AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1996
    
 
   
                                                      REGISTRATION NO. 333-02453
    
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
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                                AMENDMENT NO. 1
                                       TO
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
    
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                          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
 
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          APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
 As soon as practicable after this Registration Statement has become effective
    
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    THE  REGISTRANT HEREBY  AMENDS THIS REGISTRATION  STATEMENT ON  SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A  FURTHER  AMENDMENT  WHICH SPECIFICALLY  STATES  THAT  THIS  REGISTRATION
STATEMENT  SHALL THEREAFTER BECOME EFFECTIVE IN  ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT  OF 1933  OR UNTIL  THE REGISTRATION  STATEMENT SHALL  BECOME
EFFECTIVE  ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
    
 
    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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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.

   
                   SUBJECT TO COMPLETION, DATED MAY 16, 1996
    
 
                                7,000,000 Shares
 
                                NORTHROP GRUMMAN
                                  Common Stock
                               ($1.00 PAR VALUE)
 
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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 MAY  15,
  1996,  THE LAST REPORTED SALE PRICE  OF THE COMMON       STOCK ON THE NYSE
           WAS $62. SEE "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
    
 
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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.
 
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS COMPANY(1) ----------------- ----------------- ----------------- PER SHARE............................................. $ $ $ TOTAL (2)............................................. $ $ $
(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 JUNE , 1996, AGAINST PAYMENT IN IMMEDIATELY AVAILABLE FUNDS. CS First Boston Merrill Lynch & Co. Salomon Brothers Inc THE DATE OF THIS PROSPECTUS IS JUNE , 1996. 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 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; (iv) a description of the Common Stock of the Company set forth in a Registration Statement on Form 8-B dated June 20, 1985; and (v) 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 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 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 $2.9 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 THE OFFERINGS 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: Before the Offerings (at April 30, 1996)............ 49,633,330 shares After the Offerings (1)..... 56,633,330 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
- ------------------------ (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 SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA The following summary historical financial data with respect 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. The data for the three months ended March 31, 1996 and 1995 are unaudited but, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position for such periods. Operating results for the three months ended March 31, 1996 may not be indicative of the results that may be expected for the year ending December 31, 1996, or any future period. All such summary historical financial data 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 March 31, 1996 and the periods 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 for the year ended December 31, 1995 and the three months ended March 31, 1996 give effect to the Acquisition as if it had occurred as of January 1, 1995. The pro forma Balance Sheet Data give 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."
FOR FISCAL YEAR ENDED DECEMBER 31, -------------------------------------------------------------------- 1995 1994 1993 1992 1991 -------- ---------- -------- -------- ---------- PRO FORMA 1995 --------- (UNAUDITED) ($ IN MILLIONS, EXCEPT PER SHARE DATA) 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 cumulative effect of 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
7 SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA (CONTINUED)
THREE MONTHS ENDED MARCH 31, --------------------------------- (UNAUDITED) PRO FORMA 1996 1996 1995 --------- -------- ---------- ($ IN MILLIONS, EXCEPT PER SHARE DATA) Operating Data: Net sales.................................................................. $ 1,850 $ 1,603 $ 1,617 Cost of sales Operating costs.......................................................... 1,476 1,273 1,299 Administrative and general expenses...................................... 231 191 201 --------- -------- ---------- Operating margin........................................................... 143 139 117 Interest expense, net...................................................... (81) (46) (34) Other, net................................................................. 8 9 5 --------- -------- ---------- Income before income taxes................................................. 70 102 88 Federal and foreign income taxes........................................... 29 41 34 --------- -------- ---------- Net income................................................................. $ 41 $ 61 $ 54 --------- -------- ---------- --------- -------- ---------- Earnings per share......................................................... $ .83 $ 1.23 $ 1.10 --------- -------- ---------- --------- -------- ---------- Balance Sheet Data: Total assets............................................................... $ 9,495 $ 6,090 Net working capital........................................................ 339 469 Total debt................................................................. 4,201 1,787 Shareholders' equity....................................................... 1,505 1,326 Other Data: Capital expenditures....................................................... $ 41 $ 45 Depreciation and amortization.............................................. 71 67 Funded order backlog....................................................... 12,543 11,477 Dividends per share........................................................ $ .40 $ .40 Weighted average shares outstanding (in millions).......................... 49.6 49.3
8 USE OF PROCEEDS The Company intends to apply the net proceeds from the Offerings, estimated to be approximately $420.3 million (or approximately $483.4 million if the overallotment option is exercised), assuming an offering price of $62 per share, to repay a portion of the Company's bank borrowings incurred to finance the Acquisition in March 1996. The indebtedness to be repaid with the proceeds of the Offerings currently bears interest at 5.94% and has a maturity date of March 1, 1998. CAPITALIZATION The following table sets forth (i) the capitalization of the Company as at March 31, 1996, and (ii) the capitalization as adjusted to reflect the sale pursuant to the Offerings of 7,000,000 shares of Common Stock and the application of the estimated net proceeds therefrom. See "Use of Proceeds."
AS OF MARCH 31, 1996 ----------------------------- ACTUAL AS ADJUSTED (A) ------------ --------------- ($ IN MILLIONS) Current portion of long-term debt................................................. $ 250 $ 250 ------ ------ Long-term debt: Bank term loans and revolving credit facility (b)............................... 2,350 1,930 8 5/8% Notes due 2004........................................................... 350 350 7% Notes due 2006............................................................... 400 400 7 3/4% Debentures due 2016...................................................... 300 300 9 3/8% Debentures due 2024...................................................... 250 250 7 7/8% Debentures due 2026...................................................... 300 300 Other........................................................................... 1 1 ------ ------ Total long-term debt.......................................................... 3,951 3,531 ------ ------ Total debt.................................................................... 4,201 3,781 Shareholders' equity: Preferred stock, 10,000,000 shares authorized; none issued...................... Common stock (c), 200,000,000 shares authorized; 49,632,060 shares issued; 56,632,060 shares issued as adjusted (d)....................................... 276 696 Retained earnings............................................................... 1,241 1,241 Unfunded pension losses, net of taxes........................................... (12) (12) ------ ------ Total shareholders' equity.................................................... 1,505 1,925 ------ ------ Total capitalization........................................................ $ 5,706 $ 5,706 ------ ------ ------ ------
- ------------------------ (a) Assumes a public offering price of $62 per share, the closing price of the Company's Common Stock on the NYSE on May 15, 1996. (b) Amended bank credit facility consisting of a $1.8 billion revolving credit facility expiring in March 2002 and two term loan facilities aggregating $2 billion ($500 million due March 1998 and $1.5 billion due in quarterly installments of $62.5 million through March 2002), the proceeds of which, together with $1 billion of institutionally placed notes and debentures, were utilized to finance the Acquisition. (c) Includes an equal number of Common Stock Purchase Rights. See "Description of Capital Stock -- Common Stock Purchase Rights." (d) Excludes 3,959,423 shares of Common Stock reserved for issuance pursuant to outstanding options and rights granted under the Company's stock plans. 9 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.
PRICE RANGE CASH ------------- DIVIDENDS LOW HIGH DECLARED ----- ----- --------- 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 May 15, 1996)......................................... 58 63 1/4
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 28, 1996. 10 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. The data for the three months ended March 31, 1996 and 1995 are unaudited but, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position for such periods. Operating results for the three months ended March 31, 1996 may not be indicative of the results that may be expected for the year ending December 31, 1996, or any future period. See also "Available Information," "Incorporation of Certain Documents by Reference" and "Unaudited Pro Forma Condensed Combined Financial Data."
THREE MONTHS ENDED MARCH 31, FISCAL YEAR ENDED DECEMBER 31, ------------------- --------------------------------------------------- 1996(B) 1995 1995 1994(A) 1993 1992 1991 ------- ------ ------ ------- ------ ------ ------ (UNAUDITED) ($ IN MILLIONS, EXCEPT PER SHARE DATA) Operating Data: Net sales....................................... $ 1,603 $1,617 $6,818 $ 6,711 $5,063 $5,550 $5,694 Cost of sales Operating costs............................... 1,273 1,299 5,319 5,477 4,385 4,877 4,817 Administrative and general expenses........... 191 201 963 753 485 455 531 Special termination benefits.................. 282 ------- ------ ------ ------- ------ ------ ------ Operating margin................................ 139 117 536 199 193 218 346 Other, net...................................... 9 5 9 (31) 13 5 Interest expense, net........................... (46) (34) (136) (103) (36) (43) (69) ------- ------ ------ ------- ------ ------ ------ Income before income taxes and cumulative effect of accounting principle changes................ 102 88 409 65(b) 170 180 277 Federal and foreign taxes....................... 41 34 157 30 74 59 9 ------- ------ ------ ------- ------ ------ ------ Income before cumulative effect of accounting principle changes.............................. 61 54 252 35 96 121 268 Cumulative effect of accounting principle changes........................................ (67)(c) ------- ------ ------ ------- ------ ------ ------ Net income...................................... $ 61 $ 54 $ 252 $ 35 $ 96 $ 121 $ 201 ------- ------ ------ ------- ------ ------ ------ ------- ------ ------ ------- ------ ------ ------ Earnings per share before cumulative effect of accounting principle changes................... $ 1.23 $ 1.10 $ 5.11 $ .72 $ 1.99 $ 2.56 $ 5.69 Cumulative effect of accounting principle changes, per share............................. (1.43)(c) ------- ------ ------ ------- ------ ------ ------ Earnings per share.............................. $ 1.23 $ 1.10 $ 5.11 $ .72 $ 1.99 $ 2.56 $ 4.26 ------- ------ ------ ------- ------ ------ ------ ------- ------ ------ ------- ------ ------ ------ Balance Sheet Data: Total assets.................................... $ 9,495 $6,090 $5,455 $ 6,047 $2,939 $3,162 $3,128 Net working capital............................. 339 469 357 467 481 354 611 Total debt (d).................................. 4,201 1,787 1,372 1,934 160 510 550 Shareholders' equity............................ 1,505 1,326 1,459 1,290 1,322 1,254 1,182 Other Data: Net cash provided by operating activities....... $ 230 $ 191 $ 744 $ 441 $ 380 $ 284 $ 609 Capital expenditures............................ 41 45 133 134 135 123 118 Depreciation and amortization................... 71 67 283 269 214 160 171 Funded order backlog............................ 12,543 11,477 9,947 12,173 6,919 7,175 8,561 Dividends per share............................. $ .40 $ .40 $ 1.60 $ 1.60 $ 1.60 $ 1.20 $ 1.20 Weighted average shares outstanding (in millions)...................................... 49.6 49.3 49.4 49.2 48.1 47.2 47.1
- -------------------------- (a) Includes Grumman Corporation data from April 1994 and Vought Aircraft Company data from August 1994. (b) Includes ESSD data from March 1, 1996. (c) 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. (d) Total debt includes long-term, short-term and current portion of long-term debt. 11 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 statements of income give 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 liabilities acquired include contingent liabilities of the type normally associated with the conduct of the business including product warranty, employee, environmental and litigation claims. As to certain contingent liabilities, the Company's exposure has been limited, above certain thresholds, by indemnification from or a participation agreement with the seller up to limits that the Company believes, based on its investigations and negotiations to date, will not be exceeded as the liabilities are settled or otherwise satisfied. Based upon available information, the Company expects that those contingent liabilities for which loss provisions have not been included in the purchase price adjustment will not have a material adverse impact on the Company's results of operations or financial position. The Company does not presently anticipate that the changes to the purchase price allocation presented will be material. 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, and the unaudited consolidated financial statements, including the notes thereto, of the Company in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996, which are incorporated herein by reference. See "Available Information" and "Incorporation of Certain Documents by Reference." 12 PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION (UNAUDITED) DECEMBER 31, 1995 ASSETS
NORTHROP PRO FORMA PRO FORMA GRUMMAN ESG ADJUSTMENTS COMBINED ------- ------ ----------- --------- ($ IN MILLIONS) 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) $ 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 $9,646 ------- ------ ----------- --------- ------- ------ ----------- ---------
13 PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (UNAUDITED) YEAR ENDED DECEMBER 31, 1995
NORTHROP PRO FORMA PRO FORMA GRUMMAN ESG ADJUSTMENTS COMBINED ------- ------ --------------- --------- ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net sales....................................................................... $6,818 $2,554 $ (214)(c)(h) $9,158 Cost of sales................................................................... Operating costs............................................................. 5,319 1,997 (86)(c)(d)(h) 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
THREE MONTHS ENDED MARCH 31, 1996
NORTHROP PRO FORMA PRO FORMA GRUMMAN(G) ESG(G) ADJUSTMENTS COMBINED ------- ------ --------------- --------- ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net sales....................................................................... $1,603 $ 259 $ (12)(h) $1,850 Cost of sales................................................................... Operating costs............................................................. 1,273 194 9 (d)(h 1,476 Administrative and general expenses......................................... 191 40 231 ------- ------ ------ --------- Operating margin................................................................ 139 25 (21) 143 Interest expense, net........................................................... (46) (35)(e) (81) Other, net...................................................................... 9 (1) 8 ------- ------ ------ --------- Income before income taxes...................................................... 102 24 (56) 70 Federal and foreign income taxes................................................ 41 8 (20)(f) 29 ------- ------ ------ --------- Net income...................................................................... $ 61 $ 16 $ (36) $ 41 ------- ------ ------ --------- ------- ------ ------ --------- Earnings per share.............................................................. $ 1.23 $ .83 ------- --------- ------- --------- Weighted average shares outstanding (in millions)............................... 49.6 49.6
14 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. The Company does not presently anticipate material changes in the purchase price allocations. (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 a change in the method of recognizing contract revenue from the milestone method applied by ESG to conform with the Company's method of revenue recognition, the cost-to-cost type of percentage of completion, on similar type contracts (adjustment for the year ended December 31, 1995: net sales -- $113 million; operating costs -- $103 million). (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 amortization for the twelve-month period ended December 31, 1995 of $118 million and amortization for the three-month period ended March 31, 1996 of $21 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. (g) Northrop Grumman data includes one month of combined operations of Northrop Grumman and ESG. ESG data reflects operations for the two months ended February 29, 1996. (h) Adjustment to eliminate intercompany sales between ESG and the Company (for the year ended December 31, 1995: net sales -- $101 million; for the three months ended March 31, 1996: net sales -- $12 million). 15 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. 16 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 $2.9 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. 17 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. 18 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 19 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 KROLL 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. 20 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 30, 1996, 49,633,330 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. 21 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. 22 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. 23 NEW PROPOSED REGULATIONS The United States Treasury recently proposed new regulations regarding the withholding and information reporting rules discussed above. Among other changes, the proposed regulations would unify certification forms and procedures, require certification of residence to claim treaty benefits, and clarify reliance standards and make other changes affecting withholding agents and intermediaries. If finalized in their current form, the proposed regulations would generally be effective for payments made after December 31, 1997, subject to certain transition rules. 24 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 and not jointly agreed to purchase from the Company the following respective numbers of U.S. Shares:
NUMBER OF U.S. UNDERWRITER U.S. SHARES - -------------------------------------------------------------------------------- ------------ CS First Boston Corporation..................................................... Merrill Lynch, Pierce, Fenner & Smith Incorporated.......................................................... Salomon Brothers Inc............................................................ ------------ Total....................................................................... 5,950,000 ------------ ------------
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. 25 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, 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, as amended (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, or publicly disclose the intention to make any such offer, sale, pledge, disposal or filing, 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 of Common Stock pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants, rights or options in each case outstanding as of the date of this Prospectus, grants of employee stock options or rights pursuant to a plan in effect on the date of this Prospectus, issuances pursuant to the exercise of such options or rights, issuances pursuant to the Company's dividend reinvestment plan as in effect on the date of this Prospectus, and any filing of a registration statement under the Securities Act with respect to any of the foregoing permitted issuances or grants. 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. 26 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. 27 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. 28 - ------------------------------------------- ------------------------------------------- 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
PAGE ----- Forward Looking Statements..................... 2 Available Information.......................... 2 Incorporation of Certain Documents by Reference..................................... 3 Prospectus Summary............................. 4 Use of Proceeds................................ 9 Capitalization................................. 9 Price Range of Common Stock and Dividends...... 10 Selected Consolidated Financial Data........... 11 Unaudited Pro Forma Condensed Combined Financial Data................................ 12 The Company.................................... 16 Description of Capital Stock................... 21 Certain United States Federal Tax Consequences For Non-United States Holders................. 22 Underwriting................................... 25 Notice to Canadian Residents................... 27 Experts........................................ 27 Legal Matters.................................. 28
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 - ------------------------------------------- ------------------------------------------- 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 jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. SUBJECT TO COMPLETION, DATED MAY 16, 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 MAY 15, 1996, THE LAST REPORTED SALE PRICE OF THE COMMON STOCK ON THE NYSE WAS $62. 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.
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS COMPANY(1) ----------------- ----------------- ----------------- PER SHARE............................................. $ $ $ TOTAL (2)............................................. $ $ $
(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 JUNE , 1996, AGAINST PAYMENT IN IMMEDIATELY AVAILABLE FUNDS. CS First Boston Merrill Lynch International Salomon Brothers International Limited THE DATE OF THIS PROSPECTUS IS JUNE , 1996. 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
PAGE ----- Forward Looking Statements..................... 2 Available Information.......................... 3 Incorporation of Certain Documents by Reference..................................... 3 Prospectus Summary............................. 4 Use of Proceeds................................ 9 Capitalization................................. 9 Price Range of Common Stock and Dividends...... 10 Selected Consolidated Financial Data........... 11 PAGE ----- Unaudited Pro Forma Condensed Combined Financial Data................................ 12 The Company.................................... 16 Description of Capital Stock................... 21 Certain United States Federal Tax Consequences For Non-United States Holders................. 22 Subscription and Sale.......................... 25 Experts........................................ 27 Legal Matters.................................. 27
2 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; (iv) a description of the Common Stock of the Company set forth in a Registration Statement on Form 8-B dated June 20, 1985; and (v) 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 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:
NUMBER OF INTERNATIONAL MANAGER SHARES - -------------------------------------------------------------------------------- ------------ CS First Boston Limited Merrill Lynch International Salomon Brothers International Limited ------------ Total 1,050,000 ------------ ------------
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 ("CSFBC"), 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 CSFBC on behalf of the U.S. Underwriters. 25 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 CSFBC, 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. Prior to the expiry of the period of six months from the closing of the Offerings no Common Stock may be offered or sold in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances that have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995. All applicable provisions of the Public Offers of Securities Regulations 1995 and the Financial Services Act 1986 must be complied with in respect of anything done in relation to any Common Stock in, from or otherwise involving the United Kingdom. No document issued in connection with the issue of any Common Stock may be issued or passed on in the United Kingdom to a person, unless that person is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom the document may otherwise lawfully be issued or passed on. The Company has not authorized any offer of Common Stock to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (the "Regulations"). The Common Stock may not lawfully be offered or sold to persons in the United Kingdom except in circumstances that do not result in an offer to the public in the United Kingdom within the meaning of the Regulations or otherwise in compliance with all applicable provisions of the Regulations. The Company has agreed that it will not offer, sell, contract 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, as amended (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, or publicly disclose the intention to make any such offer, sale, pledge, disposal or filing, without the prior written consent of CSFBC for a period of 90 days after the date of this Prospectus, except for issuances of Common Stock pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants, rights or options in each case outstanding as of the date of this Prospectus, grants of employee stock options or rights pursuant to a plan in effect on the date of this Prospectus, issuances pursuant to the exercise of such options or rights, issuances pursuant to the Company's dividend reinvestment plan as in effect on the date of this Prospectus, and any filing of a registration statement under the Securities Act with respect to any of the foregoing permitted issuances or grants. 26 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. 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. 27 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: 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......................................................... $ * --------- ---------
- ------------------------ * 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 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 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*
II-2 23.3 Consent of Sheppard, Mullin, Richter & Hampton LLP (included in Exhibit 5.1)* 24.1 Power of Attorney*
- ------------------------ * Previously filed. 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 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, California on May 15, 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 Amendment No. 1 to its Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
NAME TITLE DATE ---------------------------- ------------------------ ------------------ Chairman of the Board, KENT KRESA* President and Chief - ---------------------------------- Executive Officer and May 15, 1996 Kent Kresa Director (Principal Executive Officer) RICHARD B. WAUGH, JR.* Corporate Vice President - ---------------------------------- and Chief Financial May 15, 1996 Richard B. Waugh, Jr. Officer Corporate Vice President NELSON F. GIBBS* and Controller - ---------------------------------- (Principal Accounting May 15, 1996 Nelson F. Gibbs Officer) JACK R. BORSTING* - ---------------------------------- Director May 15, 1996 Jack R. Borsting JOHN T. CHAIN, JR.* - ---------------------------------- Director May 15, 1996 John T. Chain, Jr. JACK EDWARDS* - ---------------------------------- Director May 15, 1996 Jack Edwards PHILIP FROST* - ---------------------------------- Director May 15, 1996 Philip Frost AULANA L. PETERS* - ---------------------------------- Director May 15, 1996 Aulana L. Peters JOHN E. ROBSON* - ---------------------------------- Director May 15, 1996 John E. Robson
II-4
NAME TITLE DATE ---------------------------- ------------------------ ------------------ RICHARD M. ROSENBERG* - ---------------------------------- Director May 15, 1996 Richard M. Rosenberg - ---------------------------------- Director Brent Scowcroft JOHN BROOKS SLAUGHTER* - ---------------------------------- Director May 15, 1996 John Brooks Slaughter WALLACE C. SOLBERG* - ---------------------------------- Director May 15, 1996 Wallace C. Solberg RICHARD J. STEGEMEIER* - ---------------------------------- Director May 15, 1996 Richard J. Stegemeier *By: JAMES C. JOHNSON ---------------------------- James C. Johnson ATTORNEY-IN-FACT**
- ------------------------ ** By authority of power of attorney filed with this registration statement. II-5 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE - ----------- ---------------------------------------------------------------------- ---- 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*
- ------------------------ * Previously filed.


                                                                     Exhibit 1.1


                               ____________ 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:



          (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


                                        2




     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 material 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 material 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 material 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 material 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



                                        3



     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 or foreign 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



     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 unless such failure or failures to have good
     and marketable title, free from liens, encumbrances and defects or such
     failure to hold such valid and enforceable leases, would not, individually
     or in the aggregate, have a Material Adverse Effect.

          (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 except for
     such certificates, authorities or permits, the absence of which would not
     have a Material Adverse Effect, 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) 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.

          (p) 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


                                        5



     properties that are required to be described in the Prospectuses or which
     challenge the right of the Company or the ability of the Company to perform
     its obligations under this Agreement or the Subscription Agreement.

          (q) 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.

          (r) 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.

          (s) 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.

          (t) 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  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


                                        6



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.

     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


                                        7



     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 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.


                                        8



          (e)  The Company will furnish to the Representatives copies of the
     Registration Statement (one 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; provided that the Company
     shall not be required to qualify to do business in any jurisdiction where
     it is not now qualified or to file a general consent to service or process
     in any jurisdiction.

          (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
     issuances of Securities pursuant to the conversion or exchange of
     convertible or exchangeable securities or the exercise of warrants, rights
     or options, in each case outstanding on the date hereof, grants of employee
     stock options or rights pursuant to the terms of a plan in effect on the
     date hereof, issuances of Securities pursuant to the exercise of such
     options or rights, issuances of Securities pursuant to the Company's
     dividend reinvestment plan as in effect on the date hereof, and any filing


                                        9



     of a registration statement under the Act with respect to any of the
     foregoing permitted issuances or grants.

     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 substantially
               consistent with that of the corresponding amounts in the audited
               statements of income;



                                       10




                    (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 shareholders' equity 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; and

               (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.

          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.

          (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


                                          11



     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 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;

          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 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


                                          12



     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 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) To the best of our knowledge, 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 transactions
          contemplated by this Agreement or the Subscription Agreement in
          connection with the issuance or sale of the Offered


                                          13



          Securities by the Company, except such as have been obtained and made
          under the Act and such as may be required under state or foreign
          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, to our knowledge 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 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 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


                                          14



     schedules and other financial 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, 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 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.

          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.


                                          15



          (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; 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 requests. 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.

    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,


                                          16



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 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


                                          17



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, 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


                                          18



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, telegraphed or transmitted by
facsimile 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, telegraphed or transmitted by facsimile and confirmed to it
at Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA  90067,
Attention:  Albert F. Myers, Corporate Vice President and Treasurer; provided,
however, that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered, telegraphed or transmitted by facsimile 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.

    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.


                                          19



                              [Signature Page Follows.]



    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



                                      SCHEDULE A


                             Underwriter                        Number of
                             -----------                  U.S. Firm Securities
                                                          --------------------

CS FIRST BOSTON CORPORATION . . . . . . . . . . . . . . .

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED. . . .

SALOMON BROTHERS INC  . . . . . . . . . . . . . . . . . .
                                                           --------------------

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                           --------------------
                                                           --------------------




                                      SCHEDULE B

                           LIST OF SIGNIFICANT SUBSIDIARIES


1.  Grumman Corporation, a New York corporation.



                                                                     EXHIBIT 1.2


                             _____________________ 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.



       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



       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 material 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 material 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 material 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


                                          3



       of the Prospectuses will conform in all material 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



            (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 or
       foreign 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 unless such
       failure or failures to have good and marketable title, free from liens,
       encumbrances and defects or such failure to hold such valid and
       enforceable leases, would not, individually or in the aggregate, have a
       Material Adverse Effect.


                                          5



            (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 except for such certificates, authorities or permits, the absence
       of which would not have a Material Adverse Effect, 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)  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.

            (p)  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 are required
       to be described in the Prospectuses or which challenge the right of the
       Company or the ability of the Company to perform its obligations under
       this Agreement or the Underwriting Agreement.

            (q)  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.

            (r)  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,


                                          6



       there has been no dividend or distribution of any kind declared, paid or
       made by the Company on any class of its capital stock.

            (s)  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.

            (t)  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 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.


                                          7



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 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


                                          8



       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.

            (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


                                          9




       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 one 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. 

               (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, rights or options, in each case outstanding on the
       date


                                          10




       hereof, grants of employee stock options or rights pursuant to the terms
       of a plan in effect on the date hereof, issuances of Securities pursuant
       to the exercise of such options or rights, issuances of Securities
       pursuant to the Company's dividend reinvestment plan as in effect on the
       date hereof, and any filing of a registration statement under the Act
       with respect to any of the foregoing permitted issuances or grants.

       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 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


                                          11



       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(e) 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(f)
       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; 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; 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,


                                          12



       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 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 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 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


                                          13



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 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'


                                          14



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 (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


                                          15



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, telexed or transmitted by
facsimile and confirmed to CSFBL at One Cabot Square, London E14 4QJ England,
Attention:  Company Secretary (telex 892181 CSFBC, facsimile (011 44 171 516
1300), or, if sent to the Company, will be mailed, delivered, telegraphed or
transmitted by facsimile and confirmed to it at Northrop Grumman Corporation,
1840 Century Park East, Los Angeles, CA  90067, Attention:  Albert F. Myers,
Corporate Vice President and Treasurer; provided, however, that any notice to a
Manager pursuant to Section 7 will be mailed, delivered, telexed or transmitted
by facsimile 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.

       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. 


                                          16



       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



                                      SCHEDULE A



                                                            Number of 
                          Manager                  International Firm Securities
                          -------                  -----------------------------

CS FIRST BOSTON CORPORATION ......................

MERRILL LYNCH INTERNATIONAL ......................

SALOMON BROTHERS INTERNATIONAL LIMITED ...........

[Other Managers]                                   -----------------------------

TOTAL ............................................
                                                   -----------------------------
                                                   -----------------------------



                                      SCHEDULE B

                           LIST OF SIGNIFICANT SUBSIDIARIES


1.     Grumman Corporation, a New York corporation.



                                                                    EXHIBIT 23.1
                         INDEPENDENT AUDITORS' CONSENT
 
We  consent  to  the incorporation  by  reference  in this  Amendment  No.  1 to
Registration Statement  No.  333-02453  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
 
Deloitte & Touche LLP
Los Angeles, California
May 16, 1996