law.
Upon issuance of a Global Security in respect of each series of New
Securities, the Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the New Securities
represented by such Global Security to the accounts of participants. The
accounts to be credited shall be designated by any dealers, underwriters or
agents participating in the distribution of the New Securities. Ownership of
beneficial interests in such Global Security will be shown on, and the transfer
of such ownership interests will be effected only through, records maintained by
the Depositary for such Global Security (with respect to interests of
participants) and on the records of participants (with respect to interests of
persons holding through participants). The laws of some jurisdictions may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to transfer or
pledge beneficial interests in Global Securities.
So long as the Depositary, or its nominee, is the registered holder and
owner of a Global Security, the Depositary or such nominee, as the case may be,
will be considered the sole owner and holder of such New Securities for all
purposes of such New Securities. Except as set forth below, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of certificated New Securities represented by such
Global Security in definitive form and will not be considered the owners or
holders of New Securities represented by such Global Security. Accordingly,
each person owning a beneficial interest in a Global Security must rely on the
procedures of the Depositary and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder of New Securities under such Global Security.
The Company understands that under existing industry practice, in the event an
owner of a beneficial interest in a Global Security desires to take any action
under the Indenture, the Depositary would authorize the participants to take
such action and that the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of principal of and interest on the New Securities represented by
Global Securities registered in the name of and held by the Depositary or its
nominee will be made to the Depositary or its nominee, as the case may be, as
the registered owner and holder of the Global Securities. The Company expects
that the Depositary or its nominee, upon receipt of any of principal or interest
in respect of a Global Security, will credit participants' accounts with
payments in amount proportionate to their respective beneficial interest in the
principal amount of such Global Security as shown on the records of the
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such
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Global Securities held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants. The Company will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Global
Securities for any New Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between the Depositary and its participants or the
relationship between such participants and the owners of beneficial interests in
the Global Securities owning through such participants.
CERTIFICATED SECURITIES
The New Securities represented by the Global Securities are exchangeable
for certificated New Securities in definitive form of like tenor as such Global
Securities in denominations of U.S. $1,000 and integral multiples thereof if
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or if at any time the Depositary
ceases to be a clearing agency registered under the Exchange Act, (ii) the
Company in its discretion at any time determines not to have all of the New
Securities represented by the Global Securities or (iii) a default entitling the
holders of the New Securities to accelerate the maturity thereof has occurred
and is continuing. Any New Security that is exchangeable pursuant to the
preceding sentence is exchangeable for certificated New Securities issuable in
authorized denominations and registered in such names as the Depositary shall
direct. Subject to the foregoing, the Global Securities are not exchangeable,
except for a Global Security or Global Securities of the same aggregate
denomination to be registered in the name of the Depositary or its nominee.
EVENTS OF DEFAULT
The following events constitute Events of Default under the Indenture:
(a) failure to pay principal of or any premium on any Security of that series
when due, whether at maturity or otherwise; (b) failure to pay any interest on
any Security of that series when due, and such failure continues for 30 days;
(c) failure to perform any other covenant or agreement of the Company in the
Indenture or in such Security (other than a covenant or agreement included in
the Indenture solely for the benefit of a series other than that series),
continued for 90 days after written notice has been given by the Trustee, or by
the Holders of at least 10% in principal amount of the Outstanding Securities of
that series, as provided in the Indenture; and (d) certain events in bankruptcy,
insolvency or reorganization. (Section 501)
If an Event of Default (other than an Event of Default described in
clause (d) above) with respect to the Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Securities of that
series by notice as provided in the Indenture may declare the principal amount
of the Securities of that series to be due and payable immediately. If an Event
of Default described in clause (d) above with respect to the Securities of any
series at the time Outstanding shall occur, the principal amount of all the
Securities of that series will automatically, and without any action by the
Trustee or any Holder, become immediately due and payable. After any such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal (or other specified amount), have been cured or waived as provided in
the Indenture. (Section 502) For information as to waiver of defaults, see
"-- Modification and Waiver."
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 603) Subject
to such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to the Securities of that series.
(Section 512)
No Holder of a Security of any series will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy thereunder, unless (i) such Holder had
previously given to the Trustee written notice of a continuing Event of Default
with
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respect to the Securities of that series, (ii) the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series have
made written request, and such Holder or Holders have offered reasonable
indemnity to the Trustee to institute such proceeding as trustee, and (iii) the
Trustee has failed to institute such proceeding, and has not received from the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series a direction inconsistent with such request, within
60 days after such notice, request and offer. (Section 507) However, such
limitations do not apply to a suit instituted by a Holder of a Security for the
enforcement of payment of the principal of or any premium or interest on such
Security on or after the applicable due date specified in such Security.
(Section 508)
The Company is required to furnish to the Trustee annually a statement by
certain of its officers as to whether or not the Company, to their knowledge, is
in default in the performance or observance of any of the terms, provisions and
conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Securities
under the Indenture, may consolidate with or merge into, or convey, transfer or
lease its properties and assets substantially as an entirety to, any Person, and
may permit any Person to merge into, or convey, transfer or lease its properties
and assets substantially as an entirety to, the Company, PROVIDED (i) that any
successor Person must be a corporation, partnership, trust or other entity
organized and validly existing under the laws of any domestic jurisdiction and
must assume the Company's obligations on the Securities and under the Indenture,
(ii) that after giving effect to the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing and (iii) that certain other
conditions are met. Upon any consolidation or merger into any other Person or
any conveyance, transfer or lease of the Company's assets substantially as an
entirety to any Person, the successor Person will succeed to, and be substituted
for, the Company under the Indenture, and the Company, except in the case of a
lease, will be relieved of all obligations and covenants under the Indenture and
the Securities to the extent it was the predecessor Person. (Article Eight)
CERTAIN COVENANTS
LIMITATIONS ON LIENS. The Company covenants in the Indenture that it will
not create, incur, assume or guarantee, and will not permit any Restricted
Subsidiary to create, incur, assume or guarantee, any indebtedness for borrowed
money ("Debt") secured by a mortgage, security interest, pledge, charge or
similar encumbrance ("Mortgages") upon any Principal Property of the Company or
any Restricted Subsidiary or upon any shares of stock or indebtedness of any
Restricted Subsidiary without equally and ratably securing the Securities and
other outstanding debt securities issued pursuant to the Indenture. The
foregoing restriction, however, does not apply to (a) Mortgages on property,
shares of stock or indebtedness of any corporation existing at the time such
corporation becomes a Restricted Subsidiary; (b) Mortgages on property existing
at the time of acquisition of such property by the Company or a Restricted
Subsidiary or Mortgages to secure the payment of all or any part of the purchase
price of such property upon the acquisition of such property by the Company or
any Restricted Subsidiary or to secure any Debt incurred prior to, at the time
of, or within 180 days after, the acquisition, completion of construction
(including improvements on an existing property) or commencement of full
operation of such property for the purpose of financing all or any part of the
purchase price thereof, or construction of improvements thereon; (c) Mortgages
to secure Debt of a Restricted Subsidiary owed to the Company or another
Restricted Subsidiary; (d) Mortgages existing at the date of the Indenture;
(e) Mortgages on property of a corporation existing at the time such corporation
is merged into or consolidated with the Company or a Restricted Subsidiary or at
the time of a sale, lease, or other disposition of the properties of a
corporation as an entirety or substantially as an entirety to the Company or a
Restricted Subsidiary; (f) Mortgages on property of the Company or a Restricted
Subsidiary in favor of the United States of America or any State thereof, or any
department, agency, instrumentality or political subdivision thereof, to secure
any payments, including advance or progress payments, pursuant to any contract
or statute or to secure any indebtedness incurred or guaranteed for the purpose
of financing all or any part of the purchase price or the cost of construction
of the property subject to such Mortgages (including, but not limited to,
Mortgages incurred in connection with pollution control bonds, industrial
revenue bonds or similar financings); or (g) extensions, renewals or
replacements of any mortgage referred to in the foregoing clauses (a)
through (f). (Section 1009)
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Notwithstanding the restrictions outlined in the preceding paragraph, the
Company or any Restricted Subsidiary is permitted to create, incur, assume or
guarantee any Debt secured by a Mortgage without equally and ratably securing
the Securities and the other outstanding debt securities issued pursuant to the
Indenture, PROVIDED that after giving effect thereto, the aggregate amount of
all debt (other than the Securities and the other outstanding debt securities
issued pursuant to the Indenture) so secured by Mortgages (not including
Mortgages permitted under clauses (a) through (g) above) does not exceed the
greater of $300,000,000 or 10% of Consolidated Net Tangible Assets.
(Section 1009)
SALE AND LEASEBACK ARRANGEMENTS. The Company covenants in the Indenture
that it will not, nor will it permit any Restricted Subsidiary to, enter into
any arrangement with any person that provides for the leasing to the Company or
any Restricted Subsidiary of Principal Property (other than any such transaction
involving a lease for a term of not more than three years or any such
transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries) which has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such person, unless either (a) the
Company or such Restricted Subsidiary would be entitled to create, incur, assume
or guarantee Debt secured by a Mortgage on such Principal Property at least
equal in amount to the Attributable Debt with respect to such arrangement,
without equally and ratably securing the Securities and the other outstanding
debt securities issued pursuant to the Indenture, pursuant to the limitation in
the Indenture on liens, PROVIDED that such Attributable Debt shall thereupon be
deemed to be Debt subject to the provisions of the second paragraph under
"-- Certain Covenants -- Limitations on Liens" above or (b) the Company shall
apply an amount equal to the greater of the net proceeds of such sale or the
Attributable Debt with respect to such arrangement to the retirement of Debt of
the Company or any Restricted Subsidiary that by its terms matures at or is
extinguishable or renewable at the option of the obliger to a date more than
twelve months after the creation of such Debt. (Section 1010)
FUNDED DEBT OF RESTRICTED SUBSIDIARIES. The Company covenants in the
Indenture that no Restricted Subsidiary may issue, assume or guarantee any
Funded Debt unless the aggregate amount of all Funded Debt of all Restricted
Subsidiaries (excluding Funded Debt permitted by clauses (i) through (v) below)
does not exceed 10% of Consolidated Net Tangible Assets. Such limitation will
not apply to (i) any Funded Debt owed to the Company or any other Restricted
Subsidiary; (ii) Funded Debt existing on October 15, 1994, and extensions,
renewals or replacements thereof; (iii) Funded Debt secured by a Mortgage
permitted as described in clauses (a) through (g) under "-- Certain Covenants --
Limitations on Liens" above; (iv) any guaranty by a Restricted Subsidiary of
Funded Debt of the Company incurred in connection with the acquisition of such
Restricted Subsidiary; and (v) Funded Debt of a corporation outstanding at the
time such corporation first becomes a Restricted Subsidiary. (Section 1011)
DEFINITIONS. The term "Consolidated Net Tangible Assets" shall mean, as of
any particular time, the aggregate amount of assets (less applicable reserves
and other properly deductible items) after deducting therefrom (a) all current
liabilities except for (i) notes and loans payable, (ii) current maturities of
long-term debt, (iii) current maturities of obligations under capital leases and
(iv) deferred income taxes and (b) all goodwill, tradenames, trademarks,
patents, unamortized debt discount and expenses (to the extent included in said
aggregate amount of assets) and other like intangibles, all as set forth on the
most recent quarterly or annual consolidated balance sheet of the Company and
its consolidated Subsidiaries and computed in accordance with generally accepted
accounting principles.
The term "Funded Debt" shall mean any Debt (indebtedness for money
borrowed) or guaranty thereof, whether or not secured, maturing by its terms
more than one year from the date of its creation, including any Debt or guaranty
thereof renewable or extendable at the option of the obligor to a date more than
one year from the date of original issuance thereof, but excluding any portion
of such Debt or guarantee which is included in current liabilities.
The term "Restricted Subsidiary" shall mean any subsidiary of the Company
except any subsidiary substantially all the assets of which are located, or
substantially all of the business of which is carried on, outside of the
United States of America, or any subsidiary substantially all of the assets of
which consists of stock or other securities of such a subsidiary. (Section 101)
The term "Principal Property" shall mean any manufacturing plant or
manufacturing facility which is (i) owned by the Company or any Restricted
Subsidiary and (ii) located within the continental United States
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of America, except any such plant which, in the opinion of the Board of
Directors, is not of material importance to the total business conducted by the
Company and the Restricted Subsidiaries taken as a whole.
The term "Attributable Debt" when used in connection with a sale and
leaseback transaction referred to above shall mean, at the time of
determination, the lesser of (a) the fair value of such property (as determined
by the Board of Directors of the Company) or (b) the present value (discounted
at the rate implicit in the terms of the relevant lease) of the obligation of
the lessee for net rental payments during the remaining term of the lease
(including any period for which such lease has been extended).
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee under the Indenture, only with the consent of the Holders of a
majority in aggregate principal amount of each series of the outstanding
Securities issued under the Indenture and affected by such modification or
amendment; PROVIDED, HOWEVER, that no such modification or amendment may,
without the consent of each Holder of such Security affected thereby, (a) change
the Stated Maturity of the principal of, or any installment of principal of or
interest on, any such Security, (b) reduce the principal amount of, or any
premium or interest on, any such Security, (c) reduce the amount of principal of
a Security payable upon acceleration of the maturity thereof, (d) change the
place or currency of payment of principal of, or any premium or interest on, any
such Security, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Security, (f) reduce the percentage in
principal amount of Outstanding Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture, (g) reduce
the percentage in principal amount of Outstanding Debt Securities of any series
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults or (h) modify such provisions with respect to
modification and waiver. (Section 902)
The Holders of a majority in principal amount of the Outstanding Securities
of any series may waive compliance by the Company with certain restrictive
provisions of the Indenture and, if applicable, such Securities. (Section 1008)
The Holders of a majority in principal amount of the Outstanding Securities of
any series may waive any past default under the Indenture, except a default in
the payment of principal, premium or interest and certain covenants and
provisions of the Indenture and, if applicable, such Securities which may not be
amended without the consent of the Holder of each Outstanding Security of such
series affected. (Section 513)
OUTSTANDING SECURITIES
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given or taken any
direction, notice, consent, waiver or other action under the Indenture and, if
applicable, such Securities, as of any date, Securities for whose payment or
redemption money has been deposited or set aside in trust for the Holders and
those that have been fully defeased, will not be deemed to be Outstanding. In
addition, Securities owned by the Company or any of its Affiliates will not be
deemed to be Outstanding. (Section 101)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (A) to defease and
be discharged from any and all its obligations with respect to such Securities
and except for the obligations to exchange or register the transfer of such
Securities, to replace temporary or mutilated, destroyed, lost or stolen
Securities, to maintain an office or agency with respect to the Securities and
to hold moneys for payment in trust) ("defeasance") or (B) to be released from
its obligations with respect to such Securities concerning restrictive covenants
which are subject to covenant defeasance ("covenant defeasance"), and the
occurrence of certain Events of Default, which are described above in clause (d)
(with respect to such restrictive covenants) and clause (e) under "-- Events of
Default" shall no longer be an Event of Default, in each case, upon deposit with
the Trustee (or other qualifying trustee), in trust for such purpose, money or
U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and interest on such
Securities.
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As a condition to defeasance or covenant defeasance, the Company must
deliver to the Trustee an Opinion of Counsel (as specified in the Indenture) to
the effect that Holders of such Securities will not recognize gain or loss for
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
or covenant defeasance had not occurred. The Company may exercise its
defeasance option with respect to such Securities notwithstanding its prior
exercise of its covenant defeasance option. If the Company exercises its
defeasance option, payment of such Securities may not be accelerated by
reference to the covenants noted under clause (B) above. In the event the
Company omits to comply with its remaining obligations with respect to such
Securities under the Indenture after exercising its covenant defeasance option
and such Securities are declared due and payable because of the occurrence of
any Event of Default, the amount of money and U.S. Government Obligations on
deposit in the defeasance trust may be insufficient to pay amounts due on the
Securities of such series at the time of the acceleration resulting from such
Event of Default. However, the Company will remain liable in respect of such
payments. (Article Thirteen)
DESCRIPTION OF OTHER SENIOR DEBT
In October 1994, the Company issued $350 million of 8.625% notes due 2004
(the "2004 Notes") and $250 million of 9.375% debentures due 2024 (the "2024
Debentures") pursuant to a public offering. The net proceeds of this offering
were used to prepay $600 million of indebtedness under the Company's
then-existing term loan facility. The 2004 Notes may not be redeemed by the
Company prior to maturity. The 2024 Debentures may not be redeemed by the
Company prior to October 15, 2004, and thereafter are subject to redemption at
the Company's option. There is no provision for a sinking fund for the 2004
Notes or the 2024 Debentures.
In connection with the closing of the Acquisition, the Company entered into
The Second Amended and Restated Credit Agreement with The Chase Manhattan Bank
(National Association), Chemical Bank, Bank of America, NT & SA and a syndicate
of other banks (collectively, the "Banks") which provides for borrowings of up
to $3.8 billion (the "New Bank Credit Facilities") which replaced its prior
credit agreement (the "Prior Credit Agreement"). The New Bank Credit Facilities
consist of two term loan facilities and a revolving credit facility with
aggregate commitments of $500 million, $1.5 billion and $1.8 billion,
respectively (each referred to respectively as "Term Loan Facility I", "Term
Loan Facility II" and the "Revolving Credit Facility"). Borrowings under the
New Bank Credit Facilities along with the net proceeds of the offering of the
Old Securities were used to finance the Acquisition and pay related expenses, to
refinance outstanding debt under the Prior Credit Agreement and to finance the
continuing operations of the Company. Term Loan Facility I will mature two
years from the date on which the initial loans are made (the "Credit Facilities
Closing Date"). Both Term Loan Facility II and the Revolving Credit Facility
will mature six years from the Credit Facilities Closing Date. The New Bank
Credit Facilities contain a covenant requiring the Company to issue for cash,
prior to the maturity date of Term Loan Facility I, not less than $500 million
of subordinated debt or equity. Borrowings under the New Bank Credit Facilities
will bear interest, at the option of the Company, at various rates of interest,
including a Base Rate Option and a LIBOR Option (equal to the London Interbank
Offered Rate), plus in each case an incremental margin based on the Company's
leverage ratio and credit rating level. The incremental margin for LIBOR
borrowings under Term Loan Facility I and Term Loan Facility II varies from
0.50% to 0.625%, assuming the Company retains an investment grade credit rating.
The incremental margin for LIBOR borrowings under the Revolving Credit Facility
varies from 0.35% to 0.425%, assuming the Company retains an investment grade
credit rating. The New Bank Credit Facilities also provide for a facility fee
on the daily aggregate amount of commitments under the Revolving Credit Facility
(whether or not utilized). The facility fee is also based on the Company's
leverage ratio and credit rating level and varies from 0.15% to 0.20%, assuming
the Company retains an investment grade credit rating.
CERTAIN FEDERAL TAX CONSIDERATIONS
The following is a general discussion of the material United States federal
income tax consequences applicable to the exchange of Old Securities for New
Securities, and the ownership and disposition of New Securities, by United
States Holders (as defined below) who exchange Old Securities for New Securities
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pursuant to the Exchange Offer, as well as the principal United States federal
income and estate tax consequences of the ownership of New Securities by Foreign
Holders (as defined below) who acquire New Securities pursuant to the Exchange
Offer. This discussion is based on the Internal Revenue Code of 1986, as
amended (the "Code"), existing and proposed Treasury regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all as in
effect or proposed on the date hereof and all of which are subject to change at
any time, possibly with retroactive effect, and to different interpretations.
In particular, the discussion is based in part on certain proposed regulations
issued in December 1992 concerning the tax treatment of exchanges and
modifications of debt instruments (the "1992 Proposed Regulations"). The 1992
Proposed Regulations are proposed to be effective for modifications made to debt
instruments more than 30 days after such regulations are issued as final
regulations. Until issued as final (or temporary) regulations, such regulations
are not binding on the Internal Revenue Service ("IRS") and could be withdrawn,
replaced or modified at any time, possibly with retroactive effect. This
discussion does not address the tax consequences to subsequent purchasers of New
Securities or to persons who purchased Old Securities from an initial holder at
a price other than the face amount of such New Security, and is limited to
holders that hold the New Securities as capital assets within the meaning of
section 1221 of the Code. This discussion also does not address the tax
consequences to nonresident aliens or foreign corporations that are subject to
United States federal income tax on a net basis on income realized with respect
to a New Security because such income is effectively connected with the conduct
of a U.S. trade or business. Such holders are generally taxed in a similar
manner to United States Holders; however, certain special rules apply.
Moreover, this discussion does not address all of the tax consequences that may
be relevant to particular purchasers in light of their personal circumstances,
or to certain types of purchasers (such as certain financial institutions,
insurance companies, tax-exempt entities, dealers in securities or persons who
have hedged a risk of owning New Securities).
HOLDERS EXCHANGING OLD SECURITIES FOR NEW SECURITIES ARE URGED TO CONSULT
THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE EXCHANGE
OF OLD SECURITIES FOR NEW SECURITIES AND THE CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF NEW SECURITIES, INCLUDING THE APPLICABILITY OF ANY FEDERAL TAX
LAWS OR ANY STATE, LOCAL OR FOREIGN TAX LAWS, AS WELL AS WITH RESPECT TO THE
POSSIBLE EFFECTS OF ANY CHANGES (OR PROPOSED CHANGES) IN APPLICABLE TAX LAWS OR
INTERPRETATIONS THEREOF.
UNITED STATES FEDERAL INCOME TAXATION OF UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a holder of an Old
Security or a New Security, as appropriate, that is, for United States federal
income tax purposes, (a) a citizen or resident of the United States, (b) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof or (c) an
estate or trust the income of which is subject to United States federal income
taxation regardless of source.
EXCHANGE OF OLD SECURITIES FOR NEW SECURITIES
The exchange by a United States Holder of an Old Security for a New
Security will not constitute a taxable exchange of the Old Security if the terms
of the New Security (including the interest rate) are identical to the terms of
the Old Security. Under the 1992 Proposed Regulations, even if the terms of the
New Security were not identical to the terms of the Old Security as a result of
the exchange as described under "The Exchange Offer," the exchange of the Old
Security for the New Security would not be treated as a taxable exchange, as
such change would occur pursuant to the original terms of the Old Security.
Accordingly, in the absence of any change in law or the modification or
withdrawal of the 1992 Proposed Regulations, the Company intends to take the
position that in the circumstances described in the preceding sentence, the
exchange of an Old Security for a New Security pursuant to the Exchange Offer
will not constitute a taxable exchange of the Old Security.
Assuming the exchange of an Old Security for a New Security pursuant to the
Exchange Offer is not treated as a taxable exchange for federal income tax
purposes, the New Security received by a United States Holder would be treated
as a continuation of the Old Security in the hands of such holder. As a result,
there should be no federal income tax consequences to United States Holders
exchanging Old Securities for New Securities pursuant to the Exchange Offer, and
a United States Holder should have the same adjusted basis
-41-
<PAGE>
and holding period in the New Securities immediately after the exchange as it
had in the Old Securities immediately before the exchange.
PAYMENT OF INTEREST ON NEW SECURITIES
Interest paid or payable on a New Security will be taxable to a United
States Holder as ordinary interest income, generally as received or accrued, in
accordance with such holder's method of accounting for federal income tax
purposes.
SALE, EXCHANGE OR RETIREMENT OF NEW SECURITIES
Upon the sale, exchange, redemption, retirement at maturity or other
disposition of a New Security, a United States Holder will generally recognize
taxable gain or loss equal to the difference between the sum of cash plus the
fair market value of all other property received on such disposition (except to
the extent such cash or property is attributable to accrued but unpaid interest,
which will be taxable as ordinary income) and such holder's adjusted tax basis
in the New Security. A United States Holder's adjusted tax basis in a New
Security generally will equal the cost to such holder of the Old Security
exchanged for such New Security, reduced by any principal payments received by
such holder on the New Security.
Gain or loss recognized on the disposition of a New Security generally will
be capital gain or loss and will be long-term capital gain or loss if, at the
time of such disposition, the United States Holder's holding period for the New
Security (which would include such holder's holding period in the Old Security
exchanged therefor) is more than one year.
BACKUP WITHHOLDING AND INFORMATION REPORTING
"Backup" withholding and information reporting requirements apply to
certain payments of principal, premium, if any, and interest on a New Security,
and to payments of the proceeds of the sale or redemption of New Securities
before maturity, to certain non-corporate United States Holders. The Company,
its agent, a broker, the Trustee or any paying agent, as the case may be, will
be required to withhold from any payment that is subject to backup withholding a
tax equal to 31% of such payment if a United States Holder fails to furnish its
taxpayer identification number (social security or employer identification
number), to certify that such number is correct, to certify that such holder is
not subject to backup withholding, or to otherwise comply with the applicable
requirements of the backup withholding rules. Any amounts withheld under the
backup withholding rules from a payment to a United States Holder will be
allowed as a credit against such holder's United States federal income tax
liability, and may entitle the holder to a refund, provided that the required
information is furnished to the IRS.
UNITED STATES TAXATION OF FOREIGN HOLDERS OF NEW SECURITIES
PAYMENT OF INTEREST ON NEW SECURITIES
In general, payments of interest received by any holder that is not a
United States Holder (a "Foreign Holder") will not be subject to a United States
federal withholding tax, provided that (a)(i) the holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote, (ii) the holder is not a controlled
foreign corporation that is related to the Company actually or constructively
through stock ownership and (iii) either (x) the beneficial owner of the New
Security, under penalties of perjury, provides the Company or its agent with the
beneficial owner's name and address and certifies that it is not a United States
Holder on IRS Form W-8 (or a suitable substitute form) or (y) a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") holds the New Security and certifies to the Company or its agent
under penalties of perjury that such a Form W-8 (or a suitable substitute) has
been received by it from the beneficial owner or qualifying intermediary and
furnishes the Company a copy thereof or (b) the Foreign Holder is entitled to
the benefits of an income tax treaty under which the interest on the New
Securities is exempt from United States withholding tax and the Foreign Holder
or such Holder's agent provides a properly executed IRS Form 1001 claiming the
exemption. Payments of interest not exempt from U.S. federal withholding tax as
described above will be subject to such withholding tax at a rate of 30%
(subject to reduction under an applicable income tax treaty).
-42-
<PAGE>
SALE, EXCHANGE OR RETIREMENT OF NEW SECURITIES
A Foreign Holder generally will not be subject to United States federal
income tax (and generally no tax will be withheld) with respect to gain realized
on the sale, exchange, redemption, retirement at maturity or other disposition
of New Securities, unless the Foreign Holder is an individual who is present in
the United States for a period or periods aggregating 183 or more days in the
taxable year of the disposition and certain other conditions are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current Treasury regulations, backup withholding and information
reporting on IRS Form 1099 do not apply to payments made by the Company or a
paying agent to Foreign Holders if the certification described under "United
States Taxation of Foreign Holders of New Securities--Payment of Interest on New
Securities" is received, provided that the payor does not have actual knowledge
that the holder is a United States Holder. If any payments of principal and
interest are made to the beneficial owner of a New Security by or through the
foreign office of a foreign custodian, foreign nominee or other foreign agent of
such beneficial owner, of if the foreign office of a foreign "broker" (as
defined in applicable United States Treasury Department regulations) pays the
proceeds of the sale of a New Security or a coupon to the seller thereof, backup
withholding and information reporting will not apply. Information reporting
requirements (but not backup withholding) will apply, however, to payments by a
foreign office of a broker that is a United States person, that derives 50% or
more of its gross income for certain periods from the conduct of a trade or
business in the United States, or that is a "controlled foreign corporation"
(generally, a foreign corporation controlled by certain United States
shareholders) with respect to the United States, unless the broker has
documentary evidence in its records that the holder is a Foreign Holder and
certain other conditions are met, or the holder otherwise establishes an
exemption. Payment by a United States office of a broker is subject to both
backup withholding at a rate of 31% and information reporting unless the holder
certifies under penalties of perjury that it is a Foreign Holder, or otherwise
establishes an exemption. A Foreign Holder may obtain a refund of, or a credit
against such holder's U.S. federal income tax liability for, any amounts
withheld under the backup withholding rules, provided the required information
is furnished to the IRS.
In addition, in certain circumstances interest on a New Security owned by a
Foreign Holder will be required to be reported annually on IRS Form 1042-S, in
which case such form will be filed with the IRS and furnished to the Foreign
Holder.
The foregoing description of the procedures for withholding tax on interest
payments and associated backup withholding and information reporting rules are
subject to change by future regulations.
FEDERAL ESTATE TAXES
Subject to applicable estate tax treaty provisions, New Securities held at
the time of death (or theretofore transferred subject to certain retained rights
or powers) by an individual who at the time of death is a Foreign Holder will
not be included in such holder's gross estate for United States federal estate
tax purposes provided that the individual does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote.
PLAN OF DISTRIBUTION
Each broker-dealer that holds Old Securities that were acquired for its own
account as a result of market making or other trading (other than Old Securities
acquired directly from the Company), may exchange Old Securities for New
Securities in the Exchange Offer. However, any such broker-dealer may be deemed
to be an "underwriter" within the meaning of such term under the Securities Act
and must, therefore, acknowledge that it will deliver a prospectus in connection
with any resale of New Securities received in the Exchange Offer. This
prospectus delivery requirement may be satisfied by the delivery by such broker-
dealer of this Prospectus, as it may be amended or supplemented from time to
time. The Company has agreed to make this Prospectus, as amended or
supplemented, available to any broker-dealer who receives New Securities in the
Exchange Offer for use in connection with any such sale promptly upon request.
The Company will not receive any proceeds from any sales of New Securities by
broker-dealers. Any resale of
-43-
<PAGE>
New Securities by broker-dealers may be made directly to a purchaser or to or
through brokers or dealers who may receive compensation in the form of
commissions from any such broker-dealer and/or the purchasers of any such New
Securities. Any broker-dealer that resells New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. Pursuant to the Registration Rights Agreement, the Company has agreed to
pay all expenses incident to the Exchange Offer other than commissions or
concessions of any brokers or dealers and will indemnify Eligible Holders
(including any broker-dealer) against certain liabilities, including liabilities
under the Securities Act.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1995, 1994, 1993, 1992 and 1991, and for each of the five years in the
period ended December 31, 1995 incorporated by reference from the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The combined financial statements of Electronic Systems (a unit
of Westinghouse Electric Corporation) incorporated in this Prospectus by
reference to the Current Report on Form 8-K of the Company dated March 18,
1996 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the New Securities offered hereby will be passed upon for
the Company by Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, California.
-44-
<PAGE>
All tendered Old Securities, executed Letters of Transmittal and other
related documents should be directed to the Exchange Agent. Questions and
requests for assistance and requests for additional copies of the Prospectus,
the Letter of Transmittal and other related documents should be addressed to the
Exchange Agent as follows:
BY HAND, REGISTERED OR CERTIFIED MAIL
OR OVERNIGHT CARRIER:
The Chase Manhattan Bank
(National Association)
Institutional Trust Group
Chase MetroTech Center
3rd Floor
Brooklyn, New York 11245
BY FACSIMILE:
(718) 242-5885
BY TELEPHONE:
(718) 242-7287
(Originals of all documents submitted by facsimile should be sent promptly
by hand, overnight courier, or registered or certified mail)
No dealer, salesperson or other person is authorized in connection with any
offering made hereby to give any information or to make any representation not
contained in this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by the Initial Purchasers. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any security other than the securities
offered hereby, nor does it constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby to any person in any
jurisdiction in which it is unlawful to make such an offer or solicitation to
such person. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstance create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
Offer to Exchange All Outstanding
7% Notes Due 2006
($400,000,000 principal amount outstanding)
For 7% Notes Due 2006
7 3/4% Debentures Due 2016
($300,000,000 principal amount outstanding)
For 7 3/4% Debentures Due 2016
7 7/8% Debentures Due 2026
($300,000,000 principal amount outstanding)
For 7 7/8% Debentures Due 2026
NORTHROP GRUMMAN
CORPORATION
___________________________
P R O S P E C T U S
___________________________
______________, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
DELAWARE GENERAL CORPORATION LAW
Section 145 of the Delaware General Corporation Law (the "Act"), and
Article V of the Company's Bylaws relate to the indemnification of the Company's
directors and officers, among others, in a variety of circumstances against
liabilities arising in connection with the performance of their duties.
The Act permits indemnification of directors and officers acting in good
faith and in a manner they reasonably believe to be in or not opposed to the
best interests of the Company or its shareholders (and, with respect to a
criminal proceeding, if they have no reasonable cause to believe their conduct
to be unlawful) against (i) expenses (including attorney's fees), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
in connection with any threatened, pending or completed action, suit, or
proceeding (other than an action by or in the right of the Company) arising out
of a position with the Company (or with some other entity at the Company's
request) and (ii) expenses (including attorneys' fees) and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending, or completed action or suit by or in the right of the Company, unless
the director or officer is found liable to the Company and an appropriate court
does not determine that he or she is nevertheless fairly and reasonably entitled
to indemnification.
The Act requires indemnification for expenses to the extent that a director
or officer is successful on the merits in defending against any such action,
suit or proceeding, and otherwise requires in general that the indemnification
provided for in (i) and (ii) above be made only on a determination by a majority
vote of a quorum of the Board of Directors who were not parties or threatened to
be made parties to the action, suit or proceeding, or, if a quorum cannot be
obtained, (a) by independent legal counsel, or (b) by the shareholders. In
certain circumstances, the Act further permits advances to cover such expenses
before a final determination that indemnification is permissible, upon receipt
of a written undertaking by or on behalf of the director or officer to repay
such amounts if it shall ultimately be determined that they are not entitled to
indemnification.
Indemnification under the Act is not exclusive of other rights to
indemnification to which a person may be entitled under the Company's
Certificate of Incorporation, Bylaws, or a contractual agreement. The Act
permits the Company to purchase insurance on behalf of its directors and
officers against liabilities arising out of their positions with the Company
whether or not such liabilities would be within the foregoing indemnification
provisions.
BYLAWS
Under the Company's Bylaws, the Company is required to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company, a "derivative action") and any appeal thereof by reason of the fact
that such person is, was or agreed to become a director or officer of the
Company, against expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding to the fullest extent
allowed under Delaware or other applicable state law. The Company shall
indemnify an indemnitee in connection with a suit brought by such indemnitee
only if the proceeding was authorized by the Company or is instituted to enforce
the indemnification rights herein above mentioned. The Company may pay the
expenses (including attorney's fees) incurred by any officer, director, employee
or agent who is interviewed, subpoenaed or deposed as a witness, or otherwise
incurs expenses, in connection with any action or proceeding, if it is
determined that such payments will benefit the Company.
The Company's Bylaws provide that the Company shall pay for the expenses
incurred by an indemnified director or officer in defending the proceedings
specified above, in advance of their final disposition, provided that the person
furnishes the Company with an undertaking to reimburse the Company
II-1
<PAGE>
if it is ultimately determined that such person is not entitled to
indemnification. The Company may provide indemnification at the discretion of
the Board of Directors and on such terms and under such conditions as the Board
shall deem appropriate to any person who is or was serving as an employee or
agent. In addition, the Company may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Company (or is serving or was serving at the request of an executive officer the
Company in such a position at a related entity) against any liability asserted
against and incurred by such person in such capacity, or arising out of the
person's status as such whether or not the Company would have the power or the
obligation to indemnify such person against such liability under the provisions
of the Company's Bylaws.
The Company has entered into an agreement with each of its directors and
certain of its officers indemnifying them to the fullest extent permitted by the
foregoing. The Company has also purchased director and officer liability
insurance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3-1 Certificate of Incorporation, as amended (incorporated by reference to
Form S-3 Registration Statement filed August 18, 1994)
3-2 Bylaws, as amended (incorporated by reference to Form S-3 Registration
Statement filed August 18, 1994)
4-1 Registration Rights Agreement dated as of March 1, 1996 among the
Registrant, CS First Boston Corporation, J.P. Morgan Securities, Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc.
4-2 Indenture dated as of October 15, 1994 (incorporated by reference to
Form 8-K filed October 25, 1994)
4-3 Form of Officers' Certificate (without exhibits) establishing the
terms of the New Notes, the New 2016 Debentures and the New 2026
Debentures
4-4 Form of New Note
4-5 Form of New 2016 Debenture
4-6 Form of New 2026 Debenture
4-7 Form of Letter of Transmittal
5-1 Opinion of Sheppard, Mullin, Richter & Hampton LLP
12-1 Computation of Ratio of Earnings to Fixed Charges
23-1 Consent of Deloitte & Touche LLP, independent auditors
23-2 Consent of Price Waterhouse LLP, independent accountants
23-3 Consent of Sheppard, Mullin, Richter & Hampton LLP (included in
Exhibit 5-1)
24-1 Power of Attorney
25-1 Form T-1 Statement of Eligibility and Qualification of The Chase
Manhattan Bank (National Association) as trustee
(b) Not Applicable
(c) Not Applicable
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3, or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 20
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such Act and
will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b) or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of this Registration Statement through the date
of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, California
on April 19, 1996.
NORTHROP GRUMMAN CORPORATION
By: /s/ NELSON F. GIBBS*
__________________________________________
Nelson F. Gibbs, Corporate Vice President
and Controller
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
/s/ KENT KRESA*
- ------------------------- Chairman of the Board, April 19, 1996
Kent Kresa President and Chief Executive
Officer and Director
(Principal Executive Officer)
/s/ RICHARD B. WAUGH, JR.*
- -------------------------- Corporate Vice President April 19, 1996
Richard B. Waugh, Jr. and Chief Financial Officer
/s/ NELSON F. GIBBS*
- -------------------------- Corporate Vice President April 19, 1996
Nelson F. Gibbs and Controller (Principal
Accounting Officer)
/s/ JACK R. BORSTING*
- ------------------------- Director April 19, 1996
Jack R. Borsting
/s/ JOHN T. CHAIN, JR.*
- -------------------------- Director April 19, 1996
John T. Chain, Jr.
/s/ JACK EDWARDS*
- -------------------------- Director April 19, 1996
Jack Edwards
/s/ PHILLIP FROST*
- -------------------------- Director April 19, 1996
Phillip Frost
/s/ AULANA L. PETERS*
- --------------------------- Director April 19, 1996
Aulana L. Peters
S-1
<PAGE>
/s/ JOHN E. ROBSON*
- --------------------------- Director April 19, 1996
John E. Robson
/s/ RICHARD M. ROSENBERG*
- --------------------------- Director April 19, 1996
Richard M. Rosenberg
- -------------------------- Director
Brent Scowcroft
/s/ JOHN BROOKS SLAUGHTER*
- -------------------------- Director April 19, 1996
John Brooks Slaughter
/s/ WALLACE C. SOLBERG*
- -------------------------- Director April 19, 1996
Wallace C. Solberg
/s/ RICHARD J. STEGEMEIER*
- -------------------------- Director April 19, 1996
Richard J. Stegemeier
*By: /s/ JAMES C. JOHNSON
--------------------------
James C. Johnson
Attorney-in-Fact**
</TABLE>
** By authority of power of attorney filed with this registration statement.
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<C> <S> <C>
4-1 Registration Rights Agreement dated as of March 1, 1996 among
the Registrant, CS First Boston Corporation, J.P. Morgan Securities, Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc.
4-3 Form of Officers' Certificate (without exhibits) establishing the terms
of the New Notes, the New 2016 Debentures and the New 2026 Debentures
4-4 Form of New Note
4-5 Form of New 2016 Debenture
4-6 Form of New 2026 Debenture
4-7 Form of Letter of Transmittal
5-1 Opinion of Sheppard, Mullin, Richter & Hampton LLP
12-1 Computation of Ratio of Earnings to Fixed Charges
23-1 Consent of Deloitte & Touche LLP, independent auditors
23-2 Consent of Price Waterhouse LLP, independent accountants
23-3 Consent of Sheppard, Mullin, Richter & Hampton LLP (included in
Exhibit 5.1)
24-1 Power of Attorney
25-1 Form T-1 Statement of Eligibility and Qualification of The Chase
Manhattan Bank (National Association) as trustee
</TABLE>
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
(relating to the 7% Notes Due 2006
7-3/4% Debentures Due 2016 and the
7-7/8% Debentures Due 2026)
Dated as of March 1, 1996
by and among
NORTHROP GRUMMAN CORPORATION
and
CS FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and
SALOMON BROTHERS INC
AS REPRESENTATIVES OF THE INITIAL PURCHASERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of March 1, 1996, by and among NORTHROP GRUMMAN CORPORATION, a
Delaware corporation (the "COMPANY"), and CS FIRST BOSTON CORPORATION, J.P.
MORGAN SECURITIES INC., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and
SALOMON BROTHERS INC, a representatives of the several initial purchasers (each
an "INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS") identified
in the Purchase Agreement (as defined below), which have agreed pursuant to such
agreement to purchase from the Company $400 million aggregate principal amount
of 7% Notes Due 2006 (the "SERIES A NOTES"), $300 million aggregate principal
amount of 7-3/4% Debentures Due 2016 (the SERIES A 2016 DEBENTURES"), and $300
million aggregate principal amount of 7-7/8% Debentures Due 2026 (the SERIES A
2026 DEBENTURES," and together with the Series A Notes and the Series A 2016
Debentures, the SERIES A SECURITIES").
This Agreement is made pursuant to the Purchase Agreement, dated as of
February 27, 1996 (the "PURCHASE AGREEMENT"), by and among the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Series A Securities, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 6(j)
of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
ADDITIONAL INTEREST: As defined in Section 5 hereof.
ADDITIONAL INTEREST PAYMENT DATE: With respect to the Series A
Securities, each Interest Payment Date.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Series B Securities of
any tranche that are acquired by a Broker-Dealer in the Exchange Offer in
exchange for applicable Series A Securities that such Broker-Dealer acquired for
its own account as a result of market making activities or other trading
activities (other than in exchange for Series A Securities acquired directly
from the Company or any of its affiliates).
CERTIFICATED SECURITIES: Securities issued in definitive,
certificated form under the Indenture other than the Securities issued in global
form pursuant to the Indenture and any beneficial interest therein.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
1
<PAGE>
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Securities to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Trustee under the Indenture of Series B Securities of each respective
tranche in the same aggregate principal amount as the aggregate principal amount
of the respective tranche of Series A Securities tendered by Holders thereof
pursuant to the Exchange Offer.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Company under the Act of the
Series B Securities pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities of each tranche for Series B Securities of the
respective tranche in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such exchange
offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Series A Securities to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, to certain
institutional "accredited investors," as such term is defined in Rule 501(a)(1),
(2), (3) and (7) of Regulation D under the Act, and in accordance with Rule 903
of Regulation S under the Act.
GLOBAL SECURITYHOLDER: Any owner from time to time of a beneficial
interest in any Security issued in global form pursuant to the Indenture.
HOLDERS: As defined in Section 2 hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated as of October 15, 1994, between the
Company and the Trustee, pursuant to which the Securities are to be issued, as
such Indenture is amended or further supplemented from time to time in
accordance with the terms thereof including, without limitation, any amendment
or supplement effected through an officer's certificate under Sections 201, 301
or 303 of the Indenture.
INTEREST PAYMENT DATE: As defined in the Indenture and the
Securities.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, limited liability company,
corporation, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other
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amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
RECORD HOLDER: With respect to any Additional Interest Payment Date,
each Person who is a Holder of Securities on the record date with respect to the
Interest Payment Date on which such Additional Interest Payment Date shall
occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
relating to (a) an offering of Series B Securities pursuant to an Exchange Offer
or (b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
SECURITIES: The Series A Securities and the Series B Securities.
SERIES B NOTES: The Company's 7% Series B Notes Due 2006 to be issued
pursuant to the Indenture (i) in the Exchange Offer or (ii) upon the request of
any Holder of Series A Notes covered by a Shelf Registration Statement in
exchange for such Series A Notes.
SERIES B 2016 DEBENTURES: The Company's 7-3/4% Series B Debentures
Due 2016 to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) upon the request of any Holder of Series A 2016 Debentures covered by a
Shelf Registration Statement in exchange for such Series A 2016 Debentures.
SERIES B 2026 DEBENTURES: The Company's 7-7/8% Series B Debentures
Due 2026 to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) upon the request of any Holder of Series A 2026 Debentures covered by a
Shelf Registration Statement in exchange for such Series A 2026 Debentures.
SERIES B SECURITIES: The Series B Notes, Series B 2016 Debentures and
Series B 2026 Debentures.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Security, until the earliest to
occur of (i) the date on which such Securities have been exchanged by a Person
other than a Broker-Dealer for Series B Securities of the same tranche in the
Exchange Offer, (ii) following the exchange by a Broker-Dealer in the Exchange
Offer of Securities for Series B Securities of the same tranche, the date on
which such Series B Securities are sold to a purchaser who receives from such
Broker-Dealer on or prior to the date of such sale a copy of the Prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Series B
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Securities have been effectively registered under the Act and disposed of in
accordance with a Shelf Registration Statement or (iv) the date on which such
Series B Securities are distributed to the public pursuant to Rule 144 under the
Act.
TRUSTEE: The Chase Manhattan Bank, National Association, as trustee,
under the Indenture and each successor trustee appointed pursuant to and in
accordance with the terms thereof.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) use its best efforts to cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 75 days after the Closing Date, the Exchange Offer Registration
Statement, (ii) use its best efforts to cause such Exchange Offer Registration
Statement to become effective as soon as practicable, but in no event later than
120 days after the Closing Date, (iii) in connection with the foregoing, (A)
file all pre-effective amendments to such Exchange Offer Registration Statement
as may be necessary in order to cause such Exchange Offer Registration Statement
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of each tranche of Series B Securities to be made under the Blue
Sky laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of each
tranche of Series B Securities to be offered in exchange for the respective
tranche of Series A Securities that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall use its best efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and shall keep the
Exchange Offer open for a period of not less than the minimum period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; PROVIDED, HOWEVER, that in no event shall such period be less than 20
Business Days. The Company shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Series B Securities shall be included in the Exchange Offer Registration
Statement. The Company shall use its best efforts to cause the Exchange Offer
to be Consummated as soon as practicable after the Exchange Offer Registration
Statement has become effective, but in no event later than 30 Business Days
thereafter.
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(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Series A Securities that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Series A Securities (other than Transfer
Restricted Securities acquired directly from the Company or any Affiliate of the
Company) pursuant to the Exchange Offer. The parties hereto acknowledge and
agree that such a Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and, therefore, must deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of each Series B
Security received by such Broker-Dealer in the Exchange Offer, which prospectus
delivery requirement may be satisfied by the delivery by such Broker-Dealer of
the Prospectus contained in the Exchange Offer Registration Statement.
Accordingly, such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Securities held by any
such Broker-Dealer, except to the extent expressly required by the Commission.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the date on which the Exchange Offer is
Consummated or for such shorter period terminating on the first date that (i)
there are no longer outstanding any Transfer Restricted Securities or (ii) there
is available and usable for such purpose an effective Shelf Registration
Statement covering the relevant Broker-Dealer Transfer Restricted Securities.
The Company shall promptly provide sufficient copies of the latest
version of such Prospectus to such Restricted Broker-Dealers promptly upon
request, and in no event later than one day after such request, at any time
during such period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company is not required to file
an Exchange Offer Registration Statement with respect to the Series B Securities
because the Exchange Offer is not permitted by applicable law (after the
procedures set forth in Section 6(a)(i) below have been complied with) or (ii)
if any Holder of Transfer Restricted Securities shall notify the Company within
20 Business Days following the Consummation of the Exchange Offer that (A) such
Holder was prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Series B Securities
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Securities acquired directly
from the Company or one of its affiliates, then the Company shall (x) use its
best efforts to cause to be filed as soon as practicable, but in no event later
than 30 days after the date on which the Company determines that it is not
required to file the Exchange Offer Registration Statement pursuant to clause
(i) above or 30 days after the date on which the Company receives the notice
specified in clause (ii) above a shelf registration statement pursuant to Rule
415 under the Act (which may be an amendment to the Exchange Offer
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Registration Statement (in either event, the "SHELF REGISTRATION STATEMENT")),
relating to all Transfer Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b) hereof, and shall (y)
use its best efforts to cause such Shelf Registration Statement to become
effective as soon as practicable, but in no event later than 75 days after the
date on which the Company becomes obligated to file such Shelf Registration
Statement. If, after the Company has filed an Exchange Offer Registration
Statement which satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under applicable federal law,
then the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above and the 75-day period contained in
clause (y) above shall be deemed to have commenced on the date the Company
became aware that the Exchange Offer was not permitted under applicable federal
law. The Company shall use its best efforts to keep the Shelf Registration
Statement discussed in this Section 4(a) continuously effective, supplemented
and amended as required by and subject to the provisions of Sections 6(b) and
(c) hereof to the extent necessary to ensure that it is available for sales of
Transfer Restricted Securities by the Holders thereof entitled to the benefit of
this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least three years (as extended
pursuant to Section 6(c)(i)) following the date on which such Shelf Registration
Statement first becomes effective under the Act.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 10 Business Days after receipt of a request
therefor, such information specified in item 507 of Regulation S-K under the Act
for use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to Additional Interest pursuant to Section 5 hereof
unless and until such Holder shall have provided all such information. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
SECTION 5. ADDITIONAL INTEREST
If (i) the Exchange Offer Registration Statement has not been filed
with the Commission by May 15, 1996 or any Shelf Registration Statement required
by this Agreement is not filed with the Commission on or prior to the date
specified herein, (ii) the Exchange Offer Registration Statement is not declared
effective by the Commission by July 1, 1996 or any Shelf Registration Statement
required by this Agreement is not declared effective by the Commission on or
prior to the date specified herein, (iii) the Company has not Consummated the
Exchange Offer within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission or (iv) a Shelf
Registration Statement or Exchange Offer Registration Statement is declared
effective but thereafter ceases to be effective or usable for its intended
purpose in connection with resales of Transfer Restricted Securities during the
periods specified in this Agreement without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iv) a "REGISTRATION DEFAULT"), interest will accrue on
the Series A Notes at the rate of 7-1/2% per annum, on the Series A 2016
Debentures at the rate of 8-1/4% per
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annum and on the Series A 2026 Debentures at the rate of 8-3/8% per annum, as
the case may be, in each case from and including the date on which any such
Registration Default shall occur with respect to a tranche of Series A
Securities to but excluding the date on which all relevant Registration Defaults
have been cured. At all other times, the Securities shall bear interest at the
rates per annum specified in the respective Securities. Additional Interest
with respect to each tranche of Transfer Restricted Securities shall be computed
on the same basis as on the Securities (I.E., on the basis of a 360-day year of
twelve 30-day months). Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, any Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, any Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, any Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the Additional
Interest with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), (iii) or (iv), as applicable, shall cease to accrue.
All accrued Additional Interest shall be paid to the Global
Securityholder by wire transfer of immediately available funds or by federal
funds check and to Holders of Certificated Securities by mailing checks to their
registered addresses on each Additional Interest Payment Date. All obligations
of the Company set forth in the preceding paragraph that are outstanding with
respect to any Transfer Restricted Security at the time such security ceases to
be a Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Company hereby agrees to seek a
no-action letter or other favorable decision from the Commission allowing
the Company to Consummate an Exchange Offer for such Series A Securities.
The Company hereby agrees to pursue the issuance of such a decision to the
Commission staff level. In connection with the foregoing, the Company
hereby agrees to take all such other actions as are requested by the
Commission staff or otherwise required in connection with the issuance of
such decision, including, without limitation (A) participating in
telephonic conferences with the Commission staff, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that
such an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff of such
submission.
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(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Securities to be issued in
the Exchange Offer and (C) it is acquiring the Series B Securities in its
ordinary course of business. Each Holder hereby acknowledges and agrees
that any Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on the
date of this Agreement rely on the position of the Commission enunciated in
MORGAN STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and similar
no-action letters (including, if applicable, any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the registration
and prospectus delivery requirements of the Act in connection with a
secondary resale transaction and that such a secondary resale transaction
must be covered by an effective registration statement containing the
selling security holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of Series B Securities
obtained by such Holder in exchange for Series A Securities of the
respective tranche acquired by such Holder directly from the Company or an
affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the Series B Securities to be received in the Exchange
Offer and that, to the best of the Company's information and belief, each
Holder participating in the Exchange Offer is acquiring the Series B
Securities in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Securities received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth in
any no-action letter obtained pursuant to clause (i) above.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement and the related Prospectus, to
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the extent that the same are required to be available to permit sales of Broker-
Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the Company
shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale
of Transfer Restricted Securities during the period required by this
Agreement, the Company shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any such
misstatement or omission, and (2) in the case of clauses (A) and (B), use
its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in writing,
(A) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any Registration Statement
or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of any tranche of Transfer
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of any tranche
of Transfer Restricted Securities under state securities or Blue Sky laws,
the Company shall use its best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time;
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(iv) upon the request of any such Person, furnish to any
Initial Purchaser, any selling Holder expressly named in any Registration
Statement or Prospectus as a selling securityholder and any underwriter(s)
participating in any disposition pursuant to a Registration Statement,
before filing with the Commission, copies of any Registration Statement or
any Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment of
such Holders and underwriter(s) in connection with such sale, if any, for a
period of at least five Business Days, and the Company will not file any
such Registration Statement or Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the selling Holders of the Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. Any such
review and comment shall be provided through the single counsel for all
such Persons contemplated by Section 7(b) hereof and the five Business Day
period shall terminate upon completion of such review and comment with that
counsel. A selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply with
the applicable requirements of the Act;
(v) promptly after the filing of any document that is
incorporated by reference into a Registration Statement or Prospectus and
upon the request of any Initial Purchaser, selling Holder expressly named
in such Registration Statement or underwriter participating in any
disposition pursuant to such Registration Statement, make one or more
responsible officials of the Company available, at reasonable times during
normal business hours after appropriate advance notice, for discussion of
such document and other customary due diligence matters, which discussions
shall be coordinated by the single counsel for all selling Holders
contemplated by Section 7(b) hereof;
(vi) make available at reasonable times for inspection by the
selling Holders, any managing underwriter participating in any disposition
pursuant to such Registration Statement and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all
financial and other records, pertinent corporate documents and properties
of the Company and cause one or more responsible officials of the Company
to supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness (collectively, "COMPANY
INFORMATION"); PROVIDED, HOWEVER, that if the Company determines that any
requested Company Information is confidential, such Company Information
shall not be disclosed unless the requesting party signs a confidentiality
agreement in customary form and otherwise reasonably satisfactory to the
Company (it being understood that such confidentiality agreement shall not
include any "standstill" or similar contractual restriction on the
purchase, sale or voting of securities of the Company unrelated to
compliance with the anti-fraud provisions of the federal securities laws);
and PROVIDED, FURTHER, that the Company shall not be obligated to disclose
any Company Information that it is not legally permitted to disclose by
operation of government regulation or similar requirement, including,
without limitation, by operation of national security classification;
(vii) if requested by any selling Holders or the underwriter(s)
in connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s),
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if any, may reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to such underwriter(s),
the purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without charge, at
least one conformed copy of the Registration Statement, as first filed with
the Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company hereby consents
to the use (in accordance with law) of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto;
(x) enter into such agreements (including an underwriting
agreement) and make such representations and warranties and take all such
other actions customary in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the
Company shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its
best efforts to furnish) to each selling Holder and each underwriter,
if any, upon the effectiveness of the Shelf Registration Statement and
to each Restricted Broker-Dealer upon Consummation of the Exchange
Offer:
(1) a certificate, signed on behalf of the Company by (x)
the President or any Vice President and (y) the principal
financial or accounting officer of the Company, confirming, as of
the date of Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as the case
may be, the matters described in Section 6(g) of the Purchase
Agreement and such other similar matters as the Holders,
underwriter(s) and/or Restricted Broker Dealers may reasonably
request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company covering matters similar to those set forth in Sections
6(d) and 6(e) of the Purchase Agreement and such other matters as
the Holders, underwriters and/or Restricted Broker Dealers may
reasonably request, and in any event including a statement to the
effect that such counsel has participated in conferences with
officers and other representatives of the Company,
representatives of the independent public accountants for the
Company and
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have considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis
of the foregoing (relying as to materiality to a large extent
upon facts provided to such counsel by officers and other
representatives of the Company and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective and, in the
case of the Exchange Offer Registration Statement, as of the date
of Consummation of the Exchange Offer, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as
of the date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and other financial
data included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from the
Company's independent accountants and the independent accountants
of any acquired business with respect to which audited or PRO
FORMA financial statements are included or incorporated by
reference in such Registration Statement, in the customary form
and covering matters of the type customarily covered in comfort
letters to underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Sections 6(h) and 6(i) of the
Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s), if
any, and Restricted Broker Dealers, if any, to evidence compliance
with clause (A) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the
Company pursuant to this clause (x).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company contemplated in
(A)(1) above cease to be true and correct, the Company shall so advise the
underwriter(s), if any, the selling Holders and each Restricted Broker-
Dealer promptly and if requested by such Persons, shall confirm such advice
in writing;
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(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of each tranche of Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the applicable Registration
Statement; PROVIDED, HOWEVER, that the Company shall not be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it is not
now so subject;
(xii) issue, upon the request of any Holder of Series A
Securities of any tranche covered by any Shelf Registration Statement
contemplated by this Agreement, Series B Securities of the respective
tranche having an aggregate principal amount equal to the aggregate
principal amount of Series A Securities surrendered to the Company by such
Holder in exchange therefor or being sold by such Holder; such Series B
Securities to be registered in the name of such Holder or in the name of
the purchaser(s) of such Securities, as the case may be; in return, the
Series A Securities held by such Holder shall be surrendered to the Company
for cancellation;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the Holders
or the underwriter(s), if any, may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
(xiv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(xv) provide a CUSIP number for each tranche of Transfer
Restricted Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xvi) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their respective best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
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(xvii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xviii) if not previously effected, cause the Indenture
(including, as necessary, any supplement thereto) to be qualified under the
TIA and, in connection therewith, cooperate with the Trustee and the
Holders of Securities to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use its best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified; and
(xix) provide promptly to each Initial Purchaser, selling Holder
or underwriter participating in any distribution pursuant to a Registration
Statement, upon written request, each document filed with the Commission
pursuant to the requirements of Section 13 or Section 15(d) of the Exchange
Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xiv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (the "ADVICE"). If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 6(c)(i)
or Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xiv) hereof
or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, other than underwriting discounts and
commissions of selling Holders, if any, will be borne by the Company, regardless
of whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by any Purchaser or Holder with the NASD (and, if applicable, the fees and
expenses of any "qualified independent underwriter") and its counsel that may be
required by the rules and regulations of the NASD); (ii) all fees and expenses
of compliance with federal securities and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing certificates for the Series B
Notes to be issued in the Exchange Offer and printing of
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Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company and the Holders of Transfer Restricted
Securities; (v) all application and filing fees, if any, in connection with
listing the Notes on a national securities exchange or automated quotation
system pursuant to the requirements hereof; and (vi) all fees and disbursements
of independent certified public accountants of the Company (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Purchasers and the Holders of Transfer Restricted Securities being tendered in
the Exchange Offer and/or resold pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or registered pursuant to
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be chosen by the Holders
of a majority in principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each
Holder, (ii) each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) any Holder (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"INDEMNIFIED HOLDER") against any losses, claims, damages or liabilities, joint
or several, to which such Indemnified Holder may become subject, under the Act
or the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, preliminary prospectus or Prospectus (or any
amendment or supplement thereto), or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, and will reimburse each Indemnified Holder for any legal
or other expenses reasonably incurred by such Purchaser in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; PROVIDED, HOWEVER, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Holder specifically for use therein.
(b) Each Holder of Transfer Restricted Securities will, severally and
not jointly, indemnify and hold harmless the Company and its directors,
officers, and any person controlling (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Company, and the respective officers,
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<PAGE>
directors, partners, employees, representatives and agents of each such person,
against any losses, claims, damages or liabilities to which any such Person may
become subject, under the Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, preliminary prospectus or
Prospectus (or any amendment or supplement thereto), or arise out of or are
based upon the omission or the alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Holder
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damages, liability or action as such expenses are
incurred. In no event shall any Holder be liable or responsible for, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to its sale of Transfer Restricted Securities pursuant
to a Registration Statement exceeds the sum of (i) the amount paid by such
Holder for such Transfer Restricted Securities PLUS (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
each indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Holders, on the other hand, from their
sale of Transfer Restricted Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The
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relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Indemnified Holder and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
The Company and each Holder of Transfer Restricted Securities agree
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by PRO RATA allocation (even if the Holders were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 8, no
Holder or its related Indemnified Holders shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to its sale of Transfer Restricted Securities pursuant
to a Registration Statement exceeds the sum of (i) the amount paid by such
Holder for such Transfer Restricted Securities PLUS (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Series A Securities held by each of the Holders hereunder
and not joint.
(e) The respective obligations of the Company and the Holders under
this Section 8 shall be in addition to any liability which any of them may
otherwise have.
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SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during such period, if
any, in which the Company is not subject to Section 13 or 15(d) of the Exchange
Act, to make available, upon request of any Holder of Transfer Restricted
Securities, to any Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney and other documents required under the terms
of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers for any Underwritten Offering that will
administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities (determined
without regard to the respective tranche of such Securities as if such
Securities were of one and the same tranche) included in such offering. Such
investment bankers and managers are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of Additional Interest or damages, will be entitled
to specific performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive such defense in any action for specific performance that a
remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company has
not previously entered into any agreement granting any registration rights with
respect to its securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any agreement in
effect on the date hereof.
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(c) ADJUSTMENTS AFFECTING THE NOTES. The Company will not take any
action, or voluntarily permit any change to occur, with respect to the
Securities that would materially and adversely affect the ability of the Holders
to Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement with
respect to any tranche of the Securities may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given unless (i) in the case of Section 5 hereof and this
Section 12(d)(i), the Company has obtained the written consent of Holders of all
outstanding Transfer Restricted Securities of such tranche and (ii) in the case
of all other provisions hereof, the Company has obtained the written consent of
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities of such tranche. Notwithstanding the foregoing, a waiver or consent
with respect to any tranche of the Securities to departure from the provisions
hereof that relates exclusively to the rights of Holders of Transfer Restricted
Securities of such tranche whose securities are being tendered pursuant to the
Exchange Offer and that does not affect directly or indirectly the rights of
other Holders whose securities are not being tendered pursuant to such Exchange
Offer may be given by the Holders of a majority of the outstanding principal
amount of Transfer Restricted Securities of such tranche subject to such
Exchange Offer.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Trustee under the
Indenture; and
(ii) if to the Company:
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Telecopier No.: (310) 556-4556
Attention: General Counsel
WITH A COPY TO:
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Telecopier No.: (213) 620-1398
Attention: John D. Hussey, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery with the delivery charges
prepaid.
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Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities directly from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW PROVISIONS THEREOF.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) NO INTERPRETATION AGAINST DRAFTER. This Agreement is the product
of negotiations between the parties hereto represented by counsel and such
parties agree that no rule of construction relating to interpretation against
the drafter of an agreement shall apply to this Agreement.
(l) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(m) CALCULATION OF TIME PERIODS. For purposes of this Agreement, any
action which requires a filing with, or the taking of any action by, the
Commission on a Saturday, Sunday, Federal holiday or other day on which the
Commission is closed for business, shall be extended until the next day on which
the Commission is open for business.
(Signature Page Follows.)
S:\NORTH\REG-RTS.X
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
NORTHROP GRUMMAN CORPORATION
By:
---------------------------
Name:
Title:
"INITIAL PURCHASERS"
CS FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC
As representatives of the Several Initial Purchasers
BY: CS FIRST BOSTON CORPORATION
By:
---------------------------
Name: Jeffrey R. Spain
Title: Attorney-in-Fact
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
NORTHROP GRUMMAN CORPORATION
By: James L. Sanford
--------------------------
Name: James L. Sanford
Title: Assistant Treasurer
"INITIAL PURCHASERS"
CS FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC
As representatives of the Several Initial Purchasers
BY: CS FIRST BOSTON CORPORATION
By: JEFFREY R. SPAIN
---------------------------
Name: Jeffrey R. Spain
Title: Attorney-in-Fact
<PAGE>
EXHIBIT 4.3
OFFICERS' CERTIFICATE
PURSUANT TO SECTIONS 201, 301 AND 303
OF THE INDENTURE
The undersigned, ________________ and ____________, do hereby certify
that they are the duly appointed and acting _______________ and ______________,
respectively, of NORTHROP GRUMMAN CORPORATION, a Delaware corporation (the
"Company"). Each of the undersigned also hereby certifies, pursuant to Sections
201, 301 and 303 of the Indenture, dated as of October 15, 1994 (the
"Indenture"), between the Company and The Chase Manhattan Bank (National
Association), as Trustee (the "Trustee"), that:
A. Pursuant to an Officers' Certificate of the Company dated
February 27, 1996, the Company established and thereafter issued under the
Indenture three series of Securities (as defined in the Indenture) as
follows: 7% Notes Due 2006 in the aggregate principal amount of $400,000,000
(the "Old Notes"), (ii) 7 3/4% Debentures Due 2016 in the aggregate principal
amount of $300,000,000 (the "Old 2016 Debentures"), and (iii) 7 7/8%
Debentures Due 2026 in the aggregate principal amount of $300,000,000 (the
"Old 2026 Debentures"). Pursuant to a registration statement filed under the
Securities Act of 1933, as amended, the Company desires to exchange $1,000 in
principal amount of its (i) 7% Notes Due 2006 (the "New Notes") for each
$1,000 in principal amount of its outstanding Old Notes, (ii) 7 3/4%
Debentures Due 2016 (the "New 2016 Debentures") for each $1,000 in principal
amount of its outstanding Old 2016 Debentures, and (iii) 7 7/8% Debentures
Due 2026 (the "New 2026 Debentures") for each $1,000 in principal amount of
its outstanding Old 2026 Debentures. The New Notes, the New 2016 Debentures
and the New 2026 Debentures are hereby established pursuant to resolutions
adopted by the Board of Directors of the Company on April 11, 1996, and, as
set forth in Section 301 of the Indenture, the New Notes, the New 2016
Debentures and the New 2026 Debentures shall constitute the same series of
Securities as the Old Notes, the Old 2016 Debentures and the Old 2026
Debentures, respectively, and shall have the following terms:
I. NEW NOTES
(1) The title of the New Notes is "7% New Notes Due 2006".
(2) The limit upon the aggregate principal amount of the New Notes
which may be authenticated and delivered under the Indenture (except for
New Notes authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other New Notes of the series pursuant to
Sections 304, 305, 306, 906 or 1107 of the Indenture and except for any
Securities which, pursuant to
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Section 303 of the Indenture, are deemed never to have been authenticated
and delivered hereunder) is $400,000,000.
(3) Interest on the New Notes shall be payable to the persons in
whose names the New Notes are registered at the close of business on the
Regular Record Date (as defined in the Indenture and as specified in
paragraph I(5) below) for such interest payment.
(4) The principal of the New Notes shall be payable, unless
accelerated pursuant to the Indenture, on March 1, 2006.
(5) The rate at which each of the New Notes shall bear interest shall
be 7% per annum. Interest on the New Notes shall be computed on the basis
of a 360-day year of twelve 30-day months. The date from which interest
shall accrue for each of the New Notes shall be March 1, 1996. The
Interest Payment Dates on which interest on the New Notes shall be payable
are March 1 and September 1, commencing September 1, 1996. The Regular
Record Date for the interest payable on the New Notes on any Interest
Payment Date shall be the February 15 or August 15 (whether or not a
Business Day, as defined in the Indenture), as the case may be, next
preceding such Interest Payment Date.
(6) The principal of and interest on the New Notes shall be payable
in immediately available funds at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, the City of New
York (as of the date of this Certificate, such office being located at the
office of the Trustee, 1 Chase Manhattan Plaza, New York, New York, 10081,
Attention: Institutional Trust Group), in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts, provided, however, that at the option
of the Company payment of interest may be made by wire transfer in
immediately available funds to an account maintained by the person entitled
thereto as specified in the Security Register.
(7) The New Notes are not redeemable prior to the Stated Maturity (as
defined in the Indenture) date of March 1, 2006.
(8) There is no obligation of the Company to redeem or purchase the
New Notes pursuant to any sinking fund or analogous provisions or to redeem
or purchase any of the New Notes prior to the Stated Maturity at the option
of the Holder (as defined in the Indenture) thereof.
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(9) There is no provision for the conversion or exchange of the New
Notes, either at the option of the Holder thereof or the Company, into or
for another security or securities of the Company.
(10) The New Notes shall be issued only in fully registered form
without coupons in denominations of $1,000 and integral multiples thereof.
(11) The entire principal amount of the New Notes shall be payable
upon declaration of acceleration of the maturity thereof pursuant to
Section 502 of the Indenture.
(12) The New Notes shall be issued as Global Securities (as defined in
the Indenture) and The Depository Trust Company shall be the Depositary (as
defined in the Indenture) for the New Notes.
(13) In addition to the circumstances set forth in clause (2) of
Section 305 of the Indenture with respect to the exchange of Global
Securities for Securities registered in definitive form, New Notes issued
as Global Securities may be exchanged in whole or in part for registered
Securities if the Company in its discretion at any time determines not to
have all the New Notes represented by Global Securities; and PROVIDED, that
clause (B) of clause (2) of Section 305 of the Indenture shall apply only
if the Event of Default referred to therein has occurred and is continuing
and entitles the Holders to accelerate the maturity of the New Notes.
Subject to the foregoing, the Global Securities are not exchangeable,
except for a Global Security or Global Securities of the same aggregate
denomination to be registered in the name of the Depositary or its nominee.
(14) Upon the exchange of Old Notes for New Notes, such Old Notes
shall no longer be Outstanding (as defined in the Indenture).
II. NEW 2016 DEBENTURES
(1) The title of the New 2016 Debentures is "7-3/4% Debentures Due
2016".
(2) The limit upon the aggregate principal amount of the New 2016
Debentures which may be authenticated and delivered under the Indenture
(except for New 2016 Debentures authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other New
2016 Debentures of the series pursuant to Sections 304, 305, 306, 906 or
1107 of the Indenture and except for any Securities which, pursuant to
Section 303 of the
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Indenture, are deemed never to have been authenticated and delivered
hereunder) is $300,000,000.
(3) Interest on the New 2016 Debentures shall be payable to the
persons in whose names the New 2016 Debentures are registered at the close
of business on the Regular Record Date (as defined in the Indenture and as
specified in paragraph II(5) below) for such interest payment.
(4) The principal of the New 2016 Debentures shall be payable, unless
accelerated pursuant to the Indenture, on March 1, 2016.
(5) The rate at which each of the New 2016 Debentures shall bear
interest shall be 7-3/4% per annum. Interest on the New 2016 Debentures
shall be computed on the basis of a 360-day year of twelve 30-day months.
The date from which interest shall accrue for each of the New 2016
Debentures shall be March 1, 1996. The Interest Payment Dates on which
interest on the New 2016 Debentures shall be payable are March 1 and
September 1, commencing September 1, 1996. The Regular Record Date for the
interest payable on the New 2016 Debentures on any Interest Payment Date
shall be the February 15 or August 15 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
(6) The principal of and interest on the New 2016 Debentures shall be
payable in immediately available funds at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, the City
of New York (as of the date of this Certificate, such office being located
at the office of the Trustee, 1 Chase Manhattan Plaza, New York, New York,
10081, Attention: Institutional Trust Group), in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts, provided, however, that at the option
of the Company payment of interest may be made by wire transfer in
immediately available funds to an account maintained by the person entitled
thereto as specified in the Security Register.
(7) The New 2016 Debentures are not redeemable prior to the Stated
Maturity date of March 1, 2016.
(8) There is no obligation of the Company to redeem or purchase the
New 2016 Debentures pursuant to any sinking fund or analogous provisions or
to redeem or purchase any of the New 2016 Debentures prior to the Stated
Maturity at the option of the Holder thereof.
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(9) There is no provision for the conversion or exchange of the New
2016 Debentures, either at the option of the Holder thereof or the Company,
into or for another security or securities of the Company.
(10) The New 2016 Debentures shall be issued only in fully registered
form without coupons in denominations of $1,000 and integral multiples
thereof.
(11) The entire principal amount of the New 2016 Debentures shall be
payable upon declaration of acceleration of the maturity thereof pursuant
to Section 502 of the Indenture.
(12) The New 2016 Debentures shall be issued as Global Securities and
The Depository Trust Company shall be the Depositary for the New 2016
Debentures.
(13) In addition to the circumstances set forth in clause (2) of
Section 305 of the Indenture with respect to the exchange of Global
Securities for Securities registered in definitive form, New 2016
Debentures issued as Global Securities may be exchanged in whole or in part
for registered Securities if the Company in its discretion at any time
determines not to have all the New 2016 Debentures represented by Global
Securities; and PROVIDED, that clause (B) of clause (2) of Section 305 of
the Indenture shall apply only if the Event of Default referred to therein
has occurred and is continuing and entitles the Holders to accelerate the
maturity of the New 2016 Debentures. Subject to the foregoing, the Global
Securities are not exchangeable, except for a Global Security or Global
Securities of the same aggregate denomination to be registered in the name
of the Depositary or its nominee.
(14) Upon the exchange of Old 2016 Debentures for New 2016
Debentures, such Old 2016 Debentures shall no longer be Outstanding (as
defined in the Indenture).
III. NEW 2026 DEBENTURES
(1) The title of the New 2026 Debentures is "7-7/8% Debentures Due
2026".
(2) The limit upon the aggregate principal amount of the New 2026
Debentures which may be authenticated and delivered under the Indenture
(except for New 2026 Debentures authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other New
2026 Debentures of the series pursuant to Sections 304, 305, 306, 906 or
1107 of the Indenture and except for any Securities which, pursuant to
Section 303 of the
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Indenture, are deemed never to have been authenticated and delivered
hereunder) is $300,000,000.
(3) Interest on the New 2026 Debentures shall be payable to the
persons in whose names the New 2026 Debentures are registered at the close
of business on the Regular Record Date (as defined in the Indenture and as
specified in paragraph III(5) below) for such interest payment.
(4) The principal of the New 2026 Debentures shall be payable, unless
accelerated pursuant to the Indenture, on March 1, 2026.
(5) The rate at which each of the New 2026 Debentures shall bear
interest shall be 7-7/8% per annum. Interest on the New 2026 Debentures
shall be computed on the basis of a 360-day year of twelve 30-day months.
The date from which interest shall accrue for each of the New 2026
Debentures shall be March 1, 1996. The Interest Payment Dates on which
interest on the New 2026 Debentures shall be payable are March 1 and
September 1, commencing September 1, 1996. The Regular Record Date for the
interest payable on the New 2026 Debentures on any Interest Payment Date
shall be the February 15 or August 15 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
(6) The principal of and interest on the New 2026 Debentures shall be
payable in immediately available funds at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, the City
of New York (as of the date of this Certificate, such office being located
at the office of the Trustee, 1 Chase Manhattan Plaza, New York, New York,
10081, Attention: Institutional Trust Group), in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts, provided, however, that at the option
of the Company payment of interest may be made by wire transfer in
immediately available funds to an account maintained by the person entitled
thereto as specified in the Security Register.
(7) The New 2026 Debentures are not redeemable prior to the Stated
Maturity date of March 1, 2026.
(8) There is no obligation of the Company to redeem or purchase the
New 2026 Debentures pursuant to any sinking fund or analogous provisions or
to redeem or purchase any of the New 2026 Debentures prior to the Stated
Maturity at the option of the Holder thereof.
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(9) There is no provision for the conversion or exchange of the New
2026 Debentures, either at the option of the Holder thereof or the Company,
into or for another security or securities of the Company.
(10) The New 2026 Debentures shall be issued only in fully registered
form without coupons in denominations of $1,000 and integral multiples
thereof.
(11) The entire principal amount of the New 2026 Debentures shall be
payable upon declaration of acceleration of the maturity thereof pursuant
to Section 502 of the Indenture.
(12) The New 2026 Debentures shall be issued as Global Securities and
The Depository Trust Company shall be the Depositary for the New 2026
Debentures.
(13) In addition to the circumstances set forth in clause (2) of
Section 305 of the Indenture with respect to the exchange of Global
Securities for Securities registered in definitive form, New 2026
Debentures issued as Global Securities may be exchanged in whole or in part
for registered Securities if the Company in its discretion at any time
determines not to have all the New 2026 Debentures represented by Global
Securities; and PROVIDED, that clause (B) of clause (2) of Section 305 of
the Indenture shall apply only if the Event of Default referred to therein
has occurred and is continuing and entitles the Holders to accelerate the
maturity of the New 2026 Debentures. Subject to the foregoing, the Global
Securities are not exchangeable, except for a Global Security or Global
Securities of the same aggregate denomination to be registered in the name
of the Depositary or its nominee.
(14) Upon the exchange of Old 2026 Debentures for New 2026
Debentures, such Old 2026 Debentures shall no longer be Outstanding (as
defined in the Indenture).
B. Any proposed transfer of the New Notes, the New 2016 Debentures
or the New 2026 Debentures, or any interest therein, shall be subject to the
delivery to the Trustee by the transferor and/or transferee thereof of such
certificates or other documents as the Trustee may reasonably require.
C. The forms of the New Notes, the New 2016 Debentures and the New
2026 Debentures attached hereto as EXHIBITS A, B AND C, respectively, are
approved.
D. The Trustee is appointed as Paying Agent (as defined in the
Indenture).
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<PAGE>
E. The foregoing forms and terms of the New Notes, the New 2016
Debentures and the New 2026 Debentures have been established in conformity with
the provisions of the Indenture.
F. This Officers' Certificate shall constitute evidence of, and
shall be, action by the undersigned as Officers designated in the resolutions
referred to in paragraph A above, determining and setting the specific terms of
the New Notes, the New 2016 Debentures and the New 2026 Debentures as set forth
in paragraph A above.
H. Each of the undersigned has read the provisions of Sections 201,
301 and 303 of the Indenture and the definitions relating thereto and has
examined the resolutions referred to in paragraph A above and the forms of the
New Notes, the New 2016 Debentures and the New 2026 Debentures and, in the
opinion of each of the undersigned, has made such examination or investigation
as is necessary to enable the undersigned to express an informed opinion as to
whether or not all conditions precedent provided in the Indenture relating to
the establishment, authentication and delivery of a series of Securities under
the Indenture designated as the New Notes, the New 2016 Debentures and the New
2026 Debentures have been complied with. In the opinion of each of the
undersigned, all such conditions precedent have been complied with.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto executed this
Officers' Certificate as of the ____ day of _____________, 1996.
______________________________
Name:
Title:
______________________________
Name:
Title:
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<PAGE>
[EXPLANATORY NOTE: EXHIBITS A, B AND C TO THE FORM OF
OFFICER'S CERTIFICATE FILED AS EXHIBIT 4-3 TO THIS REGISTRATION
STATEMENT HAVE BEEN FILED AS EXHIBITS 4-4, 4-5 AND 4-6,
RESPECTIVELY, TO THIS REGISTRATION STATEMENT]
<PAGE>
EXHIBIT 4.4
[Form of New Note]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED IN THE NAME OF, ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
NORTHROP GRUMMAN CORPORATION
7% NOTE DUE 2006
No.___ $ ______________
CUSIP __________
Northrop Grumman Corporation, a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ________________ Dollars on March 1, 2006 and to pay interest
thereon from March 1, 1996 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on March 1 and
September 1 in each year, commencing September 1, 1996 at the rate of 7% per
annum, until the principal hereof is paid or made available for payment.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
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<PAGE>
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made in immediately available funds at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, the City of New York in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by wire transfer in immediately available funds to an
account maintained by the person entitled thereto as specified in the Security
Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: ___________, 1996
NORTHROP GRUMMAN CORPORATION
By _________________________
Attest:
____________________________
This is one of the Securities of the series designated on the face hereof
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), As Trustee
By ___________________________________
Authorized Officer
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<PAGE>
[REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of October 15, 1994 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Chase Manhattan Bank (National
Association), as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are and are to be
authenticated and delivered. This Security is one of the series designated on
the face hereof limited in aggregate principal amount to $400,000,000. The
Securities are unsecured general obligations of the Company.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right
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<PAGE>
to institute any proceeding with respect to the Indenture or for the appointment
of a receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing Event of
Default with respect to the Securities of this series, the Holders of not less
than 25% in principal amount of the Securities of this series at the time
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
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<PAGE>
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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<PAGE>
EXHIBIT 4.5
[Form of New 2016 Debenture]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED IN THE NAME OF, ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
NORTHROP GRUMMAN CORPORATION
7-3/4% DEBENTURE DUE 2016
No.___ $ ______________
CUSIP __________
Northrop Grumman Corporation, a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ______________ Dollars on March 1, 2016 and to pay interest
thereon from March 1, 1996 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on March 1 and
September 1 in each year, commencing September 1, 1996 at the rate of 7-3/4% per
annum, until the principal hereof is paid or made available for payment.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
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<PAGE>
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made in immediately available funds at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, the City of New York in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by wire transfer in immediately available funds to an
account maintained by the person entitled thereto as specified in the Security
Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _______, 1996
NORTHROP GRUMMAN CORPORATION
By _________________________
Attest:
____________________________
This is one of the Securities of the series designated on the face hereof
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), As Trustee
By _____________________________________
Authorized Officer
-2-
<PAGE>
[REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of October 15, 1994 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Chase Manhattan Bank (National
Association), as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are and are to be
authenticated and delivered. This Security is one of the series designated on
the face hereof limited in aggregate principal amount to $300,000,000. The
Securities are unsecured general obligations of the Company.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
-3-
<PAGE>
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for
60 days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
-4-
<PAGE>
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
-5-
<PAGE>
EXHIBIT 4.6
[Form of New 2026 Debenture]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED IN THE NAME OF, ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
NORTHROP GRUMMAN CORPORATION
7-7/8% DEBENTURE DUE 2026
No.___ $ ______________
CUSIP __________
Northrop Grumman Corporation, a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ______________ Dollars on March 1, 2026 and to pay interest
thereon from March 1, 1996 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on March 1 and
September 1 in each year, commencing September 1, 1996 at the rate of 7-7/8% per
annum, until the principal hereof is paid or made available for payment.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
-1-
<PAGE>
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made in immediately available funds at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, the City of New York in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by wire transfer in immediately available funds to an
account maintained by the person entitled thereto as specified in the Security
Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: ____________, 1996
NORTHROP GRUMMAN CORPORATION
By _________________________
Attest:
____________________________
This is one of the Securities of the series designated on the face hereof
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), As Trustee
By _____________________________________
Authorized Officer
-2-
<PAGE>
[REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of October 15, 1994 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Chase Manhattan Bank (National
Association), as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are and are to be
authenticated and delivered. This Security is one of the series designated on
the face hereof limited in aggregate principal amount to $300,000,000. The
Securities are unsecured general obligations of the Company.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
-3-
<PAGE>
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for
60 days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
-4-
<PAGE>
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
-5-
<PAGE>
EXHIBIT 4.7
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
7% NOTES DUE 2006
($400,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR 7% NOTES DUE 2006
7 3/4% DEBENTURES DUE 2016
($300,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR 7 3/4% DEBENTURES DUE 2016
7 7/8% DEBENTURES DUE 2026
($300,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR 7 7/8% DEBENTURES DUE 2026
OF
NORTHROP GRUMMAN CORPORATION
PURSUANT TO THE PROSPECTUS, DATED __________, 1996.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY TIME, ON
___________, 1996, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
By Hand, Registered or Certified Mail or Overnight Courier:
-----------------------------------------------------------
The Chase Manhattan Bank (National Association)
Institutional Trust Group
Chase MetroTech Center
3rd Floor
Brooklyn, New York 11245
By Facsimile:
-------------
(718) 242-5885
For Information Call:
(718) 242-7287
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received the Prospectus,
dated __________, 1996 (the "Prospectus"), of Northrop Grumman Corporation, a
Delaware corporation (the "Company"), and this Letter of Transmittal (which
together
-1-
<PAGE>
constitute the "Exchange Offer"), to exchange $1,000 in principal amount of its
(i) 7% Notes Due 2006 (the "New Notes") for each $1,000 in principal amount of
its 7% Notes Due 2006 (the "Old Notes"), (ii) 7 3/4% Debentures Due 2016 (the
"New 2016 Debentures") for each $1,000 in principal amount of its outstanding
7 3/4% Debentures Due 2016 (the "Old Debentures"), and (iii) 7 7/8% Debentures
Due 2026 (the "New 2026 Debentures") for each $1,000 in principal amount of its
outstanding 7 7/8% Debentures Due 2026 (the "Old 2026 Debentures") (the Old
Notes, the Old 2016 Debentures and the Old 2026 Debentures are collectively
referred to herein as the "Old Securities"; the New Notes, the New 2016
Debentures and the New 2026 Debentures are collectively referred to herein as
the "New Securities"; and the Old Securities and the New Securities are
collectively referred to herein as the "Securities").
Capitalized terms used but not defined herein shall have the meaning given
them in the Prospectus.
For each Old Security accepted for exchange, the holder of such Old
Security will receive a New Security having a principal amount equal to that of
the surrendered Old Security. The New Securities will bear interest from
March 1, 1996. Holders of Old Securities whose Old Securities are accepted for
exchange will be deemed to have waived the right to receive any payment in
respect of interest on the Old Securities accrued from March 1, 1996 to the date
of the issuance of the New Securities. The Registration Rights Agreement
provides that in the event of a Registration Default (as defined below), Holders
of Old Securities are entitled to receive Additional Interest (as defined
below). A "Registration Default" with respect to the Exchange Offer shall
occur if (i) a registration statement with respect to the Exchange Offer has not
been filed with the Commission by May 15, 1996 or any shelf registration
statement required by the Registration Rights Agreement is not filed with the
Commission on or prior to the date specified in the Registration Rights
Agreement, (ii) a registration statement with respect to the Exchange Offer is
not declared effective by the Commission by July 1, 1996 or any shelf
registration statement required by the Registration Rights Agreement is not
declared effective by the Commission on or prior to the date specified in the
Registration Rights Agreement, (iii) the Company has not consummated the
Exchange Offer within 30 business days after the registration statement with
respect thereto is first declared effective by the Commission, or (iv) a shelf
registration statement or registration statement with respect to the Exchange
Offer, as specified in the Registration Rights Agreement, is declared effective
but thereafter ceases to be effective or usable for its intended purpose during
the periods specified in the Registration Rights Agreement without being
succeeded immediately by a post-effective amendment to such registration
statement that cures such failure and that is itself declared effectively
immediately. "Additional Interest" means an increase in the annual percentage
rate which the Old Securities bear equal to 0.50%.
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date to which the Exchange Offer is extended.
The Company shall notify the holders of the Old Securities of any extension by
means of a press release or other public announcement prior to 9:00 A.M., New
York City time, on the next business day after the previously scheduled
Expiration Date.
This Letter of Transmittal is to be completed by a holder of Old Securities
by book-entry transfer to the account maintained by The Chase Manhattan Bank
(National Association) (the "Exchange Agent") at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
"The Exchange Offer - Book-Entry Procedures for Tendering Old Securities"
section of the Prospectus. Holders of Old Securities who are unable to deliver
confirmation of the book-entry tender of their Old Securities into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter of Transmittal to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Securities according to the guaranteed delivery procedures set forth in "The
Exchange Offer-Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
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<PAGE>
List below the Old Securities to which this Letter of Transmittal relates.
If the space provided below is inadequate, the principal amount of Old
Securities should be listed on a separate signed schedule affixed hereto.
TO BE COMPLETED BY ALL TENDERING HOLDERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD SECURITIES
- -------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of
Registered Holder(s) as
shown on the Records of the 1 2 3 4 5 6
Book-Entry Transfer Facility
(Please fill in, if blank)
- -------------------------------------------------------------------------------------------------------------------------
Aggregate Principal Aggregate Principal
Aggregate Principal Principal Amount of Principal Amount of
Principal Amount of Amount of Old 2016 Amount of Old 2026
Amount of Old Old Notes Old 2016 Debentures Old 2026 Debentures
Notes Tendered * Debentures Tendered* Debentures Tendered*
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Total
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
* Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old Securities
represented by the Old Securities indicated in column 1. See Instruction 2. Old Securities tendered hereby must
be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
TENDERED OLD SECURITIES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE
ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY.
PLEASE COMPLETE THE FOLLOWING:
Name of Tendering Institution
____________________________________________________________
Account Number
______________________________________________________________________
Transaction Code Number
_______________________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s)
_______________________________________________________________
Window Ticket Number (if any)
_______________________________________________________________
Date of Execution of Notice of Guaranteed Delivery
_______________________________________________
Name of Institution which guaranteed delivery
__________________________________________________
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<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
1. Upon the terms and subject to the conditions of the Exchange Offer,
the undersigned hereby tenders to the Company the aggregate principal
amount of Old Securities indicated above. Subject to, and effective upon,
the acceptance for exchange of the Old Securities tendered hereby, the
undersigned hereby sells, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to such Old Securities as
are being tendered hereby.
2. The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Old
Securities tendered hereby and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim when the same
are accepted by the Company. The undersigned hereby further represents
that (i) the New Securities to be acquired in connection with the Exchange
Offer by the undersigned are being acquired by the undersigned in the
ordinary course of business of the undersigned (ii) the undersigned is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
New Securities, (iii) the undersigned acknowledges and agrees that any
person participating in the Exchange Offer for the purpose of distributing
the New Securities must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the New Securities acquired by such person and cannot
rely on the position of the Staff of the Securities and Exchange Commission
(the "Commission") set forth in no-action letters that are discussed in
"The Exchange Offer - Resales of New Securities" section of the Prospectus,
(iv) that if the undersigned is a broker-dealer that acquired Old
Securities as a result of market making or other trading activities, it
will deliver a prospectus in connection with any resale of New Securities
acquired in the Exchange Offer, (v) the undersigned understands that a
secondary resale transaction described in clause (iii) above should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 of Regulation S-K of the
Commission, and (vi) the undersigned is not an "affiliate", as defined
under Rule 405 of the Securities Act, of the Company except as otherwise
disclosed to the Company in writing.
3. The undersigned also acknowledges that the Exchange Offer is being
made based on no-action letters issued by the Staff of the Commission to
third parties with respect to similar transactions that the New Securities
issued pursuant to the Exchange Offer in exchange for the Old Securities
may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Securities are acquired in the
ordinary course of such holders' business and such holders are not engaging
in, have no arrangement with any person to participate in, and do not
intend to engage in, any distribution of such New Securities. Any holder
who tenders in the Exchange Offer for the purpose of participating in a
distribution of New Securities cannot rely on such interpretation by the
Staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with
any secondary resale.
4. The undersigned may, to the extent the conditions set forth in the
Registration Rights Agreement are satisfied, elect to have its Old
Securities registered in the Shelf Registration Statement (as defined and
described in the Registration Rights Agreement).
5. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete
the sale, assignment and transfer of the Old Securities tendered hereby.
All authority conferred or agreed to be conferred in this Letter of
Transmittal and every obligation of the
-5-
<PAGE>
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives
of the undersigned and shall not be affected by, and shall survive, the
death or incapacity of the undersigned. This tender may be withdrawn only
in accordance with the procedures set forth in "The Exchange Offer -
Withdrawal Rights" section of the Prospectus. See Instruction 9.
6. Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, please credit the account indicated above
maintained at the Book-Entry Transfer Facility.
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict between
the terms of the Prospectus and this Letter of Transmittal, the Prospectus shall
prevail.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
SECURITIES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
OLD SECURITIES AS SET FORTH IN SUCH BOX ABOVE.
-6-
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if Old Securities delivered by book-entry
transfer which are not accepted for exchange are to be returned by
credit to an account maintained at the Book-Entry Transfer Facility
other than the account indicated above.
New Securities and/or Old Securities to:
Name(s) __________________________
(Please Type or Print)
__________________________________
(Please Type or Print)
Address ___________________________
___________________________
(Zip Code)
___________________________________
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
Credit unexchanged Old Securities delivered by book-entry transfer to
the Book-Entry Transfer Facility account set forth below.
___________________________________
(Book-Entry Transfer Facility
Account Number)
- --------------------------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
-7-
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- -------------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
_____________________________ _____________________________ 1996
_____________________________ _____________________________ 1996
_____________________________ _____________________________ 1996
Signature(s) of Owner Date
Area Code and Telephone Number: __________________
Contact Person: _________________________________
If a holder is tendering any Old Securities, this Letter of Transmittal
must be signed by the registered holder(s) as the name(s) appear(s) on the
records of the Book-Entry Transfer Facility or by any Person(s) authorized
to become registered holder(s) by endorsements and documents transmitted
herewith. If a signature is by a trustee, executor, administrator, guardian,
officer or other person in a fiduciary or representative capacity, please set
forth full title. See Instruction 3.
Name(s) _____________________________________________________________________________
_____________________________________________________________________________________
(Please type or print)
Capacity ____________________________________________________________________________
Address _____________________________________________________________________________
_____________________________________________________________________________
(Including Zip Code)
Employer Identification or Social Security No. ______________________________________
(Please complete Substitute Form W-9)
SIGNATURE GUARANTEE
(If required by Instructions 3)
Signature(s) Guaranteed by an Eligible Institution:
Authorized Signature ________________________________________________________________
Title _______________________________________________________________________________
Name and Firm _______________________________________________________________________
- -------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
INSTRUCTIONS
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD SECURITIES; GUARANTEED
DELIVERY PROCEDURES.
This Letter of Transmittal is to be completed by holders of Old Securities
pursuant to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer - Book-Entry Procedures for Tendering Old Securities" section of
the Prospectus. Book-Entry Confirmation as well as a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below. Old Notes tendered hereby must be in denominations
of principal amount of $1,000 or any integral multiple thereof.
Holders of Old Securities who cannot complete the procedure for book-entry
transfer on a timely basis may tender their Old Securities pursuant to the
following guaranteed delivery procedures: (i) such delivery must be made by or
through an Eligible Institution and a Notice of Guaranteed Delivery must be
signed by such Eligible Holder , (ii) on or prior to the Expiration Date, the
Exchange Agent must receive from the Eligible Holder and the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Eligible Holder, stating that the delivery is being made thereby
and guaranteeing that, within three (3) business days after the date of delivery
of the Notice of Guaranteed Delivery, the duly executed Letter of Transmittal
and any other required documents will be deposited by the Eligible Institution
with the Exchange Agent, and (iii) such properly completed and executed
documents required by the Letter of Transmittal in proper form for confirmation
of a book-entry transfer of such Old Securities into the Exchange Agent's
account at the Book-Entry Transfer Facility must be received by the Exchange
Agent within three (3) business days after the Expiration Date. Any Eligible
Holder who wishes to comply with the guaranteed delivery procedures described
above must ensure that the Exchange Agent receives the Notice of Guaranteed
Delivery and Letter of Transmittal prior to 5:00 p.m.., New York City time, on
the Expiration Date.
This Letter of Transmittal may be delivered by an Agent's Message (as
defined below) in connection with a book-entry transfer. The term "Agent's
Message" means a message transmitted by the Book-Entry Transfer Facility to, and
received by, the Exchange Agent and forming a part of a book-entry confirmation,
which states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Old Securities that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Company may enforce
such agreement against such participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD SECURITIES
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING
HOLDERS, BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR
CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED
THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR
TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE. NO LETTER OF
TRANSMITTAL OR OLD SECURITIES SHOULD BE SENT TO THE COMPANY. See "The Exchange
Offer - Book-Entry Procedures for Tendering Old Securities" section in the
Prospectus.
2. PARTIAL TENDERS.
If less than all of the Old Securities are to be tendered, the tendering
holder(s) should fill in the aggregate principal amount at maturity of Old
Securities to be tendered in the box above entitled "Description of Old
Securities - Principal Amount at Maturity Tendered." Appropriate credit to the
account indicated above shall be
-9-
<PAGE>
made pursuant to the procedures for book-entry transfer. All of the Old
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
3. SIGNATURES ON THIS LETTER, BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter of Transmittal is signed by the registered holder of the Old
Securities tendered hereby, the signature must correspond exactly with the name
of such holder maintained with the Book-Entry Transfer Facility.
If any tendered Old Securities are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
When this Letter of Transmittal is signed by the registered holder or
holders of the Old Securities specified herein and tendered hereby, no
endorsements of separate bond powers are required. If, however, the New
Securities are to be issued, or any tendered Old Securities are to be reissued,
to a person other than the registered holder, then separate bond powers are
required. Signatures on such separate bond powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal or any bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Signatures on bond powers required by this Instruction 3 must be guaranteed
by a firm which is a member of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc. or by a
commercial bank or trust company having an office or correspondent in the United
States or by such other Eligible Guarantor Institution within the meaning of
Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution" and
collectively, "Eligible Institutions").
Signatures on this Letter need not be guaranteed by an Eligible Institution
if the Old Securities are tendered (i) by a registered holder of Old Securities
(which term, for purposes of the Exchange Offer, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a security position
listing as the holder of such Old Securities) who had not completed the box
entitled "Special Issuance Instructions" in this Letter of Transmittal, or (ii)
for the account of an Eligible Institution.
4. SPECIAL ISSUANCE INSTRUCTIONS.
If New Securities are to be issued in the name of a person other than the
signatory of this Letter of Transmittal, the appropriate boxes on this Letter of
Transmittal should be completed. Old Securities not exchanged will be returned
by crediting the account indicated above maintained at the Book-Entry Transfer
Facility.
5. TRANSFER TAXES.
Holders who tender their Old Securities for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Securities in the name of, or request that
Old Securities not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering holder.
-10-
<PAGE>
6. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated herein or in the Prospectus.
7. NO CONDITIONAL TENDERS; IRREGULARITIES.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Securities, by execution of this Letter
of Transmittal, shall waive the right to receive notice of the acceptance of
their Old Securities for exchange.
The Company will determine, in its sole discretion, all questions as to the
form of documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Old Securities, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any and all tenders determined by it not to be in proper form or
the acceptance of which, or exchange for, may, in the view of counsel to the
Company, be unlawful. The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer set forth
in the Prospectus under "The Exchange Offer - Conditions of the Exchange Offer"
or any conditions or irregularity in any tender of Old Securities of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Old Securities will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. Neither the Company, any affiliates or assigns of the Company,
the Exchange Agent, nor any other person shall be under any duty to give
notification of any irregularities in tenders or incur any liability for failure
to give such notification.
8. WITHDRAWAL OF TENDERS.
Tenders of Old Securities may be withdrawn by delivery of a written notice
to the Exchange Agent, at its address set forth on the back cover page of the
Prospectus, at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) identify the Old
Securities to be withdrawn, and (ii) specify the name and number of the account
at the Depository to be credited with the withdrawn Old Securities and otherwise
comply with the procedures of the Depository. Any questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, in its sole discretion. The Old Securities so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Securities which have been tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility pursuant to the book-entry transfer procedures described above will be
credited to an account maintained with the Book-Entry Transfer Facility for the
Old Securities as soon as practicable after such withdrawal. Properly withdrawn
Old Securities may be retendered by following one of the procedures described
under "The Exchange Offer -- Book-Entry Procedures for Tendering Old Securities"
at any time on or prior to the Expiration Date.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
-11-
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of New Securities is
required to provide the Company (as payor) with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 or otherwise establish a
basis for exemption from backup withholding to prevent backup withholding on
each payment in respect of interest thereon or gross proceeds thereof. If a
holder of New Securities is an individual, the TIN is such holder's social
security number. If the Company is not provided with the correct taxpayer
identification number, the holder of Old Securities and the holder of New
Securities may be subject to a $50 penalty imposed by the Internal Revenue
Service for each failure to provide the correct TIN. Accordingly, each
prospective holder of New Securities to be issued pursuant to Special Issuance
Instructions should complete the attached Substitute Form W-9.
Certain holders of New Securities (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt prospective holders of New
Securities should indicate their exempt status on Substitute Form W-9. A
foreign individual may qualify as an exempt recipient by submitting to the
Company, through the Exchange Agent, a properly completed Internal Revenue
Service Form W-8 (which the Exchange Agent will provide upon request) signed
under penalty of perjury, attesting to the holder's exempt status. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of New Securities or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are to be made with respect
to New Securities, each prospective holder of New Securities to be issued
pursuant to Special Issuance Instructions should provide the Company, through
the Exchange Agent, with either: (i) such prospective holder's correct TIN by
completing the form below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such prospective holder is awaiting a TIN) and that (A)
such prospective holder has not been notified by the Internal Revenue Service
that he or she is subject to backup withholding as A result of a failure to
report ALL interest or dividends or (B) the Internal Revenue Service has
notified such prospective holder that he or she is no longer subject to backup
withholding; or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective holder of New Securities is required to give the Exchange
Agent the TIN (e.g., social security number or employer identification number)
of the prospective record owner of the New Securities. If the New Securities
will be held in more than one name or are not held in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance regarding
which number to report.
-12-
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
- --------------------------------------------------------------------------------
PAYER'S NAME: NORTHROP GRUMMAN CORPORATION
- --------------------------------------------------------------------------------
Part 1 -- PLEASE PROVIDE Social Security Number
YOUR TIN IN THE BOX AT
RIGHT AND CERTIFY BY
SUBSTITUTE SIGNING AND DATING OR
BELOW.
Employer Identification
Number
FORM W-9
Part 2 -- Certification -- Under Penalties of
Perjury, I certify that: (1) The number shown on
this form is my current taxpayer identification
number (or I am waiting for a number to be issued
to me) and (2) I am not subject to backup
withholding either because I have not been
notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as
a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
Part 3 --
Awaiting TIN -> / /
DEPARTMENT OF THE TREASURY,
INTERNAL REVENUE SERVICE Certificate Instructions -- You must cross out
item (2) in Part 2 above if you have been notified
by the IRS that you are subject to backup
withholding because of underreporting interest or
dividends on your tax return. However, if after
being notified by the IRS that you are subject to
backup withholding you receive another
notification from the IRS stating that you are no
longer subject to backup withholding, do not cross
out item (2).
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) SIGNATURE -> _______________ DATE -> ____________
- --------------------------------------------------------------------------------
NOTE:FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
-13-
<PAGE>
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER
HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (B)
I INTEND TO MAIL OR DELIVER SUCH AN APPLICATION IN THE NEAR FUTURE. I
UNDERSTAND THAT, IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER TO THE
PAYER WITHIN SIXTY (60) DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME
THEREAFTER WILL BE WITHHELD UNTIL I PROVIDE SUCH A NUMBER.
- ----------------------------------- ----------------------------------------
Signature , 1996
----
Date
- --------------------------------------------------------------------------------
-14-
<PAGE>
EXHIBIT 5.1
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
April 19, 1996
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Ladies and Gentlemen:
This opinion is rendered to you in connection with a registration
statement (the "Registration Statement") on Form S-4 filed on April 19, 1996
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), relating to the exchange offer (the "Exchange Offer") by
Northrop Grumman Corporation, a Delaware corporation (the "Company"), of the
Company's $400,000,000 aggregate principal amount of 7% Notes Due 2006,
$300,000,000 aggregate principal amount of 7 3/4% Debentures Due 2016 and
$300,000,000 aggregate principal amount of 7 7/8% Debentures Due 2026
(collectively, the "New Securities") for the Company's currently outstanding 7%
Notes Due 2006, 7 3/4% Debentures Due 2016 and 7 7/8% Debentures Due 2026,
respectively (collectively, the "Old Securities") of the same respective
aggregate principal amounts. The New Securities are to be issued pursuant to
the provisions of an Indenture (the "Indenture") dated as of October 15, 1994
between the Company and The Chase Manhattan Bank (National Association), as
trustee (the "Trustee"), which shall be supplemented by an Officers' Certificate
(the "Officers' Certificate") in the form filed as an exhibit to the
Registration Statement and delivered pursuant to said Indenture, establishing
the terms of the New Securities.
We have acted as counsel for the Company in connection with the
Exchange Offer and the preparation of the Registration Statement. In rendering
the opinion expressed below, we have examined the following agreements,
instruments and other documents:
(a) the Registration Statement;
(b) the Indenture;
<PAGE>
Northrop Grumman Corporation
April 19, 1996
Page 2
(c) the form of Officers' Certificate;
(d) the forms of the New Securities to be issued pursuant to the
Indenture; and
(e) such corporate records, officers' certificates and other
documents as we have deemed necessary as a basis for the opinion expressed
below.
In rendering the opinion set forth below, we have assumed:
A. The genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies, and the authenticity of all such originals.
B. The due authorization, execution and delivery of the Indenture
and the documents and instruments referred to therein by and on behalf of all
parties thereto other than the Company.
C. That the Indenture is the legal, valid and binding obligation
of the Trustee and that the Trustee has all requisite power and authority and
has taken any and all action necessary to be taken by the Trustee to execute and
deliver the Indenture and perform the Trustee's obligations thereunder.
On the basis of the foregoing and subject to the qualifications and
limitations set forth below, it is our opinion that the New Securities have been
duly authorized by the Company and, when issued and delivered in exchange for
the Old Securities in the manner described in the Registration Statement, and
when executed and authenticated as specified in the Indenture, will be duly
issued and delivered and will constitute valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
Our opinion above, insofar as it relates to enforceability of the
New Securities, which are by their terms governed by New York law, is given
solely in reliance on the opinion of Kaye, Scholer, Fierman, Hays & Handler,
LLP, dated as of the date hereof, a copy of which is attached hereto, and
<PAGE>
Northrop Grumman Corporation
April 19, 1996
Page 2
such opinion of ours is subject to the same assumptions, exceptions and
limitations as those set forth in the opinion of Kaye, Scholer, Fierman, Hays &
Handler, LLP.
We are members of the Bar of the State of California. The opinion
contained herein is based upon an examination of the laws of the State of
California, the General Corporation Law of the State of Delaware and the Federal
laws of the United States in effect on the date hereof and no opinion is
expressed as to the application of the laws of any other jurisdiction except the
opinion with respect to the laws of the State of New York in reliance upon the
opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP, as described above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and we further consent to the use of our name under the
caption "Legal Matters" in the Prospectus forming a part of such Registration
Statement. Except as stated above, without our prior written consent, this
opinion may not be furnished or quoted to, or relied upon by, any other person
or entity for any purpose.
Very truly yours,
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
<PAGE>
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
April 19, 1996
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street
Los Angeles, California 90071-1448
Ladies and Gentlemen:
This opinion is furnished to you for the purposes of your issuing your
opinion in connection with a registration statement (the "Registration
Statement") on Form S-4 filed on April 19, 1996 with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
relating to the exchange offer (the "Exchange Offer") by Northrop Grumman
Corporation, a Delaware corporation (the "Company"), of the Company's
$400,000,000 aggregate principal amount of 7% Notes Due 2006, $300,000,000
aggregate principal amount of 7-3/4% Debentures Due 2016 and $300,000,000
aggregate principal amount of 7-7/8% Debentures Due 2026 (collectively, the
"New Securities") for the Company's currently outstanding 7% Notes Due 2006,
7-3/4% Debentures Due 2016 and 7-7/8% Debentures Due 2026, respectively
(collectively, the "Old Securities"), of the same respective aggregate
principal amounts. The New Securities will be issued under an Indenture dated
as of October 15, 1994, between the Company and The Chase Manhattan Bank
(National Association), as trustee (the "Indenture"), which shall be
supplemented by an Officers' Certificate (the "Officers' Certificate") in the
form filed as an exhibit to the Registration Statement and delivered pursuant
to said Indenture, establishing the terms of the New Securities.
In connection herewith, we have examined:
1. the Registration Statement;
<PAGE>
2. the Indenture;
3. the form of Officers' Certificate (together with the New Securities
and the Indenture, the "Documents"); and
4. the forms of the New Securities to be issued pursuant to the
Indenture.
We have examined the originals, or copies certified to our satisfaction,
of such other agreements, instruments and documents, and have made such other
investigation, as we have deemed necessary as a basis for the opinion
expressed below. We have assumed that (a) the Company (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and (ii) has the corporate power and authority to
enter into and perform the Documents, (b) the Documents have been and will be
duly authorized, executed and delivered by the Company, (c) the Documents do
not and will not conflict with or violate (i) the charter documents or board
resolutions of the Company, (ii) any contract or court order to which the
Company is a party or by which it is bound or (iii) the laws or regulations
of any jurisdiction (other than the State of New York), (d) on or prior to
the date of issuance of the New Securities, (i) all parties shall have
performed all of their obligations under the Documents to be performed on or
before that date and (ii) all warranties and representations as to factual
matters of the Company under the Officers' Certificate are true, and (e) the
Company does not exercise its rights under the Registration Statement to
amend the terms of the Exchange Offer. We have further assumed the due
execution and delivery, pursuant to due authorization, of the Documents and
the documents and instruments referred to therein by each of the parties
thereto other than the Company.
This opinion letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section
of Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
2
<PAGE>
limitations, all as more particularly described in the Accord, and this
opinion letter should be read in conjunction therewith.
Based upon the foregoing and subject to the limitations set forth below,
we are of the opinion that the New Securities, when issued and delivered in
exchange for the Old Securities in the manner described in the Registration
Statement, and when executed and authenticated as specified in the Indenture,
will be enforceable against the Company.
Our opinion set forth above is subject to the qualification that
provisions in the Indenture which require that any waiver be in writing to be
effective may not be enforceable.
Our opinion herein is limited to the laws of the State of New York. This
opinion is being delivered to you pursuant to the Exchange Offer and may not
be used or relied upon by any person or entity other than you and the parties
to the Exchange Offer or in any other connection. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement, and we
further consent to the use of our name under the caption "Legal Matters" in
the Prospectus forming a part of such Registration Statement. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other person or entity for any
purpose.
Very truly yours,
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
3
<PAGE>
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ in millions of U.S. Dollars except ratios)
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
Pro Forma --------------------------------------------------
1995 1995 1994 1993 1992 1991
--------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings
Earnings before Taxes
on Income $243.0 $409.0 $ 65.0 $170.0 $180.0 $277.0
========= ==================================================
Fixed Charges
Interest Expense $329.0 $135.0 $106.0 $ 38.0 $ 47.0 $ 80.0
Amortization of debt issue costs 18.0 2.0 3.0
Portion of rentals representative
of interest factor 40.3 29.7 28.0 15.7 17.3 17.0
--------- --------------------------------------------------
Total Fixed Charges 387.3 166.7 137.0 53.7 64.3 97.0
--------- --------------------------------------------------
Earnings Available for
Fixed Charges $630.3 $575.7 $202.0 $233.7 $244.3 $374.0
========= ==================================================
Ratio of Earnings to
Fixed Charges 1.6 3.5 1.5 4.2 3.8 3.8
========= ==================================================
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Northrop Grumman Corporation (the "Company") on Form S-4 of our report
dated February 7, 1996, appearing in the Annual Report on Form 10-K of the
Company for the year ended December 31, 1995 and to the reference to us under
the heading "Experts" in the Prospectus, which is part of the Registration
Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touch LLP
Los Angeles, California
April 18, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Northrop
Grumman Corporation of our report regarding Electronic Systems (a unit of
Westinghouse Electric Corporation) dated January 31, 1996 appearing on page 4
of the Current Report on Form 8-K for Northrop Grumman Corporation dated
March 18, 1996.
PRICE WATERHOUSE LLP
Baltimore, Maryland
April 18, 1996
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
FILING OF REGISTRATION STATEMENT ON FORM S-4
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of NORTHROP GRUMMAN CORPORATION, a Delaware corporation (the
"Company"), nominate, constitute and appoint RICHARD R. MOLLEUR and JAMES C.
JOHNSON, and each of them, acting or signing singly, as his or her agents and
attorneys-in-fact, in his or her respective name and in the capacity indicated
below to execute and/or file (1) a registration statement on Form S-4 under the
Securities Act of 1933, as amended (the "Act") in connection with the
registration under the Act of an exchange offer of the Company's
(a) $400,000,000 principal amount of 7% Notes Due 2006 for its outstanding
7% Notes Due 2006 of the same principal amount, (b) $300,000,000 principal
amount of 7 3/4% Debentures Due 2016 for its outstanding 7 3/4% Debentures Due
2016 of the same principal amount, and (c) $300,000,000 principal amount of
7 7/8% Debentures Due 2026 for its outstanding 7 7/8% Debentures Due 2026 of the
same principal amount (including the final prospectus, schedules and all
exhibits and other documents filed therewith or constituting a part thereof);
and (2) any one or more amendments to any part of the foregoing registration
statement, including any post-effective amendments or appendices or supplements
that may be required to be filed under the Act to keep such registration
statement effective or to terminate its effectiveness.
Further, the undersigned do hereby authorize and direct the said agents and
attorneys-in-fact to take any and all actions and execute and file any and all
documents with the Securities and Exchange Commission (the "SEC"), or state
regulatory agencies, necessary, proper or convenient in their opinion to comply
with the Act and the rules and regulations or orders of the SEC, or state
regulatory agencies, adopted or issued pursuant thereto, including the making of
any requests for acceleration of the effective date of said registration
statement, to the end that the registration statement of the Company shall
become effective under the Act and any other applicable law.
Finally, each of the undersigned does hereby ratify, confirm and approve each
and every act and document which the said agents and attorneys-in-fact may take,
execute or file pursuant thereto with the same force and effect as though such
action had been taken or such document had been executed or filed by the
undersigned, respectively.
This Power of Attorney shall remain in full force and effect until revoked or
superseded by written notice filed with the SEC.
-1-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has subscribed these presents
this 11th day of April, 1996.
<TABLE>
<CAPTION>
<S> <C>
/s/ KENT KRESA
- -----------------------------------
Kent Kresa Chairman of the Board,
President and Chief
Executive Officer and
Director (Principal
Executive Officer)
/s/ JACK R. BORSTING
- -----------------------------------
Jack R. Borsting Director
/s/ JOHN T. CHAIN, JR.
- -----------------------------------
John T. Chain, Jr. Director
/s/ JACK EDWARDS
- -----------------------------------
Jack Edwards Director
/s/ PHILLIP FROST
- -----------------------------------
Dr. Phillip Frost Director
/s/ AULANA L. PETERS
- -----------------------------------
Aulana L. Peters Director
/s/ JOHN E. ROBSON
- -----------------------------------
John E. Robson Director
/s/ RICHARD M. ROSENBERG
- -----------------------------------
Richard M. Rosenberg Director
/s/ BRENT SCOWCROFT
- -----------------------------------
Brent Scowcroft Director
/s/ JOHN BROOKS SLAUGHTER
- -----------------------------------
John Brooks Slaughter Director
/s/ WALLACE C. SOLBERG
- -----------------------------------
Wallace C. Solberg Director
/s/ RICHARD J. STEGEMEIER
- -----------------------------------
Richard J. Stegemeier Director
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
/s/ RICHARD B. WAUGH, JR.
- ----------------------------------
Richard B. Waugh, Jr. Corporate Vice President
and Chief Financial Officer
(Principal Financial
Officer)
/s/ NELSON F. GIBBS
- -----------------------------------
Nelson F. Gibbs Corporate Vice President
and Controller (Principal
Accounting Officer)
</TABLE>
-3-
<PAGE>
EXHIBIT 25.1
SECURITIES ACT OF 1933 FILE NO. _________
(IF APPLICATION TO DETERMINE ELIGIBILITY OF TRUSTEE
FOR DELAYED OFFERING PURSUANT TO SECTION 305 (b) (2))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)_________________
--------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
(Exact name of trustee as specified in its charter)
13-2633612
(I.R.S. Employer Identification Number)
1 CHASE MANHATTAN PLAZA, NEW YORK, NEW YORK
(Address of principal executive offices)
10081
(Zip Code)
-------------------
NORTHROP GRUMMAN CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
95-1055798
(I.R.S. Employer Identification No.)
1840 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA
(Address of principal executive offices)
90067
(Zip Code)
-------------------------------
DEBT SECURITIES
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of The Federal Reserve System, Washington,
D. C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The Trustee is not the obligor, nor is the Trustee directly or
indirectly controlling, controlled by, or under common control with
the obligor.
(See Note on Page 2.)
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
*1. -- A copy of the articles of association of the trustee as now in
effect . (See Exhibit T-1 (Item 12), Registration No. 33-55626.)
*2. -- Copies of the respective authorizations of The Chase Manhattan
Bank (National Association) and The Chase Bank of New York
(National Association) to commence business and a copy of
approval of merger of said corporations, all of which documents
are still in effect. (See Exhibit T-1 (Item 12), Registration No.
2-67437.)
*3. -- Copies of authorizations of The Chase Manhattan Bank (National
Association) to exercise corporate trust powers, both of which
documents are still in effect. (See Exhibit T-1 (Item 12),
Registration No. 2-67437.)
*4. -- A copy of the existing by-laws of the trustee. (See Exhibit T-1
(Item 16) (25.1), Registration No. 33-60809.)
*5. -- A copy of each indenture referred to in Item 4, if the obligor is
in default. (Not applicable.)
*6. -- The consents of United States institutional trustees required by
Section 321(b) of the Act. (See Exhibit T-1, (Item 12),
Registration No. 22-19019.)
7. -- A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
- ------------------
*The Exhibits thus designated are incorporated herein by reference.
Following the description of such Exhibits is a reference to the copy of the
Exhibit heretofore filed with the Securities and Exchange Commission, to which
there have been no amendments or changes.
------------------------
1.
<PAGE>
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base a responsive answer to Item 2 the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, The Chase Manhattan Bank (National Association), a corporation
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and the
State of New York, on the 15h day of April, 1996.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: RONALD J. HALLERAN
-------------------------------
Ronald J. Halleran
Second Vice President
2.
<PAGE>
EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
THE CHASE MANHATTAN BANK, N.A.
of New York in the State of New York, at the close of business on December 31,
1995, published in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161.
CHARTER NUMBER 2370 COMPTROLLER OF THE CURRENCY NORTHEASTERN DISTRICT
STATEMENT OF RESOURCES AND LIABILITIES
ASSETS
<TABLE>
<CAPTION>
THOUSANDS
OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin
$ 5,574,000
Interest-bearing balances 5,950,000
Held to maturity securities 0
Available-for-sale securities 6,731,000
Federal funds sold and securities purchased under agreements to resell
in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds sold 2,488,000
Securities purchased under agreements to resell 35,000
Loans and lease financing receivable:
Loans and leases, net of unearned income $ 57,786,000
LESS: Allowance for loan and lease losses
1,114,000
LESS: Allocated transfer risk reserve
0
-----------
Loans and leases, net of unearned income, allowance, and reserve 56,672,000
Assets held in trading accounts 12,994,000
Premises and fixed assets (including capitalized leases) 1,723,000
Other real estate owned 364,000
Investments in unconsolidated subsidiaries and associated companies 28,000
Customers' liability to this bank on acceptances outstanding 944,000
Intangible assets 1,343,000
Other assets 5,506,000
---------
TOTAL ASSETS $100,352,000
------------
------------
LIABILITIES
Deposits:
In domestic offices $ 32,483,000
Noninterest-bearing $ 13,704,000
Interest-bearing 18,799,000
-------------
In foreign offices, Edge and Agreement subsidiaries, and IBFs 37,639,000
Noninterest-bearing $ 3,555,000
Interest-bearing 34,084,000
--------------
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge
and Agreement subsidiaries, and in IBFs:
Federal funds purchased 1,572,000
Securities sold under agreements to repurchase 211,000
Demand notes issued to the U.S. Treasury 25,000
Trading liabilities 9,146,000
Other borrowed money:
With original maturity of one year or less 2,562,000
With original maturity of more than one year 379,000
Mortgage indebtedness and obligations under capitalized leases 40,000
Bank's liability on acceptances executed and outstanding 949,000
Subordinated notes and debentures 1,960,000
Other liabilities 5,411,000
TOTAL LIABILITIES 92,377,000
Limited-life preferred stock and related surplus 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITY CAPITAL
<S> <C>
Perpetual preferred stock and related surplus 0
Common stock 921,000
Surplus 5,285,000
Undivided profits and capital reserves 1,751,000
Net unrealized holding gains (losses) on
available-for-sale securities 7,000
Cumulative foreign currency translation adjustments 11,000
TOTAL EQUITY CAPITAL 7,975,000
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK,
AND EQUITY CAPITAL $ 100,352,000
</TABLE>
I, Lester J. Stephens, Jr., Senior Vice President and Controller of the above
named bank do hereby declare that this Report of Condition is true and correct
to the best of my knowledge and belief. (Signed) Lester J. Stephens, Jr.
We the undersigned directors, attest to the correctness of this statement of
resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
(Signed) Thomas G. Labrecque
(Signed) Donald Trautlein Directors
(Signed) Richard J. Boyle
