<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 12, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NORTHROP GRUMMAN CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 95-1055798
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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. John R. Light, Esq.
Sheppard, Mullin, Richter & Hampton LLP Latham & Watkins
333 South Hope Street, 48th Floor 633 West Fifth Street, Suite 4000
Los Angeles, California 90071 Los Angeles, California 90071
(213) 620-1780 (213) 485-1234
------------------------------
APPROXIMATE DATE OF COMMENCEMENTS OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement has become effective
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or investment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. / / __________________.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (2) PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value (1)................. 8,050,000 $59.25 $476,962,500 $95,505(3)
</TABLE>
(1) Includes Common Stock Purchase Rights. Prior to the occurrence of certain
events, the Rights will not be exercisable or evidenced separately from the
Common Stock.
(2) Includes 1,050,000 shares of Common Stock subject to the U.S. Underwriters'
and Managers' over-allotment option.
(3) Pursuant to Rule 429, the registration fee does not include $68,965 which
has been previously paid with respect to $200,000,000 of the aggregate
offering price (Registration No. 33-55143).
------------------------------
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.
The prospectus contained in this Registration Statement also relates to a
registration statement previously filed with the Commission (Registration No.
33-55143).
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- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 12, 1996
7,000,000 Shares
NORTHROP GRUMMAN
Common Stock
($1.00 PAR VALUE)
--------------
ALL OF THE SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE ("COMMON STOCK"),
OF NORTHROP GRUMMAN CORPORATION (THE "COMPANY") OFFERED HEREBY ARE BEING SOLD
BY THE COMPANY. OF THE 7,000,000 SHARES OF COMMON STOCK BEING OFFERED,
5,950,000 SHARES ARE INITIALLY BEING OFFERED IN THE UNITED STATES AND
CANADA (THE "U.S. SHARES") BY THE U.S. UNDERWRITERS (THE "U.S.
OFFERING") AND 1,050,000 SHARES ARE INITIALLY BEING CONCURRENTLY
OFFERED OUTSIDE THE UNITED STATES AND CANADA (THE "INTERNATIONAL
SHARES") BY THE MANAGERS (THE "INTERNATIONAL OFFERING" AND,
TOGETHER WITH THE U.S. OFFERING, THE "OFFERINGS"). THE OFFERING
PRICE AND UNDERWRITING DISCOUNTS AND COMMISSIONS OF THE U.S.
OFFERING AND THE INTERNATIONAL OFFERING ARE IDENTICAL.
THE COMMON STOCK OF THE COMPANY IS LISTED ON THE NEW YORK STOCK EXCHANGE (THE
"NYSE") AND THE PACIFIC STOCK EXCHANGE UNDER THE SYMBOL "NOC." ON APRIL 11,
1996, THE LAST REPORTED SALE PRICE OF THE COMMON STOCK ON THE NYSE
WAS $59. SEE "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
--------------
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 OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
----------------- ----------------- -----------------
<S> <C> <C> <C>
PER SHARE............................................. $ $ $
TOTAL (2)............................................. $ $ $
</TABLE>
(1) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY, ESTIMATED AT $700,000.
(2) THE COMPANY HAS GRANTED THE U.S. UNDERWRITERS AND THE MANAGERS AN OPTION,
EXERCISABLE BY CS FIRST BOSTON CORPORATION FOR THIRTY (30) DAYS FROM THE
DATE OF THIS PROSPECTUS, TO PURCHASE A MAXIMUM OF 1,050,000 ADDITIONAL
SHARES TO COVER OVER-ALLOTMENTS OF SHARES. IF THE OPTION IS EXERCISED IN
FULL, THE TOTAL PRICE TO PUBLIC WILL BE $ , UNDERWRITING DISCOUNTS
AND COMMISSIONS WILL BE $ AND PROCEEDS TO COMPANY WILL BE
$ .
THE U.S. SHARES ARE OFFERED BY THE SEVERAL U.S. UNDERWRITERS WHEN, AS AND IF
ISSUED BY THE COMPANY, DELIVERED TO AND ACCEPTED BY THE U.S. UNDERWRITERS AND
SUBJECT TO THEIR RIGHT TO REJECT ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT
THE U.S. SHARES WILL BE READY FOR DELIVERY ON OR ABOUT MAY , 1996, AGAINST
PAYMENT IN IMMEDIATELY AVAILABLE FUNDS.
CS First Boston
Merrill Lynch & Co.
Salomon Brothers Inc
THE DATE OF THIS PROSPECTUS IS MAY , 1996.
<PAGE>
IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE PACIFIC STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK OF THE COMPANY PURSUANT TO EXEMPTIONS
CONTAINED IN RULES 10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF
1934.
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.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copies may be obtained at
the principal office of the Commission at 450 Fifth Street, N.W, Washington,
D.C. 20549, and at the following regional offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W, Washington, D.C. 20549, at prescribed
rates. Reports, proxy statements and other information concerning the Company
can also 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.
The Company has filed with the Commission a Registration Statement (herein,
together with all amendments thereto, called the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities offered hereby. This Prospectus does not contain all of the
information included in the Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents of
any contract or other document referred to herein and filed as an exhibit to the
Registration Statement are not necessarily complete, and, in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information with respect to the
Company and the securities being offered hereby, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed with the Commission, pursuant to Section 13 of the
Exchange Act:
(i) an Annual Report on Form 10-K for the year ended December 31, 1995;
(ii) a Current Report on Form 8-K filed March 18, 1996;
(iii) a description of the Common Stock of the Company set forth in a
Registration Statement on Form 8-B dated June 20, 1985; and
(iv) a description of the Common Stock Purchase Rights of the Company
set forth in a Registration Statement on Form 8-A filed September 22, 1988,
as amended on Form 8 filed August 2, 1991, as further amended on Form 8-A/A
filed October 7, 1994;
which are hereby incorporated by reference in and made a part of this
Prospectus.
All documents hereafter filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in and to
be a part of this Prospectus from the date of filing of such documents. Any
statement contained in a document incorporated by reference or deemed to be
incorporated herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein
or in any other 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.
In this Prospectus, references to "dollars" and "$" are to United States
dollars.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR
ORAL REQUEST DIRECTED TO: JAMES C. JOHNSON, CORPORATE VICE PRESIDENT AND
SECRETARY, NORTHROP GRUMMAN CORPORATION, 1840 CENTURY PARK EAST, LOS
ANGELES, CALIFORNIA 90067 (TELEPHONE: (310) 553-6262).
3
<PAGE>
PROSPECTUS 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 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.
4
<PAGE>
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.
5
<PAGE>
THE OFFERINGS
<TABLE>
<S> <C> <C>
Common Stock Offered (1):
U.S. Offering............... 5,950,000 shares
International Offering...... 1,050,000 shares
---------
Total..................... 7,000,000 shares
---------
---------
Common Stock Outstanding (1):
Before the Offerings (at
April 5, 1996)............. 49,620,303 shares
After the Offerings (1)..... 56,620,303 shares
Dividends..................... For historical information related to dividends declared
and the Company's future dividend policy see "Price Range
of Common Stock and Dividends".
Use of Proceeds............... The net proceeds of the Offerings will be used to repay a
portion of the bank borrowings incurred by the Company in
connection with the Acquisition. See "Use of Proceeds" and
"The Company -- Acquisition of ESG."
New York Stock Exchange and
Pacific Stock Exchange
Symbol....................... NOC
</TABLE>
- ------------------------
(1) Does not include up to 1,050,000 shares of Common Stock subject to the
over-allotment option granted by the Company to the U.S. Underwriters and
the Managers.
6
<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" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," 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. The pro forma financial
data do not give effect to the proposed issuance of shares in the Offerings and
the use of proceeds therefrom. 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,
PRO FORMA --------------------------------------------------------
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
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>
7
<PAGE>
USE OF PROCEEDS
The Company intends to apply the net proceeds from the Offerings to repay a
portion of the Company's bank borrowings incurred to finance the Acquisition in
March 1996. The indebtedness to be repaid with the proceeds of the Offerings
currently bears interest at 5.94% and has a maturity date of March 1, 1998.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is traded on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol NOC. The table below sets forth the high
and low trading prices of the Common Stock as reported on the New York Stock
Exchange Composite Tape and quarterly cash dividends declared per share of
Common Stock during the periods indicated. For a recent closing price of the
Common Stock, see the cover page of this Prospectus.
<TABLE>
<CAPTION>
PRICE RANGE CASH
------------- DIVIDENDS
LOW HIGH DECLARED
----- ----- ---------
<S> <C> <C> <C>
1994
First Quarter ended March 31, 1994............................................ 36 7/8 45 7/8 $ .40
Second Quarter ended June 30, 1994............................................ 34 1/2 39 3/4 .40
Third Quarter ended September 30, 1994........................................ 35 3/4 45 3/8 .40
Fourth Quarter ended December 31, 1994........................................ 40 1/4 47 3/8 .40
1995
First Quarter ended March 31, 1995............................................ 39 3/4 49 3/4 .40
Second Quarter ended June 30, 1995............................................ 47 54 .40
Third Quarter ended September 30, 1995........................................ 51 7/8 62 5/8 .40
Fourth Quarter ended December 31, 1995........................................ 56 64 1/4 .40
1996
First Quarter ended March 31, 1996............................................ 58 3/8 67 3/8 .40
Second Quarter (through April 11, 1996)....................................... 58 3/4 63 3/4
</TABLE>
Dividends on the Common Stock of the Company are payable at the discretion
of the Company's Board of Directors out of funds legally available therefor.
Future dividend policy will depend on the Company's earnings, capital
requirements, financial condition and other factors considered relevant by the
Company's board of directors. The currently scheduled record date for the second
quarter dividend, if declared, is May 22, 1996.
8
<PAGE>
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as at
December 31, 1995, (ii) the capitalization as adjusted to reflect the
Acquisition and (iii) the capitalization as further adjusted to reflect the sale
pursuant to the Offerings of 7,000,000 shares of Common Stock and the
application of the net proceeds therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
----------------------------------------
AS FURTHER
ADJUSTED
ACTUAL AS ADJUSTED (A)
------------ ------------- -----------
($ IN MILLIONS)
<S> <C> <C> <C>
Notes payable to banks................................................. $ 65 $ 0 $ 0
Current portion of long-term debt (b).................................. 144 332 332
Long-term debt:
Bank term loans and revolving credit facility (c).................... 563 2,412(c) 2,012(c)
8 5/8% Notes due 2004................................................ 350 350 350
7% Notes due 2006.................................................... 400 400
7 3/4% Debentures due 2016........................................... 300 300
9 3/8% Debentures due 2024........................................... 250 250 250
7 7/8% Debentures due 2026........................................... 300 300
------ ------ -----------
Total long-term debt............................................... 1,163 4,012 3,612
------ ------ -----------
Total debt......................................................... 1,372 4,344 3,944
Shareholders' equity:
Preferred stock, 10,000,000 shares authorized; none issued...........
Common stock (d), 200,000,000 shares authorized; 49,462,615 shares
issued; 56,462,615 shares issued as further adjusted (e)............ 272 272 672
Retained earnings.................................................... 1,199 1,199 1,199
Unfunded pension losses, net of taxes................................ (12) (12) (12)
------ ------ -----------
Total shareholders' equity......................................... 1,459 1,459 1,859
------ ------ -----------
Total capitalization............................................. $ 2,831 $ 5,803 $ 5,803
------ ------ -----------
------ ------ -----------
</TABLE>
- ------------------------
(a) Assumes a public offering price of $59 per share, the closing price of the
Company's Common Stock on the NYSE on April 11, 1996.
(b)Includes $143 million of notes due 1999 redeemed in January 1996.
(c)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 $1
billion of institutionally placed notes and debentures, were utilized to
finance the Acquisition.
(d) Includes an equal number of Common Stock Purchase Rights. See "Description
of Capital Stock -- Common Stock Purchase Rights."
(e) Excludes 3,989,907 shares of Common Stock reserved for issuance pursuant to
outstanding options and rights granted under the Company's stock plans.
9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated financial data
for the Company for each of the periods indicated which have been derived from,
and are qualified by reference to, the audited consolidated financial statements
and notes thereto filed by the Company with the Commission which are
incorporated herein by reference. This data does not give effect to the
Acquisition. See also "Available Information," "Incorporation of Certain
Documents by Reference" and "Unaudited Pro Forma Condensed Combined Financial
Data."
<TABLE>
<CAPTION>
FOR FISCAL YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994(A) 1993 1992 1991
--------- --------- --------- --------- ---------
($ 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 principle 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
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>
- --------------------------
(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.
10
<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
adjustments to the unaudited pro forma financial statements do not give effect
to the proposed issuance of shares in the Offerings and the use of proceeds
therefrom. 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."
11
<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 $9,646
------- ------ ----------- ---------
------- ------ ----------- ---------
</TABLE>
12
<PAGE>
PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
NORTHROP PRO FORMA PRO FORMA
GRUMMAN ESG ADJUSTMENTS COMBINED
------- ------ ------------ ---------
($ IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <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.
13
<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.
14
<PAGE>
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.
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.
15
<PAGE>
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 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.
16
<PAGE>
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.
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
17
<PAGE>
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.
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.
18
<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Under the Company's Certificate of Incorporation, the total number of shares
of stock which the Company has authority to issue is 210,000,000, consisting of
200,000,000 shares of Common Stock, par value $1.00 per share, and 10,000,000
shares of Preferred Stock, $1.00 par value per share. As of April 5, 1996,
49,620,303 shares of Common Stock were issued and outstanding, not including
shares reserved for issuance under the Company's stock plans. No shares of
Preferred Stock were issued and outstanding on such date. The Common Stock is
listed on the New York Stock Exchange and the Pacific Stock Exchange.
PREFERRED STOCK
Under the Company's Certificate of Incorporation, the Board of Directors of
the Company is authorized, without further stockholder action, to provide for
the issuance of Preferred Stock in one or more series, with such designations of
titles, dividend rates, redemption provisions, special or relative rights in the
event of liquidation, dissolution, distribution or winding up of the Company,
sinking fund provisions, conversion provisions, voting rights, and any other
preferences, privileges, powers, rights, qualifications, limitations and
restrictions, as shall be set forth as and when established by the Board of
Directors of the Company.
DESCRIPTION OF COMMON STOCK
The holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor subject to restrictions on the declaration of dividends on
the Common Stock which may be imposed in connection with the issuance of shares
of any class or series of Preferred Stock. The Company's principle credit
agreement contains provisions restricting dividends and other distributions and
the purchase or redemption of shares of Common Stock under certain
circumstances. Except as otherwise provided by law, the holders of Common Stock
are entitled to one vote per share on all matters submitted to a vote of
stockholders and do not have cumulative voting rights. Holders of Common Stock
are entitled to receive, upon any liquidation of the Company, all remaining
assets available for distribution to stockholders after satisfaction of the
Company's liabilities and the preferential rights of any Preferred Stock that
may then be issued and outstanding. The outstanding shares of Common Stock are,
and the shares offered hereby will be, upon payment therefore by the purchasers
thereof, fully paid and nonassessable. The holders of Common Stock have no
preemptive, conversion or redemption rights. The registrar and transfer agent
for the Common Stock is Chemical Mellon Shareholders Services, L.L.C., New York.
COMMON STOCK PURCHASE RIGHTS
In 1988, the Company's Board of Directors authorized the distribution of one
Common Stock Purchase Right (a "Right") for each outstanding share of Common
Stock.
As distributed, the Rights trade together with the Common Stock. They may be
exercised or traded separately 10 business days after a person or group of
persons acquires 15% or more of the outstanding Common Stock, or announces the
intention to make a tender offer for 30% or more of the Company's outstanding
Common Stock. Upon exercise, each Right entitles the holder thereof to buy one
share of Common Stock at a price of $105. If a Person acquires 15% of the
outstanding voting power of the Company, each Right (other than those held by
the acquiror) will entitle its holder to purchase, at the Right's exercise
price, shares of Common Stock having a market value of two times the Right's
exercise price. Additionally, if the Company is acquired in a merger or other
business combination, each Right (other than those held by the surviving or
acquiring company) will entitle its holder to purchase, at the Right's exercise
price, shares of the acquiring company's common stock (or Common Stock of the
Company if it is the surviving corporation) having a market value of two times
the Right's exercise price.
Rights may be redeemed at the option of the Board of Directors for $.02 per
Right at any time prior to the earlier of the expiration of the Rights or within
10 days following the date that a person or persons acquire 15% of the general
voting power of the Company. The Board may amend the Rights at any time without
stockholder approval. The Rights will expire by their terms in October 1998.
19
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a holder of such stock that, for United States federal income tax
purposes, is not a "United States person" (a "Non-United States Holder"). This
discussion is not intended to be exhaustive and is based on statutes,
regulations, rulings and court decisions as currently in effect all of which may
be changed either retroactively or prospectively. This discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-United States Holder (including, for example, the fact that, in the case of
a Non-United States Holder that is a partnership, the U.S. tax consequences of
purchasing, holding and disposing of Common Stock may be affected by
determinations made both at the partnership and the partner level) and applies
only to Non-United States Holders that hold Common Stock as a capital asset.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
UNITED STATES FEDERAL TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF
COMMON STOCK (INCLUDING SUCH INVESTOR'S STATUS AS A UNITED STATES PERSON OR
NON-UNITED STATES HOLDER) AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER
THE LAWS OF ANY STATE, MUNICIPALITY OR OTHER TAXING JURISDICTION.
For purposes of this discussion, "United States person" means a citizen or
resident of the United States, a corporation or partnership created or organized
in the United States or under the laws of the United States or of any political
subdivision thereof, or an estate or trust whose income is includable in gross
income for United States federal income tax purposes regardless of its source.
An alien individual generally is treated as a United States person for any
calendar year if either (i) the individual is present in the United States 183
days or more during such calendar year or (ii) the individual is present in the
United States at least 31 days during such calendar year and the sum of the
number of days present during such calendar year, one-third the number of days
present during the first preceding year and one-sixth the number of days present
during the second preceding year is 183 or more.
DIVIDENDS
Dividends paid to a Non-United States Holder generally will be subject to
withholding of United States federal income tax at the rate of 30%, unless the
withholding rate is reduced under an applicable income tax treaty between the
United States and the country of tax residence of the Non-United States Holder.
No U.S. withholding will apply if the dividend is effectively connected with a
trade or business conducted within the United States by the Non-United States
Holder (or, alternatively, where an income tax treaty applies, if the dividend
is effectively connected with a permanent establishment maintained within the
United States by the Non-United States Holder), but, instead, the dividend will
be subject to the United States federal income tax on net income that applies to
United States persons (and, with respect to corporate holders, may also be
subject to the branch profits tax). A Non-United States Holder may be required
to satisfy certain certification requirements in order to claim treaty benefits
or to otherwise claim a reduction of or exemption from withholding under the
foregoing rules. A Non-United States Holder that is eligible for a reduced rate
of U.S. withholding tax pursuant to a tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund with
the United States Internal Revenue Service (the "Service").
GAIN ON DISPOSITION
Subject to special rules described below, a Non-United States Holder will
generally not be subject to United States federal income tax on gain recognized
on a sale or other disposition of Common Stock unless the gain is effectively
connected with a trade or business conducted within the United States by the
Non-United States Holder (or, alternatively, where an income tax treaty applies,
unless the gain is effectively connected with a permanent establishment
maintained within the United States by the Non-United States Holder). Any such
effectively connected gain would be subject to the United States federal income
tax on net income that applies to United States persons (and, with respect to
corporate holders, may also be subject to the branch profits tax). Such tax is
not collected by withholding.
20
<PAGE>
In addition, an individual Non-United States Holder who holds Common Stock
would generally be subject to tax at a 30% rate on any gain recognized on the
disposition of such Common Stock if such individual is present in the United
States for 183 days or more in the taxable year of disposition and either (i)
has a "tax home" in the United States (as specifically defined for purposes of
the United States federal income tax) or (ii) maintains an office or other fixed
place of business in the United States and the income from the sale of the stock
is attributable to such office or other fixed place of business. Individual Non-
United States Holders may also be subject to tax pursuant to provisions of
United States federal income tax law applicable to certain United States
expatriates.
Also, special rules apply to Non-United States Holders if the Company is or
becomes a "United States real property holding corporation" for United States
federal income tax purposes. The Company believes that it has not been, is not
currently, and is not likely to become, a United States real property holding
corporation. If the Company were a United States real property holding
corporation, gain or loss on a sale of the Common Stock by any Non-United States
Holder (other than, in most cases, a Non-United States Holder that owns or owned
(directly or constructively) 5% or less of the Common Stock during the five-year
period ending on the date of such sale) would be treated as income effectively
connected with the conduct of a trade or business within the United States by
the holder and subject to the net income tax described above.
UNITED STATES FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for United States federal estate tax purposes)
of the United States at the date of death, or Common Stock subject to certain
lifetime transfers made by such an individual, will be included in such
individual's estate for United States federal estate tax purposes and may be
subject to United States federal estate tax, unless an applicable estate tax
treaty provides otherwise. Estates of nonresident aliens are generally allowed a
credit that is equivalent to an exclusion of $60,000 of assets from the estate
for United States federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Service and to each Non-United
States Holder the amount of dividends paid to, and the tax withheld with respect
to, such holder, regardless of whether any tax was actually withheld. That
information may also be made available to the tax authorities of the country in
which a Non-United States Holder resides.
United States federal backup withholding tax (which, generally, is imposed
at the rate of 31% on certain payments to persons not otherwise exempt who fail
to furnish information required under United States information reporting
requirements) generally will not apply to dividends paid to a Non-United States
Holder either at an address outside the United States (provided that the payor
does not have actual knowledge that the payee is a United States person) or if
the dividends are subject to withholding at the 30% rate (or lower treaty rate).
As a general matter, information reporting and backup withholding also will not
apply to a payment of the proceeds of a sale of Common Stock by a foreign office
of a broker. However, information reporting requirements (but not backup
withholding) will apply to a payment of the proceeds of a sale of Common Stock
by a foreign office of a broker that is a United States person, or by a foreign
office of a foreign broker 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" as to the United States, unless the
broker has documentary evidence in its records that the holder is a Non-United
States Holder and certain conditions are met, or the holder otherwise
establishes an exemption. Payment by a United States office of a broker of the
proceeds of a sale of Common Stock is subject to both backup withholding and
information reporting unless the holder certifies as to its non-United States
status under penalties of perjury or otherwise establishes an exemption (and the
broker has no actual knowledge to the contrary.) The backup withholding tax is
not an additional tax and may be credited against the Non-United States Holder's
United States federal income tax liability or refunded to the extent excess
amounts are withheld, provided that the required information is supplied to the
Service.
21
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1996 (the "U.S. Underwriting Agreement"), the
underwriters named below (the "U.S. Underwriters"), for whom CS First Boston
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc are acting as representatives (the "Representatives"), have
severally but not jointly agreed to purchase from the Company the following
respective numbers of U.S. Shares:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITER U.S. SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
CS First Boston Corporation.....................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................................
Salomon Brothers Inc............................................................
------------
Total....................................................................... 5,950,000
------------
------------
</TABLE>
The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all of the U.S. Shares offered hereby
(other than those shares covered by the overallotment option described below) if
any are purchased. The U.S. Underwriting Agreement provides that, in the event
of a default by a U.S. Underwriter, in certain circumstances the purchase
commitments of non-defaulting U.S. Underwriters may be increased or the U.S.
Underwriting Agreement may be terminated.
The Company has entered into a Subscription Agreement (the "Subscription
Agreement") with the Managers of the International Offering (the "Managers")
providing for the concurrent offer and sale of the International Shares outside
the United States and Canada. The closing of the U.S. Offering is a condition to
the closing of the International Offering and vice versa.
The Company has granted to the U.S. Underwriters and the Managers an option,
exercisable by CS First Boston Corporation, expiring at the close of business on
the thirtieth (30th) day after the date of this Prospectus, to purchase up to
1,050,000 additional shares at the initial public offering price, less the
underwriting discounts or commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the Common Stock offered hereby. To the extent that this option to
purchase is exercised, each U.S. Underwriter and each Manager will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of additional shares being sold to the U.S. Underwriters and the
Managers as the number of U.S. Shares set forth next to such U.S. Underwriter's
name in the preceding table and as the number of International Shares set forth
next to such Manager's name in the corresponding table in the prospectus
relating to the International Offering bears to the sum of the total number of
shares of Common Stock in such tables.
The Company has been advised by the Representatives that the U.S.
Underwriters propose to offer the U.S. Shares to the public in the United States
and Canada initially at the offering price set forth on the cover page of this
Prospectus and, through the Representatives, to certain dealers at such price
less a concession of $ per share, and the U.S. Underwriters and such
dealers may allow a discount of $ per share on sales to certain other
dealers. After the initial public offering, the public offering price and
concession and discount to dealers may be changed by the Representatives.
The public offering price and the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and the concurrent International Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and the Managers (the
"Intersyndicate Agreement") relating to the Offerings, changes in the public
offering price, concession and discount to dealers will be made only upon mutual
agreement of CS First Boston Corporation, as representative of the U.S.
Underwriters, and CS First Boston Limited ("CSFBL") on behalf of the Managers.
22
<PAGE>
Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person outside the United States or Canada
or to any other dealer who does not so agree. Each of the Managers has agreed or
will agree that, as part of the distribution of the International Shares and
subject to certain exceptions, it has not offered or sold, and will not offer or
sell, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock in the United States or Canada or to any
dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the U.S. Underwriters and
the Managers pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories, possessions and other areas subject to
its jurisdiction, "Canada" means Canada, its provinces, territories, possessions
and other areas subject to its jurisdiction, and an offer or sale shall be in
the United States or Canada if it is made to (i) any individual resident of the
United States or Canada or (ii) any corporation, partnership, pension,
profit-sharing or other trust or other entity (including any such entity acting
as an investment advisor with discretionary authority) whose office most
directly involved with the purchase is located in the United States or Canada.
Pursuant to the Intersyndicate Agreement, sales may be made between the U.S.
Underwriters and the Managers of such number of shares of Common Stock as may be
mutually agreed upon. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by CS First
Boston Corporation, as representative of the U.S. Underwriters, and CSFBL, on
behalf of the Managers, but such amount will not exceed the selling concession
applicable to such shares. To the extent there are sales between the U.S.
Underwriters and the Managers pursuant to the Intersyndicate Agreement, the
number of shares of Common Stock initially available for sale by the U.S.
Underwriters or by the Managers may be more or less than the amount appearing on
the cover page of this Prospectus. Neither the U.S. Underwriters nor the
Managers are obligated to purchase from the other any unsold shares of Common
Stock.
The Company has agreed that it will not offer, sell, contract to sell,
announce, its intention to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933 (the "Securities Act") relating to,
any additional shares of its Common Stock or securities convertible into or
exchangeable or exercisable for any shares of its Common Stock without the prior
written consent of CS First Boston Corporation for a period of 90 days after the
date of this Prospectus, except for issuances and sales of shares of Common
Stock in accordance with the terms of any employee or director stock option
plan, stock ownership plan, stock bonus plan, stock compensation plan or
dividend reinvestment plan of the Company as in effect on the date of this
Prospectus.
The Company has agreed to indemnify the U.S. Underwriters and the Managers
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the U.S. Underwriters and the Managers
may be required to make in respect thereof.
Certain of the U.S. Underwriters and Managers and their affiliates have from
time to time performed, and continue to perform, various investment banking and
commercial banking services for the Company, for which customary compensation
has been received.
23
<PAGE>
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the Common Stock are effected. Accordingly, any resale of the
Common Stock in Canada must be made in accordance with applicable securities
laws which will vary depending on the relevant jurisdiction, and which may
require resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the Common Stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Common Stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
shares of Common Stock acquired by such purchaser pursuant to this Offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #95/17, a copy of which may be obtained from the
Company. Only one such report must be filed in respect of shares of Common Stock
acquired on the same date and under the same prospectus exemption.
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.
24
<PAGE>
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock and certain other
legal matters related to the Offerings will be passed upon for the Company by
Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, California. Latham &
Watkins, Los Angeles, California, will pass on certain legal matters for the
U.S. Underwriters and Managers.
25
<PAGE>
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR MANAGER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Forward Looking Statements..................... 2
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 3
Prospectus Summary............................. 4
Use of Proceeds................................ 8
Price Range of Common Stock and Dividends...... 8
Capitalization................................. 9
Selected Consolidated Financial Data........... 10
Unaudited Pro Forma Condensed Combined
Financial Data................................ 11
The Company.................................... 14
Description of Capital Stock................... 19
Certain United States Federal Tax Consequences
For Non-United States Holders................. 20
Underwriting................................... 22
Notice to Canadian Residents................... 24
Experts........................................ 24
Legal Matters.................................. 25
</TABLE>
NORTHROP GRUMMAN
7,000,000 Shares
Common Stock
($1.00 PAR VALUE)
P R O S P E C T U S
CS First Boston
Merrill Lynch & Co.
Salomon Brothers Inc
- -------------------------------------------
-------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 12, 1996
7,000,000 Shares
NORTHROP GRUMMAN
Common Stock
($1.00 PAR VALUE)
--------------
ALL OF THE SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE ("COMMON STOCK"),
OF NORTHROP GRUMMAN CORPORATION (THE "COMPANY") OFFERED HEREBY ARE BEING SOLD
BY THE COMPANY. OF THE 7,000,000 SHARES OF COMMON STOCK BEING OFFERED,
1,050,000 SHARES ARE INITIALLY BEING OFFERED OUTSIDE THE UNITED STATES AND
CANADA (THE "INTERNATIONAL SHARES") BY THE MANAGERS (THE "INTERNATIONAL
OFFERING") AND 5,950,000 SHARES ARE INITIALLY BEING CONCURRENTLY
OFFERED IN THE UNITED STATES AND CANADA (THE "U.S. SHARES") BY THE
U.S. UNDERWRITERS (THE "U.S. OFFERING" AND, TOGETHER WITH THE
INTERNATIONAL OFFERING, THE "OFFERINGS"). THE OFFERING PRICE AND
UNDERWRITING DISCOUNTS AND COMMISSIONS OF THE INTERNATIONAL
OFFERING AND THE U.S. OFFERING ARE IDENTICAL.
THE COMMON STOCK OF THE COMPANY IS LISTED ON THE NEW YORK STOCK EXCHANGE (THE
"NYSE") AND THE PACIFIC STOCK EXCHANGE UNDER THE SYMBOL "NOC." ON APRIL 11,
1996, THE LAST REPORTED SALE PRICE OF THE COMMON STOCK ON THE NYSE
WAS $59. SEE "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
--------------
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 OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
----------------- ----------------- -----------------
<S> <C> <C> <C>
PER SHARE............................................. $ $ $
TOTAL (2)............................................. $ $ $
</TABLE>
(1) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY, ESTIMATED AT $700,000.
(2) THE COMPANY HAS GRANTED THE MANAGERS AND THE U.S. UNDERWRITERS AN OPTION,
EXERCISABLE BY CS FIRST BOSTON CORPORATION FOR THIRTY (30) DAYS FROM THE
DATE OF THIS PROSPECTUS TO PURCHASE A MAXIMUM OF 1,050,000 ADDITIONAL SHARES
TO COVER OVER-ALLOTMENTS OF SHARES. IF THE OPTION IS EXERCISED IN FULL, THE
TOTAL PRICE TO PUBLIC WILL BE $ , UNDERWRITING DISCOUNTS AND
COMMISSIONS WILL BE $ AND PROCEEDS TO COMPANY WILL BE $ .
THE INTERNATIONAL SHARES ARE OFFERED BY THE SEVERAL MANAGERS WHEN, AS AND IF
ISSUED BY THE COMPANY, DELIVERED TO AND ACCEPTED BY THE MANAGERS AND SUBJECT TO
THEIR RIGHT TO REJECT ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT THE
INTERNATIONAL SHARES WILL BE READY FOR DELIVERY ON OR ABOUT MAY , 1996,
AGAINST PAYMENT IN IMMEDIATELY AVAILABLE FUNDS.
CS First Boston
Merrill Lynch International
Salomon Brothers International Limited
THE DATE OF THIS PROSPECTUS IS MAY , 1996.
<PAGE>
IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE PACIFIC STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK OF THE COMPANY PURSUANT TO EXEMPTIONS
CONTAINED IN RULES 10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF
1934.
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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Forward Looking Statements..................... 2
Available Information.......................... 3
Incorporation of Certain Documents by
Reference..................................... 3
Prospectus Summary............................. 4
Use of Proceeds................................ 8
Price Range of Common Stock and Dividends...... 8
Capitalization................................. 9
Selected Consolidated Financial Data........... 10
<CAPTION>
PAGE
-----
<S> <C>
Unaudited Pro Forma Condensed Combined
Financial Data................................ 11
The Company.................................... 14
Description of Capital Stock................... 19
Certain United States Federal Tax Consequences
For Non-United States Holders................. 20
Subscription and Sale.......................... 22
Experts........................................ 24
Legal Matters.................................. 25
</TABLE>
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copies may be obtained at
the principal office of the Commission at 450 Fifth Street, N.W, Washington,
D.C. 20549, and at the following regional offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W, Washington, D.C. 20549, at prescribed
rates. Reports, proxy statements and other information concerning the Company
can also 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.
The Company has filed with the Commission a Registration Statement (herein,
together with all amendments thereto, called the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities offered hereby. This Prospectus does not contain all of the
information included in the Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents of
any contract or other document referred to herein and filed as an exhibit to the
Registration Statement are not necessarily complete, and, in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information with respect to the
Company and the securities being offered hereby, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed with the Commission, pursuant to Section 13 of the
Exchange Act:
(i) an Annual Report on Form 10-K for the year ended December 31, 1995;
(ii) a Current Report on Form 8-K filed March 18, 1996;
(iii) a description of the Common Stock of the Company set forth in a
Registration Statement on Form 8-B dated June 20, 1985; and
(iv) a description of the Common Stock Purchase Rights of the Company
set forth in a Registration Statement on Form 8-A filed September 22, 1988,
as amended on Form 8 filed August 2, 1991, as further amended on Form 8-A/A
filed October 7, 1994;
which are hereby incorporated by reference in and made a part of this
Prospectus.
All documents hereafter filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in and to
be a part of this Prospectus from the date of filing of such documents. Any
statement contained in a document incorporated by reference or deemed to be
incorporated herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein
or in any other 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.
In this Prospectus, references to "dollars" and "$" are to United States
dollars.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR
ORAL REQUEST DIRECTED TO: JAMES C. JOHNSON, CORPORATE VICE PRESIDENT AND
SECRETARY, NORTHROP GRUMMAN CORPORATION, 1840 CENTURY PARK EAST, LOS
ANGELES, CALIFORNIA 90067 (TELEPHONE: (310) 553-6262).
3
<PAGE>
SUBSCRIPTION AND SALE
The Institutions named below (the "Managers"), have, pursuant to a
Subscription Agreement dated , 1996 (the "Subscription Agreement"),
severally but not jointly agreed to subscribe and pay for, the following
respective numbers of International Shares as set forth opposite their names:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL
MANAGER SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
CS First Boston Limited
Merrill Lynch International
Salomon Brothers International Limited
------------
Total 1,050,000
------------
------------
</TABLE>
The Subscription Agreement provides that the obligations of the Managers are
such that, subject to certain conditions precedent, the Managers will be
obligated to purchase all of the International Shares offered hereby (other than
those shares covered by the over allotment option described below) if any are
purchased. The Subscription Agreement provides that, in the event of a default
by a Manager, in certain circumstances the purchase commitments of
non-defaulting Managers may be increased or the Subscription Agreement may be
terminated.
The Company has entered into an Underwriting Agreement (the "Underwriting
Agreement") with the U.S. Underwriters of the U.S. Offering (the "U.S.
Underwriters") providing for the concurrent offer and sale of the U.S. Shares in
the United States and Canada. The closing of the U.S. Offering is a condition to
the closing of the International Offering and vice versa.
The Company has granted to the Managers and the U.S. Underwriters an option,
exercisable by CS First Boston Corporation, expiring at the close of business on
the thirtieth (30th) day after the date of this Prospectus, to purchase up to
1,050,000 additional shares, at the initial public offering price, less the
underwriting discounts or commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the shares of Common Stock offered hereby. To the extent that this
option to purchase is exercised, each Manager and U.S. Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of additional shares being sold to the Managers and the U.S.
Underwriters as the number of International Shares set forth next to such
Manager's name in the preceding table and as the number of U.S. Shares set forth
next to such U.S. Underwriter's name in the corresponding table in the
prospectus relating to the U.S. Offering bears to the sum of the total number of
shares of Common Stock in such tables.
The Company has been advised by CS First Boston Limited ("CSFBL"), on behalf
of the Managers, that the Managers propose to offer the International Shares
outside the United States and Canada initially at the public offering price set
forth on the cover page of this Prospectus and, through the Managers, to certain
dealers at such price less a commission of $ per share, and the Managers
and such dealers may allow a commission of $ per share on sales to
certain other dealers. After the initial public offering, the public offering
price and commission and reallowance may be changed by the Managers.
The offering price and the aggregate underwriting discounts and commissions
per share and per share commission and reallowance to dealers for the
International Offering and the concurrent U.S. Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and the Managers (the
"Intersyndicate Agreement") relating to the Offerings, changes in the offering
price, the aggregate Underwriting discounts and commissions per share and per
share commission and reallowance to dealers, will be made only upon mutual
agreement of CSFBL, on behalf of the Managers, and CS First Boston Corporation
on behalf of the U.S. Underwriters.
<PAGE>
Pursuant to the Intersyndicate Agreement, each of the Managers has agreed
that, as part of the distribution of the International Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person in the United States or Canada or to
any other dealer who does not so agree. Each of the U.S. Underwriters has agreed
that, as part of the distribution of the U.S. Shares and subject to certain
exceptions, it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares of Common Stock or distribute any prospectus relating to
the Common Stock to any person outside the United States or Canada or to any
dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the Managers and the U.S.
Underwriters pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories and possessions and other areas subject
to its jurisdiction, "Canada" means Canada, its provinces, territories and
possessions and other areas subject to its jurisdiction, and an offer or sale
shall be in the United States or Canada if it is made to (i) any individual
resident of the United States or Canada or (ii) any corporation, partnership,
pension, profit-sharing or other trust or other entity (including any such
entity acting as an investment advisor with discretionary authority) whose
office most directly involved with the purchase is located in the United States
or Canada.
Pursuant to the Intersyndicate Agreement, sales may be made between the
Managers and the U.S. Underwriters of such number of shares of Common Stock as
may be mutually agreed upon. The price of any shares of Common Stock so sold
will be the public offering price less such amount agreed upon by CSFBL, on
behalf of the Managers, and C.S. First Boston Corporation, as representative of
the U.S. Underwriters, but such amount will not exceed the selling concession
applicable to such shares. To the extent there are sales between the Managers
and the U.S. Underwriters pursuant to the Intersyndicate Agreement, the number
of shares of Common Stock initially available for sale by the Managers or by the
U.S. Underwriters may be more or less than the amount appearing on the cover
page of this Prospectus. Neither the Managers nor the U.S. Underwriters are
obligated to purchase from the other any unsold shares of Common Stock.
Each of the Managers and the U.S. Underwriters severally represents and
agrees that (1) it has not offered or sold, and will not offer or sell, in the
United Kingdom, by means of any document, any shares of Common Stock other than
to persons whose ordinary business it is to buy or sell shares or debentures,
whether as a principal or agent, or in circumstances which do not constitute an
offer to the public within the meaning of the Companies Act 1985, (2) it has
complied and will comply with all applicable provisions of the Financial
Services Act of 1986 with respect to anything done by it in relation to any
shares of Common Stock in, from or otherwise involving the United Kingdom, and
(3) it has only issued or passed on and will only issue or pass on to any person
in the United Kingdom any document received by it in connection with the issue
of any shares of Common Stock if the person is of a kind described in Article
9(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1988 or is a person to whom the document may otherwise lawfully be issued
or passed on.
The Company has agreed that it will not offer, sell, contract to sell,
announce its intention to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933 (the "Securities Act") relating to,
any additional shares of its Common Stock or securities convertible into or
exchangeable or exercisable for any shares of its Common Stock without the prior
written consent of CS First Boston Corporation for a period of 90 days after the
date of this Prospectus, except for issuances and sales of shares of Common
Stock in accordance with the terms of any employee or director stock option
plan, stock ownership plan, stock bonus plan, stock compensation plan or
dividend reinvestment plan of the Company as in effect on the date of this
Prospectus.
The Company has agreed to indemnify the Managers and the U.S. Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the Managers and the U.S. Underwriters
may be required to make in respect thereof.
Certain of the Managers and U.S. Underwriters and their affiliates have from
time to time performed, and continue to perform, various investment banking and
commercial banking services for the Company, for which customary compensation
has been received.
<PAGE>
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 issuance of the shares of Common Stock and certain other
legal matters related to the Offerings will be passed upon for the Company by
Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, California. Latham &
Watkins, Los Angeles, California, will pass on certain legal matters for the
U.S. Underwriters and Managers.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
An itemized statement of the estimated amount of the expenses, other than
underwriting discounts and commissions, incurred and to be incurred by the
Company in connection with the issuance and distribution of the Securities
registered pursuant to this registration statement is as follows:
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 164,470
Printing and engraving expenses................................... *
Accounting fees and expenses...................................... *
Legal fees and expenses........................................... *
Listing fees...................................................... *
Blue sky fees and expenses and legal fees......................... *
Miscellaneous..................................................... *
---------
Total......................................................... $ *
---------
---------
</TABLE>
- ------------------------
* To be provided by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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.
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
II-1
<PAGE>
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 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. Reference is made to the forms of Underwriting Agreement and
Subscription Agreement filed as Exhibits 1.1 and 1.2, respectively, to this
Registration Statement for certain provisions regarding the indemnification of
officers and directors of the Company by the U.S. Underwriters and Managers.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
1.2 Form of Subscription Agreement
3.1 Certificate of Incorporation, as amended (incorporated by reference
to Form S-3 Registration Statement, Registration No. 33-55143)
3.2 Bylaws, as amended (incorporated by reference to Form S-3
Registration Statement, Registration No. 33-55143)
4.1 Common Stock Purchase Rights Plan (incorporated by reference to Form
8-A filed September 22, 1988, amended on August 2, 1991
(incorporated by reference to Form 8 filed August 2, 1991) and
amended on September 28, 1994 (incorporated by reference to Form
8-A/A filed October 7, 1994)
4.2 Amended and Restated Credit Agreement dated March 1, 1996
(incorporated by reference to Form 8-K filed March 18, 1996)
4.3 Form of Certificate for Common Stock (incorporated by reference to
Form S-3 Registration Statement, Registration No. 33-55143)
5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP
23.1 Consent of Deloitte & Touche LLP, independent auditors
23.2 Consent of Price Waterhouse LLP, independent accountants
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
23.3 Consent of Sheppard, Mullin, Richter & Hampton LLP (included in
Exhibit 5.1)
24.1 Power of Attorney
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(a) for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) 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;
(b) insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 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;
(c) for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and
(d) for purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, California on April 11, 1996.
NORTHROP GRUMMAN CORPORATION
By: 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 dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---------------------------- ------------------------ ------------------
<S> <C> <C> <C>
Chairman of the Board,
KENT KRESA* President and Chief
- ---------------------------------- Executive Officer and April 11, 1996
Kent Kresa Director (Principal
Executive Officer)
RICHARD B. WAUGH, JR.* Corporate Vice President
- ---------------------------------- and Chief Financial April 11, 1996
Richard B. Waugh, Jr. Officer
Corporate Vice President
NELSON F. GIBBS* and Controller
- ---------------------------------- (Principal Accounting April 11, 1996
Nelson F. Gibbs Officer)
JACK R. BORSTING*
- ---------------------------------- Director April 11, 1996
Jack R. Borsting
JOHN T. CHAIN, JR.*
- ---------------------------------- Director April 11, 1996
John T. Chain, Jr.
JACK EDWARDS*
- ---------------------------------- Director April 11, 1996
Jack Edwards
PHILIP FROST*
- ---------------------------------- Director April 11, 1996
Philip Frost
AULANA L. PETERS*
- ---------------------------------- Director April 11, 1996
Aulana L. Peters
JOHN E. ROBSON*
- ---------------------------------- Director April 11, 1996
John E. Robson
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
---------------------------- ------------------------ ------------------
<S> <C> <C> <C>
RICHARD M. ROSENBERG*
- ---------------------------------- Director April 11, 1996
Richard M. Rosenberg
- ---------------------------------- Director
Brent Scowcroft
JOHN BROOKS SLAUGHTER*
- ---------------------------------- Director April 11, 1996
John Brooks Slaughter
WALLACE C. SOLBERG*
- ---------------------------------- Director April 11, 1996
Wallace C. Solberg
RICHARD J. STEGEMEIER*
- ---------------------------------- Director April 11, 1996
Richard J. Stegemeier
*By: JAMES C. JOHNSON
----------------------------
James C. Johnson
ATTORNEY-IN-FACT**
</TABLE>
- ------------------------
** By authority of power of attorney filed with this registration statement.
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement........................................
1.2 Form of Subscription Agreement........................................
3.1 Certificate of Incorporation, as amended (incorporated by reference to
Form S-3 Registration Statement, Registration No. 33-55143)..........
3.2 Bylaws, as amended (incorporated by reference to Form S-3 Registration
Statement, Registration No. 33-55143)................................
4.1 Common Stock Purchase Rights Plan (incorporated by reference to Form
8-A filed September 22, 1988, amended on August 2, 1991 (incorporated
by reference to Form 8 filed August 2, 1991) and amended on September
28, 1994 (incorporated by reference to Form 8-A/A filed October 7,
1994)................................................................
4.2 Amended and Restated Credit Agreement dated March 1, 1996
(incorporated by reference to Form 8-K filed March 18, 1996).........
4.3 Form of Certificate for Common Stock (incorporated by reference to
Form S-3 Registration Statement, Registration No. 33-55143)..........
5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP
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.....................................................
</TABLE>
<PAGE>
EXHIBIT 1.1
DRAFT OF APRIL 8, 1996
____________ SHARES
NORTHROP GRUMMAN CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
NEW YORK, NEW YORK
MAY __, 1996
CS FIRST BOSTON CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC,
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation,
Park Avenue Plaza,
New York, N.Y. 10055.
Dear Sirs:
1. INTRODUCTORY. Northrop Grumman Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell (the "U.S. Offering") to the several
Underwriters named in Schedule A hereto (the "Underwriters") ____________ shares
(the "U.S. Firm Securities") of its common stock, $1.00 par value (the
"Securities").
It is understood that the Company is concurrently entering into a
Subscription Agreement, dated the date hereof (the "Subscription Agreement"),
with CS First Boston Limited ("CSFBL"), Merrill Lynch International Limited and
Salomon Brothers International Limited, and the other managers named therein
(the "Managers") relating to the concurrent offering and sale of _________
shares of Securities (the "International Firm Securities") outside the United
States and Canada (the "International Offering").
In addition, as set forth below, the Company proposes to issue and sell (i)
to the Underwriters, at the option of the Underwriters, an aggregate of not more
than ______ additional shares of Securities (the "U.S. Optional Securities") and
(ii) to the Managers, at the option of the Managers, an aggregate of not more
than ____________ additional shares of Securities (the "International Optional
Securities"). The U.S. Firm Securities and the U.S. Optional Securities are
hereinafter called the "U.S. Securities"; the International Firm Securities and
the International Optional Securities are hereinafter called the "International
Securities"; the U.S. Firm Securities and the International Firm Securities are
hereinafter called the "Firm Securities"; the U.S. Optional Securities and the
International Optional Securities are hereinafter called the "Optional
Securities." The U.S. Securities and the International Securities are
collectively referred to as the "Offered Securities."
The Company hereby agrees with the several Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Underwriters that:
Exhibit 1.1
<PAGE>
(a) A registration statement (No. 333-_______) relating to the
Offered Securities, including a form of prospectus relating to the U.S.
Securities and a form of prospectus relating to the International
Securities being offered in the International Offering, has been filed
with the Securities and Exchange Commission (the "Commission") and either
(i) has been declared effective under the Securities Act of 1933 (the
"Act") and is not proposed to be amended or (ii) is proposed to be
amended by amendment or post-effective amendment. If such registration
statement (the "initial registration statement") has been declared
effective, either (A) an additional registration statement (the
"additional registration statement") relating to the Offered Securities
may have been filed with the Commission pursuant to Rule 462(b)
("Rule 462(b)") under the Act and, if so filed, has become effective
upon filing pursuant to such Rule and the Offered Securities all have
been duly registered under the Act pursuant to the initial registration
statement and, if applicable, the additional registration statement or
(B) such an additional registration statement is proposed to be filed
with the Commission pursuant to Rule 462(b) and will become effective
upon filing pursuant to such Rule and upon such filing the Offered
Securities will all have been duly registered under the Act pursuant
to the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (i) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all material incorporated by
reference therein, including all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all information (if any) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter
referred to as the "Initial Registration Statement." The additional
registration statement, as amended at its Effective Time, including the
contents of the Initial Registration Statement incorporated by reference
therein and including all information (if any) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement." The Initial Registration Statement and the Additional
Registration Statement are hereinafter
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referred to collectively as the "Registration Statements" and individually
as a "Registration Statement." The form of prospectus relating to the U.S.
Securities and the form of prospectus relating to the International
Securities, each as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in the Registration Statement, including
all material incorporated by reference in each such prospectus, are
hereinafter referred to as the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively as the "Prospectuses." No
document has been or will be prepared or distributed in reliance on
Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all respects to the requirements of the
Act and the rules and regulations of the Commission (the "Rules and
Regulations") and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not include,
or will not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
(iii) on the date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration Statement is
prior to the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of each of
the Prospectuses pursuant to Rule 424(b) or (if no such filing is required)
at the Effective Date of the Additional Registration Statement in which the
Prospectuses are included, each Registration Statement and each of the
Prospectuses will conform, in all respects to the requirements of the Act
and the Rules and Regulations, and none of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and each of the Prospectuses
will conform in all respects to the requirements of the Act and the Rules
and Regulations, none of such documents will include any untrue statement
of a material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
and no Additional Registration Statement has been or will be filed. The
two preceding sentences do not apply to statements in or omissions from a
Registration Statement or either of the Prospectuses based upon written
information furnished to the Company by any Underwriter through the
Representatives or by any Manager through CSFBL specifically for use
therein, it being understood and agreed that the only such information is
that described as such in Section 7(b).
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the state of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectuses; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the properties, business, results of
operations, condition (financial or otherwise), affairs or prospects of the
Company and its significant
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subsidiaries listed on Schedule B hereto (each a "Subsidiary" and,
collectively, the "Subsidiaries"), taken as a whole (a "Material Adverse
Effect").
(d) Each Subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectuses;
and each Subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where such failure would not, individually or in
the aggregate, have a Material Adverse Effect; all of the issued and
outstanding capital stock of each Subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock of each Subsidiary owned by the Company, directly or through
Subsidiaries, is owned free from liens, encumbrances and defects.
(e) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Offered Securities have
been delivered and paid for in accordance with this Agreement and the
Subscription Agreement on each Closing Date (as defined below), such
Offered Securities will have been, validly issued, fully paid and
nonassessable and will conform to the description thereof contained in the
Prospectuses; and the stockholders of the Company have no preemptive rights
with respect to the Securities.
(f) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter or
Manager for a brokerage commission, finder's fee or other like payment.
(g) Other than the Registration Rights Agreement, dated as of March 1,
1996 (the "Registration Rights Agreement"), by and among the Company, the
Representatives and J.P. Morgan Securities Inc. related to the Company's 7%
Notes Due 2006, 7 1/2% Debentures Due 2016 and 7 3/4% Debentures Due 2026,
there are no contracts, agreements or understandings between the Company
and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities
of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to
a Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under the Act.
(h) The Offered Securities have been approved for listing on The New
York Stock Exchange and the Pacific Stock Exchange subject to notice of
issuance.
(i) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body, including, without limitation, the United
States Department of Defense, or any court is required for the consummation
of the transactions contemplated by this Agreement or the Subscription
Agreement in connection with the issuance and sale of the Offered
Securities by the Company, except such as have been obtained and made under
the Act and such as may be required under state securities laws.
(j) The execution, delivery and performance of this Agreement and the
Subscription Agreement, and the issuance and sale of the Offered Securities
will not result in a breach or
4
<PAGE>
violation of any of the terms and provisions of, or constitute a default
under, (i) any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over
the Company or any Subsidiary of the Company or any of their properties, or
any agreement or instrument to which the Company or any such Subsidiary is
a party or by which the Company or any such Subsidiary is bound or to which
any of the properties of the Company or any such Subsidiary is subject,
except for any such breach, violation or default which would not have a
Material Adverse Effect, or (ii) the charter or bylaws of the Company or
any such Subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement and the Subscription Agreement, respectively.
(k) This Agreement and the Subscription Agreement have been duly
authorized, executed and delivered by the Company.
(l) Except as disclosed in the Prospectuses, the Company and its
Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectuses, the Company and its Subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made
or to be made thereof by them.
(m) The Company and its Subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(n) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(o) The Company and its Subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(p) Except as disclosed in the Prospectuses, neither the Company nor
any of its Subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a
5
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Material Adverse Effect; and the Company is not aware of any pending
investigation which might lead to such a claim.
(q) Except as disclosed in the Prospectuses, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
Subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or
in the aggregate have a Material Adverse Effect or would materially and
adversely affect the ability of the Company to perform its obligations
under this Agreement or the Subscription Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(r) The financial statements included in each Registration Statement
and the Prospectuses present fairly the financial position of the Company
and its consolidated subsidiaries as of the dates shown and their results
of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
the schedules included in each Registration Statement present fairly the
information required to be stated therein; and the assumptions used in
preparing the pro forma financial statements included in each Registration
Statement and the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(s) Except as disclosed in the Prospectuses, since the date of the
latest audited financial statements included in the Prospectuses there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
Subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectuses, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(t) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(u) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of U.S. $_______ per share, the respective
numbers of shares of U.S. Firm Securities set forth opposite the names of the
Underwriters in Schedule A hereto.
The Company will deliver the U.S. Firm Securities to the Representatives
for the accounts of the Underwriters, at the office of CS First Boston
Corporation, Park Avenue Plaza, New York, NY
6
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10055, against payment of the purchase price in funds available on the same day
by wire transfer to the account of the Company at a bank acceptable to CSFBC or
by official Federal Reserve Bank check or checks drawn to the order of the
Company at the office of Latham & Watkins, 633 W. Fifth Street, Suite 4000, Los
Angeles, CA 90071-2007, at 10:00 A.M., New York time, on May __, 1996, or at
such other time not later than seven full business days thereafter as CS First
Boston Corporation ("CSFBC") and the Company determine, such time being herein
referred to as the "First Closing Date." For purposes of Rule 15c6-1 under the
Securities Exchange Act of 1934, the First Closing Date (if later than the
otherwise applicable settlement date) shall be the settlement date for payment
of funds and delivery of securities for all the Offered Securities sold pursuant
to the U.S. Offering and the International Offering. The certificates for the
U.S. Firm Securities evidencing the U.S. Firm Securities so to be delivered will
be in definitive form, in such denominations and registered in such names as
CSFBC requests and will be made available for checking and packaging at the
office of CSFBC, at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectuses, the
Underwriters may purchase all or less than all of the U.S. Optional Securities
at the purchase price per Security to be paid for the U.S. Firm Securities. The
U.S. Optional Securities to be purchased by the Underwriters on any Optional
Closing Date shall be in the same proportion to all the Optional Securities to
be purchased by the Underwriters and the Managers on such Optional Closing Date
as the U.S. Firm Securities bear to all the Firm Securities. The Company agrees
to sell to the Underwriters such U.S. Optional Securities and the Underwriters
agree, severally and not jointly, to purchase such U.S. Optional Securities.
Such U.S. Optional Securities shall be purchased for the account of each
Underwriter in the same proportion as the number of shares of U.S. Firm
Securities set forth opposite such Underwriter's name bears to the total number
of shares of U.S. Firm Securities (subject to adjustment by CSFBC to eliminate
fractions) and may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the U.S. Firm
Securities. No Optional Securities shall be sold or delivered unless the U.S.
Firm Securities and the International Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC on behalf of Underwriters and the Managers to the Company.
It is understood that CSFBC is authorized to make payment for and accept
delivery of such Optional Securities on behalf of the Underwriters and Managers
pursuant to the terms of CSFBC's instructions to the Company.
Each time for the delivery of and payment for the U.S. Optional Securities,
being herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
U.S. Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, at the office of
CSFBC, against payment of the purchase price in funds available on the same day
by wire transfer to the account of the Company at a bank acceptable to CSFBC or
by official Federal Reserve Bank check or checks drawn to the order of the
Company, at the office of Latham & Watkins, 633 W. Fifth Street, Suite 4000, Los
Angeles, CA 90071-2007. The certificates for the U.S. Optional Securities will
be in definitive fully registered form, in such denominations and registered in
such names as CSFBC requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the office
of CSFBC, at a reasonable time in advance of such Optional Closing Date.
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4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the U.S. Securities for sale to the public as set
forth in the U.S. Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file each of the Prospectuses with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to by
CSFBC, subparagraph (4)) of Rule 424(b) not later than the earlier of (A)
the second business day following the execution and delivery of this
Agreement or (B) the fifteenth business day after the Effective Date of the
Initial Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as
of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b)
on or prior to 10:00 P.M., New York time, on the date of this Agreement or,
if earlier, on or prior to the time either Prospectus is printed and
distributed to any Underwriter or Manager, or will make such filing at such
later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or either of the related prospectuses or the Initial Registration
Statement, the Additional Registration Statement (if any) or either of the
Prospectuses and will not effect such amendment or supplementation without
CSFBC's prior consent; and the Company will also advise CSFBC promptly of
the effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any
amendment or supplementation of a Registration Statement or either of the
Prospectuses and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter, Manager or dealer, any event occurs as a result
of which either or both of the Prospectuses as then amended or supplemented
would include 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, or if it is
necessary at any time to amend either or both of the Prospectuses to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent to,
nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering
8
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a period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the fourth fiscal
quarter following the fiscal quarter that includes such Effective Date,
except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "Availability Date" means the 90th day after the end
of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of the
Registration Statement (four of which will be signed and will include all
exhibits), each preliminary prospectus relating to the U.S. Securities,
and, so long as delivery of a prospectus relating to the Offered Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, the U.S. Prospectus and all amendments and
supplements to such documents, in each case in such quantities as CSFBC
requests. The U.S. Prospectus shall be so furnished on or prior to 3:00
P.M., New York time, on the business day following the later of the
execution and delivery of this Agreement or the Effective Time of the
Initial Registration Statement. All other such documents shall be so
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions in the
United States as CSFBC designates and will continue such qualifications in
effect so long as required for the distribution.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or mailed to stockholders, and (ii) from time to time,
such other information concerning the Company as CSFBC may reasonably
request.
(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Underwriters
(if and to the extent incurred by them) for any filing fees and other
expenses (including fees and disbursements of counsel) incurred by them in
connection with qualification of the Offered Securities for sale under the
laws of such jurisdictions in the United States as CSFBC designates and the
printing of memoranda relating thereto, for the filing fee of the National
Association of Securities Dealers, Inc. relating to the Offered Securities,
for any travel expenses of the Company's officers and employees and any
other expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities and for
expenses incurred in distributing preliminary prospectuses and the
Prospectuses (including any amendments and supplements thereto) to the
Underwriters.
(i) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act relating
to, any additional shares of its Securities or securities convertible into
or exchangeable or exercisable for any shares of its Securities, or
publicly disclose the intention to make any such offer, sale, pledge,
disposal or filing, without the prior written consent of CSFBC, except
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issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, grants of employee
stock options pursuant to the terms of a plan in effect on the date hereof,
issuances of Securities pursuant to the exercise of such options or
issuances of Securities pursuant to the Company's dividend reinvestment
plan.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the U.S. Firm Securities on the
First Closing Date and the U.S. Optional Securities to be purchased on each
Optional Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of Deloitte & Touche LLP
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements and schedules and
summary of earnings examined by them and included in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements, if any, included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements and summary of
earnings, if any, included in the Registration Statements do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations or any material modifications should be
made to such unaudited financial statements and summary of
earnings for them to be in conformity with generally accepted
accounting principles;
(B) the unaudited consolidated net sales, net income and
net income per share amounts for the interim periods included in
the Prospectuses, if any, do not agree with the amounts set forth
in the unaudited consolidated financial statements for those same
periods or were not determined on a basis
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substantially consistent with that of the corresponding amounts
in the audited statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than five days prior to the date of this Agreement, there was any
change in the capital stock or any increase in short-term
indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest available
balance sheet read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in the
Prospectuses; or
(D) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year and with the period of corresponding
length ended the date of the latest income statement included in
the Prospectuses, in consolidated net sales or in the total or
per share amounts of consolidated income before extraordinary
items or net income,
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectuses disclose have
occurred or may occur or which are described in such letter;
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter; and
(v) they have performed such other procedures as agreed upon by
the Underwriters and disclosed the results of such procedures in such
letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the amendment or post-
effective amendment to be filed shortly prior to its Effective Time,
(ii) if the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement but the Effective Time of
the Additional Registration is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement and
the additional registration statement as proposed to be filed or as
proposed to be amended by the post-effective amendment to be filed shortly
prior to its Effective Time, and (iii) "Prospectuses" shall mean the
prospectuses included in the Registration Statements. All financial
statements
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and schedules included in material incorporated by reference into the
Prospectuses shall be deemed included in the Registration Statements for
purposes of this subsection.
(b) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of Price Waterhouse LLP
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements and schedules and
summary of earnings of the Electronic Systems Group, formerly a
business unit of Westinghouse Electric Corporation ("ESG"), examined
by them and included in the Registration Statements comply as to form
in all material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements of ESG, if any, included in the Registration Statements;
and
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of ESG, inquiries of officials of ESG who have responsibility for
financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:
(A) the unaudited financial statements and summary of
earnings of ESG, if any, included in the Registration Statements
do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations or any material modifications
should be made to such unaudited financial statements and summary
of earnings for them to be in conformity with generally accepted
accounting principles;
(B) the unaudited consolidated net sales and net income of
ESG for the interim periods included in the Prospectuses, if any,
do not agree with the amounts set forth in the unaudited
consolidated financial statements for those same periods or were
not determined on a basis substantially consistent with that of
the corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than five days prior to the date of this Agreement, there was any
change in the capital stock or any increase in short-term
indebtedness or long-term debt of ESG or, at the date of the
latest available balance sheet read by such accountants, there
was any decrease in consolidated net current assets or net
assets, as compared with amounts shown on the latest balance
sheet included in the Prospectuses; or
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(D) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year and with the period of corresponding
length ended the date of the latest income statement included in
the Prospectuses, in consolidated net sales or in the total or
per share amounts of consolidated income before extraordinary
items or net income,
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectuses disclose have
occurred or may occur or which are described in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the amendment or post-
effective amendment to be filed shortly prior to its Effective Time,
(ii) if the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement but the Effective Time of
the Additional Registration is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement and
the additional registration statement as proposed to be filed or as
proposed to be amended by the post-effective amendment to be filed shortly
prior to its Effective Time, and (iii) "Prospectuses" shall mean the
prospectuses included in the Registration Statements. All financial
statements and schedules included in material incorporated by reference
into the Prospectuses shall be deemed included in the Registration
Statements for purposes of this subsection.
(c) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBC. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time either
Prospectus is printed and distributed to any Underwriter or Manager, or
shall have occurred at such later date as shall have been consented to by
CSFBC. If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, each of the
Prospectuses shall have been filed with the Commission in accordance with
the Rules and Regulations and Section 5(a) of this Agreement. Prior to
such Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company or
the Representatives, shall be contemplated by the Commission.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
Subsidiaries which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the U.S. Securities;
(ii) any downgrading in the rating of any debt securities of the Company by
any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review
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<PAGE>
its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including the Representatives, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the U.S. Securities.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Sheppard, Mullin, Richter & Hampton LLP, counsel for the
Company, to the effect that:
(i) Each of the Company and its Subsidiaries has been duly
incorporated and is an existing corporation in good standing under the
laws of the State of its jurisdiction of incorporation, with corporate
power and authority to own its properties and conduct its business as
described in the Prospectuses; and, to the best of such counsel's
knowledge, each of the Company and its Subsidiaries is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where
the failure to qualify would not have a Material Adverse Effect;
(ii) The Company has authorized capitalization as set forth
in the Prospectuses;
(iii) The Offered Securities delivered on such Closing Date
and all other outstanding shares of the Common Stock of the Company
have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectuses; and the stockholders of the Company have no preemptive
rights with respect to the Offered Securities;
(iv) Other than the Registration Rights Agreement, there are
no contracts, agreements or understandings known to such counsel
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in
the securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Act;
(v) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940;
(vi) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the
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<PAGE>
transactions contemplated by this Agreement or the Subscription
Agreement in connection with the issuance or sale of the Offered
Securities by the Company, except such as have been obtained and made
under the Act and such as may be required under state securities laws;
(vii) The execution, delivery and performance of this
Agreement and the Subscription Agreement and the issuance and sale of
the Offered Securities will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
Federal or California statute, rule or regulation, the Delaware
General Corporation Law, or any rule, regulation or order of any
governmental agency or body, or any court having jurisdiction over the
Company or any Subsidiary of the Company or any of their properties,
or any agreement or instrument to which the Company or any such
Subsidiary is a party or by which the Company or any such Subsidiary
is bound or to which any of the properties of the Company or any such
Subsidiary is subject, or the charter or bylaws of the Company or any
such Subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by
this Agreement and the Subscription Agreement, respectively;
(viii) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed and
became effective under the Act as of the date and time (if
determinable) specified in such opinion, each of the Prospectuses
either were filed with the Commission pursuant to the subparagraph of
Rule 424(b) specified in such opinion on the date specified therein or
was included in the Initial Registration Statement or the Additional
Registration Statement (as the case may be), and, to the best of such
counsel's knowledge, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and each Registration Statement and each
of the Prospectuses, and each amendment or supplement thereto, as of
their respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations;
(ix) After due inquiry, such counsel does not know of any
legal or governmental proceedings required to be described in a
Registration Statement or the Prospectuses which are not described as
required or of any contracts or documents of a character required to
be described in a Registration Statement or the Prospectuses or to be
filed as exhibits to a Registration Statement which are not described
and filed as required; and
(x) This Agreement and the Subscription Agreement have been
duly authorized, executed and delivered by the Company.
Such counsel shall also state that on the basis of their involvement
in the preparation of the Registration Statements and the amendments
thereto, and the Prospectuses and any amendments or supplements thereto,
and although they have not verified the accuracy or completeness of the
statements contained therein or in any amendment thereto, nothing has come
to the attention of such counsel which causes them to believe that the
Registration Statement, as amended (other than the financial statements and
notes thereto and supporting schedules and other financial and statistical
information contained therein), contained any untrue statement of
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a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that
either of the Prospectuses, or any amendment or supplement thereto (other
than the financial statements and notes thereto and supporting schedules
and other financials and statistical information contained therein), as of
its issue date or as of such Closing Date, contained any untrue statement
of a material fact or omitted to state any material fact necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading; and such counsel does not know of any
contracts or documents of a character required to be described in or to be
filed as exhibits to any Registration Statement which are not described and
filed as required.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon
an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable to
Underwriters' counsel, familiar with the applicable laws, it being
understood and agreed that with respect to matters involving the
application of the law of the State of New York, the law firm of Kaye,
Scholer, Fierman, Hays & Handler, LLP is counsel acceptable to
Underwriters' counsel, and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company,
PROVIDED, that copies of any such statements or certificates shall be
delivered to Underwriters' counsel. The opinions of such counsel for the
Company shall state that the opinion of any such other counsel is in form
satisfactory to such counsel and, in their opinion, you and they are
justified in relying thereon.
(f) The Underwriters shall have received an opinion, dated such
Closing Date, of Richard R. Molleur, Corporate Vice President and General
Counsel of the Company, to the effect that:
(i) The execution, delivery and performance of this Agreement
and the Subscription Agreement will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any Federal or California statute, rule or regulation,
the Delaware General Corporation Law, or any rule, regulation or order
of any governmental agency or body, or any court having jurisdiction
over the Company or any Subsidiary of the Company or any of their
properties, or any material agreement or instrument to which the
Company or any such Subsidiary is a party or by which the Company or
any such Subsidiary is bound or to which any of the properties of the
Company or any such Subsidiary is subject, or the charter or bylaws of
the Company or any such Subsidiary; and the Company has full corporate
power and authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement and the Subscription
Agreement, respectively; and
(ii) To the knowledge of such counsel, there is no legal or
governmental proceeding, pending or threatened, to which the Company
or any of its Subsidiaries is subject which is required to be
described in a Registration Statement or the Prospectuses and is not
so described, and there is no contract or other document which is
required to be described in a Registration Statement or the
Prospectuses or is required to be filed as an exhibit to a
Registration Statement which is not so described and filed as
required.
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In rendering such opinion, such counsel shall opine as to the effect
of the federal laws of the United States, the internal laws of the State of
California and the General Corporation Law of the State of Delaware, and
such counsel may assume that as to matters involving the application of
laws of jurisdictions other than the laws of the State of California and
the General Corporation Law of the State of Delaware, the laws of any such
other jurisdiction are the same as the laws of the State of California.
(g) The Representatives shall have received from Latham & Watkins,
counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the validity of the
Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectuses and other related matters as the
Representatives may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(h) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time either
Prospectus was printed and distributed to any Underwriter or Manager; and,
subsequent to the respective dates of the most recent financial statements
in the Prospectuses, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Prospectuses or as described in such
certificate.
(i) The Representatives shall have received a letter, dated such
Closing Date, of Deloitte & Touche LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.
(j) The Representatives shall have received a letter, dated such
Closing Date, of Price Waterhouse LLP which meets the requirements of
subsection (b) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.
(k) On such Closing Date, the Managers shall have purchased the
International Firm Securities or the International Optional Securities, as
the case may be, pursuant to the Subscription Agreement.
The Company will furnish the Representatives with such conformed copies of
such opinions, certificates, letters and documents as the Representatives
reasonably request. CSFBC may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
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7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the 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, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter 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 any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only information furnished by any Underwriter consists of
the information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the 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, either of the
Prospectuses, or any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein 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 Underwriter
through the Representatives 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, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Underwriter consists of the following information
in the U.S. Prospectus furnished on behalf of each Underwriter: the last
paragraph at the bottom of the cover page concerning the terms of the offering
by the Underwriters, the legend concerning over-allotments and stabilizing on
the inside front cover page and the concession and reallowance figures appearing
in the fifth paragraph under the caption "Underwriting."
(c) Promptly after receipt by an indemnified party under this Section 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 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
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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 such 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 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 Underwriters on the other from the offering of the U.S.
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 the Underwriters on the other 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 relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the U.S. Securities (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The 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
Underwriters 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). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the U.S. Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
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 Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act or the Exchange Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed a Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act.
8. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default in
their obligations to purchase U.S. Securities hereunder on either the First or
any Optional Closing Date and the aggregate number of shares of U.S. Securities
that such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total number of shares of U.S. Securities that the
Underwriters are obligated to purchase on such Closing Date, CSFBC may make
arrangements satisfactory to the Company for the purchase of such U.S.
Securities by other persons, including any of the Underwriters,
19
<PAGE>
but if no such arrangements are made by such Closing Date the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the U.S. Securities that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares of
U.S. Securities with respect to which such default or defaults occur exceeds 10%
of the total number of shares of U.S. Securities that the Underwriters are
obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC and the Company for the purchase of such U.S. Securities by other persons
are not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except as provided in Section 9 (provided that if such default occurs with
respect to U.S. Optional Securities after the First Closing Date, this Agreement
will not terminate as to the U.S. Firm Securities or any U.S. Optional
Securities purchased prior to such termination). As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the U.S. Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the U.S. Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall
remain in effect and if any U.S. Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect. If the purchase of the U.S. Securities by the
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clause (iii), (iv), or (v) of Section 6(d), the Company will
reimburse the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the U.S. Securities.
10. NOTICES. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives, c/o CS First Boston Corporation, Park Avenue Plaza, New
York, N.Y. 10055, Attention: Investment Banking Department -- Transactions
Advisory Group, or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at Northrop Grumman Corporation, 1840 Century
Park East, Los Angeles, CA 90067, Attention: Richard B. Waugh, Jr., Corporate
Vice President and Chief Financial Officer; provided, however, that any notice
to an Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed
and confirmed to such Underwriter.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. REPRESENTATION OF UNDERWRITERS. The Representatives will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly or by CSFBC will be binding
upon all the Underwriters.
20
<PAGE>
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
[Signature Page Follows.]
21
<PAGE>
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
NORTHROP GRUMMAN CORPORATION
By
------------------------------
NAME: JAMES L. SANFORD
TITLE: ASSISTANT TREASURER
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
CS FIRST BOSTON CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC
Acting on behalf of themselves
and as the Representatives of the several Underwriters.
By CS FIRST BOSTON CORPORATION
By
---------------------------
NAME: GERALD M. LODGE
TITLE: MANAGING DIRECTOR
<PAGE>
SCHEDULE A
NUMBER OF
UNDERWRITER U.S. FIRM SECURITIES
----------- --------------------
CS FIRST BOSTON CORPORATION. . . . . . . . . . . . . . .
MERRILL LYNCH, PIERCE, . . . . . . . . . . . . . . . . .
FENNER & SMITH INCORPORATED. . . . . . . . . . . . . . .
SALOMON BROTHERS INC . . . . . . . . . . . . . . . . .
--------------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . .
--------------------
--------------------
<PAGE>
SCHEDULE B
LIST OF SIGNIFICANT SUBSIDIARIES
1. Grumman Corporation, a New York corporation.
<PAGE>
EXHIBIT 1.2
DRAFT OF APRIL 8, 1996
______________________ SHARES
NORTHROP GRUMMAN CORPORATION
COMMON STOCK
SUBSCRIPTION AGREEMENT
LONDON, ENGLAND
MAY ___, 1996
TO: CS FIRST BOSTON LIMITED
MERRILL LYNCH INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
[Other Managers],
C/O: CS FIRST BOSTON LIMITED ("CSFBL")
One Cabot Square
London, England E14 4QJ
Dear Sirs:
1. INTRODUCTORY. Northrop Grumman Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell (the "International Offering") to
the several Managers named in Schedule A hereto (the "Managers") _______ shares
(the "International Firm Securities") of its common stock, $1.00 par value (the
"Securities").
It is understood that the Company is concurrently entering into an
Underwriting Agreement, dated the date hereof (the "Underwriting Agreement"),
with certain United States underwriters listed in Schedule A thereto (the "U.S.
Underwriters"), for whom CS First Boston Corporation ("CSFBC"), Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc are acting as
representatives (the "U.S. Representatives"), relating to the concurrent
offering and sale of ______ shares of Securities (the " U.S. Firm Securities")
in the United States and Canada (the "U.S. Offering").
In addition, the Company proposes to issue and sell (i) to the U.S.
Underwriters, at the option of the U.S. Underwriters, an aggregate of not more
than _____ additional shares of Securities (the "U.S. Optional Securities") and
(ii) to the Managers, at the option of the Managers, an aggregate of not more
than _____ additional shares of Securities (the "International Optional
Securities"). The U.S. Firm Securities and the U.S. Optional Securities are
hereinafter called the "U.S. Securities"; the International Firm Securities and
the International Optional Securities are hereinafter called the "International
Securities"; the U.S. Firm Securities and the International Firm Securities are
hereinafter called the "Firm Securities"; the U.S. Optional Securities and the
International Optional Securities are hereinafter called the "Optional
Securities." The U.S. Securities and the International Securities are
collectively referred to as the "Offered Securities." To provide for the
coordination of their activities, the U.S. Underwriters and the Managers have
entered into an Agreement Between U.S. Underwriters and Managers which permits
them, among other things, to sell the Offered Securities to each other for
purposes of resale.
<PAGE>
The Company hereby agrees with the several Managers as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Managers that:
(a) A registration statement (No. 333-________) relating to the
Offered Securities, including a form of prospectus relating to the U.S.
Securities and a form of prospectus relating to the International
Securities being offered in the International Offering, has been filed with
the Securities and Exchange Commission (the "Commission") and either (i)
has been declared effective under the Securities Act of 1933 (the "Act")
and is not proposed to be amended or (ii) is proposed to be amended by
amendment or post-effective amendment. If such registration statement (the
"initial registration statement") has been declared effective, either
(A) an additional registration statement (the "additional registration
statement") relating to the Offered Securities may have been filed with the
Commission pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so
filed, has become effective upon filing pursuant to such Rule and the
Offered Securities all have been duly registered under the Act pursuant to
the initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or, if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (i) if the
Company has advised CSFBL that it does not propose to amend such
registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any)
filed prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing pursuant to
Rule 462(c), or (ii) if the Company has advised CSFBL that it proposes to
file an amendment or post-effective amendment to such registration
statement, the date and time as of which such registration statement, as
amended by such amendment or post-effective amendment, as the case may be,
is declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of this
Agreement but the Company has advised CSFBL that it proposes to file one,
"Effective Time" with respect to such additional registration statement
means the date and time as of which such registration statement is filed
and becomes effective pursuant to Rule 462(b). "Effective Date" with
respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective
Time, including all material incorporated by reference therein, including
all information contained in the additional registration statement (if any)
and deemed to be a part of the initial registration statement as of the
Effective Time of the additional registration statement pursuant to the
General Instructions of the Form on which it is filed and including all
information (if any)
2
<PAGE>
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
hereinafter referred to as the "Initial Registration Statement." The
additional registration statement, as amended at its Effective Time,
including the contents of the Initial Registration Statement incorporated
by reference therein and including all information (if any) deemed to be a
part of the additional registration statement as of its Effective Time
pursuant to Rule 430A(b), is hereinafter referred to as the "Additional
Registration Statement." The Initial Registration Statement and the
Additional Registration Statement are hereinafter referred to collectively
as the "Registration Statements" and individually as a "Registration
Statement." The form of prospectus relating to the U.S. Securities and the
form of prospectus relating to the International Securities, each as first
filed with the Commission pursuant to and in accordance with Rule 424(b)
("Rule 424(b)") under the Act or (if no such filing is required) as
included in the Registration Statement, including all material incorporated
by reference in each such prospectus, are hereinafter referred to as the
"U.S. Prospectus" and the "International Prospectus," respectively, and
collectively as the "Prospectuses," including all material incorporated by
reference in such prospectus, is hereinafter referred to as the "U.S.
Prospectus," and the form of prospectus relating to the International
Securities, which is identical to the U.S. Prospectus except for the
outside front cover page, the inside front cover page, the outside back
cover page and the text under the captions "Underwriting" and "Subscription
and Sale" in the U.S. Prospectus and the form of prospectus relating to the
International Securities, respectively (copies of such pages and text
having been heretofore delivered to CSFBL on behalf of the Managers), is
hereinafter referred to as the "International Prospectus"; and the U.S.
Prospectus and the International Prospectus are hereinafter collectively
referred to as the "Prospectuses." No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all respects to the requirements of the
Act and the rules and regulations of the Commission (the "Rules and
Regulations") and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not include,
or will not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
(iii) on the date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration Statement is
prior to the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of each of
the Prospectuses pursuant to Rule 424(b) or (if no such filing is required)
at the Effective Date of the Additional Registration Statement in which the
Prospectuses are included, each Registration Statement and each of the
Prospectuses will conform, in all respects to the requirements of the Act
and the Rules and Regulations, and none of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and each of the Prospectuses
3
<PAGE>
will conform in all respects to the requirements of the Act and the Rules
and Regulations, none of such documents will include any untrue statement
of a material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
and no Additional Registration Statement has been or will be filed. The
two preceding sentences do not apply to statements in or omissions from a
Registration Statement or either of the Prospectuses based upon written
information furnished to the Company by any Manager through CSFBL or by any
U.S. Underwriter through the U.S. Representatives specifically for use
therein, it being understood and agreed that the only such information is
that described as such in Section 7(b).
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectuses; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the properties, business, results of
operations, condition (financial or otherwise), affairs or prospects of the
Company and its significant subsidiaries listed on Schedule B hereto, (each
a "Subsidiary" and, collectively, the "Subsidiaries"), taken as a whole (a
"Material Adverse Effect").
(d) Each Subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectuses;
and each Subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where such failure would not, individually or in
the aggregate, have a Material Adverse Effect; all of the issued and
outstanding capital stock of each Subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock of each Subsidiary owned by the Company, directly or through
Subsidiaries, is owned free from liens, encumbrances and defects.
(e) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding
shares of capital stock of the Company are, and, when the Offered
Securities have been delivered and paid for in accordance with this
Agreement and the Underwriting Agreement on each Closing Date (as defined
below), such Offered Securities will have been, validly issued, fully paid
and nonassessable and will conform to the description thereof contained in
the Prospectuses; and the stockholders of the Company have no preemptive
rights with respect to the Securities.
(f) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Manager or U.S.
Underwriter for a brokerage commission, finder's fee or other like payment.
4
<PAGE>
(g) Other than the Registration Rights Agreement, dated as of March
1, 1996, by and among the Company, the Representatives and J.P. Morgan
Securities Inc. related to the Company's 7% Notes Due 2006, 7 1/2%
Debentures Due 2016 and 7 3/4% Debentures Due 2026, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(h) The Offered Securities have been approved for listing on The New
York Stock Exchange and the Pacific Stock Exchange subject to notice of
issuance.
(i) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body, including, without limitation, the United
States Department of Defense, or any court is required for the consummation
of the transactions contemplated by this Agreement or the Underwriting
Agreement in connection with the issuance and sale of the Offered
Securities by the Company, except such as have been obtained and made under
the Act and such as may be required under state securities laws.
(j) The execution, delivery and performance of this Agreement and the
Underwriting Agreement, and the issuance and sale of the Offered Securities
will not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, (i) any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary of the Company or
any of their properties, or any agreement or instrument to which the
Company or any such Subsidiary is a party or by which the Company or any
such Subsidiary is bound or to which any of the properties of the Company
or any such Subsidiary is subject, except for any such breach, violation or
default which would not have a Material Adverse Effect, or (ii) the charter
or bylaws of the Company or any such Subsidiary, and the Company has full
power and authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement and the Underwriting Agreement,
respectively.
(k) This Agreement and the Underwriting Agreement have been duly
authorized, executed and delivered by the Company.
(l) Except as disclosed in the Prospectuses, the Company and its
Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectuses, the Company and its Subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made
or to be made thereof by them.
(m) The Company and its Subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation
5
<PAGE>
or modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(n) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(o) The Company and its Subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(p) Except as disclosed in the Prospectuses, neither the Company nor
any of its Subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to
such a claim.
(q) Except as disclosed in the Prospectuses, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
Subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its Subsidiaries, would individually or
in the aggregate have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its obligations
under this Agreement or the Underwriting Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(r) The financial statements included in each Registration Statement
and the Prospectuses present fairly the financial position of the Company
and its consolidated subsidiaries as of the dates shown and their results
of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
the schedules included in each Registration Statement present fairly the
information required to be stated therein; and the assumptions used in
preparing the pro forma financial statements included in each Registration
Statement and the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns
6
<PAGE>
therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
(s) Except as disclosed in the Prospectuses, since the date of the
latest audited financial statements included in the Prospectuses there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
Subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectuses, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(t) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(u) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Managers, and the Managers agree, severally and not jointly, to purchase from
the Company, at a purchase price of U.S. $_____ per share, the respective
numbers of shares of International Firm Securities set forth opposite the names
of the Managers in Schedule A hereto.
The Company will deliver the International Firm Securities to CSFBL for the
accounts of the Managers, at the office of CSFBC, against payment of the
purchase price in U.S. dollars in funds available on the same day by wire
transfer to the account of the Company at a bank acceptable to CSFBL or by
official Federal Reserve Bank check or checks drawn to the order of the Company
at the office of Latham & Watkins, 633 W. Fifth Street, Suite 4000, Los Angeles,
CA 90071-2007, at 10:00 A.M., New York time, on May ___, 1996, or at such other
time not later than seven full business days thereafter as CSFBL and the Company
determine, such time being herein referred to as the "First Closing Date." For
purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First
Closing Date (if later than the otherwise applicable settlement date) shall be
the settlement date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the U.S. Offering and the International
Offering. The certificates for the International Firm Securities so to be
delivered will be in definitive form, in such denominations and registered in
such names as CSFBL requests and will be made available for checking and
packaging at the office of CSFBC, at least 24 hours prior to the First Closing
Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectuses, the
Managers may purchase all or less than all of the International Optional
Securities at the purchase price per Security to be paid for the International
Firm Securities. The International Optional Securities to be purchased by the
Managers on any Optional Closing Date shall be in the same proportion to all the
Optional Securities to be purchased by the Managers and U.S. Underwriters on
such Optional Closing Date as the International Firm Securities bear
7
<PAGE>
to all the Firm Securities. The Company agrees to sell to the Managers such
International Optional Securities and the Managers agree, severally and not
jointly, to purchase such International Optional Securities. Such International
Optional Securities shall be purchased for the account of each Manager in the
same proportion as the number of shares of International Firm Securities set
forth opposite such Manager's name bears to the total number of shares of
International Firm Securities (subject to adjustment by CSFBC to eliminate
fractions) and may be purchased by the Managers only for the purpose of covering
over-allotments made in connection with the sale of the International Firm
Securities. No Optional Securities shall be sold or delivered unless the
International Firm Securities and the U.S. Firm Securities previously have been,
or simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC on behalf of the Managers and the U.S. Underwriters to the
Company. It is understood that CSFBC is authorized to make payment for and
accept delivery of such Optional Securities on behalf of the U.S. Underwriters
and Managers pursuant to the terms of CSFBC's instructions to the Company.
Each time for the delivery of and payment for the International Optional
Securities, being herein referred to as an "Optional Closing Date," which may be
the First Closing Date (the First Closing Date and each Optional Closing Date,
if any, being sometimes referred to as a "Closing Date"), shall be determined by
CSFBC but shall be not later than five full business days after written notice
of election to purchase Optional Securities is given. The Company will deliver
the International Optional Securities being purchased on each Optional Closing
Date to CSFBL for the accounts of the several Managers, at the office of CSFBC,
against payment of the purchase price in U.S. dollars in funds available on the
same day by wire transfer to the account of the Company at a bank acceptable to
CSFBL or by official Federal Reserve Bank check or checks drawn to the order of
the Company, at the office of Latham & Watkins, 633 W. Fifth Street, Los
Angeles, CA 90071-2007. The certificates for the International Optional
Securities will be in definitive form, in such denominations and registered in
such names as CSFBL requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the office
of CSFBC, at a reasonable time in advance of such Optional Closing Date.
The Company will pay to the Managers as aggregate compensation for their
commitments hereunder and for their services in connection with the purchase of
the International Securities and the management of the offering thereof, if the
sale and delivery of the International Securities to the Managers provided
herein is consummated, an amount equal to U.S. $ _____ per International
Security purchased, which may be divided among the Managers in such proportions
as they may determine. Such payment will be made on the First Closing Date in
the case of the International Firm Securities and on each Optional Closing Date
in the case of the International Optional Securities sold to the Manager on such
Closing Date, in each case by way of deduction by the Managers of said amount
from the purchase price for the International Securities referred to above.
4. OFFERING BY MANAGERS. It is understood that the several Managers
propose to offer the International Securities for sale to the public as set
forth in the International Prospectus.
In connection with the distribution of the International Securities, the
Managers, through a stabilizing manager, may over-allot or effect transactions
on any exchange, in any over-the-counter market or otherwise which stabilize or
maintain the market prices of the International Securities at levels other than
those which might otherwise prevail, but in such event and in relation thereto,
the Managers
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will act for themselves and not as agents of the Company, and any loss resulting
from over-allotment and stabilization will be borne, and any profit arising
therefrom will be beneficially retained, by the Managers. Such stabilizing, if
commenced, may be discontinued at any time.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the
several Managers that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file each of the Prospectuses with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to by
CSFBL, subparagraph (4)) of Rule 424(b) not later than the earlier of (A)
the second business day following the execution and delivery of this
Agreement or (B) the fifteenth business day after the Effective Date of the
Initial Registration Statement.
The Company will advise CSFBL promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as
of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b)
on or prior to 10:00 P.M., New York time, on the date of this Agreement or,
if earlier, on or prior to the time either Prospectus is printed and
distributed to any Manager or U.S. Underwriter, or will make such filing at
such later date as shall have been consented to by CSFBL.
(b) The Company will advise CSFBL promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or either of the related prospectuses or the Initial Registration
Statement, the Additional Registration Statement (if any) or either of the
Prospectuses and will not effect such amendment or supplementation without
CSFBL's prior consent; and the Company will also advise CSFBL promptly of
the effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any
amendment or supplementation of a Registration Statement or either of the
Prospectuses and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any U.S. Underwriter, Manager or dealer, any event occurs as a
result of which either or both of the Prospectuses as then amended or
supplemented would include 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, or
if it is necessary at any time to amend either or both of the Prospectuses
to comply with the Act, the Company will promptly notify CSFBL of such
event and will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither
CSFBL's consent to, nor the Managers' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6.
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(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Managers copies of the
Registration Statement four of which will be signed and will include all
exhibits), each preliminary prospectus relating to the International
Securities, and, until completion of the distribution of the International
Securities as determined by CSFBL, the International Prospectus and all
amendments and supplements to such documents, in each case in such
quantities as CSFBL requests. The International Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company will pay
the expenses of printing and distributing to the Managers all such
documents.
(f) No action has been or, prior to the completion of the
distribution of the Offered Securities, will be taken by the Company in any
jurisdiction outside the United States and Canada that would permit a
public offering of the Offered Securities, or possession or distribution of
the International Prospectus, or any amendment or supplement thereto, or
any related preliminary prospectus issued in connection with the offering
of the Offered Securities, or any other offering material, in any country
or jurisdiction where action for that purpose is required.
(g) During the period of five years hereafter, the Company will
furnish to CSFBL and, upon request, to each of the other Managers, as soon
as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to CSFBL
(i) as soon as available, a copy of each report and any definitive proxy
statement of the Company filed with the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CSFBL may reasonably request.
(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Managers (if
and to the extent incurred by them) for the filing fee of the National
Association of Securities Dealers, Inc. relating to the Offered Securities,
for any travel expenses of the Company's officers and employees and any
other expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities and for
expenses incurred in distributing preliminary prospectuses and the
Prospectuses (including any amendments and supplements thereto) to the
Managers.
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(i) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act relating
to, any additional shares of its Securities or securities convertible into
or exchangeable or exercisable for any shares of its Securities, or
publicly disclose the intention to make any such offer, sale, pledge,
disposal or filing, without the prior written consent of CSFBC, except
issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, grants of employee
stock options pursuant to the terms of a plan in effect on the date hereof,
issuances of Securities pursuant to the exercise of such options or
issuances of Securities pursuant to the Company's dividend reinvestment
plan.
6. CONDITIONS OF THE OBLIGATIONS OF THE MANAGERS. The obligations of the
several Managers to purchase and pay for the International Firm Securities on
the First Closing Date and the International Optional Securities to be purchased
on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions precedent:
(a) The Managers shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of Deloitte & Touche LLP to the
effect set forth in Section 6(a) of the Underwriting Agreement.
(b) The Managers shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of Price Waterhouse LLP to the
effect set forth in Section 6(b) of the Underwriting Agreement.
(c) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBL. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time either
Prospectus is printed and distributed to any Manager or U.S. Underwriter,
or shall have occurred at such later date as shall have been consented to
by CSFBL. If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, each of the
Prospectuses shall have been filed with the Commission in accordance with
the Rules and Regulations and Section 5(a) of this Agreement. Prior to
such Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued
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and no proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Managers, shall be contemplated by the
Commission.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (A) a change in U.S. or international financial,
political or economic conditions or currency exchange rates or exchange
controls as would, in the judgment of CSFBL, be likely to prejudice
materially the success of the proposed issue, sale or distribution of the
International Securities, whether in the primary market or in respect of
dealings in the secondary market, or (B)(i) any change, or any development
or event involving a prospective change, in the condition (financial or
other), business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of CSFBL, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the International
Securities; (ii) any downgrading in the rating of any debt securities of
the Company by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by the United States Congress or any other substantial
national or international calamity or emergency if, in the judgment of
CSFBL, the effect of any such outbreak, escalation, declaration, calamity
or emergency makes it impractical or inadvisable to proceed with completion
of the public offering or the sale of and payment for the International
Securities.
(e) The Managers shall have received an opinion, dated such Closing
Date, of Sheppard, Mullin, Richter & Hampton LLP, counsel for the Company,
to the effect set forth in Section 6(d) of the Underwriting Agreement.
(f) The Managers shall have received an opinion, dated such Closing
Date, of Richard R. Molleur, Corporate Vice President and General Counsel
of the Company, to the effect set forth in Section 6(e) of the Underwriting
Agreement.
(g) The Managers shall have received from Latham & Watkins, counsel
for the Managers, such opinion or opinions, dated such Closing Date, with
respect to the incorporation of the Company, the validity of the Offered
Securities delivered on such Closing Date, the Registration Statement, the
Prospectuses and other related matters as the Managers may require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(h) The Managers shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct;
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the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to such
Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b),
including payment of the applicable filing fee in accordance with Rule
111(a) or (b) under the Act, prior to the time either Prospectus was
printed and distributed to any Manager or U.S. Underwriter; and, subsequent
to the respective dates of the most recent financial statements in the
Prospectuses, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Prospectuses or as described in such
certificate.
(i) The Managers shall have received a letter, dated such Closing
Date, of Deloitte & Touche LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.
(j) The Managers shall have received a letter, dated such Closing
Date, of Deloitte & Touche LLP which meets the requirements of
subsection (b) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.
(k) On such Closing Date, the U.S. Underwriters shall have purchased
the U.S. Firm Securities or the U.S. Optional Securities, as the case may
be, pursuant to the Underwriting Agreement.
The Company will furnish the Managers with such conformed copies of such
opinions, certificates, letters and documents as the Managers reasonably
request. CSFBL may in its sole discretion waive on behalf of the Managers
compliance with any conditions to the obligations of the Managers hereunder,
whether in respect of an Optional Closing Date or otherwise.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Manager against any losses, claims, damages or liabilities,
joint or several, to which such Manager may become subject, under the 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,
either of the Prospectuses, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Manager for any legal or other expenses reasonably incurred by
such Manager 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 any Manager through CSFBL specifically
for use therein, it
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being understood and agreed that the only information furnished by any Manager
consists of the information described as such in subsection (b) below.
(b) Each Manager will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the 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, either of the
Prospectuses, or any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein 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 Manager
through CSFBL 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, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Manager consists of the following information in
the International Prospectus furnished on behalf of each Manager: the last
paragraph at the bottom of the cover page concerning the terms of the offering
by the Managers, the legend concerning over-allotments and stabilizing on the
inside front cover page and the concession and reallowance figures appearing in
the fifth paragraph under the caption "Subscription and Sale."
(c) Promptly after receipt by an indemnified party under this Section 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 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
such 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 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 Managers on the other from the offering of the International
Securities or (ii) if the allocation provided by clause (i) above is
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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 the Managers on the other 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 relative benefits received by the Company on the one hand
and the Managers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the International Securities (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Managers. The 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 Managers
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). Notwithstanding the
provisions of this subsection (d), no Manager shall be required to contribute
any amount in excess of the amount by which the total price at which the
International Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Manager 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 Managers' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Manager
within the meaning of the Act or the Exchange Act; and the obligations of the
Managers under this Section shall be in addition to any liability which the
respective Managers may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed a Registration Statement and to each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act.
8. DEFAULT OF MANAGERS. If any Manager or Managers default in their
obligations to purchase International Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of International
Securities that such defaulting Manager or Managers agreed but failed to
purchase does not exceed 10% of the total number of shares of International
Securities that the Managers are obligated to purchase on such Closing Date,
CSFBL may make arrangements satisfactory to the Company for the purchase of such
International Securities by other persons, including any of the Managers, but if
no such arrangements are made by such Closing Date the non-defaulting Managers
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the International Securities that such defaulting
Managers agreed but failed to purchase on such Closing Date. If any Manager or
Managers so default and the aggregate number of shares of International
Securities with respect to which such default or defaults occur exceeds 10% of
the total number of shares of International Securities that the Managers are
obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBL and the Company for the purchase of such International Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Manager or the
Company, except as provided in Section 9
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(provided that if such default occurs with respect to International Optional
Securities after the First Closing Date, this Agreement will not terminate as to
the International Firm Securities or any International Optional Securities
purchased prior to such termination). As used in this Agreement, the term
"Manager" includes any person substituted for a Manager under this Section.
Nothing herein will relieve a defaulting Manager from liability for its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Managers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Manager, the Company or any of their respective representatives, officers
or directors or any controlling person, and will survive delivery of and payment
for the International Securities. If this Agreement is terminated pursuant to
Section 8 or if for any reason the purchase of the International Securities by
the Managers is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Managers pursuant to Section 7 shall remain
in effect and if any International Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect. If the purchase of the International Securities by
the Managers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in Section 6(d)(A) or clause (iii), (iv), or (v) of
Section 6(d)(B), the Company will reimburse the Managers for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred by
them in connection with the offering of the International Securities.
10. NOTICES. All communications hereunder will be in writing and, if sent
to the Managers, will be mailed, delivered or telexed and confirmed to CSFBL at
One Cabot Square, London E14 4QJ England, Attention: Company Secretary, or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
it at Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA
90067, Attention: Richard B. Waugh, Jr., Corporate Vice President and Chief
Financial Officer; provided, however, that any notice to a Manager pursuant to
Section 7 will be mailed, delivered or telexed and confirmed to such Manager.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. REPRESENTATION OF MANAGERS. CSFBL will act for the several Managers
in connection with this financing, and any action under this Agreement taken by
CSFBL will be binding upon all the Managers.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
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The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
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If the foregoing is in accordance with the Managers' understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the several
Managers in accordance with its terms.
Very truly yours,
NORTHROP GRUMMAN CORPORATION
By
---------------------------------
NAME: JAMES L. SANFORD
TITLE: ASSISTANT TREASURER
The foregoing Subscription Agreement is hereby confirmed and accepted as of
the date first above written.
CS FIRST BOSTON LIMITED
BY:
-------------------------
NAME:
TITLE:
MERRILL LYNCH INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
EACH BY ITS DULY AUTHORIZED ATTORNEY-IN-FACT:
------------------------------
NAME:
TITLE: ATTORNEY-IN-FACT
<PAGE>
SCHEDULE A
NUMBER OF
MANAGER INTERNATIONAL FIRM SECURITIES
------- ------------------------------
CS FIRST BOSTON CORPORATION. . . . . . . .
MERRILL LYNCH INTERNATIONAL . . . . . . .
SALOMON BROTHERS INTERNATIONAL LIMITED . .
[Other Managers]
------------------------------
TOTAL. . . . . . . . . . . . . . . . . . .
------------------------------
------------------------------
<PAGE>
SCHEDULE B
LIST OF SIGNIFICANT SUBSIDIARIES
1. Grumman Corporation, a New York corporation.
<PAGE>
April 11, 1996
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Re: REGISTRATION STATEMENT ON FORM S-3
Dear Sirs:
You have filed with the Securities and Exchange Commission a
registration statement on Form S-3 (the "Registration Statement") in
connection with the registration under the Securities Act of 1933, as
amended, of 8,050,000 shares of Common Stock and a like number of
Common Stock Purchase Rights (the "Securities") of Northrop Grumman
Corporation, a Delaware corporation (the "Company").
In connection with the furnishing of our opinion to you concerning this
matter, we have examined such corporate records and other documents as we
have deemed relevant and necessary as a basis for the opinions set forth
herein. In such examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as certified
or photostatic copies.
We have also examined the Registration Statement and are familiar with
the additional proceedings proposed to be taken by you in connection with the
sale of the Securities.
On the basis of the foregoing, and in reliance thereon, and after
consideration of such matters and laws as we deem applicable and relevant, we
are of the opinion that the Securities, when sold in the manner set forth in
the Registration Statement, will be legally and validly issued, fully paid
and nonassessable.
We consent to the use 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 Registration Statement and in the Prospectus which is
a part thereof.
Respectfully submitted,
SHEPPARD, MULLIN, RICHTER &
HAMPTON LLP
Exhibit 5.1
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Northrop Grumman Corporation (the "Company") on Form S-3 and in
Registration Statement No. 33-55143 of the Company on Form S-3 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 this Registration
Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
April 11, 1996
EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 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 10, 1996
EXHIBIT 23.2
r<PAGE>
POWER OF ATTORNEY
FILING OF REGISTRATION STATEMENT ON FORM S-3
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-3 under
the Securities Act of 1933, as amended (the "Act"), in connection with the
registration under the Act of Common Stock of the Company (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
Exhibit 24.1
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has subscribed these presents
this 11th day of April, 1996.
/s/ Kent Kresa Chairman of the Board,
- ---------------------------------------- President and Chief
Kent Kresa Executive Officer and
Director (Principal
Executive Officer)
/s/ Jack R. Borsting
- ---------------------------------------- Director
Jack R. Borsting
/s/ John T. Chain, Jr.
- ---------------------------------------- Director
John T. Chain, Jr.
/s/ Jack Edwards
- ---------------------------------------- Director
Jack Edwards
/s/ Phillip Frost
- ---------------------------------------- Director
Dr. Phillip Frost
/s/ Aulana L. Peters
- ---------------------------------------- Director
Aulana L. Peters
/s/ John E. Robson
- ---------------------------------------- Director
John E. Robson
/s/ Richard M. Rosenberg
- ---------------------------------------- Director
Richard M. Rosenberg
/s/ Brent Scowcroft
- ---------------------------------------- Director
Brent Scowcroft
/s/ John Brooks Slaughter
- ---------------------------------------- Director
John Brooks Slaughter
/s/ Wallace C. Solberg
- ---------------------------------------- Director
Wallace C. Solberg
/s/ Richard J. Stegemeier
- ---------------------------------------- Director
Richard J. Stegemeier
2
<PAGE>
/s/ Richard B. Waugh, Jr. Corporate Vice President
- ---------------------------------------- and Chief Financial Officer
Richard B. Waugh, Jr. (Principal Financial
Officer)
/s/ Nelson F. Gibbs Corporate Vice President
- ---------------------------------------- and Controller (Principal
Nelson F. Gibbs Accounting Officer)
3
