<PAGE>
As filed with the Securities and Exchange Commission on November 25, 1998
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM S-8
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) 201-3215
(Address, Including Zip Code, of Registrant's Principal Executive Offices)
_________________
NORTHROP GRUMMAN
1998 RESTRICTED STOCK RIGHTS PLAN
(Full Title of the Plan)
_________________
RICHARD R. MOLLEUR, ESQ.
Corporate Vice President and General Counsel
NORTHROP GRUMMAN CORPORATION
1840 Century Park East
Los Angeles, California 90067
(310) 201-3215
(Name, Address, including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service of Process)
_________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
Title of Securities Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered be Registered Offering Price per Aggregate Registration
Share Offering Price Fee
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 102,922 shares (2) $82.63 $8,504,445 $2,364.24
$1.00 per share (1)
====================================================================================================
</TABLE>
(1) Issued pursuant to Restricted Stock Rights, subject to terms and conditions
contained in Northrop Grumman 1998 Restricted Stock Rights Plan.
(2) Previously registered for issuance pursuant to Northrop Corporation 1993
Long Term Incentive Stock Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1 PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
*Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this registration statement in accordance with the
Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since the end
of the fiscal year covered by the registrant document referred to in (a) above;
(c) The description of the Company's Common Stock which is contained
in the Company's registration statement on Form 8-B dated June 20, 1985 filed
under the Exchange Act;
(d) The description of the Company's Common Stock Rights which is
contained in the Company's registration statement on Form 8-A/A filed September
24, 1998, including any amendment or report filed for the purpose of updating
such description; and
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be a part hereof
from the date of filing of such documents. Copies of these documents will not
be filed with this registration statement. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this registration
statement to the extent that such statement is modified or superseded by a
subsequently filed document which also is or is deemed to be incorporated by
reference herein. Any such statement so modified or superseded shall not be
deemed to constitute a part of this registration statement except as so modified
or superseded.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law (the "DGCL") authorizes
corporations to limit or eliminate the personal liability of directors to the
corporation and its stockholders for monetary damages in connection with the
<PAGE>
breach of a director's fiduciary duty of care. The duty of care requires that,
when acting on behalf of the corporation, directors must exercise an informed
business judgment based on all material information reasonably available to
them. Absent the limitation authorized by the DGCL, directors could be
accountable to corporations and their stockholders for monetary damages for
conduct that does not satisfy such duty of care. Although the DGCL does not
change a director's duty of care, it enables corporations to limit available
relief to equitable remedies such as injunction or rescission. The Registrant's
certificate of incorporation limits the liability of directors to the Registrant
or its stockholders to the fullest extent permitted by the DGCL as in effect
from time to time. Specifically, directors of the Registrant will not be
personally liable for monetary damages for breach of a fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or to its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which
the director derives any improper personal benefit.
The bylaws of the Registrant provide that the Registrant shall
indemnify its officers, directors and employees to the fullest extent permitted
by the DGCL. The Registrant believes that indemnification under its bylaws
covers at least negligence and gross negligence on the part of the indemnified
parties.
The Registrant has entered into an agreement with each of its
directors and certain of its officers indemnifying them to the fullest extent
permitted by the foregoing. The Company has also purchased director and officer
liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4.1 1998 Restricted Stock Rights Plan.
4.2 Form of Ownership Retention Agreement and Amendment No. 1 by
letter dated April 8, 1998.
4.3 Master Escrow Agreement and Master Escrow Agreement Clarification
dated April 8, 1998 (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998).
4.4 Northrop Corporation 1993 Long-Term Incentive Stock Plan
(incorporated by reference to Registration Statement on Form S-8,
Registration No. 33-49667).
4.5 Restated Certificate of Incorporation of the Registrant as
amended (incorporated by reference to Registration Statement on
Form S-3, Registration No. 33-55143).
4.6 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Registration Statement on Form S-3, Registration No.
33-55143).
4.7 Common Stock Rights Agreement (incorporated by reference to Form
8-A/A filed September 24, 1998).
5.1 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit
5.1).
24.1 Power of Attorney (included on page 4 hereof).
2
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement; provided, however,
-------- -------
that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act 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 the
Securities Act and will be governed by the final adjudication of such issue.
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
of the requirements for filing on Form S-8 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, State of California, on this 24 day of
November, 1998.
NORTHROP GRUMMAN CORPORATION
By: /s/ Richard R. Molleur
___________________________________________________
Richard R. Molleur
Corporate Vice President and General Counsel
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to
this Registration Statement appears below hereby constitutes and appoints
Richard R. Molleur and John H. Mullan, and each or either of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or his substitute or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in their
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Kent Kresa Chairman of the Board, President and Chief November 18, 1998
- --------------------------------------------- Executive Officer and Director (Principal
(Kent Kresa) Executive Officer)
/s/ Richard B. Waugh, Jr. Corporate Vice President and Chief Financial November 18, 1998
- --------------------------------------------- Officer (Principal Financial Officer)
(Richard B. Waugh, Jr.)
/s/ Nelson F. Gibbs Corporate Vice President and Controller November 18, 1998
- --------------------------------------------- (Principal Accounting Officer)
(Nelson F. Gibbs)
/s/ Jack R. Borsting Director November 18, 1998
- ---------------------------------------------
(Jack R. Borsting)
/s/ John T. Chain, Jr. Director November 18, 1998
- ---------------------------------------------
(John T. Chain, Jr.)
/s/ Jack Edwards Director November 18, 1998
- ---------------------------------------------
(Jack Edwards)
/s/ Robert A. Lutz Director November 18, 1998
- ---------------------------------------------
(Robert A. Lutz)
/s/ Aulana L. Peters Director November 18, 1998
- ---------------------------------------------
(Aulana L. Peters)
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ John E. Robson Director November 18, 1998
- ---------------------------------------------
(John E. Robson)
/s/ Richard M. Rosenberg Director November 18, 1998
- ---------------------------------------------
(Richard M. Rosenberg)
/s/ John Brooks Slaughter Director November 18, 1998
- ---------------------------------------------
(John Brooks Slaughter)
/s/ Phillip Frost Director November 18, 1998
- ---------------------------------------------
(Phillip Frost)
/s/ Richard J. Stegemeier Director November 18, 1998
- ---------------------------------------------
(Richard J. Stegemeier)
</TABLE>
5
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
4.1 1998 Restricted Stock Rights Plan.
4.2 Form of Ownership Retention Agreement and Amendment No. 1 by
letter dated April 8, 1998.
4.3 Master Escrow Agreement and Master Escrow Agreement
Clarification dated April 8, 1998 (incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998).
4.4 Northrop Corporation 1993 Long-Term Incentive Stock Plan
(incorporated by reference to Registration Statement on Form S-
8, Registration No. 33-49667).
4.5 Restated Certificate of Incorporation of the Registrant as
amended (incorporated by reference to Registration Statement on
Form S-3, Registration No. 33-55143).
4.6 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Registration Statement on Form S-3, Registration
No. 33-55143).
4.7 Common Stock Rights Agreement (incorporated by reference to
Form 8-A/A filed September 24, 1998).
5.1 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit
5.1).
24.1 Power of Attorney (included on page 4 hereof).
6
<PAGE>
EXHIBIT 4.1
NORTHROP GRUMMAN 1998 RESTRICTED STOCK RIGHTS PLAN
1. PURPOSE
The purpose of the Northrop Grumman 1998 Restricted Stock Rights Plan (the
"Plan") is to promote the long-term success of Northrop Grumman Corporation (the
"Company") and to increase shareholder value by providing its officers and
selected employees with incentives to create excellent performance and to
continue service with the Company, its subsidiaries and affiliates. Both by
encouraging such officers and employees to become owners of the common stock of
the Company and by providing actual ownership through Plan awards, it is
intended that Plan participants will view the Company from an ownership
perspective.
2. TERM
The Plan became effective upon the approval by the Board of Directors of
the Company (the "Board") on March 24, 1998. Unless previously terminated by
the Board, the Plan shall terminate at the close of business on the second
anniversary of such Board approval.
3. PLAN ADMINISTRATION
The Compensation and Management Development Committee of the Board (the
"Committee") shall be responsible for administering the Plan. The Committee
shall have full and exclusive power to interpret the Plan and to adopt such
rules, regulations and guidelines for carrying out the Plan as it may deem
necessary or proper, all of which power shall be executed in the best interests
of the Company and in keeping with the objectives of the Plan. This power
includes, but is not limited to, establishing all award terms and conditions and
adopting modifications, amendments and procedures, including subplans and the
like as may be necessary to comply with provisions of the laws and applicable
regulatory rulings of countries in which the Company operates in order to assure
the viability of awards granted under the Plan and to enable participants
employed in such countries to receive advantages and benefits under the Plan and
such laws and rulings, and the granting of waivers under the Plan or under the
Ownership Retention Agreement, as the Committee in its sole and absolute
discretion deems appropriate. No amendment or modification may be made to any
outstanding awards pursuant to the Plan that adversely affects the rights of the
holders thereof without prior written consent of such holder.
4. ELIGIBILITY
Any employee of the Company whose right to receive shares of the Company's
common stock, $1.00 par value per share (the "Common Stock") vested as a result
of the vote of the stockholders of the Company on February 26, 1998 to approve
the merger between the Company and a subsidiary of Lockheed Martin Corporation,
and who executes and delivers the Ownership Retention Agreement shall be
eligible to receive an award under the Plan.
5. AWARDS
The award to be made to each participant shall consist of a restricted
stock right (the "Restricted Stock Right") to receive, subject to the terms and
conditions contained herein and in the Ownership Retention Agreement, a number
of shares of Common Stock equal to 29% of the
<PAGE>
number of shares of Common Stock that such participant has placed in escrow
pursuant to the Master Escrow Agreement. Any fractional shares resulting from
such calculation may be paid in cash in lieu of shares of Common Stock at the
time, if any, at which such participant becomes entitled to receive Additional
Shares pursuant to the Ownership Retention Agreement.
6. AWARD AGREEMENTS
Awards under the Plan shall be evidenced by the fully executed and
delivered Ownership Retention Agreement, the form of which is attached hereto as
Exhibit A (the "Ownership Retention Agreement"), which sets forth the terms,
conditions, limitations and timing with respect to each award and the provisions
applicable in the event the participant's employment by the Company terminates
or there is a Change in Control.
7. ADJUSTMENTS AND REORGANIZATIONS
The number of shares of Common Stock that a participant shall receive
pursuant to the Ownership Retention Agreement, if the conditions for receipt
provided herein and therein are satisfied, shall be subject to proportionate
adjustment in the event, not including a Change in Control, of any stock split,
stock dividend, share exchange, spin-off, merger, combination, recapitalization
or other distribution (other than normal cash dividends) of Company assets to
its stockholders. The determination of whether an adjustment is to be made or
not, and, if so, the amount of the adjustment appropriate to reflect such event,
shall be made by and in the sole discretion of the Compensation and Management
Development Committee of the Board of Directors, pursuant to the Plan.
If the Company undergoes a Change in Control prior to March 1, 2000 and the
Employee is employed by the Company at the time of the occurrence of such Change
in Control, then Section 3.01 of the Ownership Retention Agreement shall apply.
For purposes of this Plan and the Ownership Retention Agreement, a "Change in
Control" of the Company shall be deemed to occur if and as of the first day that
any one or more of the following conditions are satisfied:
(i) Any Person (other than those Persons in control of the Company as
of November 15, 1995, or other than a trustee or fiduciary holding
securities under an employee benefit plan of the Company, becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the combined voting power of
the Company's then outstanding securities and for purposes of this section,
"Person" shall have the meaning ascribed to such term in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended, and as used in Section
13(d) and 14(d) thereof, including a "group" as defined in Section 13(d)
and for purposes of this subsection (i) "person" or "group" shall not
include underwriters acquiring newly-issued voting shares (or securities
convertible into voting shares) directly from the Company with a view to
distribution; or
(ii) during any period of two (2) consecutive years (not including any
period prior to November 15, 1995), individuals who at the beginning of
such period constitute the Board (and any new Director, whose election by
the Company's stockholders was
2
<PAGE>
approved by a vote of a least two-thirds (2/3) of the Directors then still
in office who either were Directors at the beginning of the period or whose
election or nomination for election was so approved), cease for any reason
to constitute a majority thereof; or
(iii) a merger, consolidation, or reorganization of the Company with
or involving any other entity ("Merger") becomes effective upon the filing
of all applicable legal documents with the appropriate governmental
authorities, or an agreement for the sale or disposition of all or
substantially all of the Company's assets in one or a series of related
transactions or a plan of complete liquidation of the Company ("Asset
Sale") is consummated; provided that the effectiveness of a Merger shall be
--------
deemed not to constitute a Change in Control if it results in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than seventy-five percent
(75%) of the combined voting power of the voting securities of the Company
(or such surviving entity) outstanding immediately after such Merger; and
provided, further, that if (A) a Merger becomes effective that constitutes
-----------------
a Change in Control, or (B) an Asset Sale is consummated, then a
participant (other than a participant whose rights under this Plan
terminated pursuant to Section 1.02 of the Ownership Retention Agreement
prior to the Change in Control) shall be deemed for all purposes of this
Plan and the Ownership Retention Agreement to be employed by the Company at
the time of the occurrence of such Change in Control if such participant
was employed by the Company on the date of the shareholder vote approving
such Merger or Asset Sale.
8. DIVIDENDS AND DIVIDEND EQUIVALENTS
No Restricted Stock Right shall earn dividends or dividend equivalents
until the Additional Shares are issued.
9. TRANSFERABILITY AND EXERCISABILITY
Restricted Stock Rights are not assignable, alienable, saleable,
pledgeable, hypothecateable or otherwise transferable by the participant and
shall not be assigned, alienated, sold, pledged, hypothecated, or otherwise
transferred, disposed of or encumbered, other than by will or the laws of
descent and distribution, pursuant to a qualified domestic relations order (as
defined by the Internal Revenue Code) or unless otherwise determined by the
Committee.
10. TAX WITHHOLDING
The Company shall have the right to deduct from any issuance of stock
pursuant to an award made under the Plan a sufficient amount to cover
withholding of any Federal, state or local income and social security, medicare
and any other applicable employment taxes required by law or to take such other
action as may be necessary to satisfy any such withholding obligations. The
Committee may permit shares to be used to satisfy required tax withholding and
such shares shall be valued at the Fair Market Value as of the settlement date
of the applicable award.
3
<PAGE>
11. PAYMENTS FOR TAXES
(i) Payments for taxes to an Employee pursuant to either Section 4.01 or
Section 4.02 of the Ownership Retention Agreement ("Tax Payments") shall be made
as soon as practicable following the receipt or deemed receipt of any income
triggering such payments and may be satisfied by the Company making the
appropriate withholding payments or by making a payment or payments to the
Employee but in all events shall be made within thirty (30) days of the receipt
or deemed receipt by the Employee of the income triggering such payments.
(ii) For purposes of determining the amount of any gross up component of a
Tax Payment, the Employee shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the payment is to be made. Such highest marginal rate shall take into account
the loss of itemized deductions by the Employee and shall also include the
Employee's share of the hospital insurance portion of FICA and state and local
income taxes at the highest marginal rate of taxation in the state and locality
of the Employee's residence on the date of payment, net of the maximum reduction
in federal income taxes that could be obtained from the deduction of such state
and local taxes.
(iii) All determinations required to be made with respect to Tax Payments,
including but not limited to whether a payment would result in a tax liability
to the Employee under Section 4999 of the Internal Revenue Code, shall be made
by the Company's independent auditors (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Employee as
requested by the Company or the Employee. All fees and expenses of the
Accounting Firm shall be borne solely by the Company and shall be paid by the
Company. All determinations made by the Accounting Firm under this Section 11
shall be final and binding upon the Company and the Employee.
12. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically determined by the Committee, settlements of
awards received by participants under the Plan shall not be deemed a part of a
participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country. Further, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
necessary.
13. UNFUNDED PLAN
Unless otherwise determined by the Committee, the Plan shall be unfunded
and shall not create (or be construed to create) a trust or a separate fund or
funds. The Plan shall not establish any fiduciary relationship between the
Company and any participant or other person. To the extent any person holds any
rights by virtue of a grant awarded under the Plan, such rights (unless
otherwise determined by the Committee) shall be no greater than the rights of an
unsecured general creditor of the Company.
4
<PAGE>
14. FUTURE RIGHTS
No person shall have any claim or rights to be granted an award under the
Plan, and no participant shall have any rights under the Plan to be retained in
the employ of the Company.
15. GOVERNING LAW
The validity, construction and effect of the Plan and any action taken or
relating to the Plan shall be determined in accordance with the laws of the
State of California and applicable Federal law.
16. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a participant,
including, without limitation, the estate of such participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the participant's creditors.
17. RIGHTS AS A SHAREHOLDER
A participant shall have no rights as a holder of Additional Shares until
he or she becomes the holder of record thereof.
18. DEFINITIONS
All capitalized terms not otherwise defined herein shall have the meaning
assigned such terms in the Ownership Retention Agreement. The term "employee of
the Company" and its correlatives mean an employee of the Company or any of its
subsidiaries. The term "Internal Revenue Code" as used in this Agreement and in
an Ownership Retention Agreement refers to the Internal Revenue Code of 1986, as
amended and any successor thereto.
5
<PAGE>
EXHIBIT 4.2
OWNERSHIP RETENTION AGREEMENT
THE UNDERSIGNED EMPLOYEE (THE "EMPLOYEE") OF NORTHROP GRUMMAN CORPORATION
--------
(THE "COMPANY"), AND THE COMPANY, BY EXECUTING AND DELIVERING THIS INSTRUMENT,
-------
AND INTENDING TO BE LEGALLY BOUND, AGREE TO THE FOLLOWING:
I. RESTRICTED STOCK RIGHT GRANT.
1.01. The Company hereby grants to the Employee a restricted stock right
(the "Restricted Stock Right") pursuant to which the Employee is entitled to
----------------------
receive on March 1, 2000 (the "Payment Date") the number of additional shares
------------
(the "Additional Shares") of the Company's common stock, $1.00 par value per
-----------------
share (the "Common Stock") stated in Annex A, subject to the terms and
------------
conditions contained herein and in that certain 1998 Restricted Stock Rights
Plan of the Company (the "Plan"), a copy of which is attached hereto as Annex B,
----
provided: (a) that prior to the Payment Date the Employee neither voluntarily
terminates (see Section 1.03 concerning Retirement) nor is terminated for Cause
as an employee of the Company and (b) that the Company does not engage in a
merger, consolidation, or similar transaction that becomes effective under
applicable law on or prior to July 1, 1998 with Lockheed Martin Corporation or
any of its subsidiaries (such transaction is a "Lockheed Merger").
---------------
1.02. If, prior to the Payment Date, the Employee voluntarily terminates,
other than by Retirement, or is terminated for Cause as an employee of the
Company, or if a Lockheed Merger becomes effective on or prior to July 1, 1998,
then the grant contained in this Article I shall terminate and the Employee
shall thereupon have no rights under this Article I or under the Plan to receive
the Additional Shares.
1.03. If, prior to the Payment Date, the Employee dies, Retires, or first
becomes Disabled and has not previously voluntarily terminated his or her
employment with the Company or been terminated for Cause, and if a Lockheed
Merger does not become effective on or prior to July 1, 1998, then a pro rata
portion (equal to the ratio of the number of full weeks between March 1, 1998
and the date of death, Retirement or such Disability, divided by 104) of the
Additional Shares shall be distributed in the form of Common Stock to the
Employee or to his guardian or estate, as appropriate.
1.04. If, prior to the Payment Date, the Employee is terminated for a
reason other than Cause as an employee of the Company and has not previously
voluntarily terminated his or her employment with the Company or been terminated
for Cause, and if a Lockheed Merger does not become effective on or prior to
July 1, 1998, then the Additional Shares shall be distributed in the form of
Common Stock to the Employee.
1.05. The number of Additional Shares shall be subject to proportionate
adjustment in the event, not including a Change in Control, of any stock split,
stock dividend, share exchange, spin-off, merger, combination, recapitalization
or other distribution (other than normal cash dividends) of Company assets to
its stockholders. The determination of whether an adjustment is to be made or
not, and, if so, the amount of the adjustment appropriate to reflect such event,
shall
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be made by and in the sole discretion of the Compensation and Management
Development Committee of the Board of Directors, pursuant to the Plan.
1.06. The Restricted Stock Right is non-transferable and non-assignable.
1.07. The Company shall be entitled to require, as a condition to the
issuance or transfer of any Additional Shares, that the Employee pay any sums
required to be withheld by federal, state or local tax law with respect to the
issuance or transfer of Additional Shares. Alternatively, the Company, in its
sole discretion, may make such provisions for the withholding of taxes as it
deems appropriate.
1.08. The issuance of the Additional Shares is subject to full compliance
with all then applicable requirements of law, and the rules and regulations of
the United States Securities and Exchange Commission, the Commissioner of
Corporations of the State of California and any other regulatory agency having
jurisdiction over the Company and its shares, and any exchange upon which the
stock of the Company may be listed.
1.09. The Employee shall have none of the rights or privileges of a
stockholder of the Company with respect to the Additional Shares until the date,
if any, on which Additional Shares are issued to the Employee.
1.10. The Compensation and Management Development Committee of the Board
of Directors of the Company shall administer the Plan, and may make such waivers
hereunder or under the Plan as such Committee in its sole and absolute
discretion deems appropriate.
II. ESCROW OF THE SHARES AND CASH PAYMENT.
2.01. The amount of federal, state and local income and social security,
medicare and any other applicable employment tax with respect to the vesting of
Restricted Performance Stock Rights, that occurred as a result of the
stockholder vote on February 26, 1998 approving the merger of the Company with a
wholly owned subsidiary of Lockheed Martin Corporation pursuant to that certain
Agreement and Plan of Merger dated as of July 2, 1997, as amended to the date
hereof, shall be deemed to equal 50% of the number of shares that vested on the
date of such stockholder vote multiplied by $138.25 per share. The amount, if
any, of such deemed tax in excess of the amount heretofore withheld by the
Company with respect to such shares shall be paid as soon as practicable to the
Employee in cash in lieu of an appropriate number of such shares valued at
$138.25 per share. Shares equal in value (at $138.25 per share) to the amount
of the tax withholding and the in-lieu cash payment shall not be issued, and the
Employee shall have no rights therein or thereto.
2.02. The shares of Common Stock to which the Employee is entitled (net of
(i) tax withholding and (ii) the in-lieu cash payment specified in Section 2.01
hereof) are referred to herein as the "Shares." All of the Shares shall remain
the property of the Employee but shall be subject to the restrictions contained
in this Agreement. Annex A sets forth the number of Shares subject to this
Agreement, as well as the number of Additional Shares under the Restricted Stock
Right.
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2.03. The Shares shall be issued in the name of Employee and delivered to
Chase Manhattan Bank and Trust Company, National Association, as Escrow Agent,
pursuant to the terms of that certain Master Escrow Agreement, of even date
herewith, by and among the Company, the Employee and certain other employees of
the Company, and the Escrow Agent, the form of which is attached hereto as Annex
C (the "Master Escrow Agreement"), and shall be held by the Escrow Agent in
accordance with the terms of the Master Escrow Agreement. In lieu of delivering
all of the Shares to the Escrow Agent, the Employee may elect to substitute
other owned shares of Common Stock for an equal number (all or part) of the
Shares, and such substituted shares of Common Stock shall thereupon become
"Shares" for purposes of this Agreement in lieu of the shares for which they
were substituted. During the pendency of this Agreement, the Employee may, in
accordance with the provisions of the Master Escrow Agreement, elect to deliver
other owned shares of Common Stock in exchange for a like number of Shares
previously contributed hereunder, and such shares so exchanged shall be "Shares"
for purposes of this Agreement. The restrictions imposed by this Agreement
shall apply only to the Shares, and only so long as the Shares are held in
escrow.
2.04. If, prior to the Payment Date, the Employee neither voluntarily
terminates nor is terminated for Cause as an employee of the Company, then on or
before the tenth business day after the Payment Date, the Company shall instruct
the Escrow Agent in writing to release and distribute to the Employee the
certificate representing the Shares. If, prior to the Payment Date, the
Employee dies, Retires, is terminated for a reason other than Cause as an
employee of the Company, or first becomes Disabled, and has not previously
voluntarily terminated his or her employment with the Company or been terminated
for Cause, then on or before the twentieth business day after the date of such
death, Retirement, termination or Disability, the Company shall instruct the
Escrow Agent in writing to release and distribute to the Employee (or his
guardian or estate, as appropriate) the certificate representing the Shares.
If, prior to the Payment Date, the Employee voluntarily terminates, other than
by Retirement, or is terminated for Cause, then the Employee shall forfeit to
the Company all of his right, title and interest in and to the Shares and the
Company is hereby empowered, in such event, to instruct the Escrow Agent in
writing to release and distribute to the Company the certificate representing
the Shares.
2.05. The certificates representing the Shares shall have the following
legend conspicuously imprinted on the face thereof:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AGREEMENT
BETWEEN THE OWNER OF SUCH SHARES AND NORTHROP GRUMMAN CORPORATION AND IN
CERTAIN EVENTS SPECIFIED IN SUCH AGREEMENT MAY BE SUBJECT TO FORFEITURE. A
COPY OF THE AGREEMENT MAY BE INSPECTED AT THE OFFICES OF NORTHROP GRUMMAN
CORPORATION.
2.06. The Shares held in escrow pursuant hereto and pursuant to the Master
Escrow Agreement may not be assigned, alienated, sold, pledged, hypothecated, or
otherwise transferred, disposed of or encumbered, other than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations order
(as defined by the Internal Revenue Code).
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2.07. The Company shall promptly pay to the Employee as owner of the
Shares all dividends and distributions with respect to the Shares as the same
shall have been declared and paid by the Company with respect to the Common
Stock, provided that the Employee shall have no right to receive any such
payment if, on or prior to the date of such payment, the Employee shall have
forfeited all his right, title and interest in and to the Shares pursuant to the
terms of this Agreement.
2.08. As owner of the Shares, the Employee shall retain all voting rights
with respect to the Shares provided to holders of shares of Common Stock under
the charter or bylaws of the Company or the laws of the State of Delaware,
provided that the Employee shall have no such voting rights from and after the
time, if any, at which he forfeits all his right, title and interest in and to
the Shares pursuant to the terms of this Agreement.
2.09. The Compensation and Management Development Committee of the Board
of Directors of the Company may make such waivers hereunder as such Committee in
its sole and absolute discretion deems appropriate.
III. LAPSE OF RESTRICTIONS; ACCELERATION OF ISSUANCE.
3.01. All restrictions on the Shares created pursuant to this Agreement
shall lapse and the Company shall deliver written notice to the Escrow Agent
directing that the Shares be distributed to the Employee, if the Employee is
employed by the Company at the time of the occurrence of a Change in Control
that occurs prior to March 1, 2000. The Restricted Stock Rights shall
immediately vest and the Company shall forthwith issue the Additional Shares to
the Employee if the Employee is employed by the Company at the time of the
occurrence of a Change in Control that occurs prior to March 1, 2000, unless
such Change in Control is a Lockheed Merger effective on or prior to July 1,
1998, in which event Section 1.02 hereof shall control.
IV. PAYMENT FOR TAXES.
4.01. If, after a final determination for federal, state or local tax
purposes, the deposit of the Shares into the escrow created under the Master
Escrow Agreement or the subjection of the Shares to the restrictions contained
in this Agreement results in a tax liability to the Employee in excess of what
the Employee's tax liability would have been had the Shares not been deposited
into the escrow or been made subject to the restrictions contained in this
Agreement, then the Company shall pay to the Employee an amount equal to any
such excess tax liability grossed up to compensate the Employee for any tax
liability incurred with respect to any payment made under this Section 4.01.
4.02. The Employee shall be responsible for all taxes imposed with respect
to the receipt of any Additional Shares pursuant to this Agreement except that
the Company shall pay the Employee an amount equal to any excise tax under
Section 4999 of the Internal Revenue Code arising as a result of the receipt of
the Additional Shares grossed up to compensate the Employee for any tax
liability incurred with respect to any payment made under this Section 4.02.
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4.03. Any payment by the Company pursuant to either Section 4.01 or
Section 4.02 shall be made pursuant to the provisions in the Plan governing such
payment.
V. CALIFORNIA LAW.
5.01. This Agreement shall be construed in accordance with and governed by
the laws of the State of California, without giving effect to its conflicts of
laws or choice of laws rules.
VI. DEFINITIONS.
6.01. For all purposes of this Agreement, the following terms shall have
the meanings assigned thereto in this Section 6.01:
"Cause" means the occurrence of either or both of the following: (i)
the Employee's conviction for committing an act of fraud, embezzlement, theft,
or other act constituting a felony; or (ii) the willful engaging by the Employee
in gross misconduct materially and demonstrably injurious to the Company.
However, no act, or failure to act, on the Employee's part shall be considered
"willful" unless done, or omitted to be done, by the Employee not in good faith
and without reasonable belief that his action or omission was in the best
interest of the Company.
"Change in Control" has the meaning assigned to it in the Plan.
"Disabled" and its correlatives mean total and permanent disability
as defined in the rules of the Social Security Administration of the United
States.
"employee of the Company" and its correlatives mean employment by
the Company or any of its subsidiaries.
"Retire," "Retirement" and their correlatives mean any retirement on
or after March 1, 1999 from active service with the Company with immediate
receipt of a pension benefit under a Company retirement or pension plan or, for
Company elements not covered by such plans, termination by the Employee at or
after age 55 following 10 or more consecutive years of Company service. If the
Employee retires before March 1, 1999, such retirement shall be treated as a
voluntary termination, and not as a Retirement, for all purposes of this
Agreement and the Plan.
VII. AMENDMENTS.
No amendment or modification to this Agreement may be made except in
writing signed by the Company and the Employee.
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BY SIGNING AND DELIVERING THIS AGREEMENT, THE EMPLOYEE EXPRESSLY AGREES
THAT THE EMPLOYEE IS A PARTY TO AND IS BOUND BY THIS AGREEMENT AND THE MASTER
ESCROW AGREEMENT.
IN WITNESS WHEREOF, THE COMPANY AND THE EMPLOYEE HAVE EXECUTED THIS
AGREEMENT AS OF THE ____ DAY OF MARCH, 1998.
NORTHROP GRUMMAN CORPORATION
BY:_________________________
ITS:________________________
EMPLOYEE
SIGNATURE:__________________
PRINTED NAME:_______________
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April 8, 1998
To: Appointed Officer Recipients of the Ownership Retention Plan
Subject: Ownership Retention Plan
We want to clarify one point concerning the Ownership Retention Agreement we
sent you on April 2, 1998. Some Northrop Grumman personnel who want to elect to
be covered by the Ownership Retention Agreement have asked what happens to their
escrowed shares and their rights to the 29% additional shares if they terminate
their employment under the Good Reason provisions of the Company's Change in
Control Severance Agreement.
The answer is that you will get all your escrowed shares and all of the 29%
additional shares if you terminate your employment for "Good Reason." In other
words, it will be treated just as if you had been laid off or otherwise
terminated for reasons other than Cause, and it will not be treated as a
voluntary termination by you. The definition of "Good Reason" will be the same
as set forth in the Company's Change in Control Severance Plan.
To cement this understanding of your benefits into the legal documents, this
letter will serve to modify, as Amendment No. 1, the Ownership Retention
Agreement we sent you. If you sign and return the Ownership Retention Agreement
and this Amendment No. 1, your Ownership Retention Agreement will be
conclusively deemed to include a new Article VIII stating that:
"Termination for Good Reason (as defined in the Company's Change in Control
Severance Plan) by the Employee as an employee of the Company shall be
deemed to be and shall be treated identically to a termination of the
Employee by the Company for reasons other than Cause, for all purposes of
this Agreement, the Master Escrow Agreement and the Plan."
We trust that this Amendment No. 1 clarifies and confirms the extensive
protections of your interests that we built into the Ownership Retention
Agreement. The undersigned, on behalf of Northrop Grumman Corporation, has
executed this Amendment No. 1, intending to be legally bound thereby.
Northrop Grumman Corporation
Kent Kresa ____________________________
Employee Name (print)
____________________________
Employee Signature
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Exhibit 5.1
-----------
[GIBSON, DUNN & CRUTCHER LLP LETTERHEAD]
November 25, 1998
(213) 229-7000 C 66093-00090
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA 90067
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Northrop Grumman Corporation, a Delaware
corporation (the "Company"), in connection with the registration by the Company
on the Registration Statement on Form S-8 (the "Registration Statement") filed
with the Securities and Exchange Commission (the "Commission") on November 25,
1998 under the Securities Act of 1933, as amended (the "Securities Act"), of
102,922 shares (the "Shares") of the Company's common stock, par value $1.00 per
share. The Shares are reserved for issuance upon exercise of Restricted Stock
Rights (the "Restricted Stock Rights") granted under the Company's 1998
Restricted Stock Rights Plan.
We are familiar with the corporate actions taken and to be taken by the
Company in connection with the authorization and issuance of the Shares and have
made such other legal and factual inquiries as we deem necessary for the purpose
of rendering this opinion.
Based on the foregoing and in reliance thereon, we are of the opinion that
(i) the Shares have been duly authorized for issuance and (ii) when issued
pursuant to the 1998 Restricted Stock Rights Plan, the Shares will be validly
issued, fully paid and nonassessable.
The Company is incorporated under the laws of the State of Delaware. We
are not admitted to practice in Delaware; however, we are generally familiar
with the Delaware General
<PAGE>
Northrop Grumman Corporation
November 25, 1998
Page 2
Corporation Law and have made such review thereof as we consider necessary for
the purpose of rendering this opinion. Subject to the foregoing, this opinion is
limited to Delaware and federal law.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act or the General Rules and Regulations of the Commission.
Very truly yours,
GIBSON, DUNN & CRUTCHER LLP
AEB/JBC/BDT
<PAGE>
EXHIBIT 23.1
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Northrop Grumman Corporation on Form S-8 of our report dated January 21, 1998,
appearing in the Annual Report on Form 10-K of Northrop Grumman Corporation for
the year ended December 31, 1997.
/s/ Deloitte & Touche LLP
Los Angeles, California
November 23, 1998
