As filed with the Securities and Exchange Commission on March 4, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Northrop Grumman Corporation
(Exact name of registrant as specified in its charter)
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Delaware 3812 95-4840775
(State or other (Primary Standard (I.R.S.
jurisdiction Industrial Classification Employer Identification
of incorporation or Code Number) Numbers)
organization)
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1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
(Address, including zip code, and telephone number,
including area code, of registrants' principal executive offices)
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John H. Mullan
Corporate Vice President and Secretary
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)
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Copies To:
Andrew E. Bogen
Peter F. Ziegler
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071-3197
(213) 229-7000
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Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this registration statement becomes
effective and upon completion of the transactions described in the enclosed
prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] ______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ______
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Each Class of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered(1) Registered(2) Per Unit Price(3) Registration Fee
- -------------------------------------------------------------------------------------------------------
Common Stock, par value
$1.00 per share (together with the
associated rights)................ 55,092,761 N/A $6,487,486,707.68 $596,849.08
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(1) This Registration Statement relates to securities of Northrop Grumman
Corporation ("Northrop Grumman") exchangeable for all of the issued and
outstanding shares of (a) common stock, par value $0.625 per share, of TRW
Inc., an Ohio corporation ("TRW"), (b) Cumulative Serial Preference
Stock II, $4.40 Convertible Series 1, no par value per share (the "Series 1
Shares"), of TRW and (c) Cumulative Serial Preference Stock II, $4.50
Convertible Series 3, no par value per share (the "Series 3 Shares" and,
together with the common stock and the Series 1 Shares, "capital stock"),
of TRW in the offer to exchange by registrant for all of the issued and
outstanding shares of TRW capital stock and in the proposed merger with TRW.
(2) This amount is based upon the maximum number of shares of common stock of
Northrop Grumman (together with the associated rights to purchase Series A
junior participating preferred stock) issuable upon completion of the offer
to exchange and merger for shares of TRW capital stock.
(3) Computed solely for purposes of calculating the registration fee. The
registration fee has been computed pursuant to Rule 457(f)(1) under the
Securities Act of 1933, as amended, based on the average of the high and
low prices for shares of TRW common stock as reported on the New York Stock
Exchange on March 1, 2002 ($51.08) and the maximum number of such shares
(127,006,396) that may be exchanged for the securities being registered
minus the maximum cash consideration payable for such shares.
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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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this offer to exchange may change. Northrop Grumman may
not complete the offer to exchange and issue these securities until the
Registration Statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer is
not permitted.
The information in this offer to exchange may change. Northrop Grumman may not
complete the exchange offer and issue these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
offer to exchange is not an offer to sell these securities and Northrop Grumman
is not soliciting offers to buy these securities in any state where the offer
is not permitted.
[LOGO] Northrop Grumman
NORTHROP GRUMMAN CORPORATION
Offer To Exchange Each Outstanding Share of Common Stock
of
TRW INC.
for
Shares of Common Stock of Northrop Grumman Corporation valued at $47.00
and
Each Outstanding Share of Serial Preference Stock II
of
TRW INC.
for
Shares of Common Stock of Northrop Grumman Corporation valued at $47.00
multiplied by the then-effective conversion rate of the applicable Series
of Serial Preference Stock II
by
NORTHROP GRUMMAN CORPORATION
in each case subject to the procedures and limitations described in this offer
to exchange and the related letters of transmittal.
The offer to exchange of Northrop Grumman Corporation, a Delaware
corporation ("Northrop Grumman"), and the withdrawal rights of the shareholders
of TRW Inc., an Ohio corporation ("TRW"), will expire at 12:00 midnight, New
York City time, on March 29, 2002, unless extended. TRW shares tendered
pursuant to the offer to exchange may be withdrawn at any time prior to the
expiration of the offer to exchange, but not during any subsequent offering
period.
Northrop Grumman hereby offers upon the terms and subject to the conditions
set forth in this offer to exchange and in the related letters of transmittal,
to issue shares of Northrop Grumman common stock, par value $1.00 per share,
(together with associated rights to purchase Series A junior participating
preferred stock) for each of the issued and outstanding shares of (a) common
stock, par value $0.625 per share of TRW (the "common stock"), (b) Cumulative
Serial Preference Stock II, $4.40 Convertible Series 1, no par value per share,
of TRW (the "Series 1 Shares"), and (c) Cumulative Serial Preference Stock II,
$4.50 Convertible Series 3, no par value per share, of TRW (the "Series 3
Shares" and, together with the common stock and the Series 1 Shares, "capital
stock" or "TRW shares"). Each share of TRW common stock may be exchanged for a
number of shares of Northrop Grumman common stock equal to the exchange rate,
as defined below. Each Series 1 Share and each Series 3 Share may be exchanged
for a number of shares of Northrop Grumman common stock equal to the
then-effective conversion rate for the Serial Preference Stock II multiplied by
the exchange ratio. The method for calculating the conversion rates for the
Series 1 Shares and the Series 3 Shares is provided in TRW's Amended Articles
of Incorporation. See "The Offer to Exchange" beginning on page 25 for a
discussion of the conversion rates. As of March 13, 2001, TRW reported that the
conversion ratios for the Series 1 Shares and Series 3 Shares were 8.8 and
7.448.
Northrop Grumman will determine the exact exchange ratio (the "exchange
ratio") by dividing $47.00 by the average of the closing sale prices for a
share of Northrop Grumman common stock on the New York Stock Exchange as
reported in The Wall Street Journal over the five consecutive trading days
ending immediately prior to the second trading day prior to the expiration of
the offer to exchange but, in no event will the exchange ratio be more than
0.4563 ($47.00/$103.00) or less than 0.4159 ($47.00/$113.00). The closing price
of Northrop Grumman common stock on the New York Stock Exchange on March 1,
2002, the last trading day before the offer to exchange commenced, was $107.75.
The purpose of the offer to exchange is for Northrop Grumman to acquire
control of, and ultimately the entire equity interest in, TRW. Northrop Grumman
intends, promptly after completion of the offer to exchange, to seek to have
TRW complete a merger (the "TRW merger") with Northrop Grumman or a
wholly-owned subsidiary of Northrop Grumman, in which each outstanding share of
capital stock of TRW (except for treasury shares of TRW and shares beneficially
owned directly or indirectly by Northrop Grumman for its own account) would be
converted into the right to receive shares of Northrop Grumman common stock at
the same exchange ratio as used in the offer to exchange, subject to
dissenters' rights under Ohio law.
Tenders of TRW shares pursuant to the offer to exchange will be effective,
and Northrop Grumman shall have the right to acquire tendered TRW shares, only
at such time as Section 1704 of the Ohio Revised Code shall not prohibit or
delay the TRW merger. No tender of TRW shares shall be effective, and Northrop
Grumman shall have no right to acquire tendered TRW shares, prior to such time.
This provision is referred to herein as the "1704 Limitation."
Northrop Grumman's obligation to exchange Northrop Grumman common stock for
TRW capital stock is subject to the 1704 Limitation and each of the conditions
listed under "The Offer to Exchange--Conditions to the Offer to Exchange"
beginning on page 36.
Northrop Grumman's common stock trades on the New York Stock Exchange and
the Pacific Stock Exchange under the symbol "NOC," and TRW's common stock
trades on the New York Stock Exchange, the Pacific Stock Exchange, the Chicago
Stock Exchange and the Philadelphia Stock Exchange under the symbol "TRW."
See "Risk Factors" beginning on page 10 for a discussion of various factors
that shareholders should consider about Northrop Grumman's offer to exchange.
Northrop Grumman is not asking TRW shareholders for a proxy and TRW
shareholders are requested not to send a proxy. Any solicitation of proxies
only will be made pursuant to separate proxy solicitation materials complying
with the requirements of Section 14(a) of the Securities Exchange Act of 1934.
Neither the Securities and Exchange Commission ("SEC") nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this offer to exchange. Any representation to
the contrary is a criminal offense.
The Dealer Manager for the Offer to Exchange is
Salomon Smith Barney
The date of this offer to exchange is March 4, 2002.
This offer to exchange incorporates important business and financial
information about Northrop Grumman and its subsidiaries, Litton Industries,
Inc. and Newport News Shipbuilding Inc., and TRW from documents filed with the
SEC that have not been included in, or delivered with, this offer to exchange.
This information is available on the SEC's website at http://www.sec.gov and
from other sources. See "Additional Information" on page 61.
TRW shareholders may also request copies of these documents from Northrop
Grumman, without charge, upon written or oral request to Northrop Grumman's
information agent, D. F. King & Co., Inc., 77 Water Street, New York, New York
10005, toll-free at (800) 755-7250 or by calling collect at (212) 269-5550. TRW
shareholders may call the toll free number above to learn the exchange ratio
starting on the second trading day prior to the expiration of the offer to
exchange.
In order to receive timely delivery of the documents, TRW shareholders must
make requests no later than March 22, 2002 (five business days before the
initially scheduled expiration date of the offer to exchange).
TABLE OF CONTENTS
Page
----
Summary.......................................................................................... 3
Risk Factors..................................................................................... 9
Ratio of Earnings to Fixed Charges............................................................... 12
Northrop Grumman Selected Historical and Unaudited Pro Forma Condensed Combined Financial Data... 13
Selected Historical Financial Data of TRW........................................................ 16
Comparative Per Share Information................................................................ 17
Comparative Market Data.......................................................................... 19
Information About Northrop Grumman and TRW....................................................... 20
Reasons for the Offer to Exchange................................................................ 22
Background of the Offer to Exchange.............................................................. 23
The Offer to Exchange............................................................................ 25
Consideration to Be Paid...................................................................... 25
Timing of the Offer to Exchange............................................................... 26
Extension, Termination and Amendment.......................................................... 26
Exchange of TRW Shares; Delivery of Northrop Grumman Common Stock............................. 27
Cash Instead of Fractional Shares of Northrop Grumman Common Stock............................ 28
Withdrawal Rights............................................................................. 28
Procedures for Tendering...................................................................... 29
Guaranteed Delivery........................................................................... 30
Material U.S. Federal Income Tax Consequence of the Offer to Exchange and the TRW Merger...... 31
Effect of the Offer to Exchange on the Market for TRW Shares; Registration Under the
Exchange Act................................................................................ 32
Purpose of the Offer to Exchange; the TRW Merger; Dissenters' Rights.......................... 33
Plans for TRW After the TRW Merger............................................................ 34
The 1704 Limitation........................................................................... 34
Conditions to the Offer to Exchange........................................................... 35
Ohio Litigation............................................................................... 40
Regulatory Approvals.......................................................................... 40
Source and Amount of Funds.................................................................... 40
Certain Relationships with TRW................................................................ 40
Fees and Expenses............................................................................. 41
Accounting Treatment.......................................................................... 41
Stock Exchange Listing........................................................................ 41
Comparative Per Share Market Price and Dividend Information...................................... 42
Unaudited Pro Forma Condensed Combined Financial Information..................................... 43
Description of Northrop Grumman Common Stock..................................................... 50
Comparison of Rights of Holders of Northrop Grumman Common Stock and TRW Capital Stock........... 51
Additional Information........................................................................... 57
TRW Information.................................................................................. 59
Forward-Looking Statements....................................................................... 60
Legal Matters.................................................................................... 61
Experts.......................................................................................... 61
Annex A Directors and Executive Officers of Northrop Grumman.................................... A-1
Annex B Sections 1701.84 and 1701.85 of the Ohio Revised Code--Rights of Dissenting Shareholders B-1
SUMMARY
This summary does not contain all of the information that is important to
TRW shareholders. To fully understand Northrop Grumman's offer to exchange, TRW
shareholders should carefully read this entire offer to exchange and all other
documents to which this offer to exchange refers. See "Additional Information"
on page 58. References to "Northrop Systems" refer to Northrop Grumman Systems
Corporation, formerly Northrop Grumman Corporation; references to "Northrop
Grumman" refer to Northrop Grumman Corporation, formerly NNG, Inc.; references
to Litton refer to Litton Industries, Inc.; references to Newport News refer to
Newport News Shipbuilding Inc., formerly Purchaser Corp. I; references to TRW
refer to TRW Inc.
The Offer to Exchange (Page 26)
Under the terms of the offer to exchange, Northrop Grumman will exchange
shares of newly issued Northrop Grumman common stock for each of the issued and
outstanding (a) shares of TRW common stock, (b) Series 1 Shares and (c) Series
3 Shares. Each share of TRW common stock may be exchanged for a number of
shares of Northrop Grumman common stock equal to the exchange rate. Each Series
1 Share may be exchanged for a number of shares of Northrop Grumman common
stock equal to the then-effective conversion rate for the Series 1 Shares
multiplied by the exchange rate, and each Series 3 Share may be exchanged for a
number of shares of Northrop Grumman common stock equal to the then-effective
conversion rate for the Series 3 Shares multiplied by the exchange ratio. See
"The Offer to Exchange" beginning on page 26for a discussion of the conversion
rates.
Northrop Grumman will determine the exact exchange ratio by dividing $47.00
by the average of the closing sale prices for a share of Northrop Grumman
common stock on the New York Stock Exchange as reported in The Wall Street
Journal over the five consecutive trading days ending immediately prior to the
second trading day before the expiration of the offer to exchange but, in no
event will the exchange ratio be more than 0.4563 ($47.00/$103.00) or less than
0.4159 ($47.00/$113.00). Northrop Grumman will issue a press release before
9:00 A.M., New York City time, on the second trading day before the offer to
exchange expires, announcing the (i) the exchange ratio assuming expiration of
the offer to exchange as scheduled, (ii) the average closing price of the
Northrop Grumman common stock over the previous five consecutive trading days
and (iii) the then-effective conversion rates of the Series 1 Shares and Series
3 Shares. If for any reason the expiration date is subsequently extended, a
revised exchange ratio will be announced prior to the new expiration date.
TRW shareholders will not receive any fractional Northrop Grumman common
stock. Instead, shareholders will receive cash in an amount equal to the value
of the fractional Northrop Grumman common stock that shareholders would
otherwise have been entitled to receive.
Northrop Grumman intends, promptly after completion of the offer to
exchange, to seek to merge TRW with Northrop Grumman or a wholly owned
subsidiary of Northrop Grumman. In the TRW merger, each share of TRW capital
stock that has not been exchanged in the offer to exchange (except for treasury
shares of TRW and shares beneficially owned directly or indirectly by Northrop
Grumman for its own account) would be converted into the right to receive
shares of Northrop Grumman common stock at the same exchange ratio as used in
the offer to exchange, subject to dissenters' rights under Ohio law. See "The
Offer to Exchange" on page 26.
Information About Northrop Grumman and TRW (Page 21)
Northrop Grumman
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
3
Northrop Grumman provides technologically advanced, innovative products,
services and solutions in defense and commercial electronics, information
technology, systems integration and nuclear and non-nuclear shipbuilding and
systems. As a prime contractor, principal subcontractor, partner, or preferred
supplier, Northrop Grumman participates in many high-priority defense and
commercial technology programs in the United States and abroad. While Northrop
Grumman is subject to the usual vagaries of the marketplace, it is also
affected by the unique characteristics of the defense industry and by certain
elements peculiar to its own business mix. It is common in this industry for
work on major programs to be shared among a number of companies. A company
competing to be a prime contractor may, upon ultimate award of the contract,
turn out to be a subcontractor. It is not uncommon to compete with customers,
and simultaneously on other contracts, to be either a supplier to, or a
customer of, such competitor. The nature of major defense programs, conducted
under binding contracts, allows companies that perform well to benefit from a
level of program continuity unknown in many industries. While Northrop Grumman
conducts most of its business with the U.S. Government, principally the
Department of Defense (DOD), domestic and international commercial sales still
represent a significant portion of its business.
Based on the closing price of Northrop Grumman common stock on the New York
Stock Exchange on March 1, 2002, Northrop Grumman's market capitalization was
approximately $12.14 billion.
TRW
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
(216) 291-7000
TRW provides advanced technology products and services. The principal
business of TRW and its subsidiaries is the design, manufacture and sale of
products and the performance of systems engineering, research and technical
services for industry and the U.S. Government in the automotive, aerospace and
information systems markets. TRW operates its business in the following seven
operating segments:
. Occupant Safety Systems;
. Chassis Systems;
. Automotive Electronics;
. Other Automotive;
. Space and Electronics;
. Systems & Information Technology; and
. Aeronautical Systems.
Based on the closing price of TRW common stock on the New York Stock
Exchange on March 1, 2002, TRW's market capitalization was approximately $6.32
billion.
The Offer to Exchange Is Subject to the 1704 Limitation and Various Conditions
(pages 35-41)
Tenders of TRW shares pursuant to the offer to exchange will be effective,
and Northrop Grumman shall have the right to acquire tendered TRW shares, only
at such time as the 1704 Limitation shall not prohibit or delay the TRW merger.
No tender of TRW shares shall be effective, and Northrop Grumman shall have no
right to acquire tendered TRW shares, prior to that time.
Northrop Grumman's obligation to exchange shares of Northrop Grumman's
common stock for TRW shares pursuant to the offer to exchange is subject to a
number of conditions, including, but not limited to, the following:
. the tender of enough shares of TRW capital stock so that, after the
completion of the offer to exchange, Northrop Grumman owns a majority of
the then-outstanding TRW common stock on a fully diluted basis;
4
. the expiration or termination of any waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, Council
Regulation (EEC) No. 4064/89 of the Council of the European Union and any
other applicable similar foreign laws or regulations;
. the requisite approval of TRW's shareholders under the Ohio control share
acquisition law or Northrup Grumman being satisfied, in its sole
discretion, that such law is inapplicable or invalid;
. the expiration or termination of the waiting period during which the Ohio
Division of Securities may suspend the offer to exchange under the Ohio
Revised Code without the occurrence of any such suspension or Northrop
Grumman being satisfied, in its sole discretion, that such law is
inapplicable or invalid; and
. the approval of the issuance of shares of Northrop Grumman common stock
pursuant to the offer to exchange and the TRW merger by the stockholders
of Northrop Grumman.
These conditions and the other conditions to the offer to exchange are
discussed under "The Offer to Exchange--Conditions to the Offer to Exchange" on
page 36.
The Receipt of Northrop Grumman Common Stock in Exchange for TRW Shares
Pursuant to the Offer to Exchange and/or the TRW Merger is not Expected to be a
Taxable Transaction to TRW Shareholders (Page 32)
In the opinion of Gibson, Dunn & Crutcher LLP, counsel to Northrop Grumman,
the exchange of TRW shares for Northrop Grumman shares pursuant to the offer to
exchange and the TRW merger will be treated as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended,
which is referred to herein as the "Code," provided that certain factual
assumptions are satisfied. If the transactions so qualify, holders of TRW
shares generally will not recognize any gain or loss for United States federal
income tax purposes on the exchange of their TRW shares for Northrop Grumman
common stock in the offer to exchange and the TRW merger, except for any gain
or loss attributable to the receipt of cash in lieu of a fractional share of
Northrop Grumman common stock. The qualification of the offer to exchange and
the TRW merger as a reorganization is based on various factual assumptions, but
there can be no assurance at the present time that such factual assumptions
will in fact be satisfied. For more information, see "The Offer to
Exchange--Material United States Federal Income Tax Consequences of the Offer
to Exchange and the TRW Merger" on page 32.
The Offer to Exchange Is Currently Scheduled to Expire on March 29, 2002 (Page
27)
The offer to exchange is scheduled to expire at 12:00 midnight, New York
City time, on March 29, 2002. The term expiration date means 12:00 midnight,
New York City time, on March 29, 2002, unless Northrop Grumman extends the
period of time for which the offer to exchange is open, in which case the term
expiration date means the latest time and date on which the offer to exchange,
as so extended, expires.
The Offer to Exchange May Be Extended, Terminated or Amended (Page 27)
Northrop Grumman expressly reserves the right, in Northrop Grumman's sole
discretion, at any time or from time to time, to extend the period of time
during which the offer to exchange remains open, and Northrop Grumman can do so
by giving oral or written notice of the extension to the exchange agent.
Northrop Grumman is not providing any assurance that it will exercise this
right to extend the offer to exchange, although Northrop Grumman currently
intends to do so until all conditions have been satisfied or, to the extent
permissible, waived. During any extension, all TRW shares previously tendered
and not properly withdrawn will remain subject to the offer to exchange,
subject to the right of each shareholder of TRW to withdraw his or her TRW
shares.
5
Subject to the SEC's applicable rules and regulations, Northrop Grumman also
reserves the right, in its sole discretion, at any time or from time to time:
. to delay its acceptance for exchange or the exchange of any TRW shares, or
to terminate the offer to exchange, upon the failure of any of the
conditions of the offer to exchange to be satisfied prior to the
expiration date, or upon the failure of the condition relating to
antitrust approvals to be satisfied at any time after the expiration date;
and
. to waive any condition (other than the conditions relating to antitrust
approvals, the absence of an injunction and the effectiveness of the
registration statement for the Northrop Grumman common stock to be issued
in the offer to exchange) or otherwise to amend the offer to exchange in
any respect, by giving oral or written notice of such delay, termination
or amendment to the exchange agent and by making a public announcement.
However, Northrop Grumman may not waive the 1704 Limitation.
Northrop Grumman will follow any extension, termination, amendment or delay,
as promptly as practicable, with a public announcement. In the case of an
extension, any related announcement will be issued no later than 9:00 A.M., New
York City time, on the next business day after the previously scheduled
expiration date. Subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act of 1934, as amended (the "Exchange Act'')),
which require that any material change in the information published, sent or
given to TRW's shareholders in connection with the offer to exchange be
promptly sent to those shareholders in a manner reasonably designed to inform
them of that change) and without limiting the manner in which Northrop Grumman
may choose to make any public announcement, Northrop Grumman assumes no
obligation to publish, advertise or otherwise communicate any public
announcement of this type other than by making a release to the Dow Jones News
Service.
The Exchange Shall Occur Promptly After the Expiration Date (Page 28)
Upon the terms and subject to the conditions of the offer to exchange
(including, if the offer to exchange is extended or amended, the terms and
conditions of any extension or amendment), Northrop Grumman will accept for
exchange, and will exchange, TRW shares validly tendered and not properly
withdrawn promptly after the expiration date and promptly after they are
tendered during any subsequent offering period that may apply.
Tendered Shares May Be Withdrawn at Any Time Prior to the Exchange of Those
Shares (Page 29)
TRW shares tendered pursuant to the offer to exchange may be withdrawn at
any time prior to the expiration date, and, unless Northrop Grumman previously
accepted them pursuant to the offer to exchange, may also be withdrawn at any
time after May 3, 2002.
Northrop Grumman May Provide a Subsequent Offering Period (Page 27)
Northrop Grumman may elect to provide a subsequent offering period of not
less than three nor more than twenty business days after the acceptance of TRW
shares pursuant to the offer to exchange if the requirements of Rule 14d-11
under the Exchange Act have been met. TRW's shareholders will not have the
right to withdraw TRW shares that they tender in the subsequent offering
period, if any.
Procedure for Tendering Shares (Page 30)
For TRW shareholders to validly tender TRW shares pursuant to the offer to
exchange, subject to the 1704 Limitation:
. a properly completed and duly executed letter of transmittal, along with
any required signature guarantees, or an agent's message in connection
with a book-entry transfer, and any other required documents, must be
received by the exchange agent at one of its addresses set forth on the
back cover of this offer to exchange, and certificates for tendered TRW
shares must be received by the exchange agent
6
at one of those addresses, or those TRW shares must be tendered pursuant
to the procedures for book- entry tender set forth (and a confirmation of
receipt of that tender received), in each case before the expiration date;
or
. shareholders must comply with the guaranteed delivery procedures set forth
in "The Offer to Exchange--Guaranteed Delivery" on page 31.
Reasons for the Offer to Exchange (Page 23)
Northrop Grumman is proposing the offer to exchange and the TRW merger
because it believes that the offer to exchange and the TRW merger will
significantly benefit Northrop Grumman's stockholders and customers. Northrop
Grumman believes that the offer to exchange and the TRW merger will provide
access to new product areas, increase diversification into new markets,
increase market presence and opportunities, provide a complimentary product mix
and increase operating efficiencies for the benefit of all Northrop Grumman
stockholders, including the former TRW shareholders.
Plans for TRW (Page 35)
Northrop Grumman is making the offer to exchange in order to acquire control
of, and ultimately the entire equity interest in, TRW. The offer to exchange is
the first step in its acquisition of TRW and is intended to facilitate the
acquisition of all TRW shares. Northrop Grumman intends, as soon as possible
after completion of the offer to exchange, to seek to have TRW merge with
Northrop Grumman or a wholly owned subsidiary of Northrop Grumman. The purpose
of the TRW merger would be to acquire all TRW shares not exchanged in the offer
to exchange. In the TRW merger, each outstanding share of TRW capital stock
(except for treasury shares of TRW and shares beneficially owned directly or
indirectly by Northrop Grumman for its own account) would be converted into the
right to receive shares of Northrop Grumman common stock at the same exchange
ratio used in the offer to exchange, subject to dissenters' rights under Ohio
law.
Once Northrop Grumman has completed the TRW merger, Northrop Grumman expects
that TRW would continue its current operations, except that it would cease to
be publicly owned and would instead be wholly owned by Northrop Grumman.
Northrop Grumman expects to promptly dispose of TRW's automotive business
either by selling that business to a third party or parties or by spinning it
off to the Northrop Grumman stockholders (including the former TRW
shareholders), or a combination thereof.
Dividend Policy of Northrop Grumman
The holders of Northrop Grumman common stock receive dividends if and when
declared by Northrop Grumman's board of directors out of legally available
funds. For the past 13 fiscal quarters, with the last quarter ended December
31, 2001, Northrop Grumman has paid a cash dividend of $0.40 per common share.
Following completion of the offer to exchange and the TRW merger, Northrop
Grumman expects to continue paying quarterly cash dividends on a basis
consistent with Northrop Grumman's past practice. However, the declaration and
payment of dividends will depend upon business conditions, operating results,
capital and reserve requirements, covenants in its debt instruments and
Northrop Grumman's board of directors' consideration of other relevant factors.
Northrop Grumman can give shareholders no assurance that Northrop Grumman will
continue to pay dividends on its common stock in the future.
No Dissenters' Rights in Connection with the Offer to Exchange Although
Dissenters' Rights Will Exist in Connection with the TRW Merger (Page 34)
No dissenters' rights are available in connection with the offer to
exchange. If the TRW merger is consummated, however, TRW shareholders will have
certain rights under the Ohio Revised Code to dissent and
7
demand dissenters' rights and to receive payment in cash of the fair value of
their shares. TRW shareholders who perfect such rights by complying with the
procedures set forth in Sections 1701.84 and Section 1701.85 will have the fair
value of their TRW shares determined by an Ohio trial court and will be
entitled to receive a cash payment equal to such fair value from the surviving
corporation. In addition, such dissenting shareholders would be entitled to
receive payment of a fair rate of interest at a rate determined by the trial
court on the amount determined to be the fair value of their TRW shares. In
determining the fair value of the shares, the court is required to take into
account all relevant factors, excluding any appreciation or depreciation in
market value resulting from the transactions. Accordingly, such determination
could be based upon considerations other than, or in addition to, the market
value of the TRW shares, including, among other things, asset values and
earning capacity. A copy of Sections 1701.84 and 1701.85 of the Ohio Revised
Code is provided in Annex B.
Material Differences in Rights of Stockholders (Page 52)
The governing documents of Northrop Grumman and TRW vary, and to that
extent, TRW shareholders will have different rights once they become Northrop
Grumman stockholders. Similarly, the laws of Ohio, TRW's state of
incorporation, differ from those of Delaware, Northrop Grumman's state of
incorporation. The differences are described in more detail under "Comparison
of Rights of Holders of Northrop Grumman Common Stock and TRW Capital Stock"
beginning on page 52.
Northrop Grumman Will Account for the Merger Using the Purchase Method (Page 42)
Northrop Grumman will account for the merger as a purchase for financial
reporting purposes.
Forward-Looking Statements May Prove Inaccurate (Page 61)
Certain statements and assumptions in this offer to exchange and in the
documents incorporated by reference contain or are based on "forward-looking"
information and involve risks and uncertainties. Such forward-looking
information includes statements as to the impact of the proposed acquisition on
revenues and earnings. Such statements are subject to numerous assumptions and
uncertainties, many of which are outside Northrop Grumman's control. These
include governmental regulatory processes, Northrop Grumman's ability to
successfully integrate the operations of TRW, achieve a successful disposition
or other resolution with respect to the TRW automotive business, assumptions
with respect to future revenues, expected program performance and cash flows,
the outcome of contingencies including litigation, environmental remediation,
divestitures of businesses, and anticipated costs of capital investments.
Northrop Grumman's operations are subject to various additional risks and
uncertainties resulting from its position as a supplier, either directly or as
subcontractor or team member, to the U.S. Government and its agencies as well
as to foreign governments and agencies. Actual outcomes are dependent upon many
factors, including, without limitation, Northrop Grumman'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; acquisition or termination of government contracts; the outcome of
political and legal processes; legal, financial, and governmental risks related
to international transactions and global needs for military aircraft, military
and civilian electronic systems and support and information technology; as well
as other economic, political and technological risks and uncertainties and
other risk factors set out in Northrop Grumman's filings from time to time with
the SEC, including, without limitation, Northrop Grumman's reports on Form 10-K
and Form 10-Q.
8
RISK FACTORS
In deciding whether to tender TRW shares for exchange pursuant to the offer
to exchange, TRW shareholders should read carefully this offer to exchange and
all other documents to which this offer to exchange refers. TRW shareholders
should also carefully consider the following factors:
Successful Integration of the Northrop Grumman and TRW Businesses Is Not Assured
Integrating and coordinating the operations and personnel of Northrop
Grumman and TRW will involve complex technological, operational and
personnel-related challenges. This process will be time-consuming and expensive
and may disrupt the business of the companies. Additional elements of
integration of the Litton and Newport News acquisitions may require significant
management time and attention. While the integration of Litton and Newport News
is expected to be substantially complete by the time of the TRW merger, the
integration of the companies may not timely result in the full benefits
expected by Northrop Grumman. The difficulties, costs and delays that could be
encountered may include:
. unanticipated issues in integrating the information, communications and
other systems;
. negative impacts on employee morale and performance as a result of job
changes and reassignments;
. loss of customers;
. unanticipated incompatibility of systems, procedures and operating methods;
. unanticipated costs in terminating or relocating facilities and
operations; and
. the effect of complying with any government imposed organizational
conflict-of-interest rules.
The Exchange Ratio Will Not be Known Until Two Full Trading Days Prior to
Expiration of the Offer to Exchange
The exchange ratio will be determined by dividing $47.00 by the average of
the closing sale prices for a share of Northrop Grumman common stock on the New
York Stock Exchange as reported in the The Wall Street Journal over the five
consecutive trading days ending immediately prior to the second trading day
prior to the expiration of the offer to exchange. Accordingly, TRW shareholders
will not know the exchange ratio until immediately prior to the opening of the
last two trading days during which the offer to exchange is open. Further, the
market price of Northrop Grumman common stock may change after the
determination of the exchange ratio, and therefore the exchange ratio may not
reflect the actual market price for Northrop Grumman common stock following
completion of the offer to exchange.
The Exchange Ratio of the Offer to Exchange Could Work to the Disadvantage of
TRW's Shareholders
Northrop Grumman is offering to exchange shares of Northrop Grumman common
stock designed to have a value of $47.00 for each outstanding share of TRW
common stock and for each outstanding share of the Serial Preference Stock II
multiplied by the applicable conversion rate of the Serial Preference Stock II.
However, because of the manner in which the exchange ratio is calculated, the
Northrop Grumman common stock to be received by holders of TRW capital stock
will have a value of $47.00 per share only if the market price of the Northrop
Grumman common stock is between $103.00 and $113.00. Holders of TRW capital
stock will receive less than $47.00 per share of value if the market price of
the Northrop Grumman common stock is less than $103.00 and will receive more
than $47.00 of value if the market price of the Northrop Grumman common stock
is more than $113.00.
The Receipt of Northrop Common Stock Could be Taxable to TRW Shareholders
Depending on Facts Surrounding the Offer to Exchange and the TRW Merger
Northrop Grumman does not plan to request a ruling from the Internal Revenue
Service with regard to the tax consequences of the offer to exchange and/or the
TRW merger. The offer to exchange and the TRW merger
9
are expected to qualify as a reorganization within the meaning of Section
368(a) of the Code provided that certain factual assumptions are satisfied,
including the following (i) the offer to exchange and the TRW merger are
consummated in the manner provided herein, (ii) none of Northrop Grumman, TRW
or any related party acquire or redeem, in connection with the offer to
exchange or the TRW merger, shares of Northrop Grumman common stock issued to
TRW shareholders pursuant to the offer or the TRW merger, and (iii) TRW will
continue a significant line of its business or will use a significant portion
of its historic business assets in a business. If such factual assumptions are
not satisfied, a TRW shareholder's exchange of TRW shares for Northrop Grumman
common stock in the offer to exchange or the TRW merger could be a taxable
transaction, depending on the surrounding facts. TRW shareholders are urged to
consult their tax advisors concerning the United States federal income and
other tax consequences of participation in the offer to exchange and/or the TRW
merger.
Resales of Northrop Grumman Common Stock Following the Offer to Exchange May
Cause the Market Price of that Stock to Fall
As of February 27, 2002, Northrop Grumman had 112,651,366 shares of common
stock outstanding and 18,900,993 shares subject to outstanding options and
other rights to purchase or acquire. Northrop Grumman expects that it will
issue a maximum of 55,092,761 shares in connection with the offer to exchange
and the TRW merger. The issuance of these new shares and the sale of additional
shares of Northrop Grumman's common stock that may become eligible for sale in
the public market from time to time upon exercise of options could have the
effect of depressing the market price for Northrop Grumman's common stock.
The Trading Price of Northrop Grumman Common Stock May Be Affected by Factors
Different from Those Affecting the Price of TRW Capital Stock
Upon completion of the offer to exchange and the TRW merger, holders of TRW
capital stock will become holders of Northrop Grumman common stock. Northrop
Grumman's business differs from that of TRW, and Northrop Grumman's results of
operations, as well as the trading price of Northrop Grumman common stock, may
be affected by factors different from those affecting TRW's results of
operations and the price of TRW capital stock.
Northrop Grumman's Indebtedness Following Completion of the Offer to Exchange
Will Be Higher Than Northrop Grumman's Existing Indebtedness
The indebtedness of Northrop Grumman as of March 1, 2001 was approximately
$5.1 billion. Northrop Grumman's pro forma indebtedness as of March 1, 2001
giving effect to the offer to exchange and the TRW merger (as described in
"Northrop Grumman Selected Historical and Unaudited Pro Forma Condensed
Combined Financial Data") is approximately $10.3 billion. As a result of the
increase in debt, demands on the cash resources of Northrop Grumman will
increase after the TRW merger, which could have important effects on an
investment in Northrop Grumman's common stock. For example, while the impact of
this increased indebtedness will be addressed by the combined cash flows of
Northrop Grumman and TRW, the increased levels of indebtedness could
nonetheless:
. reduce funds available for investment in research and development and
capital expenditures; or
. create competitive disadvantages compared to other companies with lower
debt levels.
Northrop Grumman expects that a significant portion of the debt assumed in
the acquisition of TRW will be transferred or reduced with the sale or spin off
of the TRW automotive business. However, no decisions have been made as to how
much debt will be transferred, and, as noted above, there can be no assurance
that the transfer of the TRW automotive business will occur.
10
Northrop Grumman May Be Unable to Retain Personnel Who Are Key to Northrop
Grumman's and TRW's Businesses
The success of Northrop Grumman's operations is dependent, among other
things, on Northrop Grumman's ability to attract and retain highly qualified
professional personnel. Competition for key personnel in the various localities
and business segments in which Northrop Grumman operates is intense. Northrop
Grumman's ability to attract and retain key personnel, in particular senior
officers and experienced and top rate engineers, is dependent on a number of
factors, including prevailing market conditions and compensation packages
offered by companies competing for the same talent, who may offer compensation
packages that include considerable equity based incentives through stock option
or similar programs. These same pressures and concerns also apply to TRW's
business.
Risks Related to the Business of Northrop Grumman and TRW
Results of operations of Northrop Grumman will be subject to numerous risks
affecting the businesses of Northrop Grumman and TRW, many of which are beyond
the companies' control. Many of the risks affecting Northrop Grumman are
identified under "Forward-Looking Statements" on page 61.
11
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited historical ratios of earnings
to fixed charges of Northrop Systems (formerly Northrop Grumman Corporation)
for each of the years in the five-year period ended December 31, 2000 and for
the nine months ended September 30, 2000 and for Northrop Grumman for the nine
months ended September 30, 2001 and the unaudited pro forma combined ratios of
earnings to fixed charges of Northrop Systems, Northrop Grumman, Litton,
Newport News and TRW for the year ended December 31, 2000 and the nine months
ended September 30, 2001.
The unaudited pro forma ratios of earnings to fixed charges are based upon
the historical financial statements of Northrop Systems, Northrop Grumman,
Litton, Newport News and TRW adjusted to give effect to the Litton, Newport
News and TRW acquisitions. The pro forma amounts have been developed from (a)
the audited consolidated financial statements of Northrop Systems contained in
Northrop Systems' Annual Report on Form 10-K/A for the fiscal year ended
December 31, 2000 and the unaudited consolidated financial statements of
Northrop Grumman contained in its Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2001, which are incorporated by reference in this
offer to exchange, (b) the audited consolidated financial statements contained
in Litton's Annual Report on Form 10-K for the fiscal year ended July 31, 2000
and from the unaudited consolidated financial statements contained in Litton's
Quarterly Report on Form 10-Q for the period ended January 31, 2001, which are
incorporated by reference in this offer to exchange, (c) the audited
consolidated financial statements of Newport News contained in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2000 and the
unaudited consolidated financial statements of Newport News contained in its
Quarterly Report on Form 10-Q for the period ended September 16, 2001, which
are incorporated by reference in this offer to exchange, and (d) the audited
consolidated financial statements of TRW contained in its Annual Report on Form
10-K for the year ended December 31, 2000 and the unaudited consolidated
financial statements of TRW contained in its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001, which are incorporated by reference in
this offer to exchange. In addition, the audited consolidated financial
statements contained in Litton's Annual Report on Form 10-K for the fiscal year
ended July 31, 2000 and the unaudited consolidated financial statements of
Litton contained in Litton's Quarterly Report on Form 10-Q for the period ended
January 31, 2001 have been used to bring the financial reporting periods of
Litton to within 90 days of those of Northrop Systems and Northrop Grumman.
Pro Forma Northrop Grumman Historical Data
-------------------------- -------------------------------------
Nine Months Fiscal Year Nine Months Year Ended December 31
Ended Ended Ended ------------------------
September 30, December 31, September 30
------------
2001 2000 2001 2000 2000 1999 1998 1997 1996
------------- ------------ ---- ---- ---- ---- ---- ---- ----
1.56 2.13 2.32 5.32 5.26 3.78 2.11 2.68 2.50
For purposes of computing the ratios of earnings to fixed charges, earnings
represent earnings from continuing operations before income taxes and fixed
charges, and fixed charges consist of interest expense, the portion of rental
expense calculated to be representative of the interest factor, amortization of
discounts and capitalized expenses related to indebtedness, and preferred stock
dividends. The ratios should be read in conjunction with the financial
statements and other financial data included or incorporated by reference in
this Offer to Exchange. See "Additional Information" beginning on page 58.
12
NORTHROP GRUMMAN
SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data for Northrop Systems (formerly Northrop Grumman Corporation) for each of
the years in the five-year period ended December 31, 2000 and for the nine
months ended September 30, 2000 and for Northrop Grumman for the nine months
ended September 30, 2001, and selected unaudited pro forma condensed combined
financial data of Northrop Systems, Northrop Grumman, Litton, Newport News and
TRW for the year ended December 31, 2000 and the nine months ended September
30, 2001. Historical consolidated financial data for the years ended December
31, 2000, 1999, 1998 and 1997 have been derived from, and are qualified by
reference to, the audited consolidated financial statements and notes thereto
filed by Northrop Systems with the SEC. Historical consolidated financial data
for the year ended December 31, 1996 and for the nine months ended September
30, 2001 and 2000 have been derived from unaudited consolidated financial
statements and notes thereto of Northrop Systems and Northrop Grumman. The
selected historical financial data for each of the years in the five-year
period ending December 31, 2000 do not give affect to the Litton or Newport
News acquisitions. The historical operating data for the nine months ended
September 30, 2001 include six months of Litton's operating results subsequent
to the acquisition on April 3, 2001.
The operating results for the nine months ended September 30, 2001 are not
necessarily indicative of results for the full fiscal year ending December 31,
2001. TRW shareholders should read this summary together with the financial
statements referred to below and incorporated by reference in this offer to
exchange, and the accompanying notes and management's discussion and analysis
of operations and financial conditions of Northrop Systems, Northrop Grumman,
Litton, Newport News and TRW contained in such reports.
The Unaudited Pro Forma Condensed Combined Financial Data is based upon the
historical financial statements of Northrop Systems, Northrop Grumman, Litton,
Newport News and TRW adjusted to give effect to the Litton, Newport News and
TRW acquisitions. The pro forma financial statements have been developed from
(a) the audited consolidated financial statements of Northrop Systems contained
in its Annual Report on Form 10-K/A for the year ended December 31, 2000 and
the unaudited consolidated financial statements of Northrop Grumman contained
in its Quarterly Report on Form 10-Q for the nine months ended September 30,
2001, which are incorporated by reference in this offer to exchange, (b) the
audited consolidated financial statements of Litton contained in its Annual
Report on Form 10-K for the fiscal year ended July 31, 2000 and the unaudited
consolidated financial statements of Litton contained in its Quarterly Report
on Form 10-Q for the period ended January 31, 2001, which are incorporated by
reference in this offer to exchange, (c) the audited consolidated financial
statements of Newport News contained in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 and the unaudited consolidated financial
statements of Newport News contained in its Quarterly Report on Form 10-Q for
the period ended September 16, 2001, which are incorporated by reference in
this offer to exchange, and (d) the audited consolidated financial statements
of TRW contained in its Annual Report on Form 10-K for the year ended December
31, 2000 and the unaudited consolidated financial statements of TRW contained
in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2001,
which are incorporated by reference in this offer to exchange. In addition, the
audited consolidated financial statements contained in Litton's Annual Report
on Form 10-K for the fiscal year ended July 31, 2000 and the unaudited
consolidated financial statements of Litton contained in Litton's Quarterly
Report on Form 10-Q for the period ended January 31, 2001 have been used to
bring the financial reporting periods of Litton to within 90 days of those of
Northrop Systems and Northrop Grumman.
The final determination and allocation of the purchase price paid for the
Litton, Newport News and TRW acquisitions may differ from the amounts assumed
in this Unaudited Pro Forma Condensed Combined Financial Data.
13
The acquisition of Litton, which is valued at approximately $5.2 billion,
including the assumption of Litton's net debt of $1.3 billion, is accounted for
using the purchase method of accounting. Under the purchase method of
accounting, the purchase price is allocated to the underlying tangible and
intangible assets acquired and liabilities assumed based on their respective
fair market values, with the excess recorded as goodwill. The Unaudited Pro
Forma Condensed Combined Financial Statements reflect preliminary estimates of
the fair market value of the Litton assets acquired and liabilities assumed and
the related allocations of purchase price, and preliminary estimates of
adjustments necessary to conform Litton data to Northrop Grumman's accounting
policies. The Unaudited Pro Forma Condensed Combined Financial Statements do
not include the recognition of liabilities associated with certain potential
restructuring activities. Northrop Grumman is currently reviewing the
preliminary estimates of the fair market value of the Litton assets acquired
and liabilities assumed, including valuations associated with certain contracts
and valuation study results for intangible assets, property, plant and
equipment, and retiree benefits assets and liabilities. Northrop Grumman also
is evaluating several possible restructuring activities of Litton operations.
The final determination of the fair market value of assets acquired and
liabilities assumed and final allocation of the purchase price may differ from
the amounts assumed in these Unaudited Pro Forma Condensed Combined Financial
Statements. Adjustments to the purchase price allocations will be finalized by
March 31, 2002, and will be reflected in future Northrop Grumman filings. There
can be no assurance that such adjustments will not be material.
With the exception of Newport News' long-term debt assumed, as of the date
of this offer to exchange Northrop Grumman has not completed the valuation
studies necessary to arrive at the required estimates of the fair market value
of the Newport News assets acquired and TRW assets to be acquired and the
Newport News liabilities assumed and TRW liabilities to be assumed and the
related allocations of purchase price, nor has it identified the adjustments
necessary, if any, to conform Newport News or TRW data to Northrop Grumman's
accounting policies. Accordingly, Northrop Grumman has used the historical book
values of the assets and liabilities of Newport News, other than long-term
debt, and TRW and has used the historical revenue recognition policies of
Newport News and TRW to prepare the Unaudited Pro Forma Condensed Combined
Financial Statements set forth herein, with the excess of the purchase price
over the historical net assets of Newport News and TRW recorded as goodwill and
other purchased intangibles. Once Northrop Grumman has completed the valuation
studies necessary to finalize the required purchase price allocations and
identified any necessary conforming changes, such pro forma financial
statements will be subject to adjustment. Such adjustments will likely result
in changes to the pro forma statement of financial position to reflect the
final allocations of purchase price and the pro forma statements of income, and
there can be no assurance that such adjustments will not be material.
The Unaudited Pro Forma Condensed Combined Financial Data is provided for
illustrative purposes only and does not purport to represent what the actual
consolidated results of operations or the consolidated financial position of
Northrop Grumman would have been had Northrop Grumman's offer to exchange and
the Litton, Newport News, and TRW acquisitions occurred on the dates assumed,
nor is it necessarily indicative of future consolidated results of operations
or financial position.
The Unaudited Pro Forma Condensed Combined Financial Data does not include
the realization of cost savings from operating efficiencies, synergies or other
restructurings resulting from the Litton, Newport News and TRW acquisitions.
The Unaudited Pro Forma Condensed Combined Financial Data should be read in
conjunction with the separate historical consolidated financial statements and
accompanying notes of Northrop Systems, Northrop Grumman, Litton, Newport News
and TRW that are incorporated by reference in this offer to exchange and the
Unaudited Pro Forma Condensed Combined Financial Statements on page .
14
Northrop Northrop
Grumman/ Grumman/
Litton/ Litton/
Newport Newport
News/TRW Northrop Grumman News/TRW Northrop Grumman Historical Data
Pro Forma Historical Data Pro Forma Year ended December 31,
------------- --------------------------- ------------ ----------------------------------
Nine Months Nine Months Nine Months Year
Ended Ended Ended Ended
September 30, September 30, September 30, December 31,
2001 2001 2000 2000 2000 1999 1998 1997 1996
------------- ------------- ------------- ------------ ------ ------ ------ ------ ------
Operating Data (in millions,
except per share data)
Net Sales......................... $24,488 $ 9,254 $5,389 $32,464 $7,618 $7,616 $7,367 $7,798 $7,667
Income from continuing operations,
net of tax...................... 267 296 481 1,073 625 474 193 318 330
Basic Earnings per share, from
continuing operations........... 1.60 3.53 6.86 6.82 8.86 6.84 2.82 4.76 5.27
Diluted Earnings per share, from
continuing operations........... 1.59 3.50 6.84 6.80 8.82 6.80 2.78 4.67 5.18
Cash Dividends per common share... 1.20 1.20 1.20 1.60 1.60 1.60 1.60 1.60 1.60
Balance Sheet Data
Total Assets...................... $39,814 $17,214 $9,354 N/A $9,622 $9,285 $9,536 $9,677 $9,645
Total long term obligations....... 16,689 7,636 3,111 N/A 3,015 3,564 4,319 4,339 4,694
Redeemable preferred stock........ 350 350 0 N/A 0 0 0 0 0
15
SELECTED HISTORICAL FINANCIAL DATA OF TRW
The following is a summary of selected consolidated financial data of TRW
for each of the years in the five-year period ended December 31, 2000 and the
nine months ended September 30, 2001 and September 30, 2000. The operating
results for the nine months ended September 30, 2001 are not necessarily
indicative of results for the full fiscal year ended December 31, 2001. This
information is derived from the audited consolidated financial statements of
TRW contained in its Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, the unaudited consolidated financial statements of TRW
contained in its Quarterly Report on Form 10-Q for the period ended September
30, 2001, and is qualified in its entirety by such documents. See "Additional
Information" on page 61. Shareholders should read this summary together with
the financial statements which are incorporated by reference in this offer to
exchange and their accompanying notes and management's discussion and analysis
of operations and financial conditions of TRW contained in such reports.
Nine Months ended Year Ended December 31
------------------- ---------------------------------------
Sept. 30, Sept. 30,
2001 2000 2000 1999 1998 1997 1996
--------- --------- ------- ------- ------- ------- ------
(in millions, except per share)
Operating Data
(in millions, except per share
data)
Revenues......................... $12,305 $13,094 $17,231 $16,969 $11,886 $10,831 $9,857
Net earnings (loss).............. (22) 441 438 469 477 (49) 480
Net earnings (loss) Per common
share basic.................... (0.18) 3.58 3.55 3.87 3.93 (0.40) 3.72
Net earnings (loss) per common
share diluted.................. (0.18) 3.52 3.51 3.80 3.83 (0.40) 3.62
Cash dividends declared per share 0.70 0.66 1.36 1.32 1.28 1.24 1.17
Balance Sheet Data
Total Assets..................... $15,350 $16,682 $16,467 $18,266 $ 7,169 $ 6,410 $5,899
Total long term obligations...... 7,640 8,082 7,956 8,825 2,273 2,067 1,553
16
COMPARATIVE PER SHARE INFORMATION
The following table summarizes unaudited per share information for Northrop
Systems, Northrop Grumman, Litton, Newport News and TRW on a historical basis,
pro forma combined basis for Northrop Grumman and equivalent pro forma combined
basis for TRW. The following information should be read in conjunction with the
audited consolidated financial statements of Northrop Systems, Litton, Newport
News and TRW, the unaudited interim consolidated financial statements of
Northrop Grumman, Litton, Newport News and TRW, and the unaudited pro forma
condensed combined financial information included elsewhere or incorporated by
reference in this offer to exchange. The pro forma information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if Northrop Grumman's
offer to exchange and the Litton, Newport News and TRW acquisitions had been
completed as of the beginning of the respective periods presented, nor is it
necessarily indicative of the future operating results or financial position of
the combined companies. The historical book value per share is computed by
dividing total stockholders' equity by the number of common shares outstanding
at the end of the period. The pro forma per share earnings from continuing
operations are computed by dividing the pro forma income from continuing
operations available to holders of common stock by the pro forma weighted
average number of shares outstanding. The pro forma combined book value per
share is computed by dividing total pro forma stockholders' equity by the pro
forma number of common shares outstanding at the end of the period. TRW
equivalent pro forma combined per share amounts are calculated by multiplying
Northrop Grumman pro forma combined per share amounts by 0.4204, the percentage
of a share of Northrop Grumman common stock that would be exchanged for each
share of TRW common stock in the offer to exchange, based upon a Northrop
Grumman common stock price of $111.79 per share, which represents the five-day
average of the closing sales prices for a share of Northrop Grumman common
stock on the New York Stock Exchange from February 20, 2002 through February
26, 2002. The historical per share information of Litton, Newport News and TRW
was derived from their respective historical annual and quarterly financial
statements and was adjusted as necessary to bring the information to within 90
days of the dates listed below.
Nine Months
Ended Year Ended
September 30, 2001 December 31, 2000
------------------ -----------------
Northrop Grumman and Northrop Systems--Historical
Historical per common share:
Income per basic share........................ $ 3.53 $ 8.86
Income per diluted share...................... 3.50 8.82
Dividends declared--Common.................... 1.20 1.60
Dividends declared--Preferred................. 3.44 --
Book value per share.......................... 61.57 54.38
Litton--Historical
Historical per common share:
Income per basic share........................ N/A $ 4.95
Income per diluted share...................... N/A 4.90
Dividends declared--Common.................... N/A --
Dividends declared--Preferred................. N/A 2.00
Book value per share.......................... N/A 35.24
Newport News--Historical
Historical per common share:
Income per basic share........................ $ 2.43 $ 2.91
Income per diluted share...................... 2.29 2.77
Dividends declared--Common.................... 0.12 0.16
Dividends declared--Preferred................. -- --
Book value per share.......................... 10.29 8.69
17
Nine Months
Ended Year Ended
September 30, 2001 December 31, 2000
------------------ -----------------
TRW--Historical
Historical per common share:
Income per basic share...................................... $(0.18) $ 3.55
Income per diluted share.................................... (0.18) 3.51
Dividends declared--Common.................................. 0.70 1.36
Dividends declared--Preferred............................... -- --
Book value per share........................................ 18.68 21.34
Unaudited Pro Forma Combined
Unaudited pro forma per share of Northrop Grumman common stock:
Income per basic share...................................... $ 1.60 $ 6.82
Income per diluted share.................................... 1.59 6.80
Dividends declared--Common.................................. 1.20 1.60
Dividends declared--Preferred............................... 5.25 7.00
Book value per share........................................ 82.76 N/A
Unaudited Pro Forma TRW Equivalents
Unaudited pro forma per share of TRW common shares:
Income per basic share...................................... $ 0.67 $ 2.87
Income per diluted share.................................... 0.67 2.86
Dividends declared--Common.................................. 0.50 0.67
Dividends declared--Preferred............................... 2.21 2.94
Book value per share........................................ 34.79 N/A
18
COMPARATIVE MARKET DATA
Northrop Grumman's common stock trades on the New York Stock Exchange and on
the Pacific Stock Exchange under the symbol NOC and TRW's common stock trades
on the New York Stock Exchange, the Pacific Stock Exchange, the Chicago Stock
Exchange and the Philadelphia Stock Exchange under the symbol TRW. The
following table presents trading information for Northrop Grumman and TRW
common stock on February 21, 2002 and March 1, 2002. February 21, 2002 was the
last trading day before the public announcement of Northrop Grumman's proposal
for a business combination of Northrop Grumman and TRW, and March 1, 2002 was
the last trading day before the date of this offer to exchange. TRW equivalent
per share amounts are calculated by multiplying Northrop Grumman per share
amounts by 0.4352, the percentage of a share of Northrop Grumman common stock
that would be exchanged for each share of TRW capital stock in Northrop
Grumman's offer to exchange, based upon a Northrop Grumman common stock price
of $108.00 per share. Shareholders should read the information presented below
in conjunction with "Comparative Per Share Market Price and Dividend
Information" on page 43.
Northrop Grumman TRW TRW
Common Stock Common Stock Equivalent Per Share
----------------------- --------------------- ---------------------
HIGH LOW CLOSING HIGH LOW CLOSING HIGH LOW CLOSING
February 21, 2002....... $118.89 $114.81 $117.80 $40.05 $38.91 $39.80 $51.74 $49.96 $51.26
March 1, 2002........... $108.00 $106.80 $107.75 $50.61 $50.00 $50.05 $47.00 $46.48 $46.89
19
INFORMATION ABOUT NORTHROP GRUMMAN AND TRW
Northrop Grumman Corporation
Northrop Grumman provides technologically advanced, innovative products,
services and solutions in defense and commercial electronics, information
technology, systems integration and nuclear and non-nuclear shipbuilding and
systems. As a prime contractor, principal subcontractor, partner, or preferred
supplier, Northrop Grumman participates in many high-priority defense and
commercial technology programs in the United States and abroad. While Northrop
Grumman is subject to the usual vagaries of the marketplace, it is also
affected by the unique characteristics of the defense industry and by certain
elements peculiar to its own business mix. It is common in this industry for
work on major programs to be shared among a number of companies. A company
competing to be a prime contractor may, upon ultimate award of the contract,
turn out to be a subcontractor. It is not uncommon to compete with customers,
and simultaneously on other contracts, to be either a supplier to or a customer
of such competitor. The nature of major defense programs, conducted under
binding contracts, allows companies that perform well to benefit from a level
of program continuity unknown in many industries. While Northrop Grumman
conducts most of its business with the U.S. Government, principally the
Department of Defense, domestic and international commercial sales still
represent a significant portion of our business.
Northrop Grumman is aligned into six business sectors as follows:
Integrated Systems. This sector includes the design, development and
production of airborne early warning, electronic warfare and surveillance and
battlefield management systems. Integrated Systems is the prime contractor for
the Joint STARS advanced airborne targeting and battle management system, the
U.S. Air Force's B-2 Spirit stealth bomber, unmanned vehicles including The
Global Hawk, and the EA-6B Prowler electronic countermeasures aircraft, and is
upgrading the E-2C Hawkeye early warning aircraft. Integrated Systems also has
a principal role in producing the U.S. Navy's F/A18 Hornet strike fighter and
in the development and future production of the F-35 Joint Strike Fighter.
Electronic Systems. This sector includes the design, development,
manufacture and integration of a wide variety of defense electronics and
systems, airspace management systems, precision weapons, marine systems,
logistics systems, space systems, and automation and information systems.
Significant programs include fire control radars for the F-16 and F-22 fighter
aircraft and the Longbow Apache helicopter, the AWACS airborne early warning
radar, the Joint STARS air-to-ground surveillance radar sensor, the Longbow
Hellfire missile and the BAT brilliant anti-armor submunition. This sector also
provides tactical military radars and country-wide air defense systems, plus
airborne electronic countermeasures systems intended to jam enemy aircraft and
weapons systems. The sector includes the advanced electronics businesses, which
design, develop and manufacture inertial navigation, guidance and control, IFF
(identification friend or foe), and marine electronic systems, and provide
electronic warfare systems and integrated avionics systems and shipboard
information and communication systems. The U.S. Government is a significant
customer.
Information Technology. This sector includes the design, development,
operation and support of computer systems for scientific and management
information. Information Technology has extensive expertise in command,
control, communications, computers, intelligence, surveillance and
reconnaissance (C4ISR). It is a key management support element for major
weapons systems, such as the U.S. Navy's AEGIS class destroyer, and also
provides mission planning for the U.S. Navy, Air Force and Special Operations
Command. Information Technology provides base operations support for NASA's
Kennedy Space Center, Cape Canaveral Air Station and Patrick Air Force Base,
among others. In addition, Information Technology provides information
technology services to commercial customers and to the other Northrop Grumman
sectors. Information Technology includes the information systems businesses,
which design, develop, integrate and support computer-based information systems
and provide information technology and services primarily for government
customers.
Ship Systems. This sector is engaged in the building of large multimission
non-nuclear surface ships for the U.S. Navy as well as for other government and
commercial customers worldwide and is a provider of overhaul, repair,
modernization, ship design and engineering services. The U.S. Government is a
significant customer.
20
Newport News. Newport News is the largest non-government-owned shipyard in
the U.S., as measured by each of revenues, size of facilities and number of
employees. Its primary business is the design, construction, repair,
maintenance, overhaul, life-cycle support and refueling of nuclear-powered
aircraft carriers and the design, life-cyle support and construction of nuclear
powered submarines for the U.S. Navy.
Component Technologies. This sector includes international suppliers of
complex backplanes, connectors, laser crystals, solder materials, specialty
products and other electronic components used primarily in the
telecommunications, industrial and computer markets.
The principal executive offices of Northrop Grumman are located at 1840
Century Park East, Los Angeles, California 90067 and its telephone number is
(310) 553-6262.
Additional information concerning Northrop Grumman is included in the
Northrop Grumman reports incorporated by reference in this offer to exchange.
See "Additional Information" beginning on page 61.
TRW
TRW provides advanced technology products and services. The principal
business of TRW and its subsidiaries is the design, manufacture and sale of
products and the performance of systems engineering, research and technical
services for industry and the U.S. Government in the automotive and aerospace
and information systems markets. In 2000, TRW operated its business in the
following seven operating segments:
. Occupant Safety Systems;
. Chassis Systems;
. Automotive Electronics;
. Other Automotive;
. Space and Electronics;
. Systems & Information Technology; and
. Aeronautical Systems.
The principal office of TRW is located at 1900 Richmond Road, Cleveland,
Ohio 44124, telephone number (216) 291-7000.
Additional information concerning TRW is included in the TRW reports
incorporated by reference in this offer to exchange. See "Additional
Information" beginning on page 61.
21
REASONS FOR THE OFFER TO EXCHANGE
Northrop Grumman believes that the proposed acquisition of TRW by means of
the offer to exchange and the TRW merger will produce the following benefits:
. Access to New Product Areas. TRW's proprietary technology and products
will provide Northrop Grumman with technology and products to complement
Northrop Grumman's existing technology and products.
. Increased Diversification into New Markets. The combination of Northrop
Grumman and TRW provides the affiliated entities with the opportunity for
diversification into new markets and access to new customers.
. Increased Market Presence and Opportunities. The combination of Northrop
Grumman and TRW provides the affiliated entities with increased market
presence and opportunities for growth that could allow them to be better
able to respond to the needs of customers, the increased competitiveness
of the marketplace and opportunities that changes in the market for their
respective products might bring.
. Product Mix. The complementary nature of Northrop Grumman's and TRW's
products and services will benefit clients of both companies.
. Operating Efficiencies. The combination of Northrop Grumman and TRW
provides the opportunity for potential economies of scale and cost savings.
22
BACKGROUND OF THE OFFER TO EXCHANGE
Background
Northrop Grumman's Proposal. On February 21, 2002, Northrop Grumman sent a
letter to TRW, setting forth a proposal for a business combination between TRW
and Northrop Grumman. On February 22, 2002, Northrop Grumman issued a press
release which attached a copy of the letter.
The full text of the Northrop Grumman letter is as follows:
February 21, 2002
Philip A. Odeen
Office of the Chief Executive
Kenneth W. Freeman
Lead Director
TRW Inc.
1900 Richmond Road
Cleveland, OH 44124
Gentlemen,
As you know from prior conversations between our companies, for quite some
time we have believed that a merger of the TRW Inc. ("TRW") aerospace and
information systems businesses with the complementary operations of Northrop
Grumman Corporation ("Northrop") would be a compelling strategic combination in
the best interests of stockholders, customers and employees of both
corporations. I am writing at this time to formally propose a transaction for
this purpose.
Based upon publicly available information, Northrop is prepared to provide
all TRW stockholders with $47.00 in Northrop common stock for each share of TRW
common stock. The transaction will be structured so that the receipt of
Northrop stock by TRW stockholders will be tax-free. The proposed $47.00 per
share of TRW common stock represents a premium of 18% over today's closing
price, a premium of 22% over the average trading price for the last twelve
months and is 4% over the highest closing price for the last twelve months. We
would welcome the opportunity to consider non-public information concerning
TRW, and we are prepared to consider in our offer any enhanced values that may
be demonstrated by such information. Naturally, we are prepared to provide TRW
and its representatives with a similar "due diligence" opportunity concerning
Northrop non-public information.
Upon completion of the acquisition transaction, it is Northrop's intention
to proceed with the separation of the TRW automotive business from the rest of
the company immediately. We recognize that the automotive business is an
outstanding operation in its own right, but we believe that it does not
logically fit with either your or our other business segments.
Northrop has successfully completed the integration of many large
acquisitions in recent years, and I believe we have earned the reputation for
recognizing the continuing value and contribution of the executives of those
acquired companies. We have also demonstrated fairness and evenhandedness in
dealing with employees of the acquired companies and for scrupulously observing
employees' rights to compensation and benefits.
Northrop is prepared to begin immediately with the due diligence process and
negotiation of a definitive acquisition agreement for the approval of our
respective Boards of Directors. With full cooperation from both
23
sides, we can conclude our agreement no later than March 11, 2002 and commence
immediately the necessary proceedings for stockholder approval in accordance
with Ohio law and for approval of our own stockholders. Our antitrust counsel
has advised us that delays in connection with the antitrust review process
should be minimal; and we believe a transaction could realistically be
completed in the third quarter of this year.
Ron and I sincerely believe that a combination of TRW's aerospace and
information systems businesses with our own will maximize the opportunities to
enhance the value of those operations for the benefit of all our stockholders.
Not only are the operations highly complementary, but the TRW operations will
enjoy the support of a stronger balance sheet.
In light of the importance of this proposal to Northrop's shareholders, we
will be publicly disclosing this letter. Should you have any questions
concerning our offer, I and our representatives are prepared to speak with you
at any time. We would appreciate your response to this offer by the close of
business February 27, 2002.
Sincerely,
/s/
_____________________________________
Kent Kresa
On March 3, 2002, Northrop Grumman publicly announced that in light of the
lack of a substantive response from TRW, it was commencing the offer to
exchange. Later on March 3, 2002 TRW publicly announced that it was sending a
letter to Northrop indicating that the TRW Board had concluded that the
Northrop Grumman proposal was "financially inadequate" and had decided not to
pursue discussions with regard to the proposal.
On March 4, 2002, Northrop Grumman commenced the offer to exchange and
delivered to TRW the acquiring person statement pursuant to Ohio law relating
to the offer to exchange. In addition, on March 4, 2002, in connection with the
delivery of the acquiring person statement, Northrop Grumman requested that
TRW's Board take appropriate action so that the Ohio business combination law
is not applicable to the acquisition of TRW capital stock pursuant to the offer
to exchange or the TRW merger.
Prior Contacts. Northrop Grumman has from time to time during the past few
years considered expanding its operations through acquisitions of other
companies, including TRW. In early 1999 officers of Northrop Grumman and TRW
informally discussed a possible transaction. On April 28, 1999, Kent Kresa,
Chairman and Chief Executive Officer of Northrop Grumman, sent a letter to TRW,
in which Northrop Grumman affirmed its interest in discussing a potential
acquisition of TRW. TRW did not respond to Northrop Grumman's proposal, and
Northrop Grumman did not pursue the matter.
In early October 2001, Mr. Kresa had one telephone conversation and one
meeting with David Cote, the then Chief Executive Officer of TRW, regarding a
possible transaction to combine the two companies but did not reach any
agreement.
24
THE OFFER TO EXCHANGE
Consideration to Be Paid
Under the terms of Northrop Grumman's offer to exchange, Northrop Grumman
will exchange shares of newly issued Northrop Grumman common stock for each of
the issued and outstanding (a) shares of TRW common stock, (b) Series 1 Shares
and (c) Series 3 Shares. Each share of TRW common stock may be exchanged for a
number of shares of Northrop Grumman common stock equal to the exchange ratio.
Pursuant to the terms of the offer to exchange, each Series 1 Share may be
exchanged for a number of shares of Northrop Grumman common stock equal to the
then-effective conversion rate for the Series 1 Shares multiplied by the
exchange ratio, and each Series 3 Share may be exchanged for a number of shares
of Northrop Grumman common stock equal to the then-effective conversion rate
for the Series 3 Shares multiplied by the exchange ratio.
Northrop Grumman will determine the exact exchange ratio by dividing $47.00
by the average of the closing sale prices for a share of Northrop Grumman
common stock on the New York Stock Exchange as reported in The Wall Street
Journal over the five consecutive trading days ending immediately prior to the
second trading day before the expiration of the offer to exchange but, in no
event will the exchange ratio be more than 0.4563 ($47.00/$103.00) or less than
0.4159 ($47.00/$113.00).
The Series 1 Shares are convertible into shares of TRW common stock, at the
holder's option, at the conversion rate set forth in TRW's Amended Articles of
Incorporation. Pursuant to TRW's charter, the number of shares of TRW common
stock issuable upon conversion of one Series 1 Share is determined by dividing
$100 by the conversion price then in effect. The conversion price was
originally set at $90.909 per share, subject to automatic adjustment upon the
occurrence of certain anti-dilutive events. As of March 13, 2001, TRW reported
that each Series 1 Share was convertible into the right to receive 8.8 shares
of TRW common stock. This conversion rate could change before the expiration of
the offer to exchange.
The Series 3 Shares are convertible into shares of TRW common stock, at the
holder's option, at the conversion rate set forth in TRW's charter. Pursuant to
the charter, Series 3 Shares were initially convertible into shares of common
stock at the rate of 1.862 shares of common stock for each share of Series 3,
subject to automatic adjustment upon the occurrence of certain anti-dilutive
events. As of March 13, 2001, TRW reported that each Series 3 Share was
convertible into the right to receive 7.448 shares of TRW common stock. This
conversion rate could change before the expiration of the offer to exchange.
The conversion rights of the Series 1 Shares and the Series 3 Shares
outlined above are subject to a number of other qualifications. Shareholders
seeking more information about the conversion rights should read TRW's Amended
Articles of Incorporation.
Northrop Grumman will issue a press release before 9:00 A.M., New York City
time, on the second trading day before expiration of the offer to exchange,
announcing (i) the exchange ratio, assuming expiration of the offer to exchange
as scheduled, (ii) the average closing price of the Northrop Grumman common
stock over the previous five consecutive trading days and (iii) the
then-effective conversion rates of the Series 1 Shares and Series 3 Shares. If
for any reason the expiration date is subsequently extended, a revised exchange
ratio will be announced prior to the new expiration date.
Other Aspects of the Offer to Exchange. Northrop Grumman is making the
offer to exchange in order to acquire control of, and ultimately the entire
equity interest in, TRW. The offer to exchange is the first step in Northrop
Grumman acquisition of TRW and is intended to facilitate the acquisition of all
TRW shares. Northrop Grumman intends, as soon as possible after completion of
the offer to exchange, to seek to have TRW merge with Northrop Grumman or a
wholly-owned subsidiary of Northrop Grumman. The purpose of the TRW merger
would be to acquire all TRW shares not exchanged in the offer to exchange. In
the TRW merger, each outstanding share of TRW capital stock (except for
treasury shares of TRW and shares beneficially owned directly or indirectly by
Northrop Grumman for its own account) would be converted into the right to
receive
25
shares of Northrop Grumman common stock at the same exchange ratio used in the
offer to exchange, subject to dissenters' rights under Ohio law.
Northrop Grumman's obligation to exchange shares of Northrop Grumman common
stock for TRW shares pursuant to the offer to exchange is subject to the 1704
Limitation and the conditions referred to under--"The 1704 Limitation" and
"Conditions to the Offer" beginning on page 35.
TRW shareholders who tender TRW shares pursuant to the offer to exchange,
will not be obligated to pay any charges or expenses of the exchange agent or
any brokerage commissions. Except as set forth in the instructions to the
letters of transmittal, transfer taxes on the exchange of TRW capital stock
pursuant to Northrop Grumman's offer to exchange will be paid by Northrop
Grumman or on its behalf.
On March 4, 2002, Northrop Grumman asked TRW for its shareholder list and
security position listings in order to communicate with shareholders and to
distribute the offer to exchange to the TRW shareholders.
Timing of the Offer to Exchange
Northrop Grumman's offer to exchange is scheduled to expire at 12:00
midnight, New York City time, on March 29, 2002. For more information, TRW
shareholders should read the discussion below under the caption "--Extension,
Termination and Amendment."
The term "expiration date" means 12:00 midnight, New York City time, on
March 29, 2002, unless Northrop Grumman extends the period of time for which
the offer to exchange is open, in which case the term "expiration date" means
the latest time and date on which the offer to exchange, as so extended,
expires.
Extension, Termination and Amendment
Northrop Grumman expressly reserves the right, in its sole discretion, at
any time or from time to time, to extend the period of time during which the
offer to exchange remains open, and Northrop Grumman can do so by giving oral
or written notice of that extension to the exchange agent. Northrop Grumman can
give TRW shareholders no assurance that it will exercise its right to extend
the offer to exchange, although currently Northrop Grumman intends to do so
until all conditions have been satisfied or, where permissible, waived. During
any extension, all TRW shares previously tendered and not withdrawn will remain
subject to the offer to exchange, subject to each shareholder's right to
withdraw his or her TRW shares. TRW shareholders should read the discussion
under the caption --"Withdrawal Rights" on page 29 for more details.
Subject to the SEC's applicable rules and regulations, Northrop Grumman also
reserves the right, in its sole discretion, at any time or from time to time:
. to delay acceptance for exchange or the exchange of any TRW shares
pursuant to the offer to exchange, or to terminate the offer to exchange
and not accept for exchange or exchange any TRW shares not previously
accepted for exchange or exchanged, upon the failure of any of the
conditions of the offer to exchange to be satisfied prior to the
expiration date; and
. to waive any condition (other than the antitrust condition, the conditions
relating to the absence of an injunction and the effectiveness of the
registration statement for the Northrop Grumman shares to be issued in the
offer to exchange) or otherwise amend the offer to exchange in any
respect, by giving oral or written notice of such delay, termination or
amendment to the exchange agent and by making a public announcement.
Northrop Grumman may not waive the 1704 Limitation.
Northrop Grumman will follow any extension, termination, amendment or delay,
as promptly as practicable, with a public announcement. In the case of an
extension, the related announcement will be issued no later than 9:00 A.M., New
York City time, on the next business day after the previously scheduled
expiration date. Subject to applicable law (including Rules 14d-4(d) and
14d-6(c) under the Exchange Act, which require that any
26
material change in the information published, sent or given to TRW shareholders
in connection with the offer to exchange be promptly sent to shareholders in a
manner reasonably designed to inform shareholders of that change) and without
limiting the manner in which it may choose to make any public announcement,
Northrop Grumman assumes no obligation to publish, advertise or otherwise
communicate any public announcement of this type other than by issuing a press
release to the Dow Jones News Service.
If Northrop Grumman makes a material change in the terms of the offer to
exchange or the information concerning the offer to exchange, or if Northrop
Grumman waives a material condition of the offer to exchange, Northrop Grumman
will extend the offer to exchange to the extent required under the Exchange
Act. If, prior to the expiration date, Northrop Grumman changes the percentage
of TRW shares sought in the first exchange or the consideration offered to TRW
shareholders, that change will apply to all holders whose TRW shares are
accepted for exchange pursuant to the offer to exchange whether or not these
TRW shares were accepted for exchange prior to the change. If at the time
notice of such a change is first published, sent or given to TRW shareholders,
the offer to exchange is scheduled to expire at any time earlier than the tenth
business day from and including the date that the related notice is first so
published, sent or given, Northrop Grumman will extend the offer to exchange
until the expiration of that ten business-day period. For purposes of the offer
to exchange, a business day means any day other than a Saturday, Sunday or
federal holiday and consists of the time period from 12:01 A.M. through 12:00
midnight, New York City time.
Northrop Grumman may elect to provide a subsequent offering period of not
more than twenty business days after the acceptance of TRW shares pursuant to
Northrop Grumman's offer to exchange if the requirements under Exchange Act
Rule 14d-11 have been met. TRW shareholders will not have the right to withdraw
TRW shares that they tender in the subsequent offering period, if any.
If TRW agrees upon a negotiated merger with Northrop Grumman, Northrop
Grumman may amend or terminate the offer to exchange without purchasing any TRW
shares.
Exchange of TRW Shares; Delivery of Northrop Grumman Common Stock
Upon the terms and subject to the conditions of the offer to exchange
(including, if the offer to exchange is extended or amended, the terms and
conditions of any extension or amendment), Northrop Grumman will accept, and
will exchange, TRW shares validly tendered and not properly withdrawn promptly
after the expiration date and promptly after they are tendered during any
subsequent offering period. In all cases, exchange of TRW shares tendered and
accepted for exchange pursuant to the offer to exchange will be made only after
timely receipt by the exchange agent of:
. certificates for those TRW shares (or a confirmation of a book-entry
transfer of those TRW shares in the exchange agent's account at The
Depository Trust Company, which Northrop Grumman refers to as DTC);
. a properly completed and duly executed letter of transmittal or a manually
signed facsimile of that document; and
. any other required documents.
For purposes of the offer to exchange, Northrop Grumman will be deemed to
have accepted for exchange TRW shares validly tendered and not withdrawn if and
when Northrop Grumman notifies the exchange agent of Northrop Grumman's
acceptance for exchange of the tenders of those TRW shares pursuant to the
offer to exchange. The exchange agent will deliver Northrop Grumman common
stock in exchange for TRW shares pursuant to the offer to exchange and cash to
be paid instead of fractional shares of Northrop Grumman common stock as soon
as practicable after receipt of that notice. The exchange agent will act as
agent for tendering TRW shareholders for the purpose of receiving Northrop
Grumman common stock (including cash to be paid instead of fractional shares of
Northrop Grumman common stock) from Northrop Grumman and transmitting the stock
and cash, if any, to shareholders. TRW shareholders will not receive any
interest on any cash that Northrop Grumman pays TRW shareholders regardless of
any delay in making the exchange.
27
If Northrop Grumman does not accept any tendered TRW shares for exchange
pursuant to the terms and conditions of the offer to exchange for any reason,
or if certificates are submitted for more TRW shares than are tendered,
Northrop Grumman will return certificates for such TRW shares without expense
to the tendering shareholder or, in the case of TRW shares tendered by
book-entry transfer of those TRW shares into the exchange agent's account at
DTC pursuant to the procedures set forth below under the discussion
entitled--"Procedure for Tendering," those TRW shares will be credited to an
account maintained within DTC, as soon as practicable following expiration or
termination of the offer to exchange.
Cash Instead of Fractional Shares of Northrop Grumman Common Stock
Northrop Grumman will not issue fractional shares of Northrop Grumman's
common stock pursuant to the offer to exchange. Instead, each tendering TRW
shareholder who would otherwise be entitled to a fractional share of Northrop
Grumman's common stock will receive cash in an amount equal to that fraction
(expressed as a decimal, rounded to the nearest 0.01 of a share) multiplied by
the average of the closing sale prices for a share of Northrop Grumman common
stock on the New York Stock Exchange as reported in the Wall Street Journal
over the five consecutive trading days ending immediately prior to the second
trading days before the expiration of the offer.
Withdrawal Rights
TRW shares tendered pursuant to the offer to exchange may be withdrawn at
any time prior to the expiration date, and, unless Northrop Grumman previously
accepted them pursuant to the offer to exchange, may also be withdrawn at any
time after May 3, 2002. Once Northrop Grumman accepts tendered shares for
exchange, a TRW shareholder's tender is irrevocable. If Northrop Grumman elects
to provide a subsequent offering period under Exchange Act Rule 14d-11, TRW
shares tendered in the subsequent offering period will be accepted promptly
following the tender and shareholders will not have the right to withdraw such
TRW shares.
For a withdrawal to be effective, the exchange agent must receive from each
withdrawing TRW shareholder a written notice of withdrawal at one of its
addresses set forth on the back cover of this offer to exchange, and such
notice must include the TRW shareholder's name, address, social security
number, the certificate number(s) and the number of TRW shares to be withdrawn
as well as the name of the registered holder, if it is different from that of
the person who tendered those TRW shares.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to effect these signature guarantees for shareholders. The financial
institution must be a participant in the Securities Transfer Agents Medallion
Program, an eligible institution, unless those TRW shares have been tendered
for the account of any eligible institution.
If TRW shares have been tendered pursuant to the procedures for book-entry
tender discussed under the caption entitled --"Procedure for Tendering," any
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawn TRW shares and must otherwise comply with DTC's
procedures. If certificates have been delivered or otherwise identified to the
exchange agent, the name of the registered holder and the serial numbers of the
particular certificates evidencing the withdrawn TRW shares withdrawn must also
be furnished to the exchange agent, as stated above, prior to the physical
release of those certificates.
Northrop Grumman will decide all questions as to the form and validity
(including time of receipt) of any notice of withdrawal in its sole discretion,
and Northrop Grumman's decision shall be final and binding. None of Northrop
Grumman, the exchange agent, the information agent, the dealer manager or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any notification. Any TRW shares properly withdrawn will be
deemed not to have been validly tendered for purposes of the offer to exchange.
However, TRW shareholders may retender withdrawn TRW shares by following one of
the procedures discussed under the captions entitled --"Procedure for
Tendering" or --"Guaranteed Delivery" at any time prior to the expiration date.
28
Procedure for Tendering
For TRW shareholders to validly tender TRW shares pursuant to the offer to
exchange, (a) a properly completed and duly executed letter of transmittal,
along with any required signature guarantees, or an agent's message in
connection with a book-entry transfer, and any other required documents, must
be received by the exchange agent at one of its addresses set forth on the back
cover of this offer to exchange, and certificates for tendered TRW shares must
be received by the exchange agent at that address or those TRW shares must be
tendered pursuant to the procedures for book-entry tender set forth below (and
a confirmation of receipt of that tender received (Northrop Grumman refers to
this confirmation below as a book-entry confirmation)), in each case before the
expiration date, or (b) TRW shareholders must comply with the guaranteed
delivery procedures set forth below under --"Guaranteed Delivery." All tenders
will be subject to the 1704 Limitation.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry
confirmation, that states that DTC has received an express acknowledgment from
the participant in DTC tendering the TRW shares that are the subject of that
book-entry confirmation, that the participant has received and agrees to be
bound by the terms of the letter of transmittal and that Northrop Grumman may
enforce that agreement against the participant.
The exchange agent has established accounts with respect to the TRW shares
at DTC for purposes of the offer to exchange, and any financial institution
that is a participant in DTC may make book-entry delivery of the TRW shares by
causing DTC to transfer the TRW shares into the exchange agent's account in
accordance with DTC's procedure for that transfer. However, although delivery
of TRW shares may be effected through book-entry at DTC, the letter of
transmittal with any required signature guarantees, or an agent's message in
connection with a book-entry transfer, and any other required documents, must,
in any case, be received by the exchange agent at one or more of its addresses
set forth on the back cover of this offer to exchange prior to the expiration
date, or the guaranteed delivery procedures described below must be followed.
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which TRW shares are tendered either by a
registered holder of TRW shares who has not completed the box entitled "Special
Issuance Instructions" on the letter of transmittal or for the account of an
eligible institution.
If the certificates for TRW shares are registered in the name of a person
other than the person who signs the letter of transmittal, or if certificates
for unexchanged TRW shares are to be issued to a person other than the
registered holder(s), the certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered owner or owners appear on the certificates, with the
signature(s) on the certificates or stock powers guaranteed in the manner
Northrop Grumman has described above.
The method of delivery of share certificates and all other required
documents, including delivery through DTC, is at the TRW shareholder's option
and risk, and the delivery will be deemed made only when actually received by
the exchange agent. If delivery is by mail, Northrop Grumman recommends
registered mail with return receipt requested, properly insured. In all cases,
shareholders should allow sufficient time to ensure timely delivery.
To prevent backup federal income tax withholding with respect to cash
received pursuant to the offer to exchange, TRW shareholders must provide the
exchange agent with their correct taxpayer identification number and certify
whether TRW shareholders are subject to backup withholding of federal income
tax by completing the substitute Form W-9 included in the letter of
transmittal. Some TRW shareholders including, among others, all corporations
and some foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the shareholders must submit a Form W-8, signed under penalty
of perjury, attesting to that individual's exempt status.
29
Guaranteed Delivery
If TRW shareholders wish to tender TRW shares pursuant to the offer to
exchange and their certificates are not immediately available or shareholders
cannot deliver the certificates and all other required documents to the
exchange agent prior to the expiration date or cannot complete the procedure
for book-entry transfer on a timely basis, their TRW shares may nevertheless be
tendered, so long as all of the following conditions are satisfied:
. shareholders make their tender by or through an eligible institution
(see--"Withdrawal Rights" above);
. a properly completed and duly executed notice of guaranteed delivery,
substantially in the form made available by Northrop Grumman, is received
by the exchange agent as provided below on or prior to the expiration
date; and
. the certificates for all tendered TRW shares (or a confirmation of a
book-entry transfer of such securities into the exchange agent's account
at DTC as described above), in proper form for transfer, together with a
properly completed and duly executed letter of transmittal with any
required signature guarantees (or, in the case of a book-entry transfer,
an agent's message) and all other documents required by the letter of
transmittal are received by the exchange agent within three New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery.
TRW shareholders may deliver the notice of guaranteed delivery by hand or
transmit it by facsimile transmission or mail to the exchange agent and
shareholders must include a guarantee by an eligible institution in the form
set forth in that notice.
In all cases, Northrop Grumman will exchange TRW shares tendered and
accepted for exchange pursuant to the offer to exchange only after timely
receipt by the exchange agent of certificates for TRW shares (or timely
confirmation of a book-entry transfer of those securities into the exchange
agent's account at DTC as described above), properly completed and duly
executed letter(s) of transmittal, or an agent's message in connection with a
book-entry transfer, and any other required documents.
By executing a letter of transmittal as set forth above, subject to the 1704
Limitation, TRW shareholders irrevocably appoint Northrop Grumman's designees
as their attorneys-in-fact and proxies, each with full power of substitution,
to the full extent of their rights with respect to their TRW shares tendered
and accepted for exchange by Northrop Grumman and with respect to any and all
other TRW shares and other securities issued or issuable in respect of the TRW
shares on or after March 4, 2002. That appointment is effective, and voting
rights will be affected, when and only to the extent that Northrop Grumman
deposits the shares of Northrop Grumman's common stock issuable with respect to
the TRW shares that shareholders have tendered with the exchange agent. Subject
to the 1704 Limitation, all proxies shall be considered coupled with an
interest in the tendered TRW shares and therefore shall not be revocable once
the appointment is effective. Upon the effectiveness of the appointment, all
prior proxies that TRW shareholders have given will be revoked, and TRW
shareholders may not give any subsequent proxies (and, if given, they will not
be deemed effective). Northrop Grumman's designees will, with respect to the
TRW shares for which the appointment is effective, be empowered, among other
things, to exercise all of the TRW shareholders' voting and other rights as
they, in their sole discretion, deem proper at any annual, special or adjourned
meeting of TRW's shareholders or otherwise. Northrop Grumman reserves the right
to require that, in order for TRW shares to be deemed validly tendered,
immediately upon Northrop Grumman's exchange of those TRW shares, Northrop
Grumman must be able to exercise full voting rights with respect to those TRW
shares. However, prior to acceptance for exchange by Northrop Grumman in
accordance with terms of the offer to exchange, the appointment will not be
effective, and, Northrop Grumman shall have no voting rights as a result of the
tender of TRW shares.
Northrop Grumman will determine questions as to the validity, form,
eligibility (including time of receipt) and acceptance for exchange of any
tender of TRW shares, in Northrop Grumman's sole discretion, and its
determination shall be final and binding. Northrop Grumman reserves the
absolute right to reject any and all tenders of TRW shares that Northrop
Grumman determines are not in proper form or the acceptance of or
30
exchange for which may, in the opinion of Northrop Grumman's counsel, be
unlawful. Northrop Grumman also reserves the absolute right to waive any of the
conditions of Northrop Grumman's offer to exchange (other than the antitrust
condition, the conditions relating to the absence of an injunction and the
effectiveness of the registration statement for Northrop Grumman shares to be
issued in the offer to exchange), or any defect or irregularity in the tender
of any TRW shares. However, Northrop Grumman cannot waive the 1704 Limitation.
No tender of TRW shares will be deemed to have been validly made until all
defects and irregularities in tenders of TRW shares have been cured or waived.
None of Northrop Grumman, the exchange agent, the information agent, the dealer
manager or any other person will be under any duty to give notification of any
defects or irregularities in the tender of any TRW shares or will incur any
liability for failure to give any notification. Northrop Grumman's
interpretation of the terms and conditions of the offer to exchange (including
the letter of transmittal and its instructions) will be final and binding.
The tender of TRW shares pursuant to any of the procedures described above
will constitute a binding agreement between Northrop Grumman and shareholders
upon the terms and subject to the conditions of Northrop Grumman's offer to
exchange and the letter of transmittal.
Material U.S. Federal Income Tax Consequences of the Offer to Exchange and the
TRW Merger
The following discussion summarizes the material U.S. federal income tax
considerations that are generally applicable to holders of TRW capital stock
who exchange their TRW capital stock in the offer to exchange and the TRW
merger for shares of Northrop Grumman common stock. This discussion is based on
currently existing provisions of the Code, existing and proposed Treasury
Regulations thereunder and current administrative rulings and court decisions,
all of which are subject to change. Any such change, which may or may not be
retroactive, could alter the tax consequences of the offer to exchange and the
merger that are described below. TRW shareholders should be aware that this
discussion does not deal with all federal income tax considerations that may be
relevant to particular TRW shareholders in light of their individual
circumstances, such as TRW shareholders who:
. are dealers in securities;
. are subject to the alternative minimum tax provisions of the Code;
. are foreign persons;
. do not hold their shares of TRW capital stock as capital assets;
. acquired their shares of TRW capital stock in connection with stock option
or stock purchase plans or in other compensatory transactions;
. hold their shares of TRW capital stock as part of an integrated investment
(including a ''straddle'') comprised of shares of TRW capital stock and
one or more other positions; or
. are subject to the constructive sale or constructive ownership provisions
of the Code under Sections 1259 or 1260, respectively, with respect to
their TRW capital stock.
In addition, the following discussion does not address:
. the tax consequences of the offer to exchange and the merger to any person
under foreign, state or local tax laws; or
. the tax consequences of transactions effectuated prior or subsequent to,
or concurrently with, the merger, including a potential sale or spin-off
of the TRW automotive business.
Accordingly, TRW shareholders are urged to consult their own tax advisors as
to the specific tax consequences to them of the offer to exchange and the TRW
merger, including the applicable federal, state, local and foreign tax
consequences.
In the opinion of Gibson, Dunn & Crutcher LLP, counsel to Northrop Grumman,
the exchange of TRW shares for Northrop Grumman shares pursuant to the offer to
exchange and the merger will be treated as a
31
reorganization within the meaning of Section 368(a) of the Code provided that
certain factual assumptions are satisfied. Among such factual assumptions are
the following: (i) the offer to exchange and the TRW merger are consummated in
the manner provided herein, (ii) none of Northrop Grumman, TRW or any related
party acquires or redeems, in connection with the offer to exchange or the TRW
merger, shares of Northrop Grumman common stock issued to TRW shareholders
pursuant to the offer to exchange or the TRW merger and (iii) TRW will continue
a significant line of its business or will use a significant portion of its
historic business assets in a business.
Assuming that the offer to exchange and the TRW merger qualify as a
reorganization within the meaning of Section 368(a) of the Code:
. A holder of TRW shares will not recognize any gain or loss upon exchange
of its TRW shares solely for Northrop Grumman common stock in the offer to
exchange or the TRW merger;
. If a holder of TRW shares receives cash instead of a fractional share of
Northrop Grumman common stock, the holder will be required to recognize
gain or loss, measured by the difference between the amount of cash
received instead of that fractional share of Northrop Grumman common stock
and the portion of the tax basis of that holder's TRW shares allocable to
that fractional share. Such gain or loss will be a capital gain or loss,
and will be a long-term capital gain or loss if the TRW shares that would
otherwise have been exchanged for that fractional share of Northrop
Grumman common stock were held for more than one year;
. A holder of TRW shares will have a tax basis in the Northrop Grumman
shares received in the offer to exchange and the TRW merger equal to (a)
the tax basis of the TRW shares surrendered by that holder pursuant to the
offer to exchange or in the TRW merger, less (b) any tax basis of the TRW
shares surrendered that is allocable to any fractional share of Northrop
Grumman common stock for which cash is received;
. The holding period for shares of Northrop Grumman common stock received in
exchange for TRW shares in the offer to exchange and the TRW merger will
include the holding period for TRW shares surrendered in the offer to
exchange and the TRW merger; and
. If a TRW shareholder, pursuant to the exercise of its right to seek an
appraisal, exchanges all of its TRW shares solely for cash, such
shareholder generally will recognize a capital gain or loss equal to the
difference between the amount of cash received and its adjusted tax basis
in the TRW shares surrendered. Such gain or loss generally will be a
long-term capital gain or loss if the holder held the TRW shares
surrendered for more than one year as of the date of the exchange.
Currently, Northrop Grumman does not plan to request a ruling from the
Internal Revenue Service with regard to the tax consequences of the offer to
exchange and/or the TRW merger. Whether or not the offer to exchange and the
TRW merger qualify as a tax-free reorganization depends in part on certain
factual assumptions, including the assumptions set forth above. If such factual
assumptions are not satisfied, a TRW shareholder's exchange of TRW shares for
Northrop Grumman common stock in the offer to exchange or the TRW merger could
be a taxable transaction, depending on the surrounding facts.
The foregoing discussion is intended only as a summary and does not purport
to be a complete analysis or listing of all potential U.S. federal income tax
consequences of the offer to exchange and the TRW merger. TRW shareholders are
urged to consult their tax advisors concerning the U.S. federal, state, local
and foreign tax consequences of participation in the offer to exchange and/or
the TRW merger to them.
Effect of the Offer to Exchange on the Market for TRW Shares; Registration
Under the Exchange Act
Reduced Liquidity; Possible Delisting. The tender of TRW shares pursuant to
the offer to exchange will reduce the number of holders of TRW shares and the
number of TRW shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining TRW shares held by the
public. TRW
32
shares are listed and principally traded on the New York Stock Exchange.
Depending on the number of TRW shares acquired pursuant to the offer to
exchange, following the completion of the offer to exchange, TRW shares may no
longer meet the requirements of the New York Stock Exchange for continued
listing. For example, published guidelines of the New York Stock Exchange
indicate that the New York Stock Exchange would consider delisting the
outstanding TRW shares if, among other things:
. the number of publicly held TRW shares (exclusive of holdings of officers,
directors and members of their immediate families and other concentrated
holdings of 10 percent or more) should fall below 600,000;
. the number of record holders of 100 or more TRW shares should fall below
1,200; or
. the aggregate market value of publicly held shares should fall below $5
million.
Based on TRW's Quarterly Report on Form 10-Q for the quarter ended September
30, 2001 as of November 2, 2001, there were 126,286,307 shares of TRW common
stock outstanding, held by approximately 22,500 holders of record. As of
February 9, 2001, the most recent available public information, there were
31,710 Series 1 Shares and 59,216 Series 3 Shares outstanding.
If the New York Stock Exchange were to delist the TRW shares, including
after the exchange of TRW shares in Northrop Grumman's offer to exchange but
prior to the TRW merger, the market for TRW shares could be adversely affected.
It is possible that TRW shares would be traded on other securities exchanges or
in the over-the-counter market, and that price quotations would be reported by
those exchanges, or through the Nasdaq Stock Market or by other sources. The
extent of the public market for the TRW shares and the availability of such
quotations would, however, depend upon the number of holders and/or the
aggregate market value of the TRW shares remaining at that time, the interest
in maintaining a market in the TRW shares on the part of securities firms, the
possible termination of registration of TRW shares under the Exchange Act, as
described below, and other factors.
Status as Margin Securities. The TRW shares are presently margin securities
under the regulations of the Federal Reserve Board, which has the effect, among
other things, of allowing brokers to extend credit on the collateral of TRW
shares. Depending on factors similar to those described above with respect to
listing and market quotations, following completion of the offer to exchange,
the TRW shares may no longer constitute margin securities for the purposes of
the Federal Reserve Board's margin regulations, in which event the TRW shares
would be ineligible as collateral for margin loans made by brokers.
Registration Under the Exchange Act. TRW shares are currently registered
under the Exchange Act. TRW can terminate that registration upon application to
the SEC if the outstanding shares are not listed on a national securities
exchange and if there are fewer than 300 holders of record of TRW shares.
Termination of registration of the TRW shares under the Exchange Act would
reduce the information that TRW must furnish to its shareholders and to the SEC
and would make some provisions of the Exchange Act, including the short-swing
profit recovery provisions of Section 16(b) and the requirement of furnishing a
proxy statement in connection with shareholders meetings pursuant to Section
14(a) and the related requirement of furnishing an annual report to
stockholders, no longer applicable with respect to TRW shares. Furthermore, the
ability of TRW affiliates and persons holding restricted securities of TRW to
dispose of securities pursuant to Rule 144 under the Securities Act of 1933, as
amended (the "Securities Act") may be impaired or eliminated. If registration
of the TRW shares under the Exchange Act were terminated, TRW shares would no
longer be eligible for New York Stock Exchange listing or for continued
inclusion on the Federal Reserve Board's list of margin securities.
Purpose of the Offer to Exchange; the TRW Merger; Dissenters' Rights
Northrop Grumman is making the offer to exchange in order to acquire control
of, and ultimately the entire equity interest in, TRW. The offer to exchange is
the first step in Northrop Grumman's acquisition of TRW, and is intended to
facilitate the acquisition of all TRW shares. TRW shareholders will not have
dissenters' rights as a result of the completion of the offer to exchange.
33
Northrop Grumman intends, as soon as practicable after the completion of the
offer to exchange, to seek to merge TRW with Northrop Grumman or a wholly-owned
subsidiary. The purpose of the TRW merger is to acquire all TRW shares not
tendered and exchanged pursuant to the offer to exchange. In the TRW merger,
each then-outstanding share of TRW capital stock (except for treasury shares of
TRW and shares beneficially owned directly or indirectly by Northrop Grumman
for its own account) will be converted into the right to receive shares of
Northrop Grumman common stock at the same exchange ratio used in the offer to
exchange, subject to dissenters' rights under Ohio law. Assuming the minimum
tender condition is satisfied and Northrop Grumman completes the offer to
exchange, Northrop Grumman would have sufficient voting power to effect the TRW
merger under Section 1701.80 of the Ohio Revised Code without the vote of any
other shareholder of TRW.
The TRW merger may be completed pursuant to Section 1701.80 of the Ohio
Revised Code and Section 253 of the Delaware General Corporation Law. Under
Section 1701.80, a foreign parent corporation owning at least 90% of the
outstanding shares of each class of a domestic subsidiary corporation may merge
the subsidiary corporation into itself without the approval of the shareholders
of the subsidiary corporation but with the approval of the board of directors
of the subsidiary corporation. Under Section 253 of the Delaware General
Corporation Law such a merger may be completed without the approval of the
stockholders of the parent corporation.
No dissenters' rights are available in connection with the offer to
exchange. If the TRW merger is consummated, however, TRW shareholders will have
certain rights under the Ohio Revised Code to dissent and demand dissenters'
rights and to receive payment in cash of the fair value of, their TRW shares.
TRW Shareholders that vote in favor of the TRW merger will not be entitled to
relief as dissenting shareholders. TRW Shareholders who perfect their rights by
complying with the procedures set forth in Sections 1701.84 and Section 1701.85
will have the fair value of their shares determined by an Ohio trial court and
will be entitled to receive a cash payment equal to such fair value from the
surviving corporation. In addition, such dissenting shareholders would be
entitled to receive payment of a fair rate of interest at a rate determined by
the trial court on the amount determined to be the fair value of their shares.
In determining the fair value of the TRW shares, a court is required to take
into account all relevant factors, excluding any appreciation or depreciation
in market value resulting from the transactions. Accordingly, such
determination could be based upon considerations other than, or in addition to,
the market value of the TRW shares, including, among other things, asset values
and earning capacity.
The foregoing summary of the rights of dissenting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters' rights and is
qualified in its entirety by reference to the full text of Sections 1701.84 and
section 1701.85 included herewith in Annex B. The preservation and exercise of
dissenters' rights are conditioned on strict adherence to the applicable
provisions of the Ohio Revised Code.
Rule 13e-3 of the General Rules and Regulations under the Exchange Act,
which Northrop Grumman does not believe would apply to the TRW merger if the
merger occurred within one year of the completion of the offer to exchange,
would require, among other things, that some financial information concerning
TRW, and some information relating to the fairness of the proposed transaction
and the consideration offered to shareholders of TRW, be filed with the SEC and
disclosed to shareholders prior to the completion of the TRW merger.
Plans for TRW After the TRW Merger
Once Northrop Grumman has completed the TRW merger, it expects that TRW
would continue its current operations, except that it would cease to be
publicly owned and would instead be wholly-owned by Northrop Grumman. Northrop
Grumman expects to promptly dispose of TRW's automotive business either by
selling that business to a third party or parties or by spinning it off to the
Northrop Grumman stockholders (including the former TRW shareholders) or by a
combination thereof.
The 1704 Limitation
Tenders of TRW shares pursuant to the offer to exchange will be effective,
and Northrop Grumman shall have the right to acquire tendered TRW shares, only
at such time as Section 1704 of the Ohio Revised Code (the
34
"Ohio business combination law") shall not prohibit or delay the TRW merger. No
tender of TRW shares shall be effective, and Northrop Grumman shall have no
right to acquire tendered TRW shares, prior to such time.
The Ohio business combination law prohibits certain business combinations
and other transactions (each, a "Chapter 1704 transaction"), such as the TRW
merger, between an issuing public corporation (such as TRW) and any "interested
shareholder" (defined generally as any person who, directly or indirectly, is
entitled to exercise or direct the exercise of 10% or more of the outstanding
voting power of a corporation in the election of directors) for a period of
three years after the date that person becomes an interested shareholder. After
such three-year period, a Chapter 1704 transaction between an issuing public
corporation and such interested shareholder is prohibited unless either certain
"fair price" provisions are complied with or the Chapter 1704 transaction is
approved by certain supermajority shareholder votes. The Ohio business
combination law restrictions do not apply to a Chapter 1704 transaction with an
interested shareholder if either the acquisition of the corporation's shares
that would cause the interested shareholder to become an interested
shareholder, or the Chapter 1704 transaction, is approved by a resolution of
the board of directors of the corporation adopted prior to the date on which
the interested shareholder became an interested shareholder.
On March 4, 2002, Northrop Grumman requested that TRW's board of directors
take appropriate action so that the Ohio business combination law is not
applicable to the acquisition of TRW capital stock pursuant to the offer to
exchange or the TRW merger. There can be no assurance that TRW's board of
directors will do so.
Conditions to the Offer to Exchange
In addition to the 1704 Limitation, the offer to exchange is also subject to
a number of conditions, which are described below:
Minimum Tender Condition
Consummation of the offer to exchange is conditioned upon there being
validly tendered and not withdrawn prior to the expiration of the offer to
exchange, a number of TRW shares which, together with any TRW shares that
Northrop Grumman beneficially owns for its own account, will constitute at
least a majority of the total number of outstanding shares of TRW common stock
on a fully diluted basis (as though all options or other securities convertible
into or exercisable or exchangeable for TRW shares had been so converted,
exercised or exchanged) as of the date that Northtrop Grumman accepts the TRW
shares for exchange pursuant to the offer to exchange.
Antitrust Condition
The offer to exchange is also subject to the condition that any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, Council Regulation (EEC) No. 4064/89 of the Council of the European
Union, and any other applicable similar foreign laws or regulations will have
expired or been terminated.
Under the provisions of the Hart-Scott-Rodino Act applicable to the offer to
exchange, the acquisition of TRW shares pursuant to the offer to exchange may
be completed following the expiration of a 30-calendar day waiting period (if
the thirtieth day falls on a weekend or holiday, the waiting period will expire
on the next business day) following the filing by Northrop Grumman of a
Notification and Report Form, which Northrop Grumman intends to file shortly,
with respect to the offer to exchange, unless Northrop Grumman receives a
request for additional information and documentary material from the Antitrust
Division of the Department of Justice or the Federal Trade Commission. If,
within the initial 30-day waiting period, either the Antitrust Division or the
Federal Trade Commission requests additional information and documentary
material from Northrop Grumman concerning the offer to exchange, the waiting
period will be extended and will expire at 11:59 P.M., New York City time, on
the thirtieth calendar day after the date of substantial compliance by Northrop
Grumman with that request. If the thirtieth day falls on a weekend or holiday,
the waiting period will expire on the next business day. Only one extension of
the waiting period pursuant to a request for additional information is
authorized by the Hart-Scott-Rodino Act. After that time, Northrop Grumman and
TRW may close the transaction, unless Northrop Grumman agrees with the
Antitrust Division or Federal Trade Commission to
35
delay closing the transaction or the Antitrust Division or Federal Trade
Commission seek a court order staying the transaction. In practice, complying
with a request for additional information or material can take a significant
amount of time. In addition, if the Antitrust Division or the Federal Trade
Commission raises substantive issues in connection with a proposed transaction,
the parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay completion of the transaction while those negotiations continue.
Under the laws of certain foreign nations and multinational authorities,
such as the European Commission (under Council Regulation (EEC) 4064/89, or
"ECMR"), the transaction may not be completed or control may not be exercised
unless certain filings are made with these nations' antitrust regulatory
authorities or multinational antitrust authorities and these antitrust
authorities approve or clear closing of the transaction. Other foreign nations
and multinational authorities have voluntary and/or post-merger notification
systems. Northrop Grumman intends to file shortly all other non-United States
pre-merger notifications that it believes are required. Should any other
approval or action be required, Northrop Grumman currently contemplates that
such approval or action would be sought. Although Northrop Grumman believes
that it will obtain all other material required regulatory approvals in a
timely manner, it is not certain that all other such approvals will be received
in a timely manner or at all or that foreign or multinational antitrust
authorities will not impose unfavorable conditions for granting the required
approvals.
Control Share Condition
Consummation of the offer to exchange is conditioned upon the acquisition of
TRW capital stock by Northrop Grumman being authorized by the shareholders of
TRW pursuant to Section 1701.831 of the Ohio Revised Code (the "control share
acquisition law") at a special meeting of shareholders of TRW (the "Ohio
control share acquisition meeting") in accordance with the Ohio control share
acquisition law, or Northrop Grumman being satisfied, in its sole discretion,
that the control share acquisition law is invalid or inapplicable to the
acquisition of TRW capital stock pursuant to the offer to exchange.
Under the Ohio control share acquisition law, unless a corporation's
articles of incorporation or regulations otherwise provide, any "control share
acquisition" of an "issuing public corporation" (such as TRW) may be made only
with the prior authorization of its shareholders in accordance with the control
share acquisition law. Neither TRW's Amended Articles of Incorporation nor its
regulations currently contain a provision by which TRW "opts out" of the
control share acquisition law.
Unless and until such time as TRW's articles or regulations are amended to
include such an "opt out" provision or the law is determined to be invalid, the
control share acquisition law requires shareholder approval of any proposed
"control share acquisition" of TRW. A "control share acquisition" is the
acquisition, directly or indirectly, by any person of shares of a corporation
that, when added to all other shares of such corporation of which such person
may exercise or direct the exercise of voting power, entitles such person to
exercise or direct the exercise of one-fifth or more, one third or more, or a
majority or more of the voting power in the election of directors. A control
share acquisition must be authorized in advance (i) by the holders of at least
a majority of the voting power of the corporation in the election of directors
represented at the meeting in person or by proxy and (ii) by the holders of a
majority of the portion of the voting power excluding the voting power of
interested shares at the meeting in person or by proxy. Ohio's control share
acquisition law provides that a quorum shall be deemed to be present at the
meeting if at least a majority of the voting power of the shares are
represented at such meeting in person or by proxy.
For purposes of the control share acquisition law, "interested shares" means
shares as to which any of the following may exercise or direct the exercise of
voting power in the election of directors (i) an acquiring person, (ii) an
officer elected or appointed by the directors of the issuing public
corporation, (iii) any employee of the issuing public corporation who is also a
director of such corporation and (iv) any person that acquires such shares for
valuable consideration during the period beginning with the date of the first
public disclosure of a proposed control share acquisition of the issuing public
corporation or any proposed merger, consolidation or other transaction which
would result in a change in control of the corporation or all or substantially
all of its assets, and ending on the record date for the meeting if either of
the following applies:
36
. the aggregate consideration paid or otherwise given by the person who
acquired the shares, and any other persons acting in concert with such
person for all shares exceeds $250,000; or
. the number of shares acquired by the person who acquired the shares, and
any other persons acting in concert with such person, exceeds 1/2 of 1%
of the outstanding shares of the corporation entitled to vote in the
election of directors. "Interested shares" also includes shares held by a
person that transfers interested shares after the record date if
accompanied by an instrument (such as a proxy or voting agreement) that
gives the transferee the power to vote those shares.
Under the control share acquisition law, TRW must call a meeting to vote
upon a proposed control share acquisition no later than 10 days, and it must be
held no later than 50 days, following its receipt of an "acquiring person
statement" from the acquiring person.
Without waiving its right to challenge the validity of all or any part of
the control share acquisition law or to seek an amendment to TRW's regulations
opting out of the control share acquisition law, and reserving its right to
take actions inconsistent with the applicability of the control share
acquisition law, Northrop Grumman delivered to TRW on March 4, 2002 an
acquiring person statement relating to the offer to exchange and the TRW
merger. Pursuant to the provisions of the control share acquisition law, the
Ohio control share acquisition meeting must be held no later than April 23,
2002.
Northrop Grumman expects to file suit in the United States District Court
for the Northern District of Ohio challenging the application of the control
share acquisition law to the offer to exchange and the TRW merger. See "Ohio
Litigation" on page 41.
Control Bid Condition
Consummation of the offer to exchange is conditioned upon the expiration of
the period during which the Ohio Division of Securities may suspend the offer
to exchange pursuant to Sections 1707.01, 1707.041, and 1707.042 (collectively,
the "control bid law") of the Ohio revised code, without the occurrence of any
such suspension or the invalidity of the control bid law.
The control bid law regulates tender offers for any equity security of a
subject company from a resident of Ohio if, after the purchase, the offeror
would directly or indirectly be the beneficial owner of more than 10% of any
class of issued and outstanding equity securities of such company (a "control
bid"). A subject company includes an issuer (such as TRW) that (i) either (a)
has its principal place of business or principal executive offices located in
Ohio or (b) owns or controls assets located in Ohio that have a fair market
value of at least $1.0 million and (ii) has more than 10% of its beneficial or
record equity security holders resident in Ohio, has more than 10% of its
equity securities owned, beneficially or of record, by residents of Ohio or has
1,000 beneficial or record equity security holders who are resident in Ohio.
The control bid law prohibits an offeror from making a control bid for
securities of a subject company pursuant to a tender offer until the offeror
has filed specified information with the Ohio Division of Securities. In
addition, the offeror is required to deliver a copy of such information to the
subject company not later than the offeror's filing with the Ohio Division of
Securities and to send or deliver such information and the material terms of
the proposed offer to exchange to all offerees in Ohio as soon as practicable
after the offeror's filing with the Ohio Division of Securities.
Within five calendar days of such filing, the Ohio Division of Securities
may, by order, summarily suspend the continuation of the control bid if it
determines that the offeror has not provided all of the specified information
or that the control bid materials provided to offerees do not provide full
disclosure of all material information concerning the control bid. If the Ohio
Division of Securities summarily suspends a control bid, it must schedule and
hold a hearing within 10 calendar days of the date on which the suspension is
imposed and must make its determination within three calendar days after the
hearing has been completed but no later than 14 calendar days after the date on
which the suspension is imposed. The Ohio Division of Securities may maintain
its suspension of the continuation of the control bid if, based upon the
hearing, it determines that all of the information required to be provided by
the control bid law has not been provided by the offeror, that the control
37
bid materials provided to offerees do not provide full disclosure of all
material information concerning the control bid or that the control bid is in
material violation of any provision of the Ohio securities laws. If, after the
hearing, the Ohio Division of Securities maintains the suspension, the offeror
has the right to correct the disclosure and other deficiencies identified by
the Ohio Division of Securities and to reinstitute the control bid by filing
new or amended information pursuant to the control bid law.
Northrop Grumman filed the information required under the control bid law.
Northrop Grumman expects to file suit in the United States District Court for
the Northern District of Ohio challenging the application of the control bid
law to the offer to exchange and the TRW merger. See "Ohio Litigation" on page
41.
Northrop Grumman Stockholder Approval Condition
Consummation of the offer to exchange is conditioned upon the approval by
the stockholders of Northrop Grumman of the issuance of Northrop Grumman common
stock pursuant to the offer to exchange and the TRW merger.
Pursuant to the rules of the New York Stock Exchange, upon which Northrop
Grumman's common stock is listed, the issuance of Northrop Grumman common stock
pursuant to the offer to exchange and the TRW merger must be approved by
holders of a majority of the shares voted at a meeting of such holders at which
the total number of votes cast represents over 50% in interest of all shares of
Northrop Grumman securities entitled to vote on the proposal. This approval is
required because the number of shares of Northrop Grumman's common stock to be
issued will be equal to or in excess of 20% of the shares outstanding prior to
such issuance. Northrop Grumman intends to seek this approval at a meeting of
its stockholders to be held as soon as practicable.
Certain Other Conditions to the Offer to Exchange
Notwithstanding any other provision of the offer to exchange, Northrop
Grumman shall not be required to accept for exchange or exchange any TRW
shares, may postpone the acceptance for exchange of or the exchange for
tendered TRW shares, and may, in Northrop Grumman's sole discretion, terminate
or amend the offer to exchange as to any TRW shares not then exchanged if:
. at the expiration date, any of the minimum tender condition, the antitrust
condition, the control share condition, the control bid condition or any
of the other conditions to the offer to exchange set forth in clauses (a)
through (g) below has not been satisfied or, in the case of any condition
other than the antitrust condition or the conditions set forth in clauses
(b) or (c) below, waived; or
. on or after the date of this offer to exchange and at or prior to the time
of exchange of any TRW shares (whether or not any TRW shares have
theretofore been accepted for exchange or exchanged pursuant to the offer
to exchange), and subject to the applicable rules and regulations of the
SEC (including Rule 14e-1(c) under the Exchange Act relating to Northrop
Grumman's obligation to exchange or return tendered TRW shares promptly
after the termination or withdrawal of the offer to exchange) the
antitrust condition is not satisfied.
The other conditions to the offer to exchange are as follows:
(a) the shares of Northrop Grumman's common stock to be issued to TRW
shareholders in the offer to exchange and the TRW merger have been authorized
for listing on the New York Stock Exchange, subject to official notice of
issuance;
(b) the registration statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
registration statement or a proceeding seeking a stop order shall have been
issued nor shall there have been proceedings for that purpose initiated or
threatened by the SEC, and Northrop Grumman shall have received all necessary
state securities law or blue sky authorizations;
38
(c) no temporary restraining order, preliminary or permanent injunction or
other order or decree issued by any court or agency of competent jurisdiction
or other legal restraint or prohibition preventing the completion of the offer
to exchange, the TRW merger or any of the other transactions contemplated by
the offer to exchange shall be in effect; no statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any court, administrative agency or commission or other governmental
authority or instrumentality which prohibits, restricts or makes illegal the
completion of the offer to exchange or the TRW merger;
(d) there shall not be pending or threatened any suit, action or proceeding
by any governmental entity (1) challenging the offer to exchange, seeking to
restrain or prohibit the completion of the offer to exchange or seeking to
obtain from TRW or Northrop Grumman any damages that are material in relation
to TRW and its subsidiaries taken as a whole or Northrop Grumman and its
subsidiaries taken as a whole, (2) seeking to prohibit or limit the ownership
or operation by TRW or Northrop Grumman or any of Northrop Grumman's
subsidiaries of any material portion of the business or assets of TRW or
Northrop Grumman or any of Northrop Grumman's subsidiaries or to compel TRW or
Northrop Grumman or any of Northrop Grumman's subsidiaries to dispose of or
hold separate any material portion of the business or assets of TRW or Northrop
Grumman or any of Northrop Grumman's subsidiaries as a result of Northrop
Grumman's offer to exchange, (3) seeking to prohibit Northrop Grumman from
effectively controlling in any material respect the business or operations of
TRW or (4) which otherwise is reasonably likely to have a material adverse
effect on Northrop Grumman or TRW;
(e) no change shall have occurred or been threatened (or any condition,
event or development shall have occurred or been threatened involving a
prospective change) in the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of TRW
or any of its subsidiaries that, in the reasonable judgment of Northrop
Grumman, is or may be materially adverse to TRW or any of its subsidiaries, or
Northrop Grumman shall have become aware of any facts that, in its reasonable
judgment, have or may have material adverse significance with respect to either
the value of TRW or any of its subsidiaries or the value of the capital stock
of TRW to Northrop Grumman;
(f) there shall not have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States, (ii) any extraordinary or material adverse change in the financial
markets or major stock exchange indices in the United States or abroad or in
the market price of the TRW shares, (iii) any change in the general political,
market, economic or financial conditions in the U.S. or abroad that could, in
the sole judgment of Northrop Grumman, have a material adverse effect upon the
business, properties, assets, liabilities, capitalization, stockholders equity,
condition (financial or otherwise), operations, licenses or franchises, results
of operations or prospects of TRW or any of its subsidiaries, (iv) any material
change in U.S. currency exchange rates or any other currency exchange rates or
a suspension of, or limitation on, the markets therefor, (v) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (vi) any limitation (whether or not mandatory) by any
government, domestic, foreign or supranational, or governmental entity on, or
other event that, in the sole judgment of Northrop Grumman, might affect the
extension of credit by banks or other lending institutions, (vii) a
commencement of war or armed hostilities or other national or international
calamity directly or indirectly involving the U.S., or (viii) in the case of
any of the foregoing existing at the time of the commencement of the offer to
exchange, a material acceleration or worsening thereof; and
(g) TRW shall not have entered into or effectuated any other agreement or
transaction with any person or entity having the effect of impairing Northrop
Grumman's ability to acquire TRW or otherwise diminishing the expected economic
value to Northrop Grumman of the acquisition of TRW including, but not limited
to, any material issuance of new securities of TRW, the declaration of any
extraordinary dividend, the adoption of a shareholder rights plan or any other
transaction not in the ordinary course of TRW's business.
The conditions listed above are solely for Northrop Grumman's benefit and
Northrop Grumman may assert them regardless of the circumstances giving rise to
any of the conditions (including any action or inaction by
39
Northrop Grumman). Northrop Grumman may waive any of these conditions in whole
or in part (other than the antitrust condition and the conditions set forth in
clauses (b) and (c) above). The determination as to whether any condition has
been satisfied shall be in Northrop Grumman's reasonable judgment and will be
final and binding on all parties. The failure by Northrop Grumman at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
right and each right shall be deemed a continuing right which may be asserted
at any time and from time to time.
Ohio Litigation
Northrop Grumman expects to file a lawsuit in the United States District
Court for the Northern District of Ohio against TRW and certain other persons,
seeking declaratory and injunctive relief with respect to the Ohio control
share acquisition law, the Ohio business combination law and the Ohio control
bid law. The lawsuit will allege that such statutes conflict with the U.S.
Constitution and U.S. laws governing the conduct of tender offers. No assurance
can be provided as to the time which may be required for a final decision with
respect to the issues presented, or as to the outcome of this lawsuit.
Regulatory Approvals
Other than clearance under the antitrust laws applicable to the offer to
exchange and the TRW merger which are described above under --"Conditions to
the Offer to Exchange--Antitrust Condition," the SEC declaring the
effectiveness of the registration statement of which this offer to exchange is
a part and the filings under the control bid law, Northrop Grumman does not
believe that any additional material governmental filings are required with
respect to the offer to exchange and the TRW merger.
Source and Amount of Funds
Northrop Grumman's offer to exchange is not conditioned upon any financing
arrangements. Northrop Grumman will use working capital to pay any cash
requirements of the offer to exchange.
Certain Relationships with TRW
Except as set forth in this proposal, neither Northrop Grumman nor, to the
best of its knowledge, any of Northrop Grumman's directors, executive officers
or other affiliates has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of TRW,
including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies. Except as
described in this offer to exchange, there have been no contacts, negotiations
or transactions since January 1, 1999, between Northrop Grumman or, to the best
of its knowledge, any of Northrop Grumman's directors, executive officers or
other affiliates on the one hand, and TRW or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, a tender offer to exchange
or other acquisition of securities, an election of directors, or a sale or
other transfer of a material amount of assets. In the normal course of their
businesses, Northrop Grumman and TRW are parties to transactions and
agreements. Since January 1, 1999, Northrop Grumman believes that no such
transaction had an aggregate value in excess of 1%, of TRW consolidated
revenues. Neither Northrop Grumman, nor, to the best of its knowledge, any of
Northrop Grumman's directors, executive officers or other affiliates has since
January 1, 1999 had any transaction with TRW or any of its executive officers,
directors or affiliates that would require disclosure under the rules and
regulations of the SEC applicable to the offer to exchange. As of the date of
this offer to exchange, Northrop Grumman beneficially owns for its own account
4 shares of TRW common stock. In addition, Dr. Ronald D. Sugar, President and
Chief Operating Officer and a director of Northrop Grumman, owns 21,475 shares
of TRW common stock as trustee of Ronald D. Sugar Revocable Trust dated as of
October 29, 1995. Dr. Ronald Sugar was employed by TRW through June 2000. In
accordance with the terms of his employment with TRW, Dr. Sugar continues to
receive compensation benefits from TRW relating to his past employment with
TRW. To the best of Northrop Grumman's knowledge, no other officers or
directors own TRW capital stock or have interests in TRW.
40
Fees and Expenses
Northrop Grumman has retained Salomon Smith Barney to act as the dealer
manager in connection with the offer to exchange and to provide various
financial advisory services to Northrop Grumman in connection with the offer to
exchange and the TRW merger. Salomon Smith Barney will receive reasonable and
customary compensation for these services and will be reimbursed for
out-of-pocket expenses, including reasonable expenses of counsel and other
advisors. Northrop Grumman has agreed to indemnify Salomon Smith Barney and
related persons against various liabilities and expenses in connection with its
services as the dealer manager and financial advisor, including various
liabilities and expenses under the U.S. federal securities laws. From time to
time, Salomon Smith Barney and its affiliates may actively trade the debt and
equity securities of Northrop Grumman and TRW for their own account or for the
accounts of customers and, accordingly, may hold a long or short position in
those securities. Salomon Smith Barney has in the past performed various
investment banking and financial advisory services for Northrop Grumman for
which they have received customary compensation.
Northrop Grumman has retained D. F. King & Co., Inc. as information agent in
connection with Northrop Grumman's offer to exchange. The information agent may
contact holders of TRW shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee stockholders to
forward material relating to Northrop Grumman's offer to exchange to beneficial
owners of TRW shares. Northrop Grumman will pay the information agent
reasonable and customary compensation for these services in addition to
reimbursing the information agent for its reasonable out-of- pocket expenses.
Northrop Grumman has agreed to indemnify the information agent against various
liabilities and expenses in connection with Northrop Grumman's offer to
exchange, including various liabilities under the U.S. federal securities laws.
In addition, Northrop Grumman has retained Equiserve Trust Company as the
exchange agent. Northrop Grumman will pay the exchange agent reasonable and
customary compensation for its services in connection with Northrop Grumman's
offer to exchange, will reimburse the exchange agent for its reasonable
out-of-pocket expenses and will indemnify the exchange agent against various
liabilities and expenses, including various liabilities under the U.S. federal
securities laws.
Northrop Grumman will not pay any fees or commissions to any broker, dealer
or other person for soliciting tenders of TRW shares pursuant to Northrop
Grumman's offer to exchange. Northrop Grumman will reimburse brokers, dealers,
commercial banks and trust companies and other nominees, upon request, for
customary clerical and mailing expenses incurred by them in forwarding offering
materials to their customers.
Accounting Treatment
The acquisition of TRW by Northrop Grumman would be accounted for under the
purchase method of accounting under U.S. generally accepted accounting
principles, which means that TRW's results of operations will be included with
ours from the closing date and its consolidated assets and liabilities will be
recorded at their fair values at the same date.
Stock Exchange Listing
Northrop Grumman's common stock is listed on the New York Stock Exchange and
the Pacific Stock Exchange. Northrop Grumman will make an application to list
on the New York Stock Exchange and the Pacific Stock Exchange the Northrop
Grumman common stock that will be issued pursuant to the offer to exchange and
the TRW merger.
41
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
Northrop Grumman common stock is listed on the New York Stock Exchange and
the Pacific Stock Exchange under the symbol "NOC." TRW common stock is listed
on the New York Stock Exchange, the Pacific Stock Exchange, the Chicago Stock
Exchange and the Philadelphia Stock Exchange under the symbol "TRW." The table
below sets forth, for the calendar quarters indicated, the high and low sales
prices per share reported on the New York Stock Exchange and the dividends
declared on Northrop Grumman common stock and on TRW common stock.
Northrop Grumman TRW Common
Common Stock Stock
---------------- -------------
High Low Dividends High Low Dividends
------- ------ --------- ------ ------ ---------
1999
March 31, 1999.... $ 73.25 $57.00 $0.40 $58.63 $44.75 $0.33
June 30, 1999..... 73.31 57.75 0.40 54.94 41.94 0.33
September 30, 1999 75.69 59.94 0.40 57.19 48.06 0.33
December 31, 1999. 62.31 49.00 0.40 53.94 41.50 0.33
2000
March 31, 2000.... 55.19 43.56 0.40 64.13 39.81 0.33
June 30, 2000..... 80.25 52.44 0.40 59.94 43.19 0.33
September 30, 2000 91.81 65.63 0.40 52.13 40.31 0.33
December 31, 2000. 92.50 74.13 0.40 42.00 29.88 0.35
2001
March 31, 2001.... 97.54 79.81 0.40 40.34 33.86 0.35
June 30, 2001..... 95.37 77.60 0.40 44.95 33.48 0.35
September 30, 2001 102.97 77.00 0.40 44.35 28.01 0.35
December 31, 2001. 108.97 89.02 0.40 40.51 30.01 0.18
2002
March 1, 2002..... 117.80 96.00 0.40 51.55 34.82 0.18
On March 1, 2002, the last full trading day prior to the date of this offer
to exchange, the last sale price per share of Northrop Grumman common stock on
the New York Stock Exchange was $107.75 and the last sale price per share of
TRW common stock was $50.05.
Northrop Grumman urges TRW's shareholders to obtain current market
quotations for Northrop Grumman and TRW common stock before making any decision
regarding the offer to exchange.
42
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The Unaudited Pro Forma Condensed Combined Financial Statements presented
below are derived from the historical consolidated financial statements of each
of Northrop Systems, Northrop Grumman, Litton, Newport News and TRW. The
Unaudited Pro Forma Condensed Combined Financial Statements are prepared using
the purchase method of accounting, with Northrop Grumman treated as the
acquiror and as if the Litton, Newport News and TRW acquisitions had been
completed as of the beginning of the periods presented for statements of
operations purposes and on September 30, 2001 for balance sheet purposes.
For a summary of the business combination, see "The Offer to Exchange"
beginning on page 26 of this offer to exchange.
The Unaudited Pro Forma Condensed Combined Financial Statements are based
upon the historical financial statements of Northrop Systems, Northrop Grumman,
Litton, Newport News and TRW adjusted to give effect to the Litton, Newport
News and TRW acquisitions. The pro forma adjustments are described in the
accompanying notes presented on the following pages. The pro forma financial
statements have been developed from (a) the audited consolidated financial
statements of Northrop Systems contained in its Annual Report on Form 10-K/A
for the year ended December 31, 2000 and the unaudited consolidated financial
statements of Northrop Grumman contained in its Quarterly Report on Form 10-Q
for the nine months ended September 30, 2001, which are incorporated by
reference in this offer to exchange, (b) the audited consolidated financial
statements of Litton contained in its Annual Report on Form 10-K for the fiscal
year ended July 31, 2000 and the unaudited consolidated financial statements of
Litton contained in its Quarterly Report on Form 10-Q for the period ended
January 31, 2001, which are incorporated by reference in this offer to
exchange, (c) the audited consolidated financial statements of Newport News
contained in its Annual Report on Form 10-K for the fiscal year ended December
31, 2000 and the unaudited consolidated financial statements of Newport News
contained in its Quarterly Report on Form 10-Q for the period ended September
16, 2001, which are incorporated by reference in this offer to exchange, and
(d) the audited consolidated financial statements of TRW contained in its
Annual Report on Form 10-K for the year ended December 31, 2000 and the
unaudited consolidated financial statements of TRW contained in its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2001, which are
incorporated by reference in this offer to exchange. In addition, the audited
consolidated financial statements contained in Litton's Annual Report on Form
10-K for the fiscal year ended July 31, 2000 and the unaudited consolidated
financial statements of Litton contained in Litton's Quarterly Report on Form
10-Q for the period ended January 31, 2001 have been used to bring the
financial reporting periods of Litton to within 90 days of those of Northrop
Systems and Northrop Grumman.
The acquisition of Litton, on April 2, 2001, which is valued at
approximately $5.2 billion, including the assumption of Litton's net debt of
$1.3 billion, is accounted for using the purchase method of accounting. Under
the purchase method of accounting, the purchase price is allocated to the
underlying tangible and intangible assets acquired and liabilities assumed
based on their respective fair market values, with the excess recorded as
goodwill. The Unaudited Pro Forma Condensed Combined Financial Statements
reflect preliminary estimates of the fair market value of the Litton assets
acquired and liabilities assumed and the related allocations of purchase price,
and preliminary estimates of adjustments necessary to conform Litton data to
Northrop Grumman's accounting policies. The Unaudited Pro Forma Condensed
Combined Financial Statements do not include the recognition of liabilities
associated with certain potential restructuring activities. Northrop Grumman is
currently reviewing the preliminary estimates of the fair market value of the
Litton assets acquired and liabilities assumed, including valuations associated
with certain contracts and valuation study results for intangible assets,
property, plant and equipment, and retiree benefits assets and liabilities.
Northrop Grumman also is evaluating several possible restructuring activities
of Litton operations. The final determination of the fair market value of
assets acquired and liabilities assumed and final allocation of the purchase
price may differ from the amounts assumed in these Unaudited Pro Forma
Condensed Combined Financial Statements. Adjustments to the purchase price
allocations will be finalized by March 31, 2002, and will be reflected in
future Northrop Grumman filings. There can be no assurance that such
adjustments will not be material.
43
With the exception of Newport News' long-term debt assumed, as of the date
of the offer to exchange Northrop Grumman has not completed the valuation
studies necessary to arrive at the required estimates of the fair market value
of the Newport News assets acquired and TRW assets to be acquired and the
Newport News liabilities assumed and the TRW liabilities to be assumed and the
related allocations of purchase price, nor has it identified the adjustments
necessary, if any, to conform Newport News or TRW data to Northrop Grumman's
accounting policies. Accordingly, Northrop Grumman has used the historical book
values of the assets and liabilities of Newport News, other than long-term
debt, and TRW and has used the historical revenue recognition policies of
Newport News and TRW to prepare the Unaudited Pro Forma Condensed Combined
Financial Statements set forth herein, with the excess of the purchase price
over the historical net assets of Newport News and TRW recorded as goodwill and
other purchased intangibles. Once Northrop Grumman has determined the final
purchase price for TRW and has completed the valuation studies necessary to
finalize the required purchase price allocations and identified any necessary
conforming changes for Newport News and TRW, such pro forma financial
statements will be subject to adjustment. Such adjustments will likely result
in changes to the pro forma statement of financial position to reflect the
final allocations of purchase price and the pro forma statements of income, and
there can be no assurance that such adjustments will not be material.
The Unaudited Pro Forma Condensed Combined Financial Statements are provided
for illustrative purposes only and do not purport to represent what the actual
consolidated results of operations or the consolidated financial position of
Northrop Grumman would have been had Northrop Grumman's offer to exchange and
the Litton, Newport News and TRW acquisitions occurred on the dates assumed,
nor are they necessarily indicative of future consolidated results of
operations or financial position.
The Unaudited Pro Forma Condensed Combined Financial Statements do not
include the realization of cost savings from operating efficiencies, synergies
or other restructurings resulting from the Litton, Newport News and TRW
acquisitions.
The Unaudited Pro Forma Condensed Combined Financial Statements should be
read in conjunction with the separate historical consolidated financial
statements and accompanying notes of Northrop Systems, Northrop Grumman,
Litton, Newport News and TRW that are incorporated by reference in this offer
to exchange.
44
Unaudited Pro Forma Condensed Combined
Statement of Financial Position
September 30, 2001
($ in millions)
Pro Forma Pro Forma
Northrop Newport ---------------------- -----------------------
Grumman News Adjustment Combined TRW Adjustment Combined
-------- ------- ---------- -------- ------- ---------- --------
Assets:
Current assets......................
Cash and cash equivalents......... $ 310 $ 66 $ -- $ 376 $ 242 $ -- $ 618
Accounts receivable............... 2,297 131 (7)(a) 2,421 2,201 -- 4,622
Inventoried costs................. 1,222 409 -- 1,631 871 -- 2,502
Deferred income taxes............. 35 110 -- 145 210 -- 355
Prepaid expenses and other
current assets................... 140 19 -- 159 147 -- 306
------- ------ ------ ------- ------- ------- -------
Total current assets............. 4,004 735 (7) 4,732 3,671 -- 8,403
------- ------ ------ ------- ------- ------- -------
Property, plant and equipment....... 3,297 1,616 -- 4,913 8,206 -- 13,119
Accumulated depreciation............ (1,211) (950) -- (2,161) (4,720) -- (6,881)
------- ------ ------ ------- ------- ------- -------
Property, plant and equipment, net.. 2,086 666 -- 2,752 3,486 -- 6,238
------- ------ ------ ------- ------- ------- -------
Other assets
Goodwill and other purchased
intangibles, net................. 7,956 -- 1,976(a)(k) 9,932 3,909 3,643(l)(m) 17,484
Prepaid retiree benefits cost and
intangible pension asset......... 2,773 -- -- 2,773 3,014 -- 5,787
Other assets...................... 395 237 -- 632 1,270 -- 1,902
------- ------ ------ ------- ------- ------- -------
11,124 237 1,976 13,337 8,193 3,643 25,173
------- ------ ------ ------- ------- ------- -------
$17,214 $1,638 $1,969 $20,821 $15,350 $ 3,643 $39,814
======= ====== ====== ======= ======= ======= =======
Liabilities and Shareholders' Equity
Current liabilities
Notes payable and current portion
of long term debt................ $ 134 $ 46 $ -- $ 180 $ 1,540 $ -- $ 1,720
Accounts payable.................. 757 87 (7)(a) 837 1,744 -- 2,581
Accrued employees'
compensation..................... 629 -- -- 629 -- -- 629
Advances on contracts............. 837 -- -- 837 -- -- 837
Income taxes...................... 373 -- -- 373 -- -- 373
Other current liabilities......... 1,223 484 -- 1,707 2,100 -- 3,807
------- ------ ------ ------- ------- ------- -------
Total current liabilities........ 3,953 617 (7) 4,563 5,384 -- 9,947
------- ------ ------ ------- ------- ------- -------
Long-term debt...................... 5,185 432 696(a)(k) 6,313 4,942 -- 11,255
Accrued retiree benefits............ 1,478 -- -- 1,478 -- -- 1,478
Deferred tax and other long-term
liabilities........................ 973 285 -- 1,258 2,698 -- 3,956
Redeemable preferred stock.......... 350 -- -- 350 -- -- 350
Shareholders' equity
Paid in capital and unearned
compensation..................... 2,366 452 1,132(a) 3,950 559 5,410(l)(m) 9,919
Retained earnings................. 2,928 236 (236)(a) 2,928 2,426 (2,426)(l)(m) 2,928
Accumulated other comprehensive
loss............................. (19) -- -- (19) (269) 269(l)(m) (19)
Stock Employee Compensation
Trust............................ -- (384) 384(a) -- -- -- --
Treasury Shares--cost in excess
of par value..................... -- -- -- -- (390) 390(l)(m) --
------- ------ ------ ------- ------- ------- -------
5,275 304 1,280 6,859 2,326 3,643 12,828
------- ------ ------ ------- ------- ------- -------
$17,214 $1,638 $1,969 $20,821 $15,350 $ 3,643 $39,814
======= ====== ====== ======= ======= ======= =======
45
Unaudited Pro Forma Condensed Combined
Statement of Income
Year Ended December 31, 2000
($ in millions, except per share)
Pro Forma Pro Forma
Northrop ------------------------- Newport --------------------------
Grumman Litton Adjustments Combined News Adjustments Combined TRW
-------- ------ ----------- -------- ------- ----------- -------- -------
Sales and service revenues...... $7,618 $5,626 $ (61)(b) $13,183 $2,072 $ (22)(b) $15,233 $17,231
Cost of sales
Operating Costs.............. 5,446 4,669 88(b)(c)(d) 10,203 1,870 (261)(b)(h)(j) 11,812 14,520
Administrative and
general expenses........... 1,074 491 -- 1,565 -- 271(j) 1,836 1,115
------ ------ ----- ------- ------ ----- ------- -------
Operating margin................ 1,098 466 (149) 1,415 202 (32) 1,585 1,596
Interest expense................ (175) (105) (191)(e) (471) (53) (21)(i) (545) (524)
Other, net...................... 52 16 -- 68 4 -- 72 (366)
------ ------ ----- ------- ------ ----- ------- -------
Income from continuing
operations before income
taxes......................... 975 377 (340) 1,012 153 (53) 1,112 706
Federal and foreign income taxes 350 151 (119)(f) 382 63 (27)(f)(j) 418 268
------ ------ ----- ------- ------ ----- ------- -------
Income from continuing
operations.................... $ 625 $ 226 $(221) $ 630 $ 90 $ (26) $ 694 $ 438
====== ====== ===== ======= ====== ===== ======= =======
Less, dividends paid to
preferred shareholders........ -- -- (25)(g) (25) -- -- (25) --
------ ------ ----- ------- ------ ----- ------- -------
Income available to common
shareholders.................. $ 625 $ 226 $(246) $ 605 $ 90 $ (26) $ 669 $ 438
====== ====== ===== ======= ====== ===== ======= =======
Average shares basic............ 70.58 83.58 100.22
Average shares diluted.......... 70.88 84.00 100.64
Basic earnings per share:
Continuing operations........ $ 8.86 $ 7.24 $ 6.68
Diluted earnings per share:
Continuing operations........ $ 8.82 $ 7.20* $ 6.65*
Pro Forma
-----------------------
Adjustments Combined
----------- --------
Sales and service revenues...... $ -- $32,464
Cost of sales
Operating Costs.............. 91 (l)(h) 26,423
Administrative and
general expenses........... -- 2,951
----- -------
Operating margin................ (91) 3,090
Interest expense................ -- (1,069)
Other, net...................... -- (294)
----- -------
Income from continuing
operations before income
taxes......................... (91) 1,727
Federal and foreign income taxes (32)(f)(l) 654
----- -------
Income from continuing
operations.................... $ (59) $ 1,073
===== =======
Less, dividends paid to
preferred shareholders........ -- (25)
----- -------
Income available to common
shareholders.................. $ (59) $ 1,048
===== =======
Average shares basic............ 153.62
Average shares diluted.......... 154.04
Basic earnings per share:
Continuing operations........ $ 6.82
Diluted earnings per share:
Continuing operations........ $ 6.80 *
- --------
* Calculated by dividing income available to common shareholders by average
shares diluted, which is calculated assuming preferred shares are not
converted to common shares, resulting in the most dilutive effect.
46
Unaudited Pro Forma Condensed Combined
Statement of Income
Nine Months Ended September 30, 2001
($ in millions, except per share)
Pro Forma Pro Forma
---------------------- -----------------------
Northrop Adjustments Newport Adjustments
Grumman Litton Combined News Combined TRW
-------- ------ ---------------------- ------- ----------------------- -------
Sales and service revenues.... $9,254 $1,345 $ (18)(b) $10,581 $1,639 $ (37)(b) $12,183 $12,305
Cost of sales
Operating Costs............ 7,656 1,120 19(b)(c)(d) 8,795 1,481 (168)(b)(h)(j) 10,108 10,467
Administrative and
general expenses......... 908 121 -- 1,029 -- 153(j) 1,182 795
------ ------ ----- ------- ------ ----- ------- -------
Operating margin.............. 690 104 (37) 757 158 (22) 893 1,043
Interest expense.............. (269) (27) (64)(e) (360) (37) (15)(i) (412) (368)
Other, net.................... 64 3 -- 67 (1) -- 66 (683)
------ ------ ----- ------- ------ ----- ------- -------
Income from continuing
operations before income
taxes....................... 485 80 (101) 464 120 (37) 547 (8)
Federal and foreign income
taxes....................... 189 30 (35)(f) 184 48 (18)(f)(j) 214 14
------ ------ ----- ------- ------ ----- ------- -------
Income from continuing
operations.................. $ 296 $ 50 (66) 280 $ 72 (19) 333 $ (22)
====== ====== ===== ======= ====== ===== ======= =======
Less, dividends paid to
preferred shareholders...... (12) -- (6)(g) (18) -- -- (18) --
------ ------ ----- ------- ------ ----- ------- -------
Income available to
common shareholders......... $ 284 $ 50 $ (72) $ 262 $ 72 $ (19) $ 315 $ (22)
====== ====== ===== ======= ====== ===== ======= =======
Average shares basic.......... 80.34 85.32 101.96
Average shares diluted........ 81.03 86.11 102.75
Basic earnings per share:
Continuing operations...... $ 3.53 $ 3.07 $ 3.09
Diluted earnings per share:
Continuing operations...... $ 3.50* $ 3.04 * $ 3.07 *
Pro Forma
-------------------
Adjustments
Combined
-------------------
Sales and service revenues.... $ -- $24,488
Cost of sales
Operating Costs............ 68 (l)(h) 20,643
Administrative and
general expenses......... -- 1,977
---- -------
Operating margin.............. (68) 1,868
Interest expense.............. -- (780)
Other, net.................... -- (617)
---- -------
Income from continuing
operations before income
taxes....................... (68) 471
Federal and foreign income
taxes....................... (24)(l)(f) 204
---- -------
Income from continuing
operations.................. $(44) 267
==== =======
Less, dividends paid to
preferred shareholders...... -- (18)
---- -------
Income available to
common shareholders......... $(44) $ 249
==== =======
Average shares basic.......... 155.36
Average shares diluted........ 156.15
Basic earnings per share:
Continuing operations...... $ 1.60
Diluted earnings per share:
Continuing operations...... $ 1.59 *
- --------
* Calculated by dividing income available to common shareholders by average
shares diluted, which is calculated assuming preferred shares are not
converted to common shares, resulting in the most dilutive effect.
47
Notes to Pro Forma Condensed Combined Financial Statements (Unaudited)
(a) Adjustments to (i) eliminate the equity of Newport News, (ii) eliminate
intercompany receivables and payables between Northrop Grumman and Newport
News, (iii) record issuance of common stock, (iv) record debt financing for
the Newport News acquisition along with additional acquisition related
costs, and (v) record goodwill and other purchased intangibles arising from
the acquisition of Newport News.
The amount of the purchase price allocated to goodwill and other purchased
intangibles is subject to change and is calculated based on the
assumption that Northrop Grumman has acquired 100% of Newport News
common stock and, accordingly, has issued 16,636,885 shares of
Northrop Grumman common stock available to be exchanged in the Newport
News acquisition.
The value ascribed to the Northrop Grumman common stock exchanged in the
Newport News acquisition is $95.22. This value was determined based on
a measurement date of December 5, 2001. Accordingly, this value
represents the 5-day average of the Northrop Grumman closing stock
prices from December 3, 2001 through December 7, 2001.
(b) Adjustment to eliminate intercompany sales and cost of sales transactions
between Northrop Grumman and Litton, and between Northrop Grumman and
Newport News.
(c) Adjustment to amortize the preliminary estimate of goodwill and other
purchased intangible assets arising out of the acquisition of Litton over
an estimated weighted average life of 26 years on a straight line basis.
(d) Adjustment to record depreciation of property, plant and equipment and
amortization of capitalized software arising from fair market value
adjustments for the Litton acquisition.
(e) Adjustment to record interest expense and the amortization of debt issuance
costs on new financing for the acquisition of Litton at a weighted average
rate of 7.5 and 6.8 percent for the year ended December 31, 2000 and the
nine months ended September 30, 2001, respectively.
(f) Adjustment to record income tax effects on pre-tax pro forma adjustments,
using a statutory tax rate of thirty-five percent.
(g) Adjusted, pro rata, for dividends to preferred shareholders using $7 per
share dividend rate for redeemable preferred stock issued in the
acquisition of Litton.
(h) Adjustment to amortize estimated purchased intangible assets arising out of
the Newport News and TRW acquisitions over estimated lives of 10 years on a
straight line basis. Goodwill arising from the Newport News and TRW
acquisitions has not been amortized, in accordance with the provisions of
SFAS No. 142: Goodwill and Other Intangible Assets.
(i) Adjustment to record interest on debt financing for the Newport News
acquisition at the current rate of 3.1 percent for both the year ended
December 31, 2000 and the nine months ended September 30, 2001.
(j) Adjustments to reclassify (i) G&A expense from operating costs to
administrative and general expenses and (ii) state income tax expense from
federal and foreign income taxes to operating costs to conform Newport News
data to classifications utilized by Northrop Grumman.
(k) Includes fair market value adjustment of $38 million for Newport News
long-term debt acquired.
(l) The pro-forma adjustments contained herein for TRW are based solely upon
publicly available information in TRW's quarterly and annual SEC filings.
Accordingly, we were unable to obtain adequate data to show the pro-forma
impact of Northrop Grumman's intention to divest TRW's automotive business
concurrently with the acquisition.
48
(m) Adjustments to (i) eliminate the equity of TRW, (ii) record issuance of
Northrop Grumman common stock, and (iii) record goodwill and other
purchased intangibles arising from the acquisition of TRW.
The amount of purchase price allocated to goodwill and other purchased
intangibles is subject to change and is calculated based on the assumption
that Northrop Grumman has acquired 100% of the TRW common stock and Serial
Preference Stock II, and, accordingly, has issued 53,396,492 shares of
Northrop Grumman common stock in the TRW acquisition.
The value ascribed to the Northrop Grumman common stock exchanged in the TRW
acquisition is $111.79. This value was determined based on a measurement
date of February 22, 2002. As such, the value represents the 5-day average
of the Northrop Grumman closing stock prices from February 20, 2002 through
February 26, 2002.
49
DESCRIPTION OF NORTHROP GRUMMAN COMMON STOCK
The following description of the terms of the common stock of Northrop
Grumman is not meant to be complete and is qualified by reference to Northrop
Grumman's Certificate of Incorporation, which is incorporated by reference. See
"Additional Information" beginning on page 61.
Northrop Grumman is authorized to issue 400,000,000 shares of common stock,
par value $1.00 per share. As of February 27, 2002, 112,651,366 shares of
Northrop Grumman common stock were outstanding and 18,900,993 shares were
subject to outstanding options and other rights to purchase or acquire.
Northrop Grumman's common stock is listed on the New York Stock Exchange and on
the Pacific Stock Exchange.
Dividends. Dividends may be paid on the common stock and on any class or
series of stock entitled to participate with the common stock as to dividends,
but only when and as declared by Northrop Grumman's board of directors.
Voting Rights. Each holder of Northrop Grumman's common stock is entitled
to one vote per share on all matters submitted to a vote of stockholders and
does not have cumulative voting rights.
Liquidation. If Northrop Grumman liquidates, holders of common stock are
entitled to receive all remaining assets available for distribution to
stockholders after satisfaction of Northrop Grumman's liabilities and the
preferential rights of any preferred stock that may be outstanding at that
time. Northrop Grumman's outstanding shares of common stock are fully paid and
nonassessable. The holders of Northrop Grumman's common stock do not have any
preemptive, conversion or redemption rights. The registrar and transfer agent
for Northrop Grumman's common stock is EquiServe Trust Company.
Preferred Stock Purchase Rights. Northrop Grumman's preferred share
purchase rights when exercisable, entitle the registered holder to purchase
from Northrop Grumman one one-thousandth of a share of Northrop Grumman's
Series A junior participating preferred stock, $1.00 par value per share, at a
price of $250.00 per one one-thousandth of a preferred share, subject to
adjustment. These rights are attached to all shares of Northrop Grumman common
stock outstanding until the distribution date described below. The rights will
separate from the shares of Northrop Grumman common stock on the distribution
date. Distribution date means the date which is the earlier to occur of:
. a person or group of affiliated or associated persons having acquired
beneficial ownership of 15% or more of Northrop Grumman's outstanding
common shares, except pursuant to a permitted offer; and
. 10 days, or such later date as Northrop Grumman's board of directors may
determine, following the commencement of, or announcement of an intention
to make, a tender offer or offer to exchange, the completion of which
would result in a person or group acquiring 15% of Northrop Grumman's
outstanding voting power.
Northrop Grumman may redeem the rights at the option of Northrop Grumman's
board of directors for $0.01 per right at any time prior to the earlier of the
expiration of the rights or on the date that a person or persons acquire 15% of
Northrop Grumman's voting power. Northrop Grumman's board of directors may
amend the rights at any time without stockholder approval. Unless earlier
redeemed, the rights will expire by their terms on October 31, 2008.
Convertible Debt Securities. In November 2001, Northrop Grumman issued
6,900,000 units of 7.25% Equity Security Units, each convertible into (i) a
contract to purchase, for $100, shares of Northrop Grumman common stock and
(ii) a senior note with a principal amount of $100 at an initial interest rate
of 5.25%. As of February 27, 2002, there were 6,900,000 outstanding units of
7.25% Equity Security Units convertible into 7,796,310 shares of Northrop
Grumman common stock.
50
COMPARISON OF RIGHTS OF HOLDERS
OF NORTHROP GRUMMAN COMMON STOCK AND
TRW CAPITAL STOCK
Upon completion of the offer to exchange and the TRW merger, TRW
shareholders will become stockholders of Northrop Grumman, rather than
shareholders of TRW. Since Northrop Grumman is a Delaware corporation, the
rights of the stockholders of Northrop Grumman are governed by the applicable
laws of the State of Delaware, including the Delaware General Corporation Law,
and by Northrop Grumman's charter and bylaws. Since TRW is an Ohio corporation,
the rights of the shareholders of TRW are governed by the applicable laws of
the State of Ohio, including the Ohio Revised Code, and by TRW's charter and
regulations.
The following is a summary comparison of:
. the current rights of TRW shareholders under the Ohio Revised Code and the
TRW charter and regulations; and
. the rights TRW shareholders will have as Northrop Grumman stockholders
under the Delaware General Corporation Law and the Northrop Grumman
charter and bylaws upon the completion of Northrop Grumman's offer to
exchange and the TRW merger.
The following summary discusses of some of the material differences between
the current rights of Northrop Grumman stockholders and TRW shareholders under
the Delaware General Corporation Law and Ohio Revised Code, and under the
charter and bylaws of Northrop Grumman and the Amended Articles of
Incorporation and regulations of TRW. The statements in this section are
qualified in their entirety by reference to, and are subject to, the detailed
provisions of the Delaware General Corporation Law, the Ohio Revised Code,
Northrop Grumman's charter, Northrop Grumman's bylaws, TRW's Amended Articles
of Incorporation and TRW's regulations. Copies of the Northrop Grumman charter
and bylaws and the TRW Articles of Incorporation and regulations are
incorporated by reference herein and will be sent to TRW shareholders, upon
request. See "Additional Information" beginning on page 61.
Corporate Governance
Northrop Grumman. The rights of Northrop Grumman stockholders are governed
by Delaware corporate law and the charter and bylaws of Northrop Grumman.
TRW. The rights of TRW shareholders are governed by Ohio corporate law and
the Amended Articles of Incorporation and regulations of TRW.
Authorized Capital Stock
Northrop Grumman. The authorized capital stock of Northrop Grumman
currently consists of 410,000,000 shares of capital stock consisting of (i)
400,000,000 shares of common stock, par value $1.00 per share and (ii) 10
million shares of preferred stock, par value $1.00 per share.
TRW. The authorized capital stock of TRW currently consists of 505,099,536
shares of capital stock consisting of (i) 500,000,000 shares of common stock,
no par value per share, (ii) 99,536 shares of Serial Preference Stock, no par
value per share and (iii) 5 million shares of Serial Preference Stock II, no
par value per share.
51
Number, Classification and Election Board of Directors
Northrop Grumman. The Northrop Grumman charter provides that the board of
directors is to be divided into three classes of directors, each as nearly
equal in number as possible, with each director elected for a term expiring at
the third succeeding annual meeting of stockholders after his or her election.
The bylaws of Northrop Grumman provide that the number of directors will be
fixed by resolution of the board of directors, but will be no less than three
members. As of March 1, 2002, the Northrop Grumman board consisted of 10
directors.
Neither the Northrop Grumman charter nor the Northrop Grumman bylaws permits
cumulative voting for the election of directors.
TRW. The TRW regulations provide that the board of directors is to be
divided into three classes of directors with each director elected for a term
expiring at the third succeeding annual meeting of shareholders after his or
her election. The number of directors will be fixed by action of the board of
directors, but will be no less than twelve members and no more than eighteen
members. As of March 1, 2002, the TRW board consisted of 14 directors with five
directors per class.
The Ohio Revised Code provides that any shareholder may give written notice
requesting that cumulative voting be used for the election of directors. The
notice must be given to the President, a Vice-President or the Secretary of a
corporation, generally not less than 48 hours before the time fixed for holding
a meeting of shareholders for the purpose of electing directors. Furthermore,
an announcement of the giving of such notice must be made upon the convening of
the meeting by the Chairman or Secretary or by or on behalf of such shareholder.
Removal of Directors
Northrop Grumman. The Northrop Grumman charter provides that directors may
be removed only for cause and only by the affirmative vote of the holders of
not less than 80% of all outstanding shares of capital stock of Northrop
Grumman having general voting power entitled to vote in connection with the
election of a director, regardless of class and voting together as a single
voting class; provided, however, that where the removal is approved by a
majority of Continuing Directors (as defined in the Northrop Grumman charter),
the affirmative vote of a majority of the voting power of all outstanding
shares of voting stock entitled to vote in connection with the election of that
director, regardless of class and voting together as a single voting class, is
required for approval of removal.
TRW. Under the TRW Amended Articles of Incorporation and the Ohio Revised
Code, directors may be removed only for cause and only by the affirmative vote
of the holders of not less than two-thirds of all outstanding shares of capital
stock of TRW.
Newly Created Directorships and Vacancies
Northrop Grumman. The charter and bylaws of Northrop Grumman provide that
any vacancies on the board or newly created directorships may be filled solely
by the affirmative vote of a majority of the remaining directors, although less
than a quorum. However, the Delaware General Corporation Law also provides that
if the directors then in office constitute less than a majority of the board of
directors, then, upon application by stockholders representing at least 10% of
the outstanding shares entitled to vote for those directors, the Court of
Chancery may order a stockholder election of director to be held.
TRW. TRW's regulations and the Ohio Revised Code provide that any vacancies
on the board and newly created directorships may be filled by the affirmative
vote of a majority of the directors then in office.
52
Quorum
Northrop Grumman. Northrop Grumman's bylaws provide for a quorum of a
majority of the board of directors, except that when the board of directors
consists of one director, then the one director will constitute a quorum.
TRW. The regulations of TRW provide that a quorum of the board of directors
is the lesser of a majority of the board of directors then in office or five
directors.
Annual Meetings of Stockholders/Shareholders
Northrop Grumman. The bylaws of Northrop Grumman provide that the annual
meeting of stockholders will be held between May 1 and July 1 of each year on
such date and time fixed by the board of directors.
TRW. The regulations of TRW provide that the annual meeting of shareholders
will be held on the last Wednesday in April of each year, unless such day is a
legal holiday, in which case the annual meeting will be held on the next day
that is not a legal holiday.
Special Meetings of Stockholders/Shareholders
Northrop Grumman. Under the charter and bylaws of Northrop Grumman, special
meetings of the stockholders may be called at any time by a majority of the
board of directors, the Chairman of the board of directors or by the President
and Chief Executive Officer.
TRW. TRW's regulations provide that special meeting of the shareholders may
be called at any time by (i) the Chairman of the board of directors, (ii) the
President, (iii) a Vice President, (iv) the board of directors acting at a
meeting, (v) a majority of the board of directors acting without a meeting, or
(vi) holders of not less than 35% of all of the outstanding shares entitled to
vote at such meeting.
Quorum
Northrop Grumman. Northrop Grumman's bylaws provide that the presence in
person or by proxy of the holders of a majority of the shares entitled to vote
at a meeting constitutes a quorum for that meeting, except as otherwise
provided by the Delaware General Corporation Law.
TRW. TRW's regulations provide that the presence in person or by proxy of
the holders of not less than 35% of the shares entitled to vote at the meeting
with respect to a purpose stated in the notice of such meeting constitutes a
quorum for that meeting.
Certain Voting Requirements
Northrop Grumman. Under the Northrop Grumman bylaws, except as otherwise
provided by the Northrop Grumman charter or by applicable law, action by
Northrop Grumman stockholders generally is taken by the affirmative vote, at a
meeting at which a quorum is present, of a majority of the votes cast on that
action, including certain extraordinary actions, such as mergers,
consolidations and amendments to the Northrop Grumman charter. However, the
Northrop Grumman charter requires the affirmative vote of the holders of not
less than 80% of the outstanding shares of voting stock to approve an amendment
of certain articles in the charter. The charter also requires the affirmative
vote of at least 80% of all outstanding shares entitled to vote to approve a
Business Combination (as defined in the Northrop Grumman charter) involving
specific related persons.
53
Each share of Northrop Grumman common stock entitles the holder to one vote
on each matter upon which stockholders have the right to vote.
TRW. Under the TRW regulations, except as otherwise provided by the TRW
charter or by applicable law, action by TRW shareholders generally is taken by
the affirmative vote, at a meeting at which a quorum is present, of a majority
of the votes cast on that action. However, the TRW Amended Articles of
Incorporation requires the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Serial Preference Stock II or at least
two-thirds of the outstanding shares of Serial Preference Stock II, as the case
may be, voting separately as a class, to approve the amendment of certain
articles in the charter or the regulations.
Each share of TRW common stock and each share of Serial Preference Stock II
entitles the holder to one vote on each matter upon which TRW shareholders have
the right to vote. Each share of Serial Preference Stock II entitles the holder
to two votes on each matter upon which TRW shareholders have the right to vote.
Stockholder/Shareholder Action by Written Consent
Northrop Grumman. Under the Northrop Grumman charter and bylaws, any action
required or permitted to be taken by the stockholders must be effected at a
duly called annual meeting or at special meeting of stockholders, unless such
action requiring or permitting stockholder approval is approved by a majority
of the continuing directors (as defined in the Northrop Grumman charter), in
which case that action may be authorized or taken by the written consent of the
holders of outstanding shares of voting stock having not less than the minimum
voting power that would be necessary to authorize or take such action at a
meeting of stockholders at which all shares entitled to vote thereon were
present and voted provided all other requirements of applicable law and the
charter have been satisfied.
TRW. The Ohio Revised Code provides that shareholder action may be taken
without a meeting upon the written consent of the holders of all the
outstanding shares entitled to vote. Shareholder action to amend the TRW
regulations may be taken without a meeting upon the written consent of the
holders of two-thirds of the outstanding shares entitled to vote.
Business Conducted at Stockholders'/Shareholders' Meetings
Northrop Grumman. The Northrop Grumman bylaws provide that with respect to
any stockholder meeting, nominations of persons election to the board and the
proposal of business to be considered by stockholders may be made only (a) by
or at the direction of the board of directors, (b) by a stockholder of record
who is entitled to vote and who has complied with the advance notice procedures
set forth in the bylaws or (c) pursuant to Northrop Grumman's notice with
respect to that meeting.
TRW. Under the Ohio Revised Code, shareholders must be given written notice
of the time, place and purpose or purposes of every shareholder meeting, except
as otherwise provided in the Ohio Revised Code.
Amendments of Charter/Articles of Incorporation
Northrop Grumman. Under the Delaware General Corporation Law, the
affirmative vote of the holders of a majority of the outstanding shares
entitled to vote is required to amend the Northrop Grumman charter. In
addition, amendments that make changes relating to the capital stock by
increasing or decreasing the par value or the aggregate number of authorized
shares of a class or otherwise adversely affecting the rights of that class,
must be approved by the majority vote of each class of stock affected, unless,
in the case of an increase in the number of shares, the certificate of
incorporation takes away that right, and provided that, if the amendment
affects some series, then only those series have such vote. The Northrop
Grumman charter provides that specified articles may be adopted, repealed,
rescinded, altered or amended only by the affirmative vote of the holders of
not less than 80% of the voting power of all outstanding shares of voting
stock, regardless of class and voting
54
together as a single voting class, and where that action is proposed by an
interested stockholder (as defined in the Northrop Grumman charter) or an
associate or affiliate (each as defined in the Northrop Grumman charter) of an
interested stockholder, by the majority of the voting power of all of the
outstanding shares of voting stock, voting together as a single class, other
than shares held by the interested person; provided, however, that where the
action is approved by a majority of the continuing directors (as defined in the
Northrop Grumman charter), the affirmative vote of a majority of the voting
power of all outstanding shares of voting stock, regardless of class and voting
together as a single voting class shall be required for approval of that action.
TRW. Under the Ohio Revised Code, the articles of incorporation may be
amended by the affirmative vote of two-thirds of the voting power of the
corporation, unless otherwise specified in the corporation's articles of
incorporation. The TRW articles of incorporation provides that the affirmative
vote of the holders of at least two-thirds of the outstanding shares of Serial
Preference Stock or at least two-thirds of the outstanding shares of Serial
Preference Stock II, as the case may be, voting separately as a class, is
required to amend, alter or repeal any of the provisions of the charter which
(i) adversely affects the voting powers, rights or preferences of the holders
of Serial Preference Stock or the holders of Serial Preference Stock II,
respectively or (ii) reduces the time for any notice to which the holders of
Serial Preference Stock or the holders of Serial Preference Stock II may be
entitled.
Amendments of Bylaws/Regulations
Northrop Grumman. Under the Northrop Grumman charter and bylaws, the bylaws
may be adopted, repealed, rescinded, altered or amended by stockholders, but
only by the affirmative vote of the holders of not less than 80% of the voting
power of all outstanding shares of voting stock, regardless of class and voting
together as a single voting class and, where such action is proposed by an
interested stockholder or by any associate or affiliate of an interested
stockholder, by a majority of the voting power of all outstanding shares or
voting stock, regardless of class and voting together as a single class, other
than the shares held by such interested stockholders; provided, however, that
where such action is approved by a majority of the continuing directors, the
affirmative vote of the holders of a majority of the voting power of all
outstanding shares of voting stock, regardless of class and voting together as
a single voting class shall be required for approval of that action.
TRW. The TRW regulations may be amended at a meeting of the shareholders by
the affirmative vote of the holders of not less than two-thirds of all
outstanding shares of capital stock of TRW having the general voting power
entitled to vote on such amendment. The TRW articles of incorporation provides
that the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Serial Preference Stock or at least two-thirds of the
outstanding shares of Serial Preference Stock II, as the case may be, voting
separately as a class, is required to amend, alter or repeal any of the
provisions of the regulations which (i) adversely affects the voting powers,
rights or preferences of the holders of Serial Preference Stock or the holders
of Serial Preference Stock II, respectively or (ii) reduces the time for any
notice to which the holders of Serial Preference Stock or the holders of Serial
Preference Stock II may be entitled.
Business Combinations
Northrop Grumman. Under the Delaware General Corporation Law, a majority of
the outstanding shares is needed to adopt a plan of merger or consolidation.
The Delaware General Corporation Law prohibits a Delaware corporation which has
a class of stock which is listed on a national stock exchange or which has
2,000 or more stockholders of record from engaging in a business combination
with an interested stockholder (generally, the beneficial owner of 15% or more
of the corporation's outstanding voting stock) for three years following the
time the stockholder became an interested stockholder, unless, prior to that
time, the corporation's board of directors approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder, or if at least two-thirds of the outstanding shares not
owned by that interested stockholder approve the business combination, or if,
upon becoming an interested stockholder, that stockholder owned at least 85% of
the outstanding shares (excluding those held by officers, directors and some
55
employee stock plans). In addition to the Delaware General Corporation Law
requirements, the Northrop Grumman charter provides that, subject to various
exceptions, any business combination between Northrop Grumman or any subsidiary
and an interested stockholder (as defined in the Northrop Grumman Charter) must
be approved by the holders of at least 80% of the voting power of all
outstanding voting stock, regardless of class and voting together as a single
class, and a majority of the voting power of all outstanding shares of voting
stock, other than the shares held by any interested stockholder which is a
party to such business combination or by any affiliate or associates of such
interested stockholder, regardless of class and voting together as single
voting class.
TRW. Under the Ohio Revised Code, the affirmative vote of two-thirds of the
outstanding shares is needed to adopt a plan of merger or consolidation. The
Ohio Revised Code prohibits an Ohio corporation which has 50 or more
shareholders of record and that has its principal place of business, its
principal executive offices, assets having substantial value or a substantial
percentage of its assets within Ohio from engaging in a business combination
with an interested shareholder (a shareholder that can exercise, directly or
indirectly, 10% of the voting power of the corporation) for three years
following the time the shareholder became an interested shareholder, unless,
(i) the directors of the corporation have approved the transactions or the
interested shareholder's acquisition of shares of the corporation prior to the
date such shareholder became an interested shareholder of the corporation, or
(ii) the corporation, by action of its shareholders holding at least two-thirds
of the voting power of the corporation, adopts an amendment to its charter
specifying that Chapter 1704 of the Ohio Revised Code shall not be applicable
to the corporation. This prohibition also applies to a person or entity,
whether or not an interested shareholder, that is or after the business
combination would be, an affiliate or associate of an interested shareholder.
The Ohio Revised Code further provides that the business combination may still
be prohibited after the three-year period unless either (i) certain
"fair-price" provisions are complied with or (ii) the transaction is approved
by certain super majority shareholder votes.
Under Chapter 1704 of the Ohio Revised Code, an interested shareholder
includes a shareholder of the corporation that can exercise directly or
indirectly 10% of the voting power of the corporation (i) who owns shares of
the corporation and (ii) also can exercise or direct the exercise of the voting
power of the corporation such that (i) and (ii) of 10% or more of the voting
power of the corporation.
Under Section 1701.831 of the Ohio Revised Code, unless the charter or
regulations of a corporation otherwise provide, any control share acquisition
(as defined herein) of an issuing public corporation can only be made with the
prior approval of the corporation's shareholders. A "control share acquisition"
is defined as any acquisition of shares of a corporation that, when added to
all other shares of that corporation that the acquiring person may exercise or
direct the exercise of the voting power of, would enable that person to
exercise or direct the exercise of levels of voting power in any of the
following ranges: at least 20% but less than 33 1/3 %; at least 33 1/3 but less
than 50%; or 50% or more.
In addition to the requirements of the Ohio Revised Code, the TRW Amended
Articles of Incorporation requires the affirmative vote of at least two-thirds
of the outstanding shares of Serial Preference Stock or at least two-thirds of
the outstanding shares of Serial Preference Stock II, as the case may be,
voting separately as a class, to approve a merger or consolidation of the
corporation.
Rights Plan
Northrop Grumman. Northrop Grumman entered into a Rights Agreement, dated
January 31, 2001, between Northrop Grumman and EquiServe Trust Company, N.A.,
as amended.
TRW. TRW does not have a shareholders' rights plan.
56
ADDITIONAL INFORMATION
Northrop Grumman and TRW file annual, quarterly and special reports, proxy
statements and other information with the SEC. Shareholders may read and copy
this information at the following locations of the SEC:
Public Reference Room North East Regional Office Midwest Regional Office
450 Fifth Street, N.W. 233 Broadway 175 Jackson Boulevard
Room 1024 13th Floor Chicago, Illinois 60604
Washington, D.C. 20549 New York, New York 10279
Shareholders may obtain information on the operation of the Public Reference
Rooms by calling the SEC at 1-800-SEC-0330. Shareholders may also obtain copies
of this information by mail from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers like Northrop
Grumman and TRW who file electronically with the SEC. The address of that site
is http://www.sec.gov.
Northrop Grumman filed a registration statement on Form S-4 with the SEC
under the Securities Act to register the Northrop Grumman common stock to be
issued in Northrop Grumman's offer to exchange and the TRW merger. This offer
to exchange is a part of that registration statement. As allowed by SEC rules,
this offer to exchange does not contain all the information shareholders can
find in the registration statement or the exhibits to the registration
statement. In addition, on March 4, 2002 Northrop Grumman also filed with the
SEC a statement on Schedule TO pursuant to Rule 14d-3 under the Exchange Act to
furnish various information about Northrop Grumman's offer to exchange.
Shareholders may obtain copies of the Form S-4 and the Schedule TO, and any
amendments to those documents, in the manner described above.
The SEC allows Northrop Grumman to incorporate by reference information into
this offer to exchange, which means that Northrop Grumman can disclose
important information to shareholders by referring shareholders to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this offer to exchange, except for any
information superseded by information contained directly in this offer to
exchange.
This offer to exchange incorporates by reference the documents listed below
that Northrop Grumman, Litton, Newport News and TRW have previously filed with
the SEC. These documents contain important information about Northrop Grumman
and TRW and their business, financial condition and results of operations.
The following documents filed by Northrop Grumman or Northrop Systems with
the SEC are incorporated by reference:
. Annual Report on Form 10-K/A, for the fiscal year ended December 31, 2000,
as filed on March 8, 2001;
. Quarterly Reports on Form 10-Q for the period ended March 31, 2001, as
filed on May 10, 2001, for the period ended June 30, 2001, as filed on
August 9, 2001, and for the period ended September 30, 2001, as filed on
November 5, 2001;
. Proxy Statement for the Annual Meeting of Stockholders held on May 16,
2001, as filed on April 13, 2001;
. The description of Northrop Grumman's common stock set forth in Northrop
Grumman's registration statement on Form S-3 filed by Northrop Grumman
pursuant to Section 12 of the Exchange Act, including any amendment or
report filed for purposes of updating the description as filed on January
18, 2002;
57
. Current Report on Form 8-K, as filed on April 3, 2001 and amended on Form
8K/A, as filed on June 14, 2001;
. Current Report on Form 8-K, as filed on April 17, 2001;
. Current Report on Form 8-K, as filed on November 14, 2001;
. Current Report on Form 8-K, as filed on November 16, 2001;
. Current Report on Form 8-K, as filed on November 21, 2001;
. Current Report on Form 8-K, as filed on December 14, 2001; and
. Current Report on Form 8-K, as filed on December 14, 2001, as amended on
Form 8-K/A, as filed on January 14, 2002 and amended on Form 8-K/A, as
filed on February 1, 2002
. Tender Offer Statement on Schedule TO, as filed on March 4, 2002, as it
may be amended from time to time.
The following documents filed by Litton with the SEC are incorporated by
reference:
. Annual Report on Form 10-K for the fiscal year ended July 31, 2000, as
filed on October 11, 2000;
. Quarterly Reports on Form 10-Q for the period ended October 31, 2000, as
filed on December 12, 2000, and for the period ended January 31, 2001, as
filed on March 16, 2001;
. Current Report on Form 8-K, as filed on January 30, 2001; and
. Current Report on Form 8-K, as filed on April 17, 2001.
The following documents filed by Newport News with the SEC are incorporated
by reference:
. Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as
filed on March 13, 2001;
. Quarterly Reports on Form 10-Q for the period ended March 18, 2001, as
filed on April 27, 2001, for the period ended June 17, 2001, as filed on
July 19, 2001, and for the period ended September 16, 2001, as filed on
October 25, 2001;
. Current Report on Form 8-K, as filed on April 25, 2001;
. Current Report on Form 8-K, as filed on November 8, 2001;
. Current Report on Form 8-K, as filed on November 14, 2001; and
. Current Report on Form 8-K, as filed on November 30, 2001.
The following documents filed by TRW with the SEC are incorporated by
reference:
. Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as
filed on March 13, 2001 (except for the report of TRW's independent
accountants contained in that report which is not incorporated in this
offer to exchange by reference because the consent of TRW's independent
accountants has not yet been obtained);
. Quarterly Reports on Form 10-Q for the period ended March 31, 2001, as
filed on May 1, 2001, for the period ended June 30, 2001, as filed on July
31, 2001, and for the period ended September 30, 2001, as filed on
November 7, 2001;
. The description of TRW's common stock set forth in TRW's registration
statement on Form S-3 filed by TRW pursuant to Section 12 of the Exchange
Act, including any amendment or report filed for purposes of updating the
description, as filed on October 15, 1999;
. Current Report on Form 8-K, as filed on January 31, 2002;
. Current Report on Form 8-K, as filed on February 20, 2002;
58
. Current Report on Form 8-K, as filed on February 22, 2002; and
. Current Report on Form 8-K, as filed on February 27, 2002.
All documents filed by Northrop Grumman or TRW pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act from the date of this offer to exchange
to the date that shares are accepted for exchange pursuant to Northrop
Grumman's offer to exchange (or the date that Northrop Grumman's offer to
exchange expires or is terminated) shall also be deemed to be incorporated in
this offer to exchange by reference.
Documents incorporated by reference are available from Northrop Grumman
without charge upon request to Northrop Grumman's information agent, D. F. King
& Co., Inc., 77 Water Street, New York, New York 10005, toll-free at
1-800-755-7250. In order to ensure timely delivery, any request should be
submitted no later than March 22, 2002 (five business days before the initial
scheduled expiration date of Northrop Grumman's offer to exchange). If
shareholders request any incorporated documents from Northrop Grumman, Northrop
Grumman will mail them to shareholders by first class mail, or another equally
prompt means, within one business day after Northrop Grumman receives their
request.
Northrop Grumman has not authorized anyone to give any information or make
any representation about Northrop Grumman's offer to exchange that is different
from, or in addition to, that contained in this offer to exchange or in any of
the materials that Northrop Grumman has incorporated by reference into this
offer to exchange. Therefore, if anyone does give shareholders information of
this sort, shareholders should not rely on it. If shareholders are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this offer to exchange are
unlawful, or if shareholders are a person to whom it is unlawful to direct
these types of activities, then Northrop Grumman's offer presented in this
offer to exchange does not extend to shareholders. The information contained in
this offer to exchange speaks only as of the date of this offer to exchange
unless the information specifically indicates that another date applies.
TRW INFORMATION
While Northrop Grumman has included in this offer to exchange information
concerning TRW known to Northrop Grumman based on publicly available
information (primarily filings by TRW with the SEC), Northrop Grumman is not
affiliated with TRW, and TRW has not permitted Northrop Grumman to have access
to their books and records. Therefore, non-public information concerning TRW
was not available to Northrop Grumman for the purpose of preparing this offer
to exchange. Although Northrop Grumman has no knowledge that would indicate
that statements relating to TRW contained or incorporated by reference in this
offer to exchange are inaccurate or incomplete, Northrop Grumman was not
involved in the preparation of those statements and cannot verify them.
Pursuant to Rule 409 under the Securities Act and Rule 12b-21 under the
Exchange Act, Northrop Grumman is requesting that TRW provide Northrop Grumman
with information required for complete disclosure regarding the businesses,
operations, financial condition and management of TRW. Northrop Grumman will
amend or supplement this offer to exchange to provide any and all information
Northrop Grumman receives from TRW, if Northrop Grumman receives the
information before Northrop Grumman's offer to exchange expires and Northrop
Grumman considers it to be material, reliable and appropriate. In addition,
pursuant to Rule 439 under the Securities Act, Northrop Grumman is requesting
that TRW's independent accountants, Ernst & Young LLP, provide Northrop Grumman
with the consent required for Northrop Grumman to incorporate by reference into
this offer to exchange the Ernst & Young LLP audit report included in TRW's
Annual Report on Form 10-K for the year ended December 31, 2000. If Northrop
Grumman receives this consent, Northrop Grumman will promptly file it as an
exhibit to Northrop Grumman's registration statement of which this offer to
exchange forms a part.
59
FORWARD-LOOKING STATEMENTS
Certain statements and assumptions in this offer to exchange and in the
documents incorporated by reference contain or are based on "forward-looking"
information and involve risks and uncertainties. Such forward-looking
information includes the statements as to the impact of the proposed
acquisition on revenues and earnings. Such statements are subject to numerous
assumptions and uncertainties, many of which are outside Northrop Grumman's
control. These include governmental regulatory processes, Northrop Grumman's
ability to successfully integrate the operations of TRW, achieve a successful
transaction or other resolution with respect to the TRW automotive sector,
assumptions with respect to future revenues, expected program performance and
cash flows, the outcome of contingencies including litigation, environmental
remediation, divestitures of businesses, and anticipated costs of capital
investments. Northrop Grumman's operations are subject to various additional
risks and uncertainties resulting from its position as a supplier, either
directly or as subcontractor or team member, to the U.S. Government and its
agencies as well as to foreign governments and agencies. Actual outcomes are
dependent upon many factors, including, without limitation, Northrop Grumman'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; acquisition or termination of government contracts; the outcome of
political and legal processes; legal, financial, and governmental risks related
to international transactions and global needs for military aircraft, military
and civilian electronic systems and support and information technology; as well
as other economic, political and technological risks and uncertainties and
other risk factors set out in Northrop Grumman's filings from time to time with
the SEC, including, without limitation, Northrop Grumman's reports on Form 10-K
and Form 10-Q.
Important factors that could cause actual results to differ materially from
those suggested by the forward-looking statements include:
. Northrop Grumman's dependence on sales to the U.S. Government;
. Northrop Grumman'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, which may include termination for the
convenience of the government;
. the outcome of political and legal processes;
. legal, financial and governmental risks related to international
transactions and global needs for military and commercial aircraft,
electronic systems and support, information technologies and ships; and
. other economic, political and technological risks and uncertainties.
See also "Risk Factors" beginning on page 9, and the risk factors disclosed
in Northrop Grumman's Annual Report on Form 10-K/A, for the fiscal year ended
December 31, 2000, Northrop Grumman's Quarterly
60
Reports on Form 10-Q, for the periods ended March 31, 2001, June 30, 2001 and
September 30, 2001, and Northrop Grumman's Registration Statement on Form S-3
as filed on January 18, 2002 which are incorporated herein by reference.
Readers are cautioned not to put undue reliance on forward-looking statements.
Northrop Grumman disclaims any intent or obligation to update these
forward-looking statements, whether as a result of new information, future
events or otherwise.
LEGAL MATTERS
The legality of Northrop Grumman common stock offered by this offer to
exchange will be passed upon by John H. Mullan, Corporate Vice President and
Secretary of Northrop Grumman. Mr. Mullan is paid a salary by Northrop Grumman,
is a participant in various employee benefit plans offered to employees of
Northrop Grumman generally and owns and has options to purchase shares of
Northrop Grumman common stock.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this offer to exchange by reference from Northrop
Systems' Annual Report on Form 10-K/A for the year ended December 31, 2000 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.
With respect to the unaudited interim financial information of Northrop
Grumman Corporation for the periods ended March 31, 2001, June 30, 2001 and
September 30, 2001 and of Northrop Systems for the periods ended March 31,
2000, June 30, 2000 and September 30, 2000 is incorporated in this offer to
exchange by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their report included in Northrop Grumman's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and
September 30, 2001 and incorporated by reference herein, they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act for their report on the unaudited interim financial
information because such report is not a "report" or a "part" of the
registration statement prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
The consolidated financial statements incorporated in this offer to exchange
by reference from Litton's Annual Report on Form 10-K for the year ended July
31, 2000 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 financial statements of Newport News Shipbuilding Inc. incorporated by
reference in this offer to exchange have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said reports.
61
ANNEX A
DIRECTORS AND EXECUTIVE OFFICERS OF NORTHROP GRUMMAN
The name, age, business address, present principal occupation or employment
and five-year employment history of each of the directors and executive
officers of Northrop Grumman are set forth below. Unless otherwise indicated,
each position set forth opposite an individual's name refers to employment with
Northrop Grumman and each individual has held that position for at least the
last five years. Each director and executive officer listed below is a citizen
of the United States of America. Unless otherwise indicated below, the business
address of each person is c/o Northrop Grumman, 1840 Century Park East, Los
Angeles, California 90067.
Directors (Including Executive Officers Who Are Directors)
Present Principal Occupation or Employment;
Name and Business Address Age Five Year Employment History
- ------------------------- --- -------------------------------------------
John T. Chain, Jr..... 67 Director of Northrop Grumman since 1991. General,
United States Air Force (Ret.) and Chairman of the
Board, Thomas Group, Inc., a management consulting
company. General Chain has been Chairman of Thomas
Group, Inc. since May 1998 and has been a member of
the Board of Directors of Thomas Group since May
1995. He has also served as the President of Quarterback
Equity Partners, Inc. since December 1996. He served as
Special Assistant to the Chairman of Burlington
Northern Santa Fe Corporation from November 1995 to
March 1996, and as an Executive Vice President of
Burlington Northern from 1991 to November 1995.
During his military career, General Chain's commands
included military assistant to the Secretary of the Air
Force, Director of Politico-Military Affairs, Department
of State and Chief of Staff of Supreme Headquarters
Allied Powers Europe. After serving as Commander in
Chief, Strategic Air Command, he retired from the Air
Force in February 1991. General Chain serves as a
director of R.J. Reynolds, Inc. and Kemper Insurance
Company.
Lewis W. Coleman...... 60 Director of Northrop Grumman since 2001. President,
Gordon and Betty Moore Foundation. Mr. Coleman
became President of the Gordon and Betty Moore
Foundation in January 2001. In December 2000, he
resigned as Chairman of Banc of America Securities
LLC, a subsidiary of Bank of America Corporation, after
having served in that position since joining Banc of
America Securities, LLC in December 1995. Prior to
that, he spent ten years at BankAmerica Corporation
where he held various positions including Chief
Financial Officer, head of World Banking Group and
head of Capital Markets. Previous to that he spent
thirteen years with Wells Fargo & Co. in a variety of
wholesale and retail banking positions. He is also on the
Board of Directors of Chiron Corporation.
A-1
Present Principal Occupation or Employment;
Name and Business Address Age Five Year Employment History
- ------------------------- --- -------------------------------------------
Vic Fazio.......... 59 Director of Northrop Grumman since 2000. Senior
Partner, Clark & Weinstock, a consulting firm. Mr. Fazio
served as a Member of Congress for 20 years
representing California's third congressional district.
During that time he served as a member of the Armed
Services, Budget and Ethics Committees and was a
member of the House Appropriations Committee where
he served as Subcommittee Chair or ranking member for
18 years. Mr. Fazio was a member of the elected
Democratic Leadership in the House from 1991-1998
including four years as Chair of the Democratic Caucus,
the third ranking position in the party. From 1975 to
1978 Mr. Fazio served in the California Assembly and
was a member of the staff of the California Assembly
Speaker from 1971 to 1975. Upon leaving Congress in
early 1999, he became a Senior Partner at Clark &
Weinstock, a strategic communications consulting firm.
He is a member of numerous boards including The
California Institute, Coro National Board of Governors,
which he chairs, the U.S. Capitol Historical Society, the
Board of the U.S. Capitol Visitors Center and the Board
of Visitors, The University of California at Davis
Medical School.
Phillip Frost...... 65 Director of Northrop Grumman since 1996. Chairman of
the Board of Directors and Chief Executive Officer of
IVAX Corporation, a pharmaceutical company. Dr. Frost
has served as Chairman of the Board of Directors and
Chief Executive Officer of IVAX Corporation since
1987 and served as President from 1991 to 1995. Dr.
Frost was Chairman of the Department of Dermatology
at Mt. Sinai Medical Center of Greater Miami, Miami
Beach, Florida from 1972 to 1990 and was Chairman of
the Board of Directors of Key Pharmaceuticals, Inc.
from 1972 to 1986. He is Chairman of Whitman
Education Group and Vice Chairman of Continucare
Corporation. He is also Chairman of the Board of
Trustees of the University of Miami, a member of the
Board of Governors of the American Stock Exchange
and a director of Landenburg Thalmann & Co.), an
investment banking and brokerage company.
Kent Kresa......... 63 Director of Northrop Grumman since 1987. Chairman
and Chief Executive Officer. Mr. Kresa was elected
President and Chief Operating Officer of the company in
1987. He was named Chief Executive Officer in 1989
and Chairman of the Board in 1990. Mr. Kresa is a
member of the National Academy of Engineering and is
a past Chairman of the Board of Governors of the
Aerospace Industries Association.
A-2
Present Principal Occupation or Employment;
Name and Business Address Age Five Year Employment History
- ------------------------- --- -------------------------------------------
Charles R. Larson.... 65 Director of Northrop Grumman since 2000. Admiral,
United States Navy (Ret.). Admiral Larson is recognized
as the first Naval officer to be selected as a White House
Fellow. He also served as Naval aide to the President. He
served as superintendent of the U.S. Naval Academy from
1983 to 1986 and in 1991 he became senior military
commander in the Pacific. He returned to U.S. Naval
Academy in 1994, where he served as superintendent until
1998. Currently, Admiral Larson is Chairman of the
Board of the U.S. Naval Academy Foundation, Vice
Chairman of the Board of Regents of the University
System of Maryland and serves on the board of directors
of such organizations as Unocal Corporation,
Constellation Energy Group, Inc., Edge Technologies,
Inc., Fluor Global Services, the Atlantic Council,
Military.com and the National Academy of Sciences'
Committee on International Security and Arms Control. In
addition, he is a member of the Council on Foreign
Relations and is a senior fellow of The CNA Corporation.
Jay H. Nussbaum...... 58 Director of Northrop Grumman since 2001. Mr.
Nussbaum became an Executive Vice President of KPMG
Consulting, Inc. in January 2002. Prior to this, he was
Executive Vice President for Oracle Service Industries
and was a member of Oracle Corporation's Executive
Committee. He began his career at Oracle in 1991 as the
Senior Vice President and General Manager of what was
then Oracle Federal. Mr. Nussbaum also spent 24 years at
Xerox Corporation where his last position was President,
Integrated Systems Operations. Mr. Nussbaum has served
on a number of advisory boards and committees for the
University of Maryland and has served in various advisory
capacities at George Mason University and James
Madison University. He is also on the board of directors
of Sideware, Inc. and MicroStrategy, Inc.
Aulana L. Peters..... 60 Director of Northrop Grumman since 1992. Ms. Peters is a
retired partner of the law firm of Gibson, Dunn & Crutcher
where she was a partner from 1988 to December 2000.
Effective January 1, 2001 she was elected to the Public
Oversight Board of the AICPA. From 1984 to 1988 she
served as Commissioner of the Securities and Exchange
Commission. Ms. Peters is a director of Callaway Golf
Company, Minnesota Mining and Manufacturing
Company, Merrill Lynch & Co., Inc. and 3M Corporation.
She is also a member of the Board of Directors of
Community Television for Southern California (KCET).
Ms. Peters served as a member of the Financial Accounting
Standards Board Steering Committee for its Financial
Reporting Project and as a member of the Public Oversight
Board's Panel on Audit Effectiveness.
A-3
Present Principal Occupation or Employment;
Name and Business Address Age Five Year Employment History
- ------------------------- --- -------------------------------------------
John Brooks Slaughter.. 67 Director of Northrop Grumman since 1993. President
and Chief Executive Officer, The National Action
Council for Minorities in Engineering, Inc. Dr. Slaughter
held electronics engineering positions with General
Dynamics Convair and the U.S. Navy Electronics
Laboratory. In 1975, he became Director of the Applied
Physics Laboratory of the University of Washington. In
1977, he was appointed Assistant Director for
Astronomics, Atmospherics, Earth and Ocean Sciences
at the National Science Foundation. From 1979 to 1980,
he served as Academic Vice President and Provost of
Washington State University. In 1980, he returned to the
National Science Foundation as Director and served in
that capacity until 1982 when he became Chancellor of
the University of Maryland, College Park. From 1988 to
July 1999, Dr. Slaughter was President of Occidental
College in Los Angeles and in August 1999, he assumed
the position of Melbo Professor of Leadership in
Education at the University of Southern California. In
June 2000, Dr. Slaughter was named President and Chief
Executive Officer of The National Action Council for
Minorities in Engineering, Inc. He is a member of the
National Academy of Engineering, a fellow of the
American Academy of Arts and Sciences and serves as a
director of Solutia, Inc. and International Business
Machines Corporation.
Ronald D. Sugar........ 53 Director of Northrop Grumman since 2001. President
and Chief Operating Officer since September 2001.
Dr. Sugar was elected President and Chief Executive
Officer of Litton Industries, Inc. when it became a
subsidiary of Northrop Grumman on April 3, 2001, and
was also elected as Corporate Vice President and a
member of the Board of Directors of Northrop Grumman
at that time. He joined Litton Industries as President and
Chief Operating Officer in June 2000 and was elected to
the Board of Directors of Litton Industries in September
2000. Dr. Sugar served as President and Chief Operating
Officer of TRW Aerospace & Informations System and
as a Member of the Chief Executive Office of TRW, Inc.
from 1998 to 2000. He joined TRW in 1981 and served
as Executive Vice President and Chief Financial Officer
from 1994 to 1996 and Executive Vice President and
General Manager of the TRW Automotive Electronics
Group from 1996 to 1998. He is also a member of the
National Security Telecommunications Advisory
Committee, the Conference Board Council of Operating
Executives and the Board of Governors of the Aerospace
Industries Association and is a Trustee of the National
Defense Industrial Association.
A-4
Executive Officers Who Are Not Directors (as of March 2001)
Present Principal Occupation or Employment;
Name and Business Address Age Five Year Employment History
- ------------------------- --- -------------------------------------------
Herbert W. Anderson.... 62 Corporate Vice President and President, Information
Technology Sector (formerly known as Loxicon, Inc.).
Mr. Anderson was Corporate Vice President, President
and Chief Executive Officer, of Logicon, Inc. Prior to
January, 1999, Mr. Anderson was Corporate Vice
President and General Manager of Data Systems and
Services Division (1995-1998).
Frank G. Brandenberg... 55 Corporate Vice President and President, Component
Technologies Sector since September 2001. Prior to May
2001, Mr. Brandenberg was Senior Vice President,
Electronic Components and Materials Group, Litton
Industries, Inc. from 1997 to 1999, he served as
President and Chief Executive Officer of EA Industries
Inc. Mr. Brandenberg also served as President of the
Client/Server Systems Business Unit and Deputy
President of the Computer Systems Group, UNISYS
Corporation from 1990 to 1997.
Phillip A. Dur......... 57 Corporate Vice President and President, Ship Systems
Sector since October 2001. Mr. Dur served as Vice
President, Program Operations, Electronic Systems
Sector from December 1999 until October 2001. Before
joining Northrop Grumman in 1999, Mr. Dur served as
Vice President, Worldwide Business Development and
Strategy, of Tenneco, Inc., a position he held from July
1997 to 1999. Prior to 1997, he served as the Executive
Vice President of Walter Gillet Europe.
J. Michael Hateley..... 55 Corporate Vice President and Chief Human Resources
and Administrative Officer of Northrop Grumman since
2000. Prior to January 1999, Mr. Hateley was Vice
President, Human Resources, Security and
Administration Military Aircraft Systems Division. Prior
to 1996, he was Vice President, Human Resources,
Security and Administration, B-2 Division.
Robert W. Helm......... 50 Corporate Vice President, Government Relations of
Northrop Grumman since 1994.
Robert P. Iorizzo...... 61 Corporate Vice President and President, Electronic
Systems Sector since August 2001. Previously, Mr.
Iorizzo was Vice President and General Manager of
Command, Control, Communications, Intelligence and
Naval Systems Division, Electronic Systems Sector.
John H. Mullan......... 59 Corporate Vice President and Secretary of Northrop
Grumman since 1999. Prior to this, Mr. Mullan was
Acting Secretary. Prior to May 1998, he was Senior
Corporate Counsel.
Albert F. Myers........ 56 Corporate Vice President and Treasurer of Northrop
Grumman since 1994. Mr. Myers also serves on the
Board of Directors of Moog, Inc.
A-5
Present Principal Occupation or Employment;
Name and Business Address Age Five Year Employment History
- ------------------------- --- -------------------------------------------
Roseanne P. O'Brien..... 58 Corporate Vice President, Communications of Northrop
Grumman since August 2000. Prior to this, Ms. O'Brien
was Vice President, Communications since January
1999. Prior to 1999, Ms. O'Brien was Vice President,
Corporate Relations for Allegheny Teledyne, Inc. Ms.
O'Brien serves as a Director of Los Angeles Educational
Partnership and is also a Trustee of California Sciences
Center.
W. Burks Terry.......... 51 Corporate Vice President and General Counsel of
Northrop Grumman since August 2000. Prior to this, Mr.
Terry became Vice President, Deputy General Counsel
and Sector Counsel in October 1998 and prior to
October, 1998 he was Vice President and Assistant
General Counsel.
Thomas C. Schievelbein.. 48 Corporate Vice President and President, Newport News
Sector since November 2001. Prior to this appointment,
Mr. Schievelbein served as Executive Vice President and
Chief Operating Officer, Newport News Shipbuilding,
Inc. from 1995 to 1999.
Scott J. Seymour........ 51 Corporate Vice President and President, Integrated
Systems Sector since January 2002. Mr. Seymour served
as Sector Vice President, Air Combat Systems from
1998 to 2002, and B2 Program Manager from 1996 to
1998.
Richard B. Waugh, Jr.... 58 Corporate Vice President and Chief Financial Officer of
Northrop Grumman since 1993.
Sandra J. Wright........ 46 Corporate Vice President and Controller since June
2001. Prior to May 2001, Ms. Wright served as Vice
President and Controller of Litton Industries, Inc. From
1999 to 2000, she served as Vice President and
Controller of Aeroject, a GenCorp company, and
Director of Financial Planning and Aeroject prior to that.
A-6
ANNEX B
SECTIONS 1701.84 AND 1701.85 OF THE OHIO REVISED CODE
RIGHTS OF DISSENTING SHAREHOLDERS
1701.84 DISSENTING SHAREHOLDERS ENTITLED TO RELIEF
The following are entitled to relief as dissenting shareholders under
section 1701.85 of the Revised Code:
(A) Shareholders of a domestic corporation that is being merged or
consolidated into a surviving or new entity, domestic or foreign, pursuant
to section 1701.78, 1701.781, 1701.79, 1701.791, or 1701.801 of the Revised
Code;
(B) In the case of a merger into a domestic corporation, shareholders of
the surviving corporation who under section 1701.78 or 1701.781 of the
Revised Code are entitled to vote on the adoption of an agreement of merger,
but only as to the shares so entitling them to vote;
(C) Shareholders, other than the parent corporation, of a domestic
subsidiary corporation that is being merged into the domestic or foreign
parent corporation pursuant to section 1701.80 of the Revised Code;
(D) In the case of a combination or a majority share acquisition,
shareholders of the acquiring corporation who under section 1701.83 of the
Revised Code are entitled to vote on such transaction, but only as to the
shares so entitling them to vote;
(E) Shareholders of a domestic subsidiary corporation into which one or
more domestic or foreign corporations are being merged pursuant to section
1701.801 of the Revised Code.
1701.85 QUALIFICATIONS OF AND PROCEDURES FOR DISSENTING SHAREHOLDERS
(A) (1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the corporation
involved, the dissenting shareholder shall be a record holder of the shares of
the corporation as to which he seeks relief as of the date fixed for the
determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall
not have been voted in favor of the proposal. Not later than ten days after the
date on which the vote on the proposal was taken at the meeting of the
shareholders, the dissenting shareholder shall deliver to the corporation a
written demand for payment to him of the fair cash value of the shares as to
which he seeks relief, which demand shall state his address, the number and
class of such shares, and the amount claimed by him as the fair cash value of
the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the dissenting shareholder
shall deliver to the corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the
new entity, whether the demand is served before, on, or after the effective
date of the merger or consolidation.
B-1
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the shares
as to which he seeks relief, the dissenting shareholder, within fifteen days
from the date of the sending of such request, shall deliver to the corporation
the certificates requested so that the corporation may forthwith endorse on
them a legend to the effect that demand for the fair cash value of such shares
has been made. The corporation promptly shall return such endorsed certificates
to the dissenting shareholder. A dissenting shareholder's failure to deliver
such certificates terminates his rights as a dissenting shareholder, at the
option of the corporation, exercised by written notice sent to the dissenting
shareholder within twenty days after the lapse of the fifteen-day period,
unless a court for good cause shown otherwise directs. If shares represented by
a certificate on which such a legend has been endorsed are transferred, each
new certificate issued for them shall bear a similar legend, together with the
name of the original dissenting holder of such shares. Upon receiving a demand
for payment from a dissenting shareholder who is the record holder of
uncertificated securities, the corporation shall make an appropriate notation
of the demand for payment in its shareholder records. If uncertificated shares
for which payment has been demanded are to be transferred, any new certificate
issued for the shares shall bear the legend required for certificated
securities as provided in this paragraph. A transferee of the shares so
endorsed, or of uncertificated securities where such notation has been made,
acquires only such rights in the corporation as the original dissenting holder
of such shares had immediately after the service of a demand for payment of the
fair cash value of the shares. A request under this paragraph by the
corporation is not an admission by the corporation that the shareholder is
entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of
the county in which the principal office of the corporation that issued the
shares is located or was located when the proposal was adopted by the
shareholders of the corporation, or, if the proposal was not required to be
submitted to the shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as plaintiffs or may be
joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of the facts, including the vote and the facts entitling the dissenting
shareholder to the relief demanded. No answer to such a complaint is required.
Upon the filing of such a complaint, the court, on motion of the petitioner,
shall enter an order fixing a date for a hearing on the complaint and requiring
that a copy of the complaint and a notice of the filing and of the date for
hearing be given to the respondent or defendant in the manner in which summons
is required to be served or substituted service is required to be made in other
cases. On the day fixed for the hearing on the complaint or any adjournment of
it, the court shall determine from the complaint and from such evidence as is
submitted by either party whether the dissenting shareholder is entitled to be
paid the fair cash value of any shares and, if so, the number and class of such
shares. If the court finds that the dissenting shareholder is so entitled, the
court may appoint one or more persons as appraisers to receive evidence and to
recommend a decision on the amount of the fair cash value. The appraisers have
such power and authority as is specified in the order of their appointment. The
court thereupon shall make a finding as to the fair cash value of a share and
shall render judgment against the corporation for the payment of it, with
interest at such rate and from such date as the court considers equitable. The
costs of the proceeding, including reasonable compensation to the appraisers to
be fixed by the court, shall be assessed or apportioned as the court considers
equitable. The proceeding is a special proceeding and final orders in it may be
vacated, modified, or reversed on appeal pursuant to the Rules of Appellate
Procedure and, to the extent not in conflict with those rules, Chapter 2505. of
the Revised Code. If, during the pendency of any proceeding instituted under
this section, a suit or proceeding is or has been instituted to enjoin or
otherwise to prevent the carrying out of the action as to which the shareholder
has dissented, the proceeding instituted under this section shall be stayed
until the final determination of the other suit or proceeding. Unless any
provision in division (D) of this section is applicable, the fair cash value of
the shares that is agreed upon by the parties or fixed under this section shall
be paid within thirty days after the date of final determination of such value
under this division, the effective date of the amendment to the articles, or
the consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event,
B-2
payment shall be made immediately to a holder of uncertificated securities
entitled to such payment. In the case of holders of shares represented by
certificates, payment shall be made only upon and simultaneously with the
surrender to the corporation of the certificates representing the shares for
which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to the day on which the vote by the shareholders was taken and,
in the case of a merger pursuant to section 1701.80 or 1701.801 of the Revised
Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the particular shareholder. In computing such
fair cash value, any appreciation or depreciation in market value resulting
from the proposal submitted to the directors or to the shareholders shall be
excluded.
(D) (1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay the
fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section, unless
the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally enjoined
or prevented from carrying it out, or the shareholders rescind their
adoption of the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent of
the corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder
nor the corporation has filed or joined in a complaint under division (B) of
this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand until
either the termination of the rights and obligations arising from it or the
purchase of the shares by the corporation, all other rights accruing from such
shares, including voting and dividend or distribution rights, are suspended. If
during the suspension, any dividend or distribution is paid in money upon
shares of such class or any dividend, distribution, or interest is paid in
money upon any securities issued in extinguishment of or in substitution for
such shares, an amount equal to the dividend, distribution, or interest which,
except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair
cash value of the shares. If the right to receive fair cash value is terminated
other than by the purchase of the shares by the corporation, all rights of the
holder shall be restored and all distributions which, except for the
suspension, would have been made shall be made to the holder of record of the
shares at the time of termination.
B-3
The Exchange Agent for Northrop Grumman's offer to exchange is:
EQUISERVE TRUST COMPANY
By Mail: By Hand Delivery: By Overnight Delivery:
EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY40
P.O. Box 43034 c/o Securities Transfer Campanelli Drive
Providence, RI 02940-3034 and Braintree, Massachusetts
Reporting Services, Inc. 02184
100 William
Street--Galleria
New York, New York 10038
Confirm by Telephone:
(781) 575-4816
Any questions or requests for assistance or additional copies of the offer
to exchange, the letter of transmittal and the notice of guaranteed delivery
and related exchange offer materials may be directed to the information agent
at its telephone number and location listed below. Shareholders may also
contact their local broker, commercial bank, trust company or nominee for
assistance concerning the offer to exchange.
The Information Agent for Northrop Grumman's offer to exchange is:
D. F. King & Co., Inc.
U.S. and Canada Europe
77 Water Street No. 2 London Wall Buildings, 2nd Floor
New York, New York 10005 London Wall
Banks and Brokers Call London EC2M 5PP, United Kingdom
Collect: 1-212-269-5550
All Others Call Tel.: +(44) 207 920 9700
Toll-Free: 1-800-755-7250
The Dealer Manager for Northrop Grumman's offer to exchange is:
Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
(888) 328-4596
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation-a derivative action), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceedings, had no reasonable cause to believe their
conduct was unlawful.
A similar standard is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of such action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's certificate of
incorporation, bylaws, disinterested director vote, stockholder vote, agreement
or otherwise.
As permitted by Section 145 of the Delaware General Corporation Law, Article
EIGHTEENTH of Northrop Grumman's restated certificate of incorporation, as
amended, provides:
A director of the Corporation shall not be personally liable to the
Corporation or to its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the directors'
duty of loyalty to the Corporation or to its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derives any improper personal benefit. If, after approval of this
Article by the stockholders of the Corporation, the General Corporation Law of
the State of Delaware is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest extent permitted
by the General Corporation Law of the State of Delaware, as so amended. Any
repeal or modification of this Article by the stockholders of the Corporation
as provided in Article SEVENTEENTH hereof shall not adversely affect any right
or protection of a director of the Corporation existing at the time of such
repeal or modification.
Northrop Grumman has purchased insurance on behalf of any person who is or
was a director, officer, employee or agent of Northrop Grumman, or is or was
serving at the request of Northrop Grumman as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not
Northrop Grumman would have the power to indemnify him against such liability
under the provisions of Northrop Grumman's restated certificate of
incorporation, as amended.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
2.1 Agreement and Plan of Merger among Northrop Grumman Corporation, Purchaser Corp. I and Newport
News Shipbuilding Inc. dated as of November 7, 2001 (incorporated by reference to Annex C to
Amendment No. 5 to Form S-4 Registration Statement No. 333-61506 filed November 13, 2001)
2.2 Amended and Restated Agreement and Plan of Merger dated as of January 23, 2001 among Northrop
Grumman Systems Corporation, Litton Industries, Inc., Northrop Grumman Corporation and LII
Acquisition Corp. (incorporated by reference to Exhibit 2.2 to Form S-4 Registration Statement
No. 333-54800 filed February 1, 2001)
II-1
3.1 Amended and Restated Certificate of Incorporation of Northrop Grumman Corporation (incorporated
by reference to Exhibit D to the Definitive Proxy Statement filed April 13, 2001)
3.2 Certificate of Amendment of Certificate of Incorporation of Northrop Grumman Corporation filed as
exhibit 3.2 to Form 10-Q filed with the SEC on May 10, 2001 and incorporated herein by this
reference (incorporated by reference to Exhibit 3.2 to Form 10-Q filed with the SEC on May 10, 2001)
3.3 Restated Bylaws of Northrop Grumman Corporation (incorporated by reference to Exhibit 3.2 to Form
S-4 Registration Statement No. 333-54800 filed February 1, 2001)
4.1 Registration Rights Agreement dated as of January 23, 2001 by and among Northrop Grumman
Systems Corporation, Northrop Grumman Corporation and Unitrin, Inc. (incorporated by reference to
Exhibit (d)(6) to Amendment No. 4 to Schedule TO filed January 31, 2001)
4.2 Certificate of Designations, Preferences and Rights of Series B Preferred Stock of Northrop Grumman
Corporation (incorporated by reference to Exhibit C to the Definitive Proxy Statement filed April 13,
2001)
4.3 Rights Agreement dated as of January 31, 2001 between Northrop Grumman Corporation and
EquiServe Trust Company, N.A. (incorporated by reference to Exhibit 4.3 to Amendment No. 2 to
Form S-4 Registration Statement No. 333-54800 filed March 27, 2001)
4.4 Indenture dated as of October 15, 1994 between Northrop Grumman Systems Corporation and
JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as trustee (incorporated by reference to
Exhibit 4.1 to Form 8-K filed October 25, 1994)
4.5 Form of Officer's Certificate (without exhibits) establishing the terms of Northrop Grumman Systems
Corporation's 7% Notes due 2006, 7 3/4% Debentures due 2016 and 7 7/8% Debentures due 2026
(incorporated by reference to Exhibit 4-3 to Form S-4 Registration Statement filed April 19, 1996)
4.6 Form of Northrop Grumman Systems Corporation's 7% Notes due 2006 (incorporated by reference to
Exhibit 4-4 to Form S-4 Registration Statement filed April 19, 1996)
4.7 Form of Northrop Grumman Systems Corporation's 7 3/4% Debentures due 2016 (incorporated by
reference to Exhibit 4-5 to Form S-4 Registration Statement filed April 19, 1996)
4.8 Form of Northrop Grumman Systems Corporation's 7 7/8% Debentures due 2026 (incorporated by
reference to Exhibit 4-6 to Form S-4 Registration Statement filed April 19, 1996)
4.9 Purchase Contract Agreement dated as of November 21, 2001 between Northrop Grumman
Corporation and JPMorgan Chase Bank, as Purchase Contract Agent (incorporated by reference to
Exhibit 4.3 to Form 8-K dated and filed November 21, 2001)
4.10 Pledge Agreement dated as of November 21, 2001 among Northrop Grumman Corporation, The Bank
of New York, as Collateral Agent, Custodial Agent and Securities Intermediary, and JPMorgan Chase
Bank, as Purchase Contract Agent (incorporated by reference to Exhibit 4.4 to Form 8-K dated and
filed November 21, 2001)
4.11 Form of Remarketing Agreement (incorporated by reference to Exhibit 4.5 to Form 8-K dated and
filed November 21, 2001)
4.12 Form of Officers' Certificate establishing the terms of Northrop Grumman Corporation's 7 1/8% Notes
due 2011 and 7 3/4% Debentures due 2031 (incorporated by reference to Exhibit 10.9 to Form 8-K
dated and filed April 17, 2001)
4.13 Indenture dated as of November 21, 2001 between Northrop Grumman Corporation and JPMorgan Chase
Bank, as trustee (incorporated by reference to Exhibit 4.1 to Form 8-K dated and filed November 21, 2001)
4.14 Officers' Certificate dated as of November 21, 2001 describing the terms of the Senior Notes that are a
component of Northrop Grumman Corporation's Equity Security Units (incorporated by reference to
Exhibit 4.2 to Form 8-K dated and filed November 21, 2001)
II-2
4.15 Indenture dated as of April 13, 1998 between Litton Industries, Inc. and The Bank of New York, as
trustee, under which Litton's 6.05% Senior Notes due 2003 and 6.75% Senior Debentures due 2018
were issued (incorporated by reference to Exhibit 4.1 to Litton Industries, Inc.'s Form 10-Q for the
quarter ended April 30, 1998 and filed June 15, 1998)
4.16 Supplemental Indenture with respect to Indenture dated April 13, 1998, dated as of April 3, 2001
among Litton Industries, Inc., Northrop Grumman Corporation, Northrop Grumman Systems
Corporation and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.5 to Form
10-Q for the quarter ended March 31, 2001 filed May 10, 2001)
4.17 Senior Indenture dated as of December 15, 1991 between Litton Industries, Inc. and The Bank of
New York, as trustee, under which Litton's 7.75% and 6.98% debentures due 2026 and 2036 were
issued and specimens of such debentures (incorporated by reference to Exhibit 4.1 to Litton
Industries Inc.'s Form 10-Q for the quarter ended April 30, 1996 filed June 11, 1996)
4.18 Supplemental Indenture with respect to Indenture dated December 15, 1991, dated as of April 3,
2001, among Litton Industries, Inc., Northrop Grumman Corporation, Northrop Grumman Systems
Corporation and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.7 to Form
10-Q for the quarter ended March 31, 2001 filed May 10, 2001)
4.19 Form of Exchange Security for Litton's $400,000,000 8% senior notes due 2009 (incorporated by
reference to Exhibit 4.3 to Litton Industries Inc.'s Form 10-Q for the quarter ended April 30, 2000
filed August 19, 2000)
*5.1 Form of Opinion of John H. Mullan regarding the validity of the securities being registered
*8.1 Opinion of Gibson, Dunn & Crutcher LLP regarding certain tax matters
10.1 Northrop Grumman 2001 Long-Term Incentive Stock Plan (incorporated by reference to Exhibit B to
the Definitive Proxy Statement on Schedule 14A filed April 13, 2001)
10.2 Amendment Agreement between Kent Kresa and Northrop Grumman Corporation dated August 3,
2001 (incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended June 30, 2001
filed August 9, 2001)
10.3 Employment Agreement between Dr. Ronald D. Sugar and Northrop Grumman Corporation dated
September 19, 2001 (incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended
September 30, 2001 filed November 5, 2001)
10.4 Form of Notice of Grant of Restricted Performance Stock Rights and Rights Agreement under the
Northrop Grumman Corporation 2001 Long-Term Incentive Stock Plan (incorporated by reference to
Exhibit 10.4 to Form 10-Q for the quarter ended September 30, 2001 filed November 5, 2001)
*10.5 Form of Notice of Grant of Stock Options and Option Agreement under the Northrop Grumman
Corporation 2001 Long-Term Incentive Stock
10.6 Notice of Grant of Restricted Performance Stock Rights and Rights Agreement of Kent Kresa, dated
August 15, 2001 under the Northrop Grumman Corporation 2001 Long-Term Incentive Stock Plan
(incorporated by reference to Exhibit 10.6 to Form 10-Q for the quarter ended September 30, 2001
filed November 5, 2001)
10.7 Notice of Grant of Stock Options and Option Agreement of Kent Kresa, dated August 15, 2001 under
the Northrop Grumman Corporation 2001 Long-Term Incentive Stock Plan (incorporated by
reference to Exhibit 10.7 to Form 10-Q for the quarter ended September 30, 2001 filed November 5,
2001)
10.8 Form of $2,500,000,000 Five-Year Revolving Credit Agreement dated as of March 30, 2001 among
Northrop Grumman Corporation, Northrop Grumman Systems Corporation and Litton Industries,
Inc., the Lenders party thereto, The Chase Manhattan Bank and Credit Suisse First Boston, as Co-
Administrative Agents, Salomon Smith Barney Inc., as Syndication Agent, and The Bank of Nova
Scotia and Deutsche Banc Alex. Brown, Inc. as Co-Documentation Agents (incorporated by
reference to Exhibit 10.7 to Amendment No. 2 to Form S-4 Registration Statement No. 333-54800
filed March 27, 2001)
II-3
10.9 Retention Bonus Agreement between Northrop Grumman Corporation and Thomas C. Schievelbein
dated November 7, 2001 (incorporated by reference to Exhibit 10.32 to Amendment No. 5 to Form S-4
Registration Statement No. 333-61506 filed November 13, 2001)
10.10 Form of Guarantee dated as of April 3, 2001 by Northrop Grumman Corporation of Litton Industries,
Inc. indenture indebtedness (incorporated by reference to Exhibit 10.10 to Form 8-K filed dated and
April 17, 2001)
10.11 Form of Guarantee dated as of April 3, 2001 by Northrop Grumman Corporation of Northrop
Grumman Systems Corporation indenture indebtedness (incorporated by reference to Exhibit 10.11 to
Form 8-K dated and filed April 17, 2001)
10.12 Form of Guarantee dated as of April 3, 2001 by Northrop Grumman Systems Corporation of Litton
Industries, Inc. indenture indebtedness (incorporated by reference to Exhibit 10.12 to Form 8-K dated
and filed April 17, 2001)
10.13 Form of Guarantee dated as of April 3, 2001 by Litton Industries, Inc. of Northrop Grumman Systems
Corporation indenture indebtedness (incorporated by reference to Exhibit 10.13 to Form 8-K dated and
filed April 17, 2001)
10.14 1973 Incentive Compensation Plan as amended December 16, 1998 (incorporated by reference to
Exhibit 10(c) to Form 10-K filed March 23, 1999)
10.15 1973 Performance Achievement Plan (incorporated by reference to Form 8-B filed June 21, 1985)
10.16 Northrop Grumman Corporation Supplemental Plan 2 (incorporated by reference to Exhibit 10(e) to
Form 10-K filed February 22, 1996) and amended as of June 19, 1996 (incorporated by reference to
Exhibit 10(e) to Form 10-K filed February 27, 1997)
10.17 Northrop Grumman Corporation ERISA Supplemental Plan I (incorporated by reference to Exhibit
10(d) to Form 10-K filed February 28, 1994)
10.18 Retirement Plan for Independent Outside Directors as amended April 24, 1998 (incorporated by
reference to Exhibit 10(g) to Form 10-K filed March 23, 1999)
10.19 1987 Long-Term Incentive Plan, as amended (incorporated by reference to Form SE filed March 30, 1989)
10.20 Executive Life Insurance Policy (incorporated by reference to Exhibit 10(i) to Form 10-K filed
February 22, 1996)
10.21 Executive Accidental Death, Dismemberment and Plegia Insurance Policy (incorporated by reference
to Exhibit 10(j) to Form 10-K filed February 22, 1996)
10.22 Executive Long-Term Disability Insurance Policy (incorporated by reference to Exhibit 10(k) to Form
10-K filed February 22, 1996)
10.23 Key Executive Medical Plan Benefit Matrix (incorporated by reference to Exhibit 10(l) to Form 10-K
filed February 22, 1996)
10.24 Executive Dental Insurance Policy Group Numbers 5134 and 5135 (incorporated by reference to
Exhibit 10(m) to Form 10-K filed February 22, 1996)
10.25 Group Excess Liability Policy (incorporated by reference to Exhibit 10(n) to Form 10-K filed February
22, 1996)
10.26 Northrop Grumman 1993 Long-Term Incentive Stock Plan, as amended and restated (incorporated by
reference to Exhibit 4.1 to Form S-8 Registration Statement filed November 25, 1998)
10.27 Northrop Corporation 1993 Stock Plan for Non-Employee Directors (incorporated by reference to
Exhibit B to the Northrop Corporation 1993 Proxy Statement filed March 30, 1993), amended as of
September 21, 1994 (incorporated by reference to Exhibit 10(q) to Form 10-K filed March 21, 1995)
10.28 Northrop Grumman Corporation 1995 Stock Option Plan for Non-Employee Directors (incorporated
by reference to Exhibit A to the Definitive Proxy Statement on Schedule 14A filed March 30, 1995)
10.29 Northrop Grumman Corporation March 2000 Change-in-Control Severance Plan (incorporated by
reference to Exhibit 10(b) to Form 10-Q filed November 4, 1999)
10.29 Northrop Grumman Corporation March 2000 Change-in-Control Severance Plan (incorporated by
reference to Exhibit 10(b) to Form 10-Q filed November 4, 1999)
II-4
10.30 Form of Northrop Grumman Corporation March 2000 Special Agreement (effective March 1, 2000)
(incorporated by reference to Exhibit 10(a) to Form 10-Q filed November 4, 1999)
*10.31 Northrop Grumman Executive Deferred Compensation Plan (effective December 29, 1994, as
amended and restated effective November 2, 2000 and amended March 1, 2001
10.32 Northrop Grumman Corporation Non-Employee Directors Equity Participation Plan, as amended
March 15, 2000 (incorporated by reference to Exhibit 10(a) to Form 10-Q filed May 9, 2000)
10.33 CPC Supplemental Executive Retirement Program (incorporated by reference to Exhibit 10(u) to
Form 10-K filed March 30, 1998)
10.34 Northrop Grumman Estate Enhancement Program, effective November 1, 2000 (incorporated by
reference to Exhibit 10(v) to Form 10-K/A filed March 8, 2001)
10.35 Special Officer Retiree Medical Plan as amended December 19, 2000 (incorporated by reference to
Exhibit 10(w) to Form 10-K/A filed March 8, 2001)
*10.36 Northrop Grumman Deferred Compensation Plan (effective December 1, 2000) and amended March
1, 2001, March 30, 2001 and September 14, 2001
*10.37 Consultant Agreement dated January 7, 2002 between Northrop Grumman Corporation and
Ralph D. Crosby, Jr.
*10.38 Agreement dated December 22, 2001 between Northrop Grumman Corporation and Ralph D. Crosby,
Jr.
*10.39 Form of Indemnification Agreement between Northrop Grumman Corporation and its directors and
executive officers
*12.1 Ratios of Earnings to Fixed Charges
*15.1 Letter from Independent Accountants Regarding Unaudited Interim Financial Information
*21.1 Subsidiaries
*23.1 Consent of Deloitte & Touche LLP (for Northrop Systems)
*23.2 Consent of Deloitte & Touche LLP (for Litton Industries)
*23.3 Consent of Arthur Andersen LLP (for Newport News)
*23.4 Consent of John H. Mullan (included in Exhibit 5.1)
*23.5 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 8.1)
*24.1 Power of Attorney
*99.1 Form of Letter of Transmittal for Common Shares
*99.2 Form of Letter of Transmittal for Serial Preference Shares
*99.3 Form of Notice of Guaranteed Delivery for Common Shares
*99.4 Form of Notice of Guaranteed Delivery for Serial Preference Shares
*99.5 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees,
Common Shares and Serial Preference Shares
*99.6 Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees, Common Shares
*99.7 Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees, Serial Preference Shares
*99.8 Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
*99.9 Form 041 Filing of Information Pertaining to a Control Bid
*99.10 Acquiring Person Statement, dated March 4, 2002
99.11 Press Release, dated February 22, 2002 (incorporated by reference to Rule 425 filing filed
February 27, 2002)
99.12 Slide Presentation, dated February 27, 2002 (incorporated by reference to Rule 425 filing filed
February 27, 2002)
II-5
*99.13 Press Release, dated March 3, 2002
*99.14 Summary Advertisement as published in the Wall Street Journal on March 4, 2002
* Filed with this offer to exchange
(b) None
(c) None
ITEM 22. UNDERTAKINGS.
(A) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 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) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(C)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (a) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(D) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-6
(E) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(F) The undersigned registrant hereby undertakes to supply by means of a
post- effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not subject of and included
in the registration statement when it became effective.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on this 4th day of March, 2002.
/S/ JOHN H. MULLAN
By: _______________________________
John H. Mullan
Corporate Vice President and
Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Richard B. Waugh, Jr., W. Burks Terry
and John H. Mullan with full power to act alone, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933, as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together, shall constitute
one instrument.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/S/ KENT KRESA Chairman of the Board, March 4, 2002
- ----------------------------- President and Chief
Kent Kresa Executive Officer and
Director (Principal
Executive Officer)
/S/ RONALD D. SUGAR President and Chief Operating March 4, 2002
- ----------------------------- Officer and Director
Ronald D. Sugar
/S/ RICHARD B. WAUGH, JR. Corporate Vice President and March 4, 2002
- ----------------------------- Chief Financial Officer
Richard B. Waugh, Jr. (Principal Financial
Officer)
/S/ SANDRA J. WRIGHT Corporate Vice President and March 4, 2002
- ----------------------------- Controller (Principal
Sandra J. Wright Accounting Officer)
/S/ JOHN T. CHAIN, JR. Director March 4, 2002
- -----------------------------
John T. Chain, Jr.
II-8
Signature Title Date
--------- ----- ----
/S/ LEWIS W. COLEMAN Director March 4, 2002
- -----------------------------
Lewis W. Coleman
/S/ VIC FAZIO Director March 4, 2002
- -----------------------------
Vic Fazio
/S/ PHILLIP FROST Director March 4, 2002
- -----------------------------
Phillip Frost
/S/ CHARLES R. LARSON Director March 4, 2002
- -----------------------------
Charles R. Larson
/S/ JAY H. NUSSBAUM Director March 4, 2002
- -----------------------------
Jay H. Nussbaum
/S/ AULANA L. PETERS Director March 4, 2002
- -----------------------------
Aulana L. Peters
/S/ JOHN BROOKS SLAUGHTER Director March 4, 2002
- -----------------------------
John Brooks Slaughter
II-9
Exhibit 5.1
FORM OF
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
__________, 2002
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Ladies and Gentlemen:
I am a member of the bars of the States of New York and California. I am
also Corporate Vice President and Secretary of Northrop Grumman Corporation, a
Delaware corporation (the "Company"). I am familiar with the Registration
Statement on Form S-4 (the "Registration Statement") being filed by the Company
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, in connection with the Company's registration of shares of common
stock, par value $1.00 per share (the "Northrop Grumman Shares"), to be issued
in exchange for shares of (i) common stock, par value $0.625 per share (the
"Common Stock"), of TRW Inc., an Ohio corporation ("TRW"); (ii) Cumulative
Serial Preference Stock II, $4.40 Convertible Series I, no par value per share
of TRW (the "Series 1 Shares") and (iii) Cumulative Serial Preference Stock II,
$4.50 Convertible Series 3, no par value per share of TRW (the "Series 3 Shares"
and, together with the Common Stock and the Series 1 Shares, "TRW Shares").
I have examined the Company's certificate of incorporation and bylaws and
originals or copies certified or otherwise identified to my satisfaction of such
other documents, corporate records, certificates of public officials and other
instruments as I have deemed necessary or advisable for the purpose of rendering
this opinion. Based on the foregoing, I am of the opinion that the Northrop
Grumman Shares will, when issued in exchange for TRW Shares as contemplated by
the offer to exchange forming part of the Registration Statement, be duly
authorized, validly issued, fully paid and non-assessable.
I hereby consent to the use of my name under the caption "Legal Matters"
in the Form S-4 and to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
---------------------------
Name: John H. Mullan
Title: Corporate Vice President and
Secretary
March 4, 2002
Direct Dial Client No.
(213) 229-7000 C 66093-00115
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA 90067
Re: Offer to Exchange Common Stock of Northrop Grumman
for Capital Stock of TRW and the TRW Merger
Ladies and Gentlemen:
You have requested our opinion as to certain United States federal
income tax consequences of the offer to exchange common stock of Northrop
Grumman Corporation, a Delaware corporation, for each outstanding share of
capital stock of TRW Inc., an Ohio corporation, and the TRW merger. Capitalized
terms used, but not defined herein, have the meaning set forth in the
Registration Statement on Form S-4 filed with the U.S. Securities and Exchange
Commission on March 4, 2002 ("Registration Statement").
We hereby confirm our opinion as set forth under the heading "Material
U.S. Federal Income Tax Consequences of the Offer to Exchange and the Merger" in
the Registration Statement. We also hereby consent to the reference to us under
the heading "Material U.S. Federal Income Tax Consequences of the Offer to
Exchange and the TRW Merger" in the Registration Statement and to the filing of
this opinion as an exhibit to the Registration Statement. In giving this
consent, we do not hereby admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, or the rules
and regulations of the Securities and Exchange Commission promulgated
thereunder.
Sincerely,
/s/ Gibson, Dunn & Crutcher LLP
HB/SLT/DA/da
- ---------------------------------- Northrop Grumman Corporation
1840 Century Park East
Notice of Grant of Stock Options Los Angeles, CA 90067
and Option Agreement
- ----------------------------------
- --------------------------------------------------------------------------------
Name
Address
Address
Pursuant to the terms and conditions of the company's 52 2001 NQ Stock Option
Plan (the `Plan'), you have been granted a Non-Qualified Stock Option to
purchase shares (the `Option') of stock as outlined below.
- --------------------------------------------------------------------------------
Granted To: (Name)
Grant Date:
Options Granted:
Option Price per Share: $
Expiration Date:
Vesting Schedule: 25% per year for 4 years
- --------------------------------------------------------------------------------
This page and the attached Terms and Conditions together constitute the Option
Agreement. By your Signature and the Company's signature below, you and the
Company agree that these options are granted under and governed by the terms of
the Company's 2001 Long-Term Incentive Stock Plan and the Option Agreement.
NORTHROP GRUMMAN CORPORATION
By: ________________________________ By: ________________________________
Signature: _______________________________ Date: _________________________
(Name)
NORTHROP GRUMMAN CORPORATION
2001 LONG-TERM INCENTIVE STOCK PLAN
NON-QUALIFIED STOCK OPTION
TERMS AND CONDITIONS
1. The Grantee is entitled at the time or times designated in paragraph 4
hereof but before the close of business on the day before the tenth anniversary
of the Date of Grant (the "Expiration Date") to purchase and receive from the
Company the maximum number of shares of Common Stock of the Company set forth
above upon exercise of this Option, all subject, however, to the terms and
conditions stated herein and in the Northrop Grumman 2001 Long-Term Incentive
Stock Plan, as amended from time to time (the "Plan"), and any rules or guides
to administration adopted by the Company's Compensation and Management
Development Committee or any successor committee appointed by the Company's
Board of Directors to administer the Plan (the "Committee") in effect from time
to time, including, without limitation, the Plan's 2001 Guide to Administration
(the "Guide").
2. This Option is non-transferable and non-assignable and may be exercised
solely by the Grantee or a duly appointed guardian or personal representative,
except as provided in paragraph 3 hereof in the event of the death of the
Grantee. This Option shall not be an "incentive stock option" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended.
3. This Option shall terminate if and when the Grantee ceases to be an
employee of the Company or one of its subsidiaries, except as follows:
(i) If the Grantee Retires (as defined below), dies, or is Disabled
(as defined below) while employed by the Company or a subsidiary, the next
succeeding vesting installment of this Option shall vest and all installments
under this Option which have vested may be exercised by the Grantee (or, in the
case of the Grantee's death, by the Grantee's successor) until the fifth
anniversary of the Grantee's Retirement, death, or Disability, whichever first
occurs, but in no event after the Expiration Date.
(ii) Subject to the following sentence, if the employment of the
Grantee with the Company or a subsidiary is terminated for any reason other than
the Grantee's death, Retirement or Disability, this Option may be exercised (as
to not more than the number of shares as to which the Grantee might have
exercised this Option on the date on which his or her employment terminated)
only within 90 days from the date of such termination of employment, but in no
event after the Expiration Date; provided, however, that if the Grantee is
dismissed by the Company or a subsidiary for cause, of which the Committee shall
be the sole judge, this Option shall expire forthwith. If the Grantee dies
within 90 days after a termination of employment described in the preceding
sentence (other than a termination by the Company or a subsidiary for cause),
this Option may be exercised by the Grantee's successor for one year from the
date of the Grantee's death, but in no event after the Expiration Date and as to
not more than the number of shares as to which the Grantee might have exercised
this Option on the date on which his or her employment by the Company or a
subsidiary terminated.
(iii) For purposes of this instrument, "Disabled" means disabled
pursuant to the provisions of the Company's (or one of its subsidiary's) Long
Term Disability Plan applicable to the Grantee; or, if the Grantee is not
covered by such a Long Term Disability Plan, the incapacity of the Grantee, due
to injury, illness, disease, or bodily or mental infirmity, to engage in the
performance of substantially all of the usual duties of employment with the
Company or the subsidiary which employs the Grantee, such disability to be
determined by the Committee upon receipt and in reliance on competent medical
advice from one or more individuals, selected by the Committee, who are
qualified to give such professional medical advice. For purposes of this
instrument, "Retire" means that the Grantee terminates employment after
attaining age 55 with at least 10 years of service (other than in connection
with a termination by the Company or a subsidiary for cause).
4. Subject to the earlier vesting and/or termination of this Option
pursuant to paragraph 3 or paragraph 8 hereof, this Option shall become
exercisable as to 25 percent of the total number of shares set forth above on
the first anniversary of the Date of Grant, and on each succeeding anniversary
of the Date of Grant this Option shall become exercisable as to an additional 25
percent of the total number of shares so that on the fourth anniversary of the
Date of Grant this Option shall be exercisable in full. Subject to the earlier
vesting and/or termination of this Option pursuant to paragraph 3 or paragraph 8
hereof, this Option may be exercised to the extent that it is exercisable in
accordance with the foregoing at any time up to the Expiration Date.
5. In order to exercise this Option, the Grantee or such other person as
may be entitled to exercise the same shall (i) execute and deliver to the
Corporate Secretary of the Company a written notice indicating the number of
shares subject to this Option to be exercised, and/or (ii) complete such other
exercise procedure as may be prescribed by the Corporate Secretary of the
Company. The date of exercise of this Option shall be the day such notice is
received by the Corporate Secretary of the Company or the day such exercise
procedures are satisfied, as applicable; provided that in no event shall this
Option be considered to have been exercised unless the per share exercise price
of this Option is paid in full (or provided for in accordance with the following
sentence) for each of the shares to be acquired on such exercise and all
required tax withholding obligations with respect to such exercise have been
satisfied or provided for in accordance with paragraph 8 hereof. The purchase
price shall be paid in cash or, in the sole discretion of the Committee and on
such terms and conditions as the Corporate Secretary of the Company may
prescribe, either in whole or in part in Common Stock of the Company (either
actually or by attestation
-1-
and valued at their fair market value on the date of exercise of this Option as
defined in paragraph 6 hereof) or pursuant to a cashless exercise arranged
through a broker or other third party.
6. The fair market value of the shares of Common Stock of the Company on
the date of exercise of this Option shall be the closing price in the composite
tape of the Common Stock on the New York Stock Exchange on such date, or, if
there was no trading on such date, the closing price on the next preceding date
on which there was trading in such shares; provided, however, the Committee in
determining such fair market value may utilize such other exchange, market, or
listing as it deems appropriate. For purposes of a cashless exercise, the fair
market value of the shares shall be the price at which the shares in payment of
the exercise price are sold.
7. The issue and sale of shares of stock upon any exercise of this Option
is further subject to full compliance with all then applicable requirements of
law, the Securities and Exchange Commission, the Commissioner of Corporations of
the State of California, or other regulatory agencies having jurisdiction over
the Company and its shares, and of any exchanges upon which stock of the Company
may be listed. The Grantee shall not have the rights and privileges of a
stockholder with respect to shares subject to or purchased under this Option
until the date appearing on the certificate(s) issued upon the exercise of this
Option.
8. The number and price of shares subject to this Option are subject to
adjustment upon the occurrence of events such as stock splits, stock dividends
and other changes in capitalization in accordance with Section 6 of the Plan. In
the event of any adjustment, the Company will give the Grantee written notice
thereof which will set forth the nature of the adjustment. Except as set forth
below in this paragraph 8, the Grantee's rights with respect to this Option in
the event of a Change in Control (as defined in the Plan) shall be determined
under Section 6 of the Plan. Notwithstanding the acceleration provisions of
paragraph 3 hereof but subject to the limited exercise periods set forth
therein, further subject to the Company's ability to terminate this Option in
connection with a Change in Control in accordance with the provisions of Section
6 of the Plan, and further subject to the exceptions set forth in Section X of
the Guide, this Option shall become fully exercisable as of the date of the
Grantee's termination of employment if either within the Protected Period (as
defined in the Guide) corresponding to a Change in Control of the Company or
within twenty-four (24) calendar months following the date of a Change in
Control of the Company, the Grantee's employment by the Company and its
subsidiaries is involuntarily terminated by the Company and its subsidiaries for
reasons other than Cause (as defined in Section X of the Guide) or by the
Grantee for Good Reason (as defined in Section X of the Guide).
9. The vesting of this Option requires continued employment through each
vesting date as a condition to the vesting of the corresponding installment of
this Option. Employment before or between the specified vesting dates, even if
substantial, will not entitle the Grantee to any proportionate vesting or avoid
or mitigate a termination of rights and benefits upon or following a termination
of employment. Subject to the leave of absence provisions of the Guide, the term
"employment" as used herein means active employment by the Company or one of its
subsidiaries and salary continuation without active employment will not, in and
of itself, constitute "employment" for purposes hereof (in the case of salary
continuation without active employment, the participant's cessation of active
employee status shall be deemed to be a termination of "employment" for purposes
hereof). Nothing contained in this instrument, the Plan, or the Guide
constitutes an employment commitment by the Company or any subsidiary, affects
the Grantee's status (if the Grantee is otherwise an at-will employee) as an
employee at will who is subject to termination without cause, confers upon the
Grantee any right to continue in the employ of the Company or any subsidiary, or
interferes in any way with the right of the Company or of any subsidiary to
terminate such employment at any time.
10. The Company or the subsidiary which employs the Grantee shall be
entitled to require, as a condition of issuing shares upon exercise of this
Option, that the Grantee or other person exercising this Option pay any sums
required to be withheld by federal, state or local tax law with respect to the
exercise of this Option. Alternatively, the Company or such subsidiary, in its
discretion, may make such provisions for the withholding of any taxes as it
deems appropriate.
11. The Company will pay all federal and state transfer taxes, if any, and
other fees and expenses in connection with the issuance of shares upon exercise
of this Option.
12. The Company may, for all purposes, regard the Grantee as the holder of
this Option until written notice of transfer pursuant to paragraph 3 hereof in
connection with the Grantee's death has been given to and received by the
Corporate Secretary of the Company.
13. The Committee has the discretionary authority to determine any
questions as to the date when the Grantee's employment terminated and the cause
of such termination and to interpret any provision of this instrument, the Plan,
the Guide, and any other applicable rules or guides to administration. Any
action taken by, or inaction of, the Committee relating to or pursuant to this
instrument, the Plan, the Guide, or any other applicable rules or guides to
administration shall be within the absolute discretion of the Committee and
shall be conclusive and binding on all persons.
14. This Option was granted under the Plan. This Option is governed by, and
the Grantee's rights are subject to, all of the terms and conditions of the
Plan, the Guide, and any other rules or regulations adopted by the Committee, as
the foregoing may be amended from time to time. The Grantee shall have no rights
with respect to any amendment of this instrument, the Plan or the Guide unless
such amendment is in writing and signed by a duly authorized officer of the
Company.
2
NORTHROP GRUMMAN
EXECUTIVE DEFERRED COMPENSATION PLAN
1. Purpose.
--------
The purpose of the Plan is to provide an arrangement whereby executives can
elect to defer receipt of compensation for which a deduction to the Corporation
would otherwise be disallowed for federal income tax purposes under Section
162(m) of the Internal Revenue Code of 1986, as amended ("Code"). The Plan as
amended and restated herein is effective November 2, 2000.
2. Definitions.
------------
(a) "Committee" is the Compensation and Management Development Committee (or
its successor) of the Board of Directors of Northrop Grumman Corporation.
(b) "Company" means Northrop Grumman Corporation and any of its
subsidiaries or affiliates.
(c) "Compensation" means salary and other items of includible compensation
paid to a Participant from the Company or a calendar year.
(d) "Corporation" means Northrop Grumman Corporation.
(e) "Disability" means a permanent and total disability for which a
Participant is currently receiving benefits from a long-term disability plan
sponsored by the Company.
(f) "Effective Date" means December 30, 1994, or such other date as
specified by the Board of Directors.
(g) "Eligible Employee" means an employee who meets the conditions for
eligibility under Section 3 of this Plan.
(h) "Estate Enhancement Program Election" means an election made by a
participant to participate in the Northrop Grumman Estate Enhancement Program
under which the Participant elects to have all or any portion of his or her
deferral account balance converted to an Estate Enhancement Program Account.
Northrop Grumman Executive Deferred Compensation Plan
(i) "Estate Enhancement Program Account" means all or any portion of the
Participant's Plan account balance with respect to which the Participant has
made an Estate Enhancement Program Election.
(j) "Participant" means an Eligible Employee who makes an election to defer
Compensation under this Plan.
(k) "Plan" means the Executive Deferred Compensation Plan of the Northrop
Grumman Corporation as set forth herein and as from time to time amended.
(l) "Plan Year" means the calendar year.
(m) "Retirement" means retirement pursuant to one or more of the qualified
pension or profit-sharing plans maintained by the Company.
(n) "Section 162(m) limit" means the limit on deductibility of salary and
other compensation imposed by Section 162(m) of the Code, and any subsequent or
superseding provisions of the Code.
(o) "Termination" means a complete separation from service by the
Participant from the Company.
3. Eligibility.
------------
An employee of the Company who is eligible to receive Compensation in excess of
the Section 162(m) limit may be eligible to participate in this Plan for that
year, upon approval of his eligibility by the Committee.
4. Participation.
--------------
(a) An Eligible Employee may become a Participant by electing to defer some
or all of his Compensation under this Plan, on a form and in the manner
specified by the Committee.
(b) Eligible Employees must make a separate election to participate with
respect to each Plan Year. Any deferral made under this Plan shall only be
effective with respect to the Plan Year to which it relates.
2
Northrop Grumman Executive Deferred Compensation Plan
5. Time of Deferral.
-----------------
(a) An election to defer Compensation under this Plan shall be made no
later than December 31 preceding the calendar year in which the services are
performed to which the Compensation relates.
(b) Any deferral election under this Plan shall be binding with respect to
the period for which it was made and shall be irrevocable with respect to that
period.
6. Deferral Account.
-----------------
There shall be established on the books of the Corporation a deferral account
for each Participant, and all amounts deferred by the Participant under this
Plan for all years of participation shall be credited to that account, together
with any interest or earnings on such amounts.
7. Investment options.
-------------------
(a) During the first full Plan Year, interest will be credited to deferral
accounts at a rate equal to 115-percent of the fourth quarter monthly rate of
Moody's Average Corporate Bond rate.
(b) With respect to subsequent Plan Years, the Committee, in its sole
discretion, may make available one or more investment options under this Plan in
which Participants may elect to direct investment of their deferral accounts. In
addition, the Committee may determine that one or more of the accounts shall
earn interest at a stated rate over a specified term.
(c) Notwithstanding the other provisions of this Section 7, amounts in an
Estate Enhancement Program Account shall not be credited with any interest or
other investment earnings or losses.
8. No Guarantee of Payment; No Funding.
------------------------------------
(a) Participants in this Plan shall have no rights on account of this Plan
in or to any specific assets of the Company, and any rights that a Participant
shall
3
Northrop Grumman Executive Deferred Compensation Plan
have on account of this Plan shall be no greater than those of a general,
unsecured creditor of the Corporation.
(b) The Corporation in no way guarantees the principal, or any other
portion of a Participant deferral account and any earnings thereon. Any and all
investments remain the property of the Corporation.
(c) The Corporation, in its sole discretion, may establish a separate
rabbi trust for the purpose of funding its obligations under this Plan, and may
also fund its obligations under a rabbi trust which funds other nonqualified
benefit obligations of the Corporation. However, nothing contained herein shall
require the establishment or funding of any such trust with respect to benefit
obligations or liabilities under this Plan.
(d) This Plan is intended to qualify as an unfunded plan maintained
primarily for the purpose of providing deferred compensation for a select group
of management and highly compensated employees ("a Top-Hat Plan"), for purposes
of Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). In the event of any change in law which the Committee determines, in
its discretion, will cause the Plan to fail to qualify as a Top-Hat Plan, the
Committee may terminate the participation of such Participants as it deems
necessary to preserve or restore the Plan's status, and may take such other
action, including the acceleration of payment of Participant deferral accounts,
if necessary to preserve or restore the Plan's status as a Top-Hat Plan.
9. Form and Timing of Distributions.
---------------------------------
(a) At the time a Participant makes a deferral election under this Plan,
he or she shall also make an election with respect to the form of payment of
that deferral (a "Distribution Election"). Each Distribution Election shall be
effective only with respect to the deferral elected for that period (and
pro-rata earnings on that deferral, if any), and a separate Distribution
Election shall be made for any subsequent deferrals.
(b) A Distribution Election shall consist of one of the following:
(1) A lump sum payment to be made in the year following the earliest
to occur of the Participant's Termination, Retirement or
Disability; and
4
Northrop Grumman Executive Deferred Compensation Plan
(2) Annual installment payments for a period of five or ten years,
beginning in the year following the earliest to occur of the
Participant's Termination, Retirement or Disability.
(c) Distributions shall be paid in January of each year or as soon
thereafter as administratively possible.
(d) The death of a Participant prior to his Retirement or Disability shall
be treated as a Termination of employment for purposes of the distribution of
benefits under this Plan. In the event that a Participant receiving installment
distributions dies prior to the receipt of all such installments, installment
payments shall continue to the Participant's beneficiary or beneficiaries, as
designated under this Plan.
(e) Notwithstanding the other provisions of this Section 9, any amounts in
a Participant's Estate Enhancement Program Account shall be paid in a single sum
within sixty (60) days after the Participant's death (or the death of the
survivor of the Participant and the Participant's spouse, if the life insurance
policy issued pursuant to the Participant's Estate Enhancement Program Election
is a survivorship policy insuring the Participant and the Participant's spouse).
10. Beneficiary Designation.
------------------------
(a) At the time of deferral election or any time thereafter, a Participant
may designate one or more beneficiaries to receive any benefits due upon death.
In the absence of any designation under this Plan, the beneficiary of a married
Participant shall be the Participant's spouse to whom he was married at the time
of death, and the beneficiary of an unmarried Participant shall be his estate.
(b) The Participant can elect to change his beneficiary at any time up to
the date of distribution, and no consent shall be required for a married
Participant to designate a non-spouse beneficiary.
(c) A Participant who has an Estate Enhancement Program Account shall
designate one or more beneficiaries to receive any benefits payable from such
account upon death, and a beneficiary designation made with respect to any such
amounts before such amounts are converted to the Estate Enhancement Program
Account shall not be effective with respect to such amounts. In the absence of
any
5
Northrop Grumman Executive Deferred Compensation Plan
such designation, amounts in the Estate Enhancement Program Account shall be
paid in a single sum to the estate of the Participant (or, if the insurance
policy issued pursuant to the Participant's Estate Enhancement Program Election
is a survivorship policy insuring the Participant and the Participant's spouse,
the estate of the survivor of the Participant and the Participant's spouse).
11. Emergency Benefit.
------------------
If a Participant suffers an unforeseeable and immediate financial emergency, the
Committee, in its sole discretion and upon the written application of the
Participant, may distribute to the Participant at such time as the Committee may
prescribe that portion of his deferral account, if any, which the Committee
determines is necessary to meet the financial emergency. A financial emergency
shall include major uninsured medical expenses or such other circumstances as
the Committee may, in its discretion, determine, provided that the Participant
demonstrates to the Committee's satisfaction that he lacks available resources
to meet the emergency. Any such distribution shall reduce the balance in the
Participants deferral account available for distribution. Notwithstanding the
foregoing, no portion of a Participant's Estate Enhancement Program Account is
eligible to be distributed to a Participant as an emergency benefit.
12. Administration of the Plan.
---------------------------
(a) The Committee shall be the Administrator of the Plan, and it may
delegate responsibilities therefor to the Vice President, Human Resources, or
his delegates.
(b) The Committee shall have the full and exclusive authority to interpret
the Plan, to construe ambiguities and to decide all matters under the Plan in
its discretion. Such interpretation and decision shall be final, conclusive and
binding on all Participants and any person claiming under or through any
Participant.
(c) The Committee shall have full discretionary authority to interpret and
administer the Plan, and to make such rules and regulations as it deems
necessary or appropriate to carry out its responsibilities under this Plan as
well as the purposes for which it was established, including any rules relating
to the availability of investment options for deferral accounts.
6
Northrop Grumman Executive Deferred Compensation Plan
13. Taxes.
------
The Corporation may withhold from any distribution under this Plan any and all
amounts necessary for the payment of any taxes, including without limitation,
income and employment taxes, and the amounts payable to Participants shall be
reduced by the tax so withheld.
14. Amendment and Termination.
--------------------------
(a) The Committee may at any time amend the Plan in any manner (including
any method for determining earnings on deferral accounts), provided that no such
amendment shall reduce the amounts previously credited to a deferral account of
any Participant for periods prior to the amendment.
(b) The Plan shall continue in effect until terminated by action of the
Board of Directors of the Corporation. Upon termination of the Plan, no further
deferrals of Compensation shall be made, and distribution of any amounts
credited to deferral accounts shall be made in accordance with rules of the
Committee.
15. No Assignment of Benefits.
--------------------------
Participants rights to benefit payments under the Plan are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Participant or the
Participant's beneficiary.
16. Future Rights.
--------------
No person shall have any claim or right under this Plan to be retained in the
employ of the Company, or to remain eligible for any Compensation able to be
deferred under this Plan.
17. Governing Law
-------------
The terms of this Plan shall be construed in accordance with the laws of the
State of Delaware, to the extent not preempted by federal law.
7
Northrop Grumman Executive Deferred Compensation Plan
18. Forfeitures.
------------
Notwithstanding anything in this Plan to the contrary, any benefit payable to a
Participant hereunder may be forfeited, discontinued or reduced if the
Participant is discharged for gross misconduct of a type which is or was
directly or indirectly harmful to the business or reputation of the Corporation.
8
FIRST AMENDMENT TO THE
NORTHROP GRUMMAN
EXECUTIVE DEFERRED COMPENSATION PLAN
The following changes to the Northrop Grumman Executive Deferred
Compensation Plan effective November 2, 2000 (the "Plan"), as described below,
are intended to transfer certain liabilities to the Northrop Grumman Deferred
Compensation Plan, effective March 1, 2001.
1. A new Section 19 is added as follows:
19. Transfer of Liabilities.
-----------------------
Effective March 1, 2001, all liabilities under this Plan, other than the
Estate Enhancement Program Account, are transferred to the Northrop Grumman
Deferred Compensation Plan. After the transfer, those liabilities will be
governed by the terms of that plan, and the provisions of this Plan will
cease to apply. After the transfer, any assets set aside for these
liabilities in a rabbi trust will instead be set aside for the liabilities
under the Northrop Grumman Deferred Compensation Plan.
NORTHROP GRUMMAN
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I--DEFINITIONS .................................................................... 1
1.1 Definitions.............................................................. 1
ARTICLE II--PARTICIPATION ................................................................. 4
2.1 In General............................................................... 4
2.2 Disputes as to Employment Status......................................... 5
2.3 Cessation of Eligibility................................................. 5
ARTICLE III--DEFERRAL ELECTIONS............................................................ 5
3.1 Elections to Defer Compensation.......................................... 5
3.2 Investment Elections..................................................... 6
3.3 Investment Return Not Guaranteed......................................... 7
ARTICLE IV--ACCOUNTS AND TRUST FUNDING..................................................... 7
4.1 Accounts ................................................................ 7
4.2 Use of a Trust........................................................... 8
ARTICLE V--VESTING ........................................................................ 8
5.1 In General............................................................... 8
5.2 Exceptions............................................................... 8
ARTICLE VI--DISTRIBUTIONS ................................................................. 9
6.1 Distribution of Deferred Compensation Contributions...................... 9
6.2 Early Non-Scheduled Distributions........................................ 10
6.3 Hardship Distribution.................................................... 11
6.4 Payments Not Received At Death........................................... 11
6.5 Inability to Locate Participant.......................................... 11
6.6 Committee Rules.......................................................... 12
ARTICLE VII--ADMINISTRATION ............................................................... 12
(i)
Page
----
7.1 Committees........................................................ 12
7.2 Committee Action.................................................. 12
7.3 Powers and Duties of the Administrative Committee................. 12
7.4 Powers and Duties of the Investment Committee..................... 13
7.5 Construction and Interpretation................................... 13
7.6 Information....................................................... 13
7.7 Committee Compensation, Expenses and Indemnity.................... 14
7.8 Disputes ......................................................... 14
ARTICLE VIII--MISCELLANEOUS ........................................................ 15
8.1 Unsecured General Creditor........................................ 15
8.2 Restriction Against Assignment.................................... 16
8.3 Restriction Against Double Payment................................ 16
8.4 Withholding....................................................... 16
8.5 Amendment, Modification, Suspension or Termination................ 16
8.6 Governing Law..................................................... 16
8.7 Receipt or Release................................................ 17
8.8 Administrative Delays............................................. 17
8.9 Disputes About Payee.............................................. 17
8.10 Incorrect Payment of Benefits..................................... 17
8.11 Payments on Behalf of Persons Under Incapacity.................... 17
8.12 Limitation of Rights and Employment Relationship.................. 18
8.13 Headings ......................................................... 18
(ii)
NORTHROP GRUMMAN
DEFERRED COMPENSATION PLAN
WHEREAS, Northrop Grumman Corporation (the "Company") desires to
establish this unfunded Deferred Compensation Plan (the "Plan") for a select
group of management and highly compensated employees;
NOW, THEREFORE, effective as of December 1, 2000, this Plan is hereby
adopted to read as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions
-----------
Whenever the following words and phrases are used in this
Plan, with the first letter capitalized, they shall have the meanings specified
below.
(a) "Account" shall mean the recordkeeping account set up for each
Participant to keep track of amounts to his or her credit.
(b) "Administrative Committee" means the committee in charge of Plan
administration, as described in Article VII.
(c) "Affiliated Companies" shall mean the Company and any entity
affiliated with the Company under Code sections 414(b) or (c).
(d) "Base Salary" shall mean a Participant's annual base salary,
excluding bonuses, commissions, incentive and all other remuneration for
services rendered to the Affiliated Companies and prior to reduction for any
salary contributions to a plan established pursuant to section 125 of the Code
or qualified pursuant to section 401(k) of the Code.
(e) "Beneficiary" or "Beneficiaries" shall mean the person or
persons, including a trustee, personal representative or other fiduciary, last
designated in writing by a Participant in accordance with procedures established
by the Administrative Committee to receive the benefits specified hereunder in
the event of the Participant's death.
(1) No Beneficiary designation shall become effective until it is
filed with the Administrative Committee.
(2) Any designation shall be revocable at any time through a
written instrument filed by the Participant with the Administrative Committee
with or without the consent of the previous Beneficiary.
(3) No designation of a Beneficiary other than the Participant's
spouse shall be valid unless consented to in writing by such spouse. If there is
no such designation or if there is no surviving designated Beneficiary, then the
Participant's surviving spouse shall be the Beneficiary. If there is no
surviving spouse to receive any benefits payable in accordance with the
preceding sentence, the duly appointed and currently acting personal
representative of the Participant's estate (which shall include either the
Participant's probate estate or living trust) shall be the Beneficiary. In any
case where there is no such personal representative of the Participant's estate
duly appointed and acting in that capacity within 90 days after the
Participant's death (or such extended period as the Administrative Committee
determines is reasonably necessary to allow such personal representative to be
appointed, but not to exceed 180 days after the Participant's death), then
Beneficiary shall mean the person or persons who can verify by affidavit or
court order to the satisfaction of the Administrative Committee that they are
legally entitled to receive the benefits specified hereunder.
(4) In the event any amount is payable under the Plan to a minor,
payment shall not be made to the minor, but instead be paid (a) to that person's
living parent(s) to act as custodian, (b) if that person's parents are then
divorced, and one parent is the sole custodial parent, to such custodial parent,
or (c) if no parent of that person is then living, to a custodian selected by
the Administrative Committee to hold the funds for the minor under the Uniform
Transfers or Gifts to Minors Act in effect in the jurisdiction in which the
minor resides. If no parent is living and the Administrative Committee decides
not to select another custodian to hold the funds for the minor, then payment
shall be made to the duly appointed and currently acting guardian of the estate
for the minor or, if no guardian of the estate for the minor is duly appointed
and currently acting within 60 days after the date the amount becomes payable,
payment shall be deposited with the court having jurisdiction over the estate of
the minor.
(5) Payment by the Affiliated Companies pursuant to any unrevoked
Beneficiary designation, or to the Participant's estate if no such designation
exists, of all benefits owed hereunder shall terminate any and all liability of
the Affiliated Companies.
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Bonuses" shall mean the bonuses earned under the Company's
formal incentive plans as defined by the Administrative Committee.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Committees" shall mean the Committees appointed by the Board to
administer the Plan and investments in accordance with Article VII.
(j) "Company" shall mean Northrop Grumman Corporation and any
successor.
(k) "Compensation" shall be Base Salary plus Bonuses.
(l) "Disability" shall mean the Participant's inability to perform
each and every duty of his or her occupation or position of employment due to
illness or injury as determined in the sole and absolute discretion of the
Administrative Committee.
-2-
(m) "Early Distribution" shall mean an election by a Participant
in accordance with Section 6.2 to receive a withdrawal of amounts from his or
her Account prior to the time at which such Participant would otherwise be
entitled to such amounts.
(n) "Employee" shall mean any common law employee of the
Affiliated Companies.
(o) "Effective Date" shall be December 1, 2000.
(p) "Eligible Employee" shall mean any Employee who meets the
following conditions:
(1) he or she is initially treated by the Affiliated
Companies as an Employee and not as an independent contractor; and
(2) he or she meets the eligibility criteria set by the
Administrative Committee.
(q) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time.
(r) "Hardship Distribution" shall mean a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of his or her dependent (as defined in Section
152(a) of the Code), loss of a Participant's property due to casualty, or other
similar or extraordinary and unforseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that would
constitute an unforseeable emergency will depend upon the facts of each case,
but, in any case, a Hardship Distribution may not be made to the extent that
such hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii) by liquidation of the Participant's assets, to the
extent the liquidation of assets would not itself cause severe financial
hardship, or (iii) by cessation of deferrals under this Plan.
(s) "Initial Election Period" shall mean
(1) in the case of an employee who becomes an Eligible
Employee upon the Effective Date of the Plan, the 30-day period prior to the
Effective Date of the Plan;
(2) in the case of an Employee who becomes an Eligible
Employee after the Effective Date under Section 2.1(a)(2)(a new hire), the
30-day period following the time the Employee first becomes an Eligible
Employee; and
(3) in the case of an Employee who becomes an Eligible
Employee after the Effective Date under Section 2.1(b)(because of a raise or
promotion), the next Open Enrollment Period.
(t) "Investment Committee" means the committee in charge of
investment aspects of the Plan, as described in Article VII.
-3-
(u) "Open Enrollment Period" means the period near the end of
each Plan Year designated by the Administrative Committee for electing deferrals
for the following Plan Year.
(v) "Participant" shall mean any Eligible Employee who becomes
a participant in this Plan in accordance with Article II and retains a positive
balance to his or her account under the Plan.
(w) "Payment Date" shall mean:
(1) for distributions upon early termination under Section
6.1(a), a date after the end of the month in which termination of employment
occurs;
(2) for distributions after Retirement, Disability or death
under Section 6.1(b), a date after the end of the month in which occurs
Retirement, the determination of Disability by the Administrative Committee, or
the notification of the Administrative Committee of the Participant's death (or
later qualification of the Beneficiary or Beneficiaries), as applicable; and
(3) for distributions with a scheduled withdrawal date under
Section 6.1(c), a date after the December 31 prior to the elected payment year,
the exact date in each case to be determined by the Administrative Committee to
allow time for administrative processing.
(x) "Plan" shall be the Northrop Grumman Deferred Compensation
Plan.
(y) "Plan Year" shall be the calendar year.
(z) "Retirement" shall mean termination of employment with the
Affiliated Companies after reaching age 55.
(aa) "Scheduled Withdrawal Date" shall mean the distribution date
elected by the Participant for an in-service withdrawal of amounts deferred in a
given Plan Year, and earnings and losses attributable thereto, as set forth on
the election form for such Plan Year.
ARTICLE II
PARTICIPATION
-------------
2.1 In General
----------
(a) An Eligible Employee may become a Participant if he or she:
(1) is an Eligible Employee on the Effective Date, or
-4-
(2) he or she is newly hired by the Affiliated Companies
after the Effective Date and he or she is an Eligible Employee as of the first
date of employment with the Affiliated Companies.
(b) Someone who becomes an Eligible Employee after the
Effective Date because he or she receives a raise or promotion will not be
entitled to participate in the Plan until the next Open Enrollment Period.
(c) Anyone eligible to participate under (a) or (b) may become
a Participant by complying with the procedures set out by the Administrative
Committee.
2.2 Disputes as to Employment Status
--------------------------------
(a) Because there may be disputes about an individual's proper
status as an Employee or non-Employee, this Section describes how such disputes
are to be handled with respect to Plan participation.
(b) The Affiliated Companies will make the initial
determination of an individual's employment status.
(1) If an individual is not treated by the Affiliated
Companies as a common law employee, then the Plan will not consider the
individual to be an "Eligible Employee" and he or she will not be entitled to
participate in the Plan.
(2) This will be so even if the individual is told he or
she is entitled to participate in the Plan and given a summary plan description
and enrollment forms or other actions are taken indicating that he or she may
participate.
(c) Disputes may arise as to an individual's employment status.
As part of the resolution of the dispute, an individual's status may be changed
by the Affiliated Companies from non-Employee to Employee. Such Employees are
not Eligible Employees.
2.3 Cessation of Eligibility
------------------------
If the Administrative Committee determines or reasonably believes
that a Participant has ceased to be a management or highly compensated employee
within the meaning of ERISA Title I, the Participant will no longer be able to
defer any further compensation under the Plan.
ARTICLE III
DEFERRAL ELECTIONS
------------------
3.1 Elections to Defer Compensation
-------------------------------
(a) Initial Election Period. Subject to the provisions of
-----------------------
Article II, each Eligible Employee may elect to defer an amount of Compensation
by filing an election with the Administrative Committee no later than the last
day of his or her Initial Election Period.
-5-
(b) General Rule. The amount of Compensation which an Eligible
------------
Employee may elect to defer is such Compensation earned after the time at which
the Eligible Employee elects to defer in accordance with Section 3.1(a). The
Administrative Committee may set limits and other requirements on the amount
which may be deferred as well as procedures for elections. The Administrative
Committee may change these rules from time to time. The minimum contribution
which may be made in any Plan Year by an Eligible Employee shall not be less
than $5,000, provided such minimum contribution can be satisfied from any
element of Compensation.
(c) Initial and Subsequent Elections. An Eligible Employee's
--------------------------------
initial election to defer Compensation must be made by the Effective Date and is
to be effective with respect to Compensation received in 2001.
(1) In the case of an Employee who becomes an Eligible
Employee after the Effective Date under Section 2.1(a)(2) (a new hire), such
Eligible Employee shall have 30 days from the date he or she has become an
Eligible Employee to make an initial election with respect to Compensation. Such
election shall be for Compensation earned during the remainder of the Plan Year,
in the event the Plan Year has commenced.
(2) In the case of an Employee who becomes an Eligible
Employee after the Effective Date under Section 2.1(b) (because of a raise or
promotion), such Eligible Employee may make an initial election to defer
Compensation earned in the following Plan Year during the next Open Enrollment
Period.
(3) Participants may maintain, increase, decrease or
terminate a deferral election with respect to Compensation for any subsequent
Plan Year by filing a new election in the Open Enrollment Period each year.
(4) These elections for a Plan Year are irrevocable.
(d) Committee Rules. All elections must be made in accordance
---------------
with the rules, procedures and utilizing the forms prescribed by the
Administrative Committee. The Administrative Committee may change the rules,
procedures and forms from time to time and without prior notice to Participants.
3.2 Investment Elections
--------------------
(a) The Investment Committee will establish a number of
different types of investment for the Plan. The Investment Committee may change
the investments from time to time, without prior notice to Participants.
(b) Participants may elect how their future contributions and
existing account balances will be invested in the various types of investment
and may change their elections from time to time.
(c) Although the Participants may designate the type of
investments, the Investment Committee is not bound to invest in any particular
investment. The Investment Committee will select from time to time, in its sole
and absolute discretion, commercially
-6-
available investments of each of the types offered. All investments remain the
property of the Affiliated Companies (or the rabbi trust under Section 4.2) and
are not Plan assets. Investments are used solely for purposes of measuring the
deemed earnings and losses in Participants' Accounts under Section 4.1.
(d) Selections of the types of investments, changes and
transfers must be made according to the rules and procedures of the
Administrative Committee.
(1) The Administrative Committee may prescribe rules which
may include, among other matters, limitations on the amounts which may be
transferred and procedures for electing transfers.
(2) The Administrative Committee may prescribe rules for
valuing accounts for purposes of transfers. Such rules may, in the
Administrative Committee's discretion, use averaging methods to determine values
and accrue estimated expenses.
(3) The Administrative Committee may prescribe the periods
and frequency with which Participants may change investment elections and make
transfers.
(4) The Administrative Committee may change its rules from
time to time and without prior notice to Participants.
3.3 Investment Return Not Guaranteed
--------------------------------
Investment performance under the Plan is not guaranteed at any
level. Participants may lose all or a portion of their contributions due to poor
investment performance.
ARTICLE IV
ACCOUNTS AND TRUST FUNDING
--------------------------
4.1 Accounts
--------
The Administrative Committee shall establish and maintain an
Account for each Participant under the Plan. Each Participant's Account shall be
further divided into separate subaccounts ("investment subaccounts"), each of
which corresponds to an investment type elected by the Participant pursuant to
Section 3.2(a). A Participant's Account shall be credited as follows:
(a) The Administrative Committee shall credit the investment
subaccounts of the Participant's Account with an amount equal to Compensation
deferred by the Participant in accordance with the Participant's election under
Section 3.2(b); that is, the portion of the Participant's deferred Compensation
that the Participant has elected to be deemed to be invested in a certain type
of investment shall be credited to the investment subaccount corresponding to
that investment type.
(b) The investment subaccounts of Participants' Accounts will
be credited with earnings or losses based on the earnings or losses of the
corresponding investments selected
-7-
by the Investment Committee and valued in accordance with the rules and
procedures of the Administrative Committee.
(1) The Administrative Committee may set regular valuation dates
and times and also use special valuation dates and times and procedures from
time to time under unusual circumstances and to protect the financial integrity
of the Plan.
(2) The Administrative Committee may use averaging methods to
determine values and accrue estimated expenses.
(3) The Administrative Committee may change its valuation rules
and procedures from time to time and without prior notice to Participants.
(c) In the event that a Participant elects for a given Plan Year's
deferral of Compensation to have a Scheduled Withdrawal Date, all amounts
attributed to the deferral of Compensation for such Plan Year shall be accounted
for in a manner which allows separate accounting for the deferral of
Compensation and investment gains and losses associated with such Plan Year's
deferral of Compensation.
4.2 Use of a Trust
--------------
The Company may set up a trust to hold any assets or insurance
policies under the Plan. Any trust set up will be a rabbi trust.
ARTICLE V
VESTING
-------
5.1 In General
----------
A Participant's interest in his or her Account will be nonforfeitable.
5.2 Exceptions
----------
The following exceptions apply to the vesting rule:
(a) Forfeitures on account of a lost payee. See Section 6.4.
(b) Forfeitures under an escheat law. See Section 6.4.
(c) Recapture of amounts improperly credited to a Participant's
Account or improperly paid to or with respect to a Participant.
(d) Expenses paid from a Participant's Account.
(e) Investment losses.
(f) Forfeitures resulting from early withdrawals. See Section 6.2.
-8-
ARTICLE VI
DISTRIBUTIONS
-------------
6.1 Distribution of Deferred Compensation Contributions
---------------------------------------------------
(a) Distributions Upon Early Termination.
------------------------------------
(1) Voluntary Termination. If a Participant voluntarily
---------------------
terminates employment with the Affiliated Companies before age 55 or Disability,
distribution of his or her Account will be made in a lump sum on the
Participant's Payment Date.
(2) Involuntary Termination. If a Participant involuntarily
-----------------------
terminates employment with the Affiliated Companies before age 55, distribution
of his or her Account will generally be made in quarterly installments over a 5,
10 or 15-year period, commencing on the Participant's Payment Date, in
accordance with the Participant's original election on his or her deferral
election form. Payment will be made in a lump sum if the Participant had
originally elected a lump sum, if the Account balance is $50,000 or less, or if
the Administrative Committee so requires.
(b) Distribution After Retirement, Disability or Death. In the case of
--------------------------------------------------
a Participant who separates from service with the Affiliated Companies on
account of Retirement, Disability or death and has an Account balance of more
than $50,000, the Account shall be paid to the Participant (and after his or her
death to his or her Beneficiary) in substantially equal quarterly installments
over 10 years commencing on the Participant's Payment Date.
(1) An optional form of benefit may be elected by the
Participant, on the form provided by Administrative Committee, during his or her
Initial Election Period from among those listed below:
(A) A lump sum distribution on the Participant's Payment
Date.
(B) Quarterly installments over 5 years beginning on the
Participant's Payment Date.
(C) Quarterly installments over 15 years beginning on the
Participant's Payment Date.
(2) A Participant from time to time may modify the form of
benefit that he or she has previously elected. Upon his or her separation from
service under this Section, the most recently elected form of distribution
submitted at least 12 months prior to separation will govern. If no such
election exists, distributions will be paid under the 10-year installment
method.
(3) In the case of a Participant who terminates employment with
the Affiliated Companies on account of Retirement, Disability or death with an
Account balance of $50,000 or less, the Account shall be paid to the Participant
in a lump sum distribution on the Participant's Payment Date.
-9-
(4) In general, upon the Participant's death, payment of any
remaining Account balance will be made to the Beneficiary in a lump sum on the
Payment Date. But the Beneficiary will receive any remaining installments
(starting on the Payment Date) if the Participant was receiving installments, or
if the Participant died on or after age 55 with an Account balance over $50,000
and with an effective installment payout election in place. In such cases, the
Beneficiary may still elect a lump sum payment of the remaining Account balance,
but only with the Administrative Committee's consent.
(5) The Participant's Account shall continue to be credited with
earnings pursuant to Section 4.1 of the Plan until all amounts credited to his
or her Account under the Plan have been distributed.
(c) Distribution With Scheduled Withdrawal Date. A Participant who
-------------------------------------------
has elected a Scheduled Withdrawal Date for a distribution while still in the
employ of the Affiliated Companies, will receive the designated portion of his
or her Account as follows:
(1) A Participant's Scheduled Withdrawal Date can be no earlier
than two years from the last day of the Plan Year for which the deferrals of
Compensation are made.
(2) A Participant may extend the Scheduled Withdrawal Date for
any Plan Year, provided such extension occurs at least one year before the
Scheduled Withdrawal Date and is for a period of not less than two years from
the Scheduled Withdrawal Date. The Participant shall have the right to twice
modify any Scheduled Withdrawal Date.
(3) Payments under this subsection may be in the form of a lump
sum, or 2, 3, 4 or 5-year quarterly installments. The default form will be a
lump sum. If the Account balance to be distributed is $25,000 or less, payment
will automatically be made in a lump sum. Payments will commence on the
Scheduled Withdrawal Date.
(4) In the event a Participant terminates employment with the
Affiliated Companies prior to the commencement or completion of a distribution
under this subsection, the portion of the Participant's Account associated with
a Scheduled Withdrawal Date which has not been distributed prior to such
termination shall be distributed in accordance with Section 6.1(a) and (b) along
with the remainder of the Account.
6.2 Early Non-Scheduled Distributions
---------------------------------
A Participant shall be permitted to elect an Early Distribution from
his or her Account prior to a Payment Date under Section 6.1, subject to the
following restrictions:
(a) The election to take an Early Distribution shall be made by
filing a form provided by and filed with the Administrative Committee prior to
the end of any calendar month.
(b) The amount of the Early Distribution shall equal up to 90% of his
or her Account balance.
(c) The amount described in subsection (b) above shall be paid in a
lump sum as of a date after the receipt by the Administrative Committee of the
request for a withdrawal
-10-
under this Section. The exact date will be determined by the Administrative
Committee to allow time for administrative processing.
(d) A Participant shall forfeit 10% of the amount of the requested
distribution. The Affiliated Companies shall have no obligation to the
Participant or his or her Beneficiary with respect to such forfeited amount.
(1) Example 1: A Participant requests a distribution of 100% of
---------
the Account. The Participant receives 90%. The amount forfeited is 10% of the
Account.
(2) Example 2: A Participant requests a distribution of 50% of
---------
the Account. The Participant receives 45%. The amount forfeited is 5% of the
Account.
(e) If a Participant receives an Early Distribution of either all or
a part of his or her Account, the Participant will be ineligible to participate
in the Plan for the balance of the Plan Year and the following Plan Year. All
distributions shall be made on a pro rata basis from among a Participant's
investment subaccounts.
6.3 Hardship Distribution
---------------------
A Participant shall be permitted to elect a Hardship Distribution from
his or her Account prior to a Payment Date under Section 6.1, subject to the
following restrictions:
(a) The election to take a Hardship Distribution shall be made by
filing a form provided by and filed with the Administrative Committee prior to
the end of any calendar month.
(b) The Administrative Committee shall have made a determination that
the requested distribution constitutes a Hardship Distribution.
(c) The amount determined by the Administrative Committee as a
Hardship Distribution shall be paid in a lump sum as of a date after the
approval by the Administrative Committee of the request for a withdrawal under
this Section. The exact date will be determined by the Administrative Committee
to allow time for administrative processing.
6.4 Payments Not Received At Death
------------------------------
In the event of the death of a Participant before receiving a payment,
payment will be made to his or her estate if death occurs on or after the date
of a check which has been issued by the Plan. Otherwise, payment of the amount
will be made to the Participant's Beneficiary.
6.5 Inability to Locate Participant
-------------------------------
In the event that the Administrative Committee is unable to locate a
Participant or Beneficiary within two years following the required Payment Date,
the amount allocated to the Participant's Deferral Account shall be forfeited.
If, after such forfeiture, the Participant or Beneficiary later claims such
benefit, such benefit shall be reinstated without interest or earnings for the
forfeiture period.
-11-
6.6 Committee Rules
---------------
All distributions are subject to the rules and procedures of the
Administrative Committee. The Administrative Committee may also require the use
of particular forms. The Administrative Committee may change its rules,
procedures and forms from time to time and without prior notice to Participants.
ARTICLE VII
ADMINISTRATION
--------------
7.1 Committees
----------
A Deferred Compensation Administrative Committee and an Investment
Committee (together, the "Committees"), each of one or more persons, shall be
appointed by, and serve at the pleasure of, the Board. The number of members
comprising the Committees shall be determined by the Board, which may from time
to time vary the number of members. A member of the Committees may resign by
delivering a written notice of resignation to the Board. The Board may remove
any member by delivering a certified copy of its resolution of removal to such
member. Vacancies in the membership of the Committees shall be filled promptly
by the Board.
7.2 Committee Action
----------------
Each Committee shall act at meetings by affirmative vote of a majority
of the members of that Committee. Any action permitted to be taken at a meeting
may be taken without a meeting if, prior to such action, a written consent to
the action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committees shall not vote or act upon any matter which relates solely to himself
or herself as a Participant. The Chairman or any other member or members of each
Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee of which he or she is a member.
7.3 Powers and Duties of the Administrative Committee
-------------------------------------------------
The Administrative Committee, shall enforce the Plan in accordance
with its terms, shall be charged with the general administration of the Plan,
and shall have all powers necessary to accomplish its purposes, including, but
not by way of limitation, the following:
(a) To construe and interpret the terms and provisions of this Plan;
(b) To compute and certify to the amount and kind of benefits payable
to Participants and their Beneficiaries;
(c) To maintain all records that may be necessary for the
administration of the Plan;
-12-
(d) To provide for the disclosure of all information and the filing
or provision of all reports and statements to Participants, Beneficiaries or
governmental agencies as shall be required by law;
(e) To make and publish such rules for the regulation of the Plan and
procedures for the administration of the Plan as are not inconsistent with the
terms hereof;
(f) To appoint a Plan administrator or any other agent, and to
delegate to them such powers and duties in connection with the administration of
the Plan as the Administrative Committee may from time to time prescribe
(including the power to subdelegate);
(g) To exercise powers granted the Administrative Committee under
other Sections of the Plan; and
(h) To take all actions necessary for the administration of the Plan,
including determining whether to hold or discontinue insurance policies
purchased in connection with the Plan.
7.4 Powers and Duties of the Investment Committee
---------------------------------------------
The Investment Committee, shall have all powers necessary to
accomplish its purposes, including, but not by way of limitation, the following:
(a) To select types of investment and the actual investments against
which earnings and losses will be measured;
(b) To oversee the rabbi trust; and
(c) To appoint agents, and to delegate to them such powers and duties
in connection with its duties as the Investment Committee may from time to time
prescribe (including the power to subdelegate).
7.5 Construction and Interpretation
-------------------------------
The Administrative Committee shall have full discretion to construe
and interpret the terms and provisions of this Plan and to remedy possible
inconsistencies and omissions. The Administrative Committee's interpretations,
constructions and remedies shall be final and binding on all parties, including
but not limited to the Affiliated Companies and any Participant or Beneficiary.
The Administrative Committee shall administer such terms and provisions in a
uniform and nondiscriminatory manner and in full accordance with any and all
laws applicable to the Plan.
7.6 Information
-----------
To enable the Committees to perform their functions, the Affiliated
Companies adopting the Plan shall supply full and timely information to the
Committees on all matters relating to the Compensation of all Participants,
their death or other events which cause
-13-
termination of their participation in this Plan, and such other pertinent facts
as the Committees may require.
7.7 Committee Compensation, Expenses and Indemnity
----------------------------------------------
(a) The members of the Committees shall serve without compensation
for their services hereunder.
(b) The Committees are authorized to employ such legal counsel as
they may deem advisable to assist in the performance of their duties hereunder.
(c) To the extent permitted by ERISA and applicable state law, the
Company shall indemnify and hold harmless the Committees and each member
thereof, the Board and any delegate of the Committees who is an employee of the
Affiliated Companies against any and all expenses, liabilities and claims,
including legal fees to defend against such liabilities and claims arising out
of their discharge in good faith of responsibilities under or incident to the
Plan, other than expenses and liabilities arising out of willful misconduct.
This indemnity shall not preclude such further indemnities as may be available
under insurance purchased by the Company or provided by the Company under any
bylaw, agreement or otherwise, as such indemnities are permitted under ERISA and
state law.
7.8 Disputes
--------
(a) Claims
------
A person who believes that he or she is being denied a benefit to
which he or she is entitled under this Plan (hereinafter referred to as
"Claimant") must file a written request for such benefit with the Administrative
Committee, setting forth his or her claim.
(b) Claim Decision
--------------
Upon receipt of a claim, the Administrative Committee shall advise the
Claimant that a reply will be forthcoming within ninety (90) days and shall, in
fact, deliver such reply within such period. The Administrative Committee may,
however, extend the reply period for an additional ninety (90) days for special
circumstances.
If the claim is denied in whole or in part, the Administrative
Committee shall inform the Claimant in writing, using language calculated to be
understood by the Claimant, setting forth: (A) the specific reason or reasons
for such denial; (B) specific references to pertinent provisions of this Plan on
which such denial is based; (C) a description of any additional material or
information necessary for the Claimant to perfect his or her claim and an
explanation of why such material or such information is necessary; (D)
appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and (E) the time limits for requesting a review
under subsection (c).
-14-
(c) Request For Review
------------------
Within sixty (60) days after the receipt by the Claimant of the
written opinion described above, the Claimant may request in writing that the
Administrative Committee review the initial claim determination. The Claimant or
his or her duly authorized representative may, but need not, review the
pertinent documents and submit issues and comments in writing for consideration
by the Administrative Committee. If the Claimant does not request a review
within such sixty (60) day period, he or she shall be barred and estopped from
challenging the initial determination.
(d) Review of Decision
------------------
Within sixty (60) days after the Administrative Committee's receipt of
a request for review, after considering all materials presented by the Claimant,
the Administrative Committee will inform the Participant in writing, in a manner
calculated to be understood by the Claimant, the decision setting forth the
specific reasons for the decision containing specific references to the
pertinent provisions of this Plan on which the decision is based. If special
circumstances require that the sixty (60) day time period be extended, the
Administrative Committee will so notify the Claimant and will render the
decision as soon as possible, but no later than one hundred twenty (120) days
after receipt of the request for review.
(e) Limitation on Claims
--------------------
No action may be brought in court on a claim for benefits under this
Plan after the later of:
(1) Two years after the claim arose, or
(2) One year after the decision on appeal under this Section (or
one year after the expiration of the time to take an appeal if no appeal is
taken).
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Unsecured General Creditor
--------------------------
Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of the Affiliated Companies. No assets of the Affiliated
Companies shall be held in any way as collateral security for the fulfilling of
the obligations of the Affiliated Companies under this Plan. Any and all of the
Affiliated Companies' assets shall be, and remain, the general unpledged,
unrestricted assets of the Affiliated Companies. The obligation under the Plan
of the Affiliated Companies adopting the Plan shall be merely that of an
unfunded and unsecured promise of those Affiliated Companies to pay money in the
future, and the rights of the Participants and Beneficiaries shall be no greater
than those of unsecured general creditors. It is the intention of the Affiliated
Companies that this Plan be unfunded for purposes of the Code and for purposes
of Title I of ERISA.
-15-
8.2 Restriction Against Assignment
------------------------------
(a) The Company shall pay all amounts payable hereunder only to the
person or persons designated by the Plan and not to any other person or
corporation. No part of a Participant's Accounts shall be liable for the debts,
contracts, or engagements of any Participant, his or her Beneficiary, or
successors in interest, nor shall a Participant's Accounts be subject to
execution by levy, attachment, or garnishment or by any other legal or equitable
proceeding, nor shall any such person have any right to alienate, anticipate,
sell, transfer, commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever. If any Participant, Beneficiary or successor
in interest is adjudicated bankrupt or purports to anticipate, alienate, sell,
transfer, commute, assign, pledge, encumber or charge any distribution or
payment from the Plan, voluntarily or involuntarily, the Administrative
Committee, in its discretion, may cancel such distribution or payment (or any
part thereof) to or for the benefit of such Participant, Beneficiary or
successor in interest in such manner as the Administrative Committee shall
direct.
(b) The actions considered exceptions to the vesting rule under
Section 5.2 will not be treated as violations of this Section.
8.3 Restriction Against Double Payment
----------------------------------
If a court orders an assignment of benefits despite the previous
Section, the affected Participant's benefits will be reduced accordingly. The
Administrative Committee may use any reasonable actuarial assumptions to
accomplish the offset under this Section.
8.4 Withholding
-----------
There shall be deducted from each payment made under the Plan or any
other Compensation payable to the Participant (or Beneficiary) all taxes which
are required to be withheld by the Affiliated Companies in respect to such
payment or this Plan. The Affiliated Companies shall have the right to reduce
any payment (or compensation) by the amount of cash sufficient to provide the
amount of said taxes.
8.5 Amendment, Modification, Suspension or Termination
--------------------------------------------------
The Administrative Committee may amend, modify, suspend or terminate
the Plan in whole or in part, except that no amendment, modification, suspension
or termination may reduce a Participant's Account balance below its dollar value
as determined under Section 4.1(b) immediately prior to the amendment. The
preceding sentence is not intended to protect Participants against investment
losses. In the event that this Plan is terminated, the amounts allocated to a
Participant's Account shall be distributed to the Participant or, in the event
of his or her death, to his or her Beneficiary in a lump sum.
8.6 Governing Law
-------------
To the extent not preempted by ERISA, this Plan shall be construed,
governed and administered in accordance with the laws of Delaware.
-16-
8.7 Receipt or Release
------------------
Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committees and the Affiliated
Companies. The Administrative Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect.
8.8 Administrative Delays
---------------------
If the amount of any payment cannot be determined by the date it is
supposed to be paid, or if it is not possible to make payments on time because
the Administrative Committee cannot find the payee, or adequate information is
not available to make the distribution, or the payee has failed to file the
applicable forms with the Administrative Committee, or because of other legal,
financial or administrative obstacles, payments may be made no later than 60
days after the date payment becomes possible.
8.9 Disputes About Payee
--------------------
In the event that the Administrative Committee determines that there
is some uncertainty as to whom any Plan payment is due, the Administrative
Committee is authorized to delay payment, seek agreements from the interested
parties, make payment to an appropriate judicial forum and allow the court to
determine the identity of the proper payee, and/or take any other necessary or
appropriate steps to protect the Plan and the interested parties.
8.10 Incorrect Payment of Benefits
-----------------------------
If the Administrative Committee determines in its full discretion that
the Plan made an incorrect payment of benefits, and that a correction is
necessary or desirable under the law, then:
(a) If the Plan makes an overpayment of the amount of any benefits
due any payee under the Plan, the Plan may recover the amounts either by
requiring the payee to return the excess to the Plan, by reducing any future
Plan payments to the payee, or by any other method deemed reasonable by the
Administrative Committee.
(b) If the Plan makes a late payment or an underpayment of the amount
of any benefits due any payee under the Plan, correct payment will be made as
soon as possible after the late payment or underpayment is discovered.
8.11 Payments on Behalf of Persons Under Incapacity
----------------------------------------------
In the event that any amount becomes payable under the Plan to a
person who, in the sole judgment of the Administrative Committee, is considered
by reason of physical or mental condition to be unable to give a valid receipt
therefore, the Administrative Committee may direct that such payment be made to
any person found by the Committee, in its sole judgment, to have assumed the
care of such person. Any payment made pursuant to such
-17-
determination shall constitute a full release and discharge of the
Administrative Committee and the Company.
8.12 Limitation of Rights and Employment Relationship
------------------------------------------------
Neither the establishment of the Plan and Trust nor any modification
thereof, nor the creating of any fund or account, nor the payment of any
benefits shall be construed as giving to any Participant, or Beneficiary or
other person any legal or equitable right against the Affiliated Companies or
any trustee except as provided in the Plan and any trust agreement; and in no
event shall the terms of employment of any Employee or Participant be modified
or in any way be affected by the provisions of the Plan and any trust agreement.
8.13 Headings
--------
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
-18-
FIRST AMENDMENT TO THE
NORTHROP GRUMMAN
DEFERRED COMPENSATION PLAN
The following changes to the Northrop Grumman Deferred Compensation Plan
effective December 1, 2000 (the "Plan"), as described below, are intended to
provide for the acceptance of a transfer of certain liabilities from the
Northrop Grumman Executive Deferred Compensation Plan, effective March 1, 2001.
1. A new Appendix A is added as follows:
APPENDIX A
TRANSFER OF LIABILITIES
-----------------------
A.1 Background
----------
Effective March 1, 2001, all liabilities under the Northrop
Grumman Executive Deferred Compensation Plan other than the Estate
Enhancement Program Account, were transferred to this Plan. This Appendix
describes the treatment of those liabilities (plus earnings) ("Transferred
Liabilities") and the Participant to whom those liabilities are owed
("Transferred Participant").
A.2 Treatment of Transferred Liabilities
------------------------------------
The Transferred Liabilities will generally be treated under the Plan
like Compensation deferred in accordance with Article III.
A.3 Investments
-----------
The Transferred Participant may make investment elections for the
Transferred Liabilities in accordance with Section 3.2. Section 3.3 will also
apply.
A.4 Distributions
-------------
Distributions of amounts corresponding to the Transferred Liabilities
will generally be made in accordance with the provisions of Article VI. The
following exceptions and special rules apply:
(a) Section 6.1.
-----------
(1) For purposes of Sections 6.1(a)(2) and 6.1(b)(1), the
Transferred Participant will be deemed to have made an election of 5 or 10-year
installments corresponding to his elections of 5 or 10-year installments under
Section 9(b)(2) of the Northrop Grumman Executive Deferred Compensation Plan.
(2) The Transferred Participant may utilize Section 6.1(b)(2) to
vary the form of his distribution.
(3) Distributions under Section 6.1(c) are not available.
2
(b) Section 6.2. The Early Non-Scheduled Distribution election
-----------
is available. The Transferred Liabilities will be aggregated with any other
amounts in the Transferred Participant's Account for purposes of distributions
under Section 6.2.
(c) Sections 6.3-6.6. These Sections are fully applicable.
----------------
A.5 Other Provisions
----------------
The Transferred Liabilities and the Transferred Participant will
be fully subject to the provisions of Articles IV, V, VII and VIII.
3
SECOND AMENDMENT TO THE
NORTHROP GRUMMAN DEFERRED COMPENSATION PLAN
This amendment to the Northrop Grumman Deferred Compensation Plan effective
December 1, 2000 ("Plan"), as described below, changes the Plan to account for
the acquisition of Litton Industries, Inc. and the associated corporate
reorganization. The changes in this amendment are effective upon adoption.
1. A new Section 8.14 is added to read as follows:
8.14 2001 Reorganization
-------------------
Effective as of the 2001 Reorganization Date in (d), the corporate
structure of Northrop Grumman Corporation and its affiliates was modified.
Effective as of the Litton Acquisition Date in (e), Litton Industries, Inc. was
acquired and became a subsidiary of the Northrop Grumman Corporation (the
"Litton Acquisition").
(a) The former Northrop Grumman Corporation was renamed Northrop Grumman
Systems Corporation. It became a wholly-owned subsidiary of the new parent of
the reorganized controlled group.
(b) The new parent corporation resulting from the restructuring is called
Northrop Grumman Corporation. All references in this Plan to the former Northrop
Grumman Corporation and its Board of Directors now refer to the new parent
corporation bearing the same name and its Board of Directors.
(c) As of the 2001 Reorganization Date, the new Northrop Grumman
Corporation became the sponsor of this Plan, and its Board of Directors assumed
authority over this Plan.
(d) 2001 Reorganization Date. The date as of which the corporate
------------------------
restructuring described in (a) and (b) occurred.
(e) Litton Acquisition Date. The date as of which the conditions for the
-----------------------
completion of the Litton Acquisition were satisfied in accordance with the
"Amended and Restated Agreement and Plan of Merger Among Northrop Grumman
Corporation, Litton Industries, Inc., NNG, Inc., and LII Acquisition Corp."
2
THIRD AMENDMENT TO THE
NORTHROP GRUMMAN
DEFERRED COMPENSATION PLAN
The following changes to the Northrop Grumman Deferred Compensation Plan
effective December 1, 2000 (the "Plan"), as described below, are intended to
provide for the acceptance of a transfer of certain liabilities from certain
nonqualified deferred compensation plans of Aerojet-General Corporation,
effective as of the Closing Date specified in the April 19, 2001 Asset Purchase
Agreement by and Between Aerojet-General Corporation and Northrop Grumman
Systems Corporation.
1. A new Appendix B is added as follows:
APPENDIX B
AEROJET-GENERAL LIABILITIES
---------------------------
B.1 Background
----------
(a) Effective as of the Closing Date specified in the April 19,
2001 Asset Purchase Agreement by and Between Aerojet-General Corporation
and Northrop Grumman Systems Corporation (the "APA"), certain liabilities
("Transferred Liabilities") under the Benefits Restoration Plan for
Salaried Employees of GenCorp Inc. and Certain Subsidiary Companies and the
GenCorp Inc. and Participating Subsidiaries Deferred Bonus Plan were
transferred to this Plan.
(b) The transfer took place pursuant to section 10.6 of the APA,
under which Northrop Grumman acquired the Azusa and Colorado Operations
units from Aerojet-General Corporation. That section reads:
* * * * *
10.6 Unfunded Deferred Compensation
------------------------------
(a) Subject to legal requirements for employee
acquiescence, as of the effective time of the Closing, the Purchaser
shall assume any and all obligations of the Seller to pay any and all
unfunded deferred compensation as set forth on Schedule 10.6 for all
Transferring Employees, provided such benefits are adequately
reflected on the Balance Sheet.
(b) The Seller shall retain any and all legal obligation to
pay any and all unfunded deferred compensation for all Aerojet
Employees that are not Transferring Employees.
* * * * *
(c) This Appendix is intended to effectuate the assumption of
certain of the liabilities contemplated by section 10.6 of the APA. It
describes the treatment of those liabilities (plus earnings) and the
Participants to whom those liabilities are owed ("Transferred
Participants").
2
(d) The only liabilities assumed by this Plan are:
(1) those from the GenCorp Inc. and Participating
Subsidiaries Deferred Bonus Plan, and
(2) those liabilities under the Benefits Restoration Plan
for Salaried Employees of GenCorp Inc. and Certain Subsidiary Companies
which represent supplements with respect to an Aerojet defined contribution
plan. No liabilities are assumed which represent supplements with respect
to an Aerojet defined benefit plan.
(e) The assumed liabilities will be represented by starting
Account balances for the Transferred Participants, determined in the
discretion of the Administrative Committee.
B.2 Treatment of Transferred Liabilities
------------------------------------
The Transferred Liabilities will generally be treated under the
Plan like Compensation deferred in accordance with Article III.
B.3 Investments
-----------
The Transferred Participants may make investment elections for
the Transferred Liabilities in accordance with Section 3.2. Section 3.3
will also apply.
B.4 Distributions
-------------
Distributions of amounts corresponding to the Transferred
Liabilities will generally be made in accordance
3
with the provisions of Article VI. The following exceptions and special
rules apply:
(a) Section 6.1.
-----------
(1) For purposes of Sections 6.1(a)(2) and 6.1(b)(1), the
Transferred Participants will be deemed to have made an election of 10-year
installments.
(2) The Transferred Participants may utilize Section
6.1(b)(2) to vary the form of their distributions.
(3) Distributions under Section 6.1(c) are not available.
(b) Section 6.2. The Early Non-Scheduled Distribution election
-----------
is available. The Transferred Liabilities will be aggregated with any other
amounts in the Transferred Participants' Accounts for purposes of
distributions under Section 6.2.
(c) Sections 6.3-6.6. These Sections are fully applicable.
----------------
B.5 Other Provisions
----------------
The Transferred Liabilities and the Transferred Participants will
be fully subject to the provisions of Articles IV, V, VII and VIII.
4
CONSULTANT CONTRACT
-------------------
This Agreement for consulting services is between NORTHROP GRUMMAN
CORPORATION, a Delaware corporation, whose principal place of business is
located at 1840 Century Park East, Los Angeles, California 90067 ("NGC") and
Ralph D. Crosby, Jr. of 3500 Drexel Drive, Highland Park, Texas 91604.
I. ENGAGEMENT
----------
NGC hereby retains Consultant to provide the services described in
Attachment A hereto. Consultant shall serve at NGC's call. Consultant's
principal point of contact at NGC with respect to the specific nature and scope
of the services to be provided hereunder shall be Kent Kresa NGC's Chairman and
Chief Executive Officer. Consultant shall submit monthly written reports to NGC,
in the format described in Attachment B hereto, setting forth the actions taken
on behalf of NGC and provide such other reports as NGC may reasonably require.
II. PLACE OF ENGAGEMENT
-------------------
Consultant shall perform the services called for under this Agreement in
such places and at such times as NGC may reasonably require.
III. TERM OF ENGAGEMENT
------------------
The term of this Agreement shall be for a period of one year commencing on
January 12, 2002 and terminating on January 11, 2003. This Agreement may be
renewed or extended for such time as NGC and the Consultant may agree upon in
writing.
IV. COMPENSATION
------------
A. Fee. NGC shall pay Consultant and Consultant shall accept from NGC in
----
full payment for services hereunder, compensation at the rate of one thousand
dollars per day ($1000/day) for each day of service performed. Payment shall be
made only upon submittal of a proper invoice and only to the extent that
Consultant satisfactorily performs services pursuant to this Agreement and
substantiates such performance in the monthly activity report required by
Attachment B. In the event services are not required or performed in a given
month, NGC shall be
under no obligation to pay any compensation for that month except as otherwise
provided herein. If Consultant fails to substantiate any invoice for services,
NGC shall have no obligation to compensate Consultant for such claimed services.
B. Expenses. NGC shall reimburse Consultant for all reasonable and
---------
necessary business expenses incurred by Consultant in connection with the
rendering of services hereunder provided that all such expenses are approved in
advance by Kent Kresa or his designee. Claims for expenses must be in accordance
with NGC's established policies and limitations pertaining to allowable expenses
and documented pursuant to the procedures applicable to NGC's employees.
C. Maximum Compensation. Notwithstanding any other provisions of this
---------------------
Agreement to the contrary, NGC shall not be obligated to request or to pay
Consultant for any minimum amount of services, and in no event shall NGC be
obligated during the term of this Agreement for consulting fees and expenses of
more than thirty thousand dollars ($30,000.00).
D. Full Extent Of Compensation. Unless otherwise specifically stated in
----------------------------
writing, this Section IV describes the full extent of compensation Consultant
shall receive under this Agreement and Consultant shall not be entitled by
virtue of this Agreement to be paid a commission or to participate in any
insurance, saving, retirement or other benefit programs, including, without
limitation, stock ownership plans offered by NGC to its employees, nor shall
this Agreement in any way modify any other Agreement that Consultant may have
with NGC.
E. Warranty. Consultant certifies and warrants that in the course of
---------
performing services under this Agreement, no payments will be made to government
officials or customer representatives, that no government official or customer
representative has any direct or indirect investment interest or interest in the
revenues or profits of Consultant, and that no expenditure for other than lawful
purposes will be made.
F. Exclusion Of Lobbying Costs From Overhead Rates. NGC is prohibited from
------------------------------------------------
charging directly or indirectly, costs associated with lobbying activities to
its contracts with the United States Government. Unallowable costs associated
with lobbying activities are defined at Federal Acquisition Regulations (FAR)
31.205-22, effective as of the date of this Agreement. Consultant agrees that in
the event that consultant performs lobbying activities under this Agreement,
Consultant shall provide NGC with a detailed accounting of time expended,
individual agency/congressional employees contacted, and NGC programs discussed
in the required activity report.
2
V. TRADE SECRETS AND PROPRIETARY INFORMATION
-----------------------------------------
A. Disclosure To Third Parties Prohibited. Consultant shall not divulge,
---------------------------------------
disclose or communicate any information concerning any matters affecting or
relating to the business of NGC without the express written consent of NGC. The
terms of this section shall remain in full force and effect after the
termination or expiration of this Agreement.
B. Ideas, Improvements and Inventions. Any and all ideas, improvements
-----------------------------------
and inventions conceived of, developed, or first reduced to practice in the
performance of work hereunder for NGC shall become the exclusive property of NGC
and ideas and developments accruing therefrom shall all be fully disclosed to
NGC and shall be the exclusive property of NGC and may be treated and dealt with
by NGC as such without payment of further consideration than is hereinabove
specified. Consultant shall preserve such ideas, improvements and inventions as
confidential during the term of the contract and thereafter and will execute all
papers and documents necessary to vest title to such ideas, developments,
information, data, improvements and inventions in NGC and to enable NGC to apply
for and obtain letters patent on such ideas, developments, information, data,
improvements and inventions in any and all countries and to assign to NGC the
entire right, title and interest thereto.
C. Notes, Memoranda, Reports and Data. Consultant agrees that the
-----------------------------------
original and all copies of notes, memoranda, reports, findings or other data
prepared by Consultant in connection with the services performed hereunder shall
become the sole and exclusive property of NGC.
D. Disclosure of Confidential or Proprietary Information of Third Parties
----------------------------------------------------------------------
Prohibited. Consultant will not disclose to NGC or induce NGC to use any secret
- -----------
process, trade secret, or other confidential or proprietary knowledge or
information belonging to others, including but not limited to the United States.
Such information includes but is not limited to information relating to bids,
offers, technical proposals, responses to requests for procurement, rankings of
competitors and other similar procurement sensitive information.
VI. PRESERVATION OF TRADE NAMES, TRADE MARKS AND PATENT RIGHTS
----------------------------------------------------------
All trade names, trade marks and patent rights of NGC pertaining to NGC
products, including the names "Northrop," "Grumman" and "Northrop Grumman
Corporation" shall remain
3
the sole property of NGC and Consultant agrees to do all things necessary to
protect and preserve such trade names, trade marks and patent rights from claims
by other persons or entities.
VII. COOPERATION WITH NGC
--------------------
During and after the expiration of this Agreement, Consultant shall
cooperate with NGC in regard to any matter, dispute or controversy in which NGC
is involved, or may become involved and of which Consultant may have knowledge.
Such cooperation shall be subject to further agreement providing for legally
appropriate compensation.
VIII. INDEMNIFICATION
---------------
Consultant shall indemnify, defend and hold NGC harmless from any and all
claims of third parties for loss or damage arising out of or relating to
Consultant's activities or operations or omissions, including those of the
Consultant's employees, pursuant to this Agreement. Such indemnification shall
survive the expiration or termination of this Agreement.
IX. INDEPENDENT CONTRACTOR
----------------------
Consultant shall render all services hereunder as an independent
contractor and shall not hold out himself or herself as an agent of NGC. Nothing
herein shall be construed to create or confer upon Consultant the right to make
contracts or commitments for or on behalf of NGC.
X. TAXES
-----
Consultant shall pay all taxes due with respect to the compensation paid
hereunder.
XI. OBSERVANCE OF APPLICABLE LAWS AND REGULATIONS
---------------------------------------------
A. United States Laws. Consultant shall comply with and do all things
-------------------
necessary for NGC to comply with United States laws and regulations and express
policies of the United States Government, including but not limited to the
requirements of the Foreign Corrupt Practices Act, 15 U.S.C. Section 78 dd-1 et
--
seq., the Federal Acquisition Regulations, 48 CFR section 1.101 et seq.,
- ---- -- ----
("FAR"), the International Traffic in Arms Regulations, 22 CFR Parts 120 through
130 and applicable regulations; the Byrd Amendment (31 U.S.C. Section 1352) and
applicable regulations; the Office of Federal Procurement Policy Act (41 U.S.C.
Section 423) and applicable
4
regulations; and the DoD Joint Ethics Regulation (DoD 5500.7-R). No part of any
compensation or fee paid by NGC will be used directly or indirectly to make any
kickbacks to any person or entity, or to make payments, gratuities, emoluments
or to confer any other benefit to an official of any government or any political
party. Consultant shall not seek, nor relay to NGC, any classified, proprietary
or source selection information not generally available to the public.
Consultant shall also comply with and do all things necessary for NGC to comply
with provisions of contracts between agencies of the United States Government or
their contractors and NGC that relate either to patent rights or the
safeguarding of information pertaining to the security of the United States.
This entire Agreement and/or the contents thereof may be disclosed to the United
States Government.
B. No Selling Agency Employed. Consultant further represents and warrants
---------------------------
that no person or selling agency has been or will be employed or retained to
solicit or secure any contract, including but not limited to a United States
Government contract, upon an agreement or understanding for a commission,
percentage, brokerage, or contingent fee, excepting bona fide employees or bona
fide established commercial or selling agencies maintained by the Consultant for
the purpose of receiving business. In the event of a breach or violation of this
warranty, NGC shall have the right to annul this Agreement without liability or
in its discretion to deduct from the fee or consideration, or otherwise recover,
the full amount of such commission, percentage, brokerage or contingent fee.
C. State Law And Regulations. Consultant shall comply with and do all
--------------------------
things necessary for Consultant and NGC each to comply with all laws and
regulations of the State of California and any other state, including Texas and
the District of Columbia, in which services hereunder are or may be rendered.
D. Maintenance Of Time And Expense Records. Consultant shall maintain
----------------------------------------
appropriate time and expense records pertaining to the services performed under
this Agreement. Said records shall be subject to examination and audit by NGC
and the United States Government until notified by NGC in writing, that the
records no longer need to be maintained.
E. Certification. This Agreement is made in material reliance upon the
--------------
representations and warranties made by Consultant. The effectiveness of this
Agreement is contingent upon and will not commence until receipt by NGC of the
certifications set forth in Attachment C hereto. In the event that NGC has
reason to believe that these certifications are incorrect, NGC
5
may treat this Agreement as being null and void or may terminate this Agreement
pursuant to Section XVI.
F. Standards of Business Conduct. Consultant hereby acknowledges that he
------------------------------
has received a copy of the NGC Standards of Business Conduct (or amendment
thereof) and agrees to conduct his activities for or on behalf of NGC in
accordance with such principles as a condition of this Agreement.
XII. ASSIGNMENT OF RIGHTS
--------------------
This Agreement and the rights, benefits, duties and obligations contained
herein may not be assigned or otherwise transferred in any manner to third
parties without the express written approval of NGC. Any such assignment or
transfer without prior approval of NGC will be null, void and without effect.
XIII. MODIFICATION
------------
No waiver or modification of this Agreement or of any covenant, condition,
or limitation herein shall be valid and enforceable unless such waiver or
modification is in writing.
XIV. USE OR EMPLOYMENT OF THIRD PARTIES
----------------------------------
Consultant shall not utilize or employ any third party, individual or
entity, in connection with Consultant's performance of services under this
Agreement without the express written approval of NGC.
XV. CONFLICTS OF INTEREST
---------------------
No business or legal conflicts of interest shall exist between services
performed or to be performed by Consultant on behalf of NGC and by Consultant on
behalf of any other client. The identity of Consultant's directorships, other
employment and clients shall be fully disclosed in the Certification, Attachment
D.
6
XVI. COVENANT NOT TO COMPETE
-----------------------
Consultant shall not directly or indirectly engage in any activities
designed to deprive or which may have the effect of depriving NGC of the good
will of customers or potential customers of its products and services. Further,
Consultant shall not, during the term of this Agreement, and for a period of
twelve (12) months after expiration or termination of this Agreement, represent,
act as representative for, or market or sell, directly or indirectly, products
competing with NGC products and services.
XVII. TERMINATION
-----------
A. Thirty Days Notice. Either party may terminate this Agreement upon
-------------------
thirty days written notice to the other. Except as otherwise provided herein, in
the event of termination, Consultant shall be entitled to compensation until the
expiration of the stated notice period.
B. Violation Of Term Or Condition. Notwithstanding the foregoing, in the
-------------------------------
event of a violation by Consultant of any term or condition, express or implied,
of this Agreement or of any federal or state law or regulation pertaining to or
arising from Consultant's performance of services under this Agreement, NGC may,
in its discretion, terminate this Agreement immediately, without notice and in
such event, Consultant shall only be entitled to compensation up to the time of
such violation.
C. Bankruptcy. Notwithstanding the foregoing, in the event that
-----------
Consultant is adjudicated a bankrupt or petitions for relief under bankruptcy,
reorganization, receivership, liquidation, compromise or other arrangement or
attempts to make an assignment for the benefit of creditors, this Agreement
shall be deemed terminated automatically, without requirement of notice, without
further liability or obligation to NGC.
XVIII. SEVERABILITY OF PROVISIONS
--------------------------
All provisions contained herein are severable and in the event any of
them are held to be invalid by any competent court, this Agreement shall be
interpreted as if such invalid provision was not contained herein.
7
XIX. AVAILABILITY OF EQUITABLE REMEDIES
----------------------------------
Consultant understands and agrees that any breach or evasion of any of the
terms of this Agreement will result in immediate and irreparable injury to NGC
and will entitle NGC to all legal and equitable remedies including, without
limitation, injunction or specific performance.
XX. GOVERNING LAW
-------------
This Agreement and the performance hereunder shall be governed by and
construed in accordance with the laws of the State of Texas (excluding any
conflicts of laws provisions) which shall be the exclusive applicable law.
XXI. SETTLEMENT OF DISPUTES
----------------------
A. NGC and Consultant hereby consent to the resolution by arbitration of
all disputes, issues, claims or controversies arising out of or in connection
with this Agreement, that NGC may have against Consultant, or that Consultant
may have against NGC, or against its officers, directors, employees or agents
acting in their capacity as such. Each party's promise to resolve all such
claims, issues, or disputes by arbitration in accordance with this Agreement
rather than through the courts, is consideration for the other party's like
promise. It is further agreed that the decision of an arbitrator on any issue,
dispute, claim or controversy submitted for arbitration, shall be final and
binding upon the NGC and Consultant and that judgment may be entered on the
award of the arbitrator in any court having proper jurisdiction.
B. Except as otherwise provided herein or by mutual agreement of the
parties, any arbitration shall be administered in accordance with the
then-current Model Arbitration Procedures of the American Arbitration
Association (AAA) before an arbitrator who is licensed to practice law in the
state in which the arbitration is convened. The arbitration shall be held in
Dallas, Texas or at any other location mutually agreed upon by the parties.
C. The parties shall attempt to agree upon the arbitrator. If the parties
cannot agree on the arbitrator, the AAA shall then provide the names of nine (9)
arbitrators experienced in business employment matters along with their resumes
and fee schedules. Each party may strike all names on the list it deems
unacceptable. If more than one common name remains on the list of all parties,
the parties shall strike names alternately until only one remains. The party who
did
8
not initiate the claim shall strike first. If no common name remains on the
lists of the parties, the AAA shall furnish an additional list until an
arbitrator is selected.
D. The arbitrator shall interpret this Agreement, and any applicable NGC
policy or rules and regulations, any applicable substantive law (and the law of
remedies, if applicable) of the state of Texas, or applicable federal law. In
reaching his or her decision, the arbitrator shall have no authority to change
or modify any lawful NGC policy, rule or regulation, or this Agreement. The
arbitrator, and not any federal, state or local court or agency, shall have
exclusive and broad authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement,
including, but not limited to, any claim that all or any part of this Agreement
is voidable.
XXII. NOTICE
------
Any notice to be given hereunder shall be in writing, mailed by
certified or registered mail with return receipt requested addressed to NGC:
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA 90067
Attn.: Fritz Baskett
or to Consultant:
Ralph D. Crosby, Jr.
3500 Drexel Drive
Highland Park, Texas 91604
or to such other address as may have been furnished at the date of mailing
either by NGC or Consultant in writing.
XXIII. COMPLETE AGREEMENT
------------------
This Agreement constitutes the entire agreement of the parties with
respect to the engagement of Consultant by NGC and supersedes any and all other
agreements between the parties. The parties stipulate and agree that neither of
them has made any representation with respect to this Agreement except that such
representations are specifically set forth herein. The
9
parties acknowledge that any other payments or representations that may have
been made are of no effect and that neither party has relied on such payments or
representations in connection with this Agreement or the performance of services
contemplated herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
entered into and executed as set forth below.
NORTHROP GRUMMAN CORPORATION
/s/ KENT KRESA
---------------------------------------
Kent Kresa
Chairman and Chief Executive Officer
Date: 11 Jan 02
---------------------------------
CONSULTANT
/s/ RALPH D. CROSBY, JR.
---------------------------------------
Ralph D. Crosby, Jr.
Date: January 7, 2002
---------------------------------
TIN: __________________________________
10
ATTACHMENT A
STATEMENT OF WORK
Ralph D. Crosby, Jr.
When requested, Consultant shall advise NGC on issues relating to matters
he was involved with while an employee of NGC, as well as issues relating to
business development, new business proposals and business opportunity
evaluations.
ATTACHMENT B
MONTHLY ACTIVITY REPORT FORMAT
Ralph D. Crosby, Jr.
As a Consultant, you are required to submit a written activity report each
month directly to the Northrop Grumman Corporation ("NGC") employee identified
in Article I of the Agreement. Each activity report must include the following
information:
1. A detailed accounting of the amount of time spent by you on behalf of
NGC since your last Activity Report, itemized each hour or by fraction of an
hour worked, reflecting the work performed during each periodic segment and the
individual who performed it.
2. The identity of all persons with whom you met or discussed business on
behalf of NGC, including a description of the business or government affiliation
of the individual, as well as the specific position or rank of each person.
3. A statement of the subject matter of all meetings and discussions in
which you participated on behalf of NGC, including all NGC programs discussed in
connection with any activities performed.
4. An invoice, on a separate page, clearly identifying the Agreement,
specifying the time period covered, summarizing the fees and expenses claimed
for that time period, and enclosing the original receipts for all claimed
expenses. Consultant must certify on each invoice that the charges for the
period covered by it do not include any charges for assignments not authorized
by the Agreement. A suggested certification is as follows:
"The undersigned certifies that the payment requested herein is
correct and just, and that payment has not been received. The
undersigned certifies that this invoice does not include any
charges for services not authorized by the Agreement and,
specifically, that no services have been performed involving the
influence or attempt to influence any Federal agency officer
or employee, any Member of Congress, officer or employee of
Congress, or employee of a Member of Congress, in connection
with any Federal action as defined in the Byrd Amendment
(including the awarding, extension, continuation, renewal,
amendment, or modification of any Federal contract); and that
no services have been performed regarding advice, information,
direction or assistance to NGC for a Federal contract."
Unless your services are fully described and accurately recorded in this
fashion, your fees will not be paid by NGC. You are not authorized to engage in
any activity covered by the Byrd Amendment (31 U.S.C. Section 1352), but if you
do so you must clearly identify it as such in your activity report, and the
activity you describe shall be treated as a material representation of fact upon
which NGC shall rely in preparing any certifications and/or disclosures required
by the Byrd Amendment, 31 USC Section 1352. Any and all liability arising from
an erroneous representation shall be borne solely by you.
2
ATTACHMENT C
------------
CERTIFICATION
-------------
Ralph D. Crosby, Jr.
The undersigned, Ralph D. Crosby, Jr., ("Consultant"), hereby certifies,
represents and warrants the following:
1. In past dealings with Northrop Grumman Corporation ("NGC") or other clients,
Consultant has complied with all applicable laws, rules, regulations and express
policies of the United States and the State or territory in which services were
performed.
2. In performing the services under this Agreement, Consultant will comply with
all applicable laws, rules, regulations and express policies of the United
States and the State or territory in which services will be performed.
3. There have been no kick-backs or other payments made, either directly or
indirectly, to any NGC director, employee or consultant or to the family of any
NGC director, employee or consultant.
4. No kick-backs or other payments will be made, either directly or indirectly,
to any NGC director, employee or consultant or to the family of any NGC
director, employee or consultant.
5. Consultant has not used and will not use any part of the compensation paid by
NGC to make payments, gratuities, emoluments or to confer any other benefit to
an official of any government, or any political party, or official of any
political party.
6. No person or selling agency has been or will be employed or retained to
solicit or secure any contract, including but not limited to a United States
government contract, upon an agreement or understanding for a commission,
percentage, brokerage, or contingent fee, excepting bona fide employees or bona
fide established commercial selling agencies maintained by the Consultant for
the purpose of receiving business.
7. No classified, proprietary, source selection or procurement sensitive
information has been or will be solicited on behalf of or conveyed to NGC.
8. Consultant has not influenced or attempted to influence and will not
influence or attempt to influence any United States government official or
employee in connection with the award, extension, continuation, renewal,
amendment or modification of a federal contract or otherwise engage in
"non-exempt services" within the meaning of the Byrd Amendment, 31 U.S.C.
Section 1352.
9. Consultant has not utilized or employed and will not utilize or employ any
third party, individual or entity, in connection with the performance of
services on behalf of NGC, except as follows: (if none, state "None").
------------------------
10. No business or legal conflicts of interest exist between services performed
or to be performed by Consultant on behalf of NGC and by Consultant on behalf of
any other client, the identities of which Consultant has fully disclosed to NGC.
The person whose signature appears below is authorized by Consultant to certify
that the foregoing is true and correct.
I declare under penalty of perjury that the foregoing certificate is true and
correct
/s/ RALPH D. CROSBY, JR. Date: January 7, 2002
- ------------------------------- -------------------
Ralph D. Crosby, Jr.
2
ATTACHMENT D
CERTIFICATION OF DIRECTORSHIPS, EMPLOYMENT AND CLIENTS
------------------------------------------------------
Ralph D. Crosby, Jr.
The following is a complete list of Consultant's directorships, employment and
consulting clients (if none, state "None"):
I. Directorships and Employment
----------------------------
Name of Company Responsibilities/Duties
- --------------- --------------------------------------
Ducommun Incorporated Director
II. CLIENTS
-------
Name of Company Services/Duties
- --------------- --------------------------------------
Signature: /s/ RALPH D. CROSBY, JR.
------------------------
Ralph D. Crosby, Jr.
Date: January 7, 2002
---------------
AGREEMENT
1. PARTIES: The Parties to this Agreement are Ralph D. Crosby, Jr. ("Mr.
Crosby") and Northrop Grumman Corporation ("Northrop Grumman" or the
"Company").
2. RECITALS: This Agreement is made with reference to the following facts:
2.1 Mr. Crosby is currently a Corporate Vice President and President of
the Integrated Systems sector of Northrop Grumman. He has indicated
his desire to resign from employment as soon as practicable to pursue
other interests.
2.2 It is in the best interests of Northrop Grumman to offer a Retention
Incentive to retain Mr. Crosby's services for a period of time in
order to permit a smooth transition of his critical responsibilities.
2.3 It is also in the best interests of Northrop Grumman to offer Mr.
Crosby severance benefits in recognition of and compensation for his
many contributions to the Company, and to induce him to enter into
this Agreement.
2.4 Mr. Crosby wishes to accept the Company's offer and enter into this
Agreement.
3. CONTINUED EMPLOYMENT; TERMINATION OF EMPLOYMENT: Mr. Crosby agrees to
remain employed through January 11, 2002. During the remaining period of
his employment, Mr. Crosby agrees to work diligently to insure a smooth
transition of his responsibilities and to complete a close out of 2001
activities for the Integrated Systems sector. Mr. Crosby will separate from
employment on January 11, 2002. Following his separation from employment,
he will be eligible for all benefits he has accrued under the employee
benefit plans in which he participates. If Mr. Crosby dies prior to
commencing his pension benefits under the Northrop Grumman Retirement Plan
and excess nonqualified pension plans, his surviving spouse shall be
entitled to pre-retirement survivor annuities under the terms of those
plans.
4. RETENTION INCENTIVE: In consideration of Mr. Crosby's continuing his
employment through December 11, 2001, he will be paid a Retention Incentive
in the amount of $825,000 no later than December 18, 2001. This incentive
is eligible compensation for pension calculation purposes.
5. SEVERANCE BENEFITS: Provided that Mr. Crosby continues employment through
January 11, 2002 on the terms set forth above, the following benefits shall
be payable:
2
A. Cash Severance: Within 30 days following his termination from
employment, Mr. Crosby will be paid a cash severance payment of
$505,000, representing one year's base salary.
B. Early Retirement Subsidy Differential: Within 30 days following his
termination from employment, Mr. Crosby will be paid an early
retirement subsidy differential in the amount of $2,400,000.
C. Retiree Medical: Following his termination from employment, Mr. Crosby
shall be eligible for the Special Officer Retiree Medical Plan in
accordance with the terms of that Plan.
D. Accelerated Vesting of Certain Equity Grants: The following provisions
shall apply to Mr. Crosby's unvested equity grants notwithstanding
anything to the contrary in the grant certificates:
1. Restricted Stock Rights ("RSRs"): Upon Mr. Crosby's termination
from employment on January 11, 2002, 2,000 unvested RSRs granted
to him in November of 1999 shall accelerate and vest.
3
2. Stock Options: Upon Mr. Crosby's termination from employment
on January 11, 2002, the following unvested stock options
which have previously been granted to him will accelerate
and vest:
Number of Unvested Options
Option Grant Date Strike Price Which Will Vest At Termination
----------------- ------------ ------------------------------
December 1998 $88.125 9,375
December 1998 $99.141 9,375
Mr. Crosby shall have two years after his termination from
employment within which he may exercise his Northrop Grumman
stock options, after which the options will no longer be
exercisable.
3. Restricted Performance Stock Rights ("RPSRs"): In December
of 1998, Mr. Crosby received a grant of RPSRs. Upon his
termination from employment on January 11, 2002, he will be
eligible to receive a pro-rata portion of the grant in the
amount of a target number of 5,000 shares for the 12/31/2001
period, 2,000 shares for the 12/31/2002 period and 2,000
shares for the 12/31/2003 period. These RPSRs shall become
payable in accordance with the terms of the RPSR grant
certificate and the Guide to Administration of the Company's
Long-Term Incentive Stock Plan.
E. Relocation: Within 30 days following his termination from
employment on January 11, 2002, Mr. Crosby will be paid a cash
payment of $250,000
4
(grossed up for income tax purposes, such that Mr. Crosby receives a
net of $250,000 after applicable tax withholding) for relocation
expenses.
F. Additional Benefits: Within 30 days following his termination from
employment on January 11, 2002, Mr. Crosby shall be paid the lump sum
equivalent value of one year of his current car allowance and one year
of his current financial planning/tax preparation benefit, as well as
a payment of $50,000 to cover the cost of outplacement services.
6. 2001 BONUS: Provided that Mr. Crosby remains employed through December 31,
2001, he shall receive a bonus under the Northrop Grumman Incentive
Compensation Plan ("ICP") for his performance during 2001, with the
calculation of this bonus to be made based upon normal ICP factors as
approved by the Compensation and Management Development Committee of the
Board of Directors as soon as administratively practical following the
February 2002 Board of Directors meeting.
7. NON-DISPARAGEMENT:
A. Mr. Crosby agrees that, following his termination from employment, he
shall not issue or communicate any statement that may be critical or
disparaging of the Company, its products, services, officers,
directors or employees; provided, however, that the foregoing shall
not apply to
5
truthful statements made in compliance with legal process or governmental
inquiry.
B. Northrop Grumman agrees that, following Mr. Crosby's termination from
employment, the Company shall not issue or communicate any statement that
may be critical or disparaging of Mr. Crosby; provided, however, that the
foregoing shall not apply to truthful statements made in compliance with
legal process, governmental inquiry or as required by legal filing or
disclosure requirements.
8. COOPERATION: Mr. Crosby agrees that, during the two year period following his
termination from employment, he will reasonably cooperate with Northrop Grumman
requests for assistance in connection with serving as a witness or providing
information as to matters connected with his prior employment with Northrop
Grumman.
9. INDEMNIFICATION: Northrop Grumman agrees to indemnify Mr. Crosby and hold him
harmless to the fullest extent permitted by law and under the By-laws of the
Company against and in respect to any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including attorney's fees), losses
and damages resulting from Mr. Crosby's good faith performance of his duties and
obligations with the Company. This agreement is in addition to Mr. Crosby's
rights under his current August 5, 1994 Indemnification Agreement with the
Company.
6
10. COMPLETE RELEASE: In consideration of the severance benefits provided
herein, Mr. Crosby does hereby acknowledge full and complete satisfaction of and
does hereby agree to release, absolve and discharge the Company, its subsidiary,
affiliated and related companies, past, present and future, and each of them, as
well as its and their employees, officers, directors and agents, past and
present, and each of them (collectively referred to as "Releasees"), from all
claims, causes of action, demands, damages or costs he may have against
Releasees on behalf of himself or others arising out of or relating to his
employment with the Company or the termination of such employment.
10.1 This waiver and release includes, but is not limited to, any rights,
claims, causes of actions, demands, damages or costs arising under
the Age Discrimination in Employment Act, which prohibits
discrimination in employment based on age, and retaliation; Title VII
of the Civil Rights Act of 1964, which prohibits discrimination in
employment based on race, color, religion, sex or national origin,
and retaliation; the Americans With Disabilities Act, which prohibits
discrimination in employment based on disability, and retaliation; or
any other federal, state or local laws or regulations which prohibits
employment discrimination or retaliation whether such claim is based
on an action filed by Mr. Crosby or by any governmental agency.
7
10.2 This waiver and release also includes, but is not limited to,
any rights, claims, causes of action, demands, damages or costs
arising under or in relation to the Company's employee handbook
and personnel policies, or any oral or written representations
or statements made by officers, directors, lawyers, employees or
agents of the Company, past and present, and each of them, or
under any state or federal law regulating wages, hours,
compensation or employment, or any claim for retaliation,
wrongful discharge, breach of contract, breach of the implied
covenant of good faith and fair dealing, constructive discharge,
intentional or negligent infliction of emotional distress,
intentional or negligent misrepresentation, or defamation.
10.3 This waiver and release also includes, but is not limited to,
any rights, claims, causes of action, demands, damages or costs
arising under or in relation to any severance plan, program or
arrangement.
10.4 This waiver and release also includes, but is not limited to,
any rights, claims, causes of action, demands, damages or costs
arising under the Federal False Claims Act.
10.5 This release covers both claims that Mr. Crosby knows about and
those he may not know about. Mr. Crosby expressly acknowledges
that this Agreement is intended to include all claims which he
does not know or
8
suspect to exist in his favor at the time of his signature on this
Agreement, and this Agreement will extinguish such claims.
10.6 Notwithstanding anything to the contrary herein, this Agreement does
not waive or release (i) any rights or claims which Mr. Crosby may
have under the Age Discrimination in Employment Act or other laws
which arise after the date on which he signs this Agreement; (ii) any
claims Mr. Crosby may have for vested benefits under any Northrop
Grumman employee benefit plan; or (iii) any rights or claims Mr.
Crosby may have for breach of this Agreement.
11. PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL: Mr.
Crosby agrees and understands that he has been given a period of 21
calendar days from his receipt of this Agreement to review and consider
this Agreement before signing it. Mr. Crosby further understands that he
may use as much of this review period as he wishes prior to signing; he can
sign this Agreement at any time prior to the expiration of the 21-calendar
day period. Mr. Crosby is advised and encouraged to consult with his own
legal counsel prior to signing this Agreement.
12. RIGHT TO REVOKE AGREEMENT: Mr. Crosby may revoke this Agreement within 7
calendar days of signing it. Revocation may be made by delivering a written
notice of revocation to Chief Human Resources Officer,
9
Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA
90067. For this revocation to be effective, written notice must be received
by the Chief Human Resources Officer no later than 5:00 pm PST on the
seventh calendar day after Mr. Crosby signs this Agreement. If Mr. Crosby
revokes this Agreement, it shall not be effective or enforceable, and Mr.
Crosby will not receive the benefits described in this Agreement.
13. WITHHOLDING OF TAXES: The Company shall be entitled to withhold from any
amounts payable pursuant to this Agreement all taxes as legally shall be
required (including, without limitation, any United States federal taxes,
and any other state, city, or local taxes).
14. ENTIRE AGREEMENT: This Agreement sets forth the entire agreement between
the Parties hereto, and fully supersedes any and all discussions, prior
agreements or understandings between the Parties hereto pertaining to the
subject matter of this Agreement.
10
15. GOVERNING LAW: This Agreement shall be interpreted and enforced in
accordance with the law of the State of Texas without regard to principles
regarding conflicts of law.
RALPH D. CROSBY, JR.
Dated: December 13, 2001 By: /s/ RALPH D. CROSBY, JR.
----------------- -------------------------
NORTHROP GRUMMAN CORPORATION
Dated: December 22, 2001 By: /s/ J. MICHAEL HATELEY
----------------- -----------------------
11
Form of
INDEMNIFICATION AGREEMENT
This Agreement, dated as of the ____ day of _____________, 2002 between
Northrop Grumman Corporation, a Delaware corporation (the "Corporation"), and
NAME IN BOLD CAPS ("Indemnitee").
- -----------------
WHEREAS, it has come to the attention of the Board of Directors of the
Corporation (the "Board") that in certain circumstances highly competent persons
have recently become more reluctant to serve publicly-held corporations as
directors, officers or in other capacities unless they are provided with
adequate protection from the risk of liability due to claims and actions against
them arising out of their service to and activities on behalf of such
corporations; and
WHEREAS, it has also come to the attention of the Board that, in this
regard, the current difficulty of obtaining adequate liability insurance and the
uncertainties related to indemnification for directors and officers have
increased the difficulty of attracting and retaining such highly competent
persons; and
WHEREAS, the Board has determined that the inability to attract and retain
such highly competent persons is detrimental to the best interests of the
Corporation and its stockholders and that persons serving the Corporation should
be assured they will have adequate protection from certain liabilities; and
WHEREAS, it is reasonable, prudent and necessary for the Corporation to
obligate itself contractually to indemnify such persons to the fullest extent
permitted by applicable law, so that such persons will serve or continue to
serve the Corporation, free from undue concern that they will not be adequately
indemnified; and
WHEREAS, the Corporation's stockholders have approved the form of this
Agreement and have authorized the Corporation to enter into this Agreement with
certain persons, including Indemnitee; and
WHEREAS, this Agreement is a supplement to and in furtherance of any rights
granted under the Certificate of Incorporation of the Corporation, or Article V
of the Bylaws of the Corporation, and any resolutions adopted pursuant thereto,
and shall not be deemed to be a substitute therefor nor to diminish or abrogate
any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee is willing to serve the Corporation in the capacity or
capacities in which he serves, continue so to serve and, if appropriate, to take
on additional service for or on behalf of the Corporation on the condition that
he be indemnified according to the terms of this Agreement;
1
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
Section 1. Definitions. For purposes of this Agreement:
------------
(a) "Change in Control" means a change in control of the Corporation,
occurring after the Effective Date, which would be required to be reported in
response to Item 6(e) of Schedule 14A under Regulation 14A (or in response to
any similar item on any similar schedule or form) promulgated under the
Securities Exchange Act of 1934, as amended (the "Act"), whether or not the
Corporation is then subject to such reporting requirement. Without limiting the
generality of the foregoing, a Change in Control shall be deemed to have
occurred if, after the Effective Date: (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage interest; (ii) the Corporation is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board in office immediately
prior to such transaction or event constitute less than a majority of the Board
thereafter; or (iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds of the
directors then still office who were directors at the beginning of such period)
cease for any reason to constitute at least a majority of the Board.
(b) "Corporate Status" means the status of a person who is or was a
director, officer, employee, agent or fiduciary of the Corporation or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Corporation.
(c) "Disinterested Director" means a director of the Corporation who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(d) "Effective Date" means as of _________________, 2002.
(e) "Expenses" means all reasonable attorneys' fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
Proceeding.
(f) "Independent Counsel" means an attorney, a law firm, or a member of a
law firm,
2
who (or which) is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Corporation or Indemnitee in any other matter material to either such party;
or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Corporation or Indemnitee in an action to determine
Indemnitee's rights under this Agreement.
(g) "Proceeding" means any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee pursuant to Section 11 of this Agreement to enforce
his rights under this Agreement.
Section 2. Services by Indemnitee. Indemnitee agrees to serve as a
-----------------------
[director/officer/employee/agent/fiduciary] of the Corporation and, at its
request, as a director, officer, employee, agent or fiduciary of certain other
corporations and entities. Indemnitee may at any time and for any reason resign
from any such position (subject to any other contractual obligation or any
obligation imposed by operation of law).
Section 3. Indemnification - General. Subject to the provisions of Section
--------------------------
12(c), the Corporation shall indemnify, and advance Expenses to, Indemnitee as
provided in this Agreement to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit, whether the actions or omissions (or
alleged actions or omissions) of Indemnitee giving rise to such indemnification
(including the advancing of Expenses) occurs or occurred before or after the
Effective Date. The rights of Indemnitee provided under the preceding sentence
shall include, but shall not be limited to, the rights set forth in the other
Sections of this Agreement.
Section 4. Proceedings Other Than Proceedings by or in the Right of the
------------------------------------------------------------
Corporation. Indemnitee shall be entitled to the rights of indemnification
- ------------
provided in this Section if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Corporation.
Pursuant to this Section, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any such
Proceeding or any claim, issue or matter therein, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 5. Proceedings by or in the Right of the Corporation. Indemnitee
--------------------------------------------------
shall be entitled to the rights of indemnification provided in this Section if,
by reason of his Corporate Status, he is, or is threatened to be made, a party
to any threatened, pending or completed Proceeding brought by or
3
in the right of the Corporation to procure a judgment in its favor. Pursuant to
this Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with any such
Proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation. Notwithstanding
the foregoing, no indemnification against such Expenses shall be made in respect
of any claim, issue or matter in any such Proceeding as to which Indemnitee
shall have been adjudged to be liable to the Corporation if applicable law
prohibits such indemnification; provided, however, that if applicable law so
-------- -------
permits, indemnification against Expenses shall nevertheless be made by the
Corporation in such event if, and only to the extent that, the Court of Chancery
of the State of Delaware, or the court in which such Proceeding shall have been
brought or is pending, shall so determine.
Section 6. Indemnification for Expenses of a Party Who is Wholly or Partly
---------------------------------------------------------------
Successful. Notwithstanding any other provision of this Agreement (other than
- -----------
Section 12(c)), to the extent that Indemnitee is, by reason of his Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Corporation shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For the purposes of this Section
and without limiting the foregoing, the termination of any claim, issue or
matter in any such Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.
Section 7. Indemnification for Expenses of a Witness. Notwithstanding any
------------------------------------------
other provision of this Agreement (other than Section 12(c)), to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding,
he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
Section 8. Advancement of Expenses. The Corporation shall advance all
------------------------
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding within twenty days after the receipt by the Corporation of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
Section 9. Procedure for Determination of Entitlement to Indemnification.
--------------------------------------------------------------
(a) To obtain indemnification under this Agreement in connection with any
Proceeding, and for the duration thereof, Indemnitee shall submit to the
Corporation a written request, including
4
therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The Secretary of the
Corporation shall, promptly upon receipt of any such request for
indemnification, advise the Board in writing that Indemnitee has requested
indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
Section 9(a), a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in such case: (i) if a Change in
Control shall have occurred, by Independent Counsel (unless Indemnitee shall
request that such determination be made by the Board or the stockholders, in
which case in the manner provided for in clause (ii) or (iii) of this Section
9(b) in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board by a majority vote of a quorum consisting of Disinterested Directors, or
(B) if a quorum of the Board consisting of Disinterested Directors is not
obtainable, or even if such quorum is obtainable, if such quorum of
Disinterested Directors so directs, either (x) by Independent Counsel in a
written opinion to the Board, a copy of which shall be delivered to Indemnitee,
or (y) by the stockholders of the Corporation, as determined by such quorum of
Disinterested Directors, or a quorum of the Board, as the case may be; or (iii)
if necessary, as provided in Section 10(b). If it is so determined that
Indemnitee is entitled to Indemnification, payment to Indemnitee shall be made
within ten days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including without limitation providing to such
person, persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Corporation
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Corporation hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) If required, Independent Counsel shall be selected as follows: (i) if
a Change of Control shall not have occurred, Independent Counsel shall be
selected by the Board, and the Corporation shall give written notice to
Indemnitee advising him of the identity of Independent Counsel so selected; or
(ii) if a Change of Control shall have occurred, Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board, in which event (i) shall apply), and Indemnitee shall give
written notice to the Corporation advising it of the identity of Independent
Counsel so selected. In either event, Indemnitee or the Corporation, as the case
may be, may, within seven days after such written notice of selection shall have
been given, deliver to the Corporation or to Indemnitee, as the case may be, a
written objection to such selection. Such objection may be asserted only on the
ground that Independent Counsel so selected does not meet the requirements of
"Independent Counsel" as defined in Section 1, and the objection shall set forth
with particularity the factual basis of such assertion. If such written
objection is made, Independent Counsel so selected may not serve as Independent
Counsel unless and until a court has determined that such objection is without
merit. If, within twenty days after submission by
5
Indemnitee of a written request for indemnification pursuant to Section 9(a), no
Independent Counsel shall have been selected and not objected to, either the
Corporation or Indemnitee may petition the Court of Chancery of the State of
Delaware, or any other court of competent jurisdiction, for resolution of any
objection which shall have been made by the Corporation or Indemnitee to the
other's selection of Independent Counsel and/or for appointment as Independent
Counsel of a person selected by such court or by such other person as such court
shall designate, and the person with respect to whom an objection is so resolved
or the person so appointed shall act as Independent Counsel under Section 9(b).
The Corporation shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with its
actions pursuant to this Agreement, and the Corporation shall pay all reasonable
fees and expenses incident to the procedures of this Section 9(c), regardless of
the manner in which such Independent Counsel was selected or appointed. Upon the
due commencement date of any judicial proceeding pursuant to Section 11(a)(iii),
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
Section 10. Presumptions and Effects of Certain Proceedings.
------------------------------------------------
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 9(a), and the Corporation shall have the burden of proof
to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to the presumption.
(b) If the person, persons or entity empowered or selected under Section 9
to determine whether Indemnitee is entitled to indemnification shall not have
made a determination within 60 days after receipt by the Corporation of the
request therefor, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for indemnification, or
(ii) prohibition of such indemnification under applicable law; provided,
---------
however, that such 60-day period may be extended for a reasonable time, not to
- -------
exceed an additional 30 days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
require(s) such additional time for the obtaining or evaluating of documentation
and/or information relating thereto; and provided, further, that the foregoing
-----------------
provisions of this Section 10(b) shall not apply (i) if the determination of
entitlement to indemnification is to be made by the stockholders pursuant to
Section 9(b) and if (A) within fifteen days after receipt by the Corporation of
the request for such determination, the Board has resolved to submit such
determination to the stockholders for their consideration at an Annual Meeting
thereof to be held within 75 days after such receipt and such determination is
made thereat, or (B) a special meeting of stockholders is called as provided in
the Corporation's Certificate of Incorporation and under applicable law within
30 days after such receipt for the purpose of making
6
such determination (which 30-day period may be extended for reasonable periods
not to exceed an additional 30 days in order to ensure compliance with all
applicable laws), such meeting is held for such purpose within 60 days after
having been so called and such determination is made thereat, it being
understood that provisions of this Agreement shall not obligate the Corporation
to call such a special meeting, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 9(b).
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
----
contendere or its equivalent, shall not (except as otherwise expressly provided
- ----------
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
Section 11. Remedies of Indemnitee.
-----------------------
(a) In the event that (i) a determination is made pursuant to Section 9
that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 8, (iii) the
determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 9(b) and such determination shall not have been made
and delivered in a written opinion within 90 days after receipt by the
Corporation of the request for indemnification, (iv) payment of indemnification
is not made pursuant to Section 7 within ten days after receipt by the
Corporation of a written request therefor, or (v) payment of indemnification is
not made within ten days after a determination has been made that Indemnitee is
entitled to indemnification or such determination is deemed to have been made
pursuant to Section 9 or 10, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. The Corporation shall not oppose Indemnitee's right to
seek any such adjudication.
(b) In the event that a determination shall have been made pursuant to
Section 9 that Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this Section shall be conducted in all respects
as a de novo trial on the merits and Indemnitee shall not be prejudiced by
-------
reason of that adverse determination. In any judicial proceeding commenced
pursuant to this Section, the Corporation shall have the burden of proving that
Indemnitee is not entitled to indemnification or advancement of Expenses, as the
case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 9 or 10 that Indemnitee is entitled to indemnification, the
Corporation shall be bound by such determination in any judicial proceeding
commenced pursuant to this Section, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
7
indemnification, or (ii) prohibition of such indemnification under applicable
law.
(d) The Corporation shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Corporation
is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section, seeks a
judicial adjudication of his rights under, or to recover damages for breach of,
this Agreement, Indemnitee shall be entitled to recover from the Corporation,
and shall be indemnified by the Corporation against, any and all expenses (of
the kinds described in the definition of Expenses) actually and reasonably
incurred by him in such judicial adjudication, but only if he prevails therein.
If it shall be determined in such judicial adjudication that Indemnitee is
entitled to receive part but not all of the indemnification or advancement of
expenses sought, the expenses incurred by Indemnitee in connection with such
judicial adjudication shall be appropriately prorated.
Section 12. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
------------------------------------------------------------
(a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable law, the
Certificate of Incorporation or Bylaws of the Corporation, any agreement, a vote
of stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or any provision hereof shall be
effective as to Indemnitee with respect to any action taken or omitted by such
Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal.
(b) To the extent that the Corporation maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Corporation or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Corporation, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies.
(c) If any policy referred to in Section 12(b) (or any other policy which
may provide coverage to Indemnitee) contains a provision which eliminates
coverage under such policy to the extent of the Corporation's contractual
obligations of indemnification, the Corporation shall have no obligations
hereunder to the extent that Indemnitee shall have been afforded coverage under
such policy.
(d) In the event of any payment under this Agreement, the Corporation shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Corporation to bring suit to enforce such rights.
8
(e) The Corporation shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
9
Section 13. Duration of Agreement. This Agreement shall continue until and
---------------------
terminate upon the later of: (a) ten years after the date that Indemnitee shall
have ceased to serve as a director, officer, employee, agent or fiduciary of the
Corporation or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which Indemnitee served at the request
of the Corporation; or (b) the final termination of all pending Proceedings in
respect of which Indemnitee is granted rights of indemnification or advancement
of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 11. This Agreement shall be binding upon the Corporation and its
successors and assigns and shall inure to the benefit of Indemnitee and his
heirs, executors and administrators.
Section 14. Severability. If any provision or provisions of this Agreement
------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including without limitation each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) to the fullest extent
possible, the provisions of this Agreement (including without limitation each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself held invalid, illegal
or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
Section 15. Exception to Right of Indemnification or Advancement of
-------------------------------------------------------
Expenses. Except as provided in Section 11(e), Indemnitee shall not be entitled
- --------
to indemnification or advancement of Expenses under this Agreement with respect
to any Proceeding, or any claim therein, brought or made by him against the
Corporation.
Section 16. Settlement. The Corporation shall have no obligation to
----------
indemnify Indemnitee hereunder for any amounts paid in settlement of any
Proceeding effected without the Corporation's prior written consent, which shall
not be unreasonably withheld.
Section 17. Identical Counterparts. This Agreement may be executed in one
----------------------
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart, signed by the party against whom enforceability is
sought, may constitute evidence of the existence of this Agreement.
Section 18. Headings. The headings of the paragraphs of this Agreement are
--------
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
Section 19. Modification and Waiver. No supplement, modification or
-----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of
10
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
Section 20. Notice by Indemnitee. Indemnitee agrees to notify the
--------------------
Corporation promptly in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder.
Section 21. Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom such
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
-------------------
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067-2199
(b) If to the Corporation, to:
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067-2199
Attention: John H. Mullan
Corporate Vice President and Secretary
or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
Section 22. Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws in effect in the State of
Delaware.
Section 23. Miscellaneous. Use of the masculine pronoun shall be deemed to
-------------
include usage of the feminine pronoun where appropriate.
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the day and year first above written.
NORTHROP GRUMMAN CORPORATION INDEMNITEE
_____________________ __________________________
Kent Kresa
Chairman and
Chief Executive Officer
12
EXHIBIT 12.1
Ratios of Earnings to Fixed Charges
Pro Forma Actual
------------------------- ---------------------------------------------
Nine Months
Ended
Nine Months Fiscal Year September 30, Fiscal Year Ended December 31,
Ended Ended ------------- -------------------------------
September 30, December 31,
2001 2000 2001 2000 2000 1999 1998 1997 1996
------------- ------------ ----- ----- ------ ------ ----- ----- -----
Income from Continuing operations before
income taxes and accounting change:....... $ 471 $1,727 $ 485 $ 756 $ 975 $ 747 $ 309 $ 512 $ 478
Plus Fixed Charges:
Interest on all Indebtedness:............ 794 1,222 269 135 175 224 232 257 270
Capitalized Interest..................... 4 5 0 0 0 0 0 0 0
Amortization of debt expense:............ 28 37 22 10 13 13 14 15 24
Portion of rental expenses on operating
leases deemed to be representative of
the interest factor:.................... 130 201 41 30 41 32 32 33 25
Preferred stock dividend requirements of
consolidated subsidiaries:.............. 29* 38* 20* 0 0 0 0 0 0
------ ------ ----- ----- ------ ------ ----- ----- -----
Total Fixed Charges:....................... 985 1,503 352 175 229 269 278 305 319
------ ------ ----- ----- ------ ------ ----- ----- -----
Plus Unconsolidated affiliates Earnings:... 95 1 0 0 0 0 0 0 0
Plus Minority Earnings:.................... 18 13 0 0 0 0 0 0 0
Less Preferred stock dividend:............. -29 -38 -20 0 0 0 0 0 0
------ ------ ----- ----- ------ ------ ----- ----- -----
Earnings:.................................. $1,540 $3,206 $ 817 $ 931 $1,204 $1,016 $ 587 $ 817 $ 797
------ ------ ----- ----- ------ ------ ----- ----- -----
Fixed Charges Ratio:..................... 1.56 2.13 2.32 5.32 5.26 3.78 2.11 2.68 2.50
====== ====== ===== ===== ====== ====== ===== ===== =====
- --------
* Required preferred stock dividend divided by 1 minus the effective tax rate
of 35%. See instructions to Item 503(d) of Regulation S-K.
The ratios of earnings to fixed charges should be read in conjunction with
the financial statements and other financial data included or incorporated by
reference in this registration statement.
1
LETTER FROM INDEPENDENT ACCOUNTANTS REGARDING UNAUDITED
INTERIM FINANCIAL INFORMATION
March 4, 2002
Northrop Grumman Corporation
Los Angeles, California
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Northrop Grumman Corporation and subsidiaries for the periods
ended March 31, 2001, June 30, 2001 and September 30, 2001, and of Northrop
Grumman Systems Corporation (formerly Northrop Grumman Corporation) and
subsidiaries for the periods ended March 31, 2000, June 30, 2000 and September
30, 2000, as indicated in our reports dated May 10, 2001, July 25, 2001 and
November 5, 2001; because we did not perform an audit, we expressed no opinion
on that information.
We are aware that our reports referred to above, which were included in Northrop
Grumman Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2001, June 30, 2001 and September 30, 2001, are being incorporated by
reference in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Los Angeles, California
NORTHROP GRUMMAN CORPORATION
a Delaware corporation
(Holding Company)
NORTHROP GRUMMAN SYSTEMS CORPORATION
a Delaware corporation
(a wholly owned subsidiary of Northrop Grumman Corporation Operating Company)
SUBSIDIARIES OF OPERATING COMPANY
Address for all subsidiaries (unless otherwise noted) is:
c/o NORTHROP GRUMMAN CORPORATION
Office of the Corporate Secretary
1840 Century Park East
Los Angeles, California 90067
1. Allied Holdings, Inc. - DE
- Allied Transportation Products, Inc. - DE
- Grumman Credit Corporation - DE
2. California Microwave, Inc. - DE
3. Comptek Research, Inc. - NY
- Telemus, Inc. - Ontario, Canada
- Advanced Systems Development, Inc. - NY
- Amherst Systems, Inc. - NY
- Logicon Comptek, Inc. - NY
(formerly Comptek Federal Systems, Inc.)
- Northrop Grumman PRB Systems, Inc. - MD
(formerly Comptek PRB Associates, Inc.)
o SimWright, Inc. - FL
- Comptek Research International Corp. - NY
- Comptek Research, Ltd. - Virgin Islands
- Comptek Technical Services, Inc. - DE
- Comptek Telecommunications, Inc. - NY
- Industrial Systems Service, Inc. - PA
4. Data Procurement Corporation, Inc. - MD (merged into Logicon, Inc.
12/29/00)
5. Logicon FDC, Inc. - DE
(formerly Federal Data Corporation)
- Doxsys, Inc. - DE
- R.O.W. Sciences, Inc. - DE
- FDCT Corp. - DE
o FDC Technologies, Inc. - DE
o NYMA, Inc. - MD
o Sylvest Management Systems, Inc. - DE
- Technical and Management Assistance, Inc. - NJ
- Ardel Inc. (formerly VAD International)
6. Grumman International, Inc. - NY
7. Northrop Grumman Ohio Corporation - DE
(formerly Grumman Ohio Corporation)
8. IRAN - Northrop Grumman Programs Service Company - DE
9. Logicon Commercial Information Services Inc. - MD
10. Logicon, Inc. - DE
- International Research Institute, Inc. - VA (merged into Logicon,
Inc. 12/29/00)
o Logicon Europe, Ltd. - UK
address: Alpha House
Chilworth Research Centre
Southhampton S016 7NS
United Kingdom
- Logicon Technical Services, Inc. - CA
11. Logicon International, Inc. - FL
12. Mocit, Inc. - DE
13. NGC Denmark ApS - Denmark
address: Midtermolen 7
P.O. Box 2585
DK 2100 Copenhagen O
Denmark
2
- Park AirSystems AS - Norway
address: Enebakkvien 150
P.O. Box 50 Manglerud
0612 Oslo
NORWAY
- Northrop Grumman Automated Systems Belgium NV - Belgium
(owned 99% by NGC Denmark ApS; 1% by Northrop Grumman
Overseas Corporation)
address: Businesspark 19
Battelsesteenweg 455B
2800 Mechelen
Belgium
14. Northrop Grumman Aviation, Inc. - DE
15. Northrop Grumman - Canada, Ltd. - Ontario, Canada
address: c/o Gowling, Strathy & Henderson
120 King Street West, Suite 600
Hamilton, Ontario L8P 4V2
16. Northrop Grumman Electronic Systems International Company - DE
17. Northrop Grumman Electronic Systems International Company (UK) - DE
18. Northrop Grumman Electronic Systems Integration International, Inc. - CA
- Northrop Electronic Systems Integration Limited - UK
address: Senator House
85 Queen Victoria Street
London EC4V 4IL
19. Northrop Grumman Field Support Services, Inc. - DE
20. Northrop Grumman Foreign Sales Corporation - Barbados
address: c/o Chase Trade, Inc.
Stevmar House, Suite 2
Rockley, Christ Church
Barbados
21. Northrop Grumman International, Inc. - DE
- Northrop Grumman Singapore Private Limited - Singapore
address: 250 North Bridge Road #15-04
Raffles City Tower
Singapore 179101
22. Northrop Grumman International Services Company, Inc. - DE
23. Northrop Grumman ISA International, Inc. - DE
3
24. Northrop Grumman Overseas Holdings, Inc. - DE
- Northrop Grumman Electronic Sensors and Systems International,
Inc. - DE
o Wescan Europe Ltd. (Ireland) - Ireland
address: 3 Burlington Road
Dublin 4, Ireland
- Northrop Grumman Electronicos, Inc. - DE
- Northrop Grumman Overseas Holdings (U.K.), Ltd. - UK
address: c/o Baker & McKenzie
100 New Bridge Street
London EC4V 6JA
United Kingdom
o Park Air Electronics Ltd. (UK) - UK
address: Northfields
Market Deeping
Peterborough
PE6 8LG
England
o Remotec, UK - UK
25. Northrop Grumman Overseas Service Corporation - DE
26. Northrop Grumman Space Operations, L.P. - DE
27. Northrop Grumman Tactical Systems, LLC - DE
28. Northrop Grumman Technical Services Corporation - DE
29. Northrop Grumman Technical Services, Inc. - OK
30. Northrop International Aircraft, Inc. - CA
31. Park Air Electronics, Inc. - DE
32. Perceptics Corporation - TN
33. Remotec, Inc. - TN
96% owned by NGC
4% owned by Toyo Engineering Corporation (Japan)
34. Sterling Software (U.S.) Inc.
35. Xetron Corporation - OH
36. Newport News Shipbuilding Inc. - DE
37. NNS Delaware Management Company - DE
38. Newport News Shipbuilding and Dry Dock Company - VA
39. Continental Maritime of San Diego, Inc. - CA
40. Naptheon Inc. - DE
4
41. The following are the wholly or partially owned foreign subsidiaries of
Litton Industries, Inc.
135363 Canada, Inc. 9055-1599 Quebec, Inc.
25 City View Drive 30 Aeroport Street
Toronto, Ontario Canada M9W 5A7 Bromont, Quebec Canada JOE 1LO
C. Plath GmbH, Mautische-Elektronische Gulf Industrial Marine Company
Tehnik Salhiah-Sahab Tower, 17th Floor
Gotenstrasse 18 PO Box 830
D-2000 Hamburg 1 Safat, Kuwait 13009
West Germany
L.E.F. Litton Elektrotechnische Fabrik GmbH LITEF GmbH
Hinterdorfstrasse 16 Loerracher Strasse 18
D-79367 Weisweil, Germany Postfach 774
Friburg, Germany 79007
Litton Components (M) Sdn. Bhd. Litton Components Private Limited
Room 7, 13th Floor 500 Chai Chee Lane
Kompleks Tun Abdul Razak 469024 Singapore
Jalan Wong Ah Fook
Johor Bahro, Jahor 80000 Malaysia
Litton do Brasil Ltd. Litton Electronics (Suzhou) Co., Ltd.
Avenida Tegula, 888 Block C #02-01/08, No. 5
Ponte Alta, Blocco 4, CEP12940-000 Xing Ham Street
Atibaia, Sao Paulo Brasil Suzhou Industrial Park, China 215021 China
Litton Finance Europe B.V. Litton FSC, Inc.
Griendstraat 10 Griendstraat 10
NL-2921LA Van Utrectweg 25
Krimpen, Holland Krimpen a/d Yssel NL-2921 LA The Netherlands
Litton Holdings GmbH Litton International S.A
P.O. Box 774, D- 79007 Gubelstrasse 28
Freiburg, Germany CH-8050 Zurich
LITTON ITALIA S.p.A. Litton Marine Systems (S) PTE LTD
Via Pontina km 27.800 Blk 203B, Henderson Road
I-00040 Ponzenia (Rome) Italy #02-08, Henderson Industrial Park
Singapore 15948
Litton Marine Systems Asia Inc. Litton Marine Systems B.V.
Romco Bldg. James Wattkeg 22
16-5, Misuji 1-Chrome 3133 KK
Taito Ku Vlaardingen, Holland THE NETHERLANDS
Tokyo, Japan 111-0055
Litton Marine Systems GmbH & Co. Kg Litton Marine Systems Limited
Stuckenstrasse 1-3 BP Collins & Co.
D-22081 Hamburg Collins House
GERMANY 32-38 Station Road
Gerrards Crossing
Bucks SL9 8EL England
5
Litton Marine Systems S.A.R.L. Litton Precision Products International, Inc.
Sokolow, Dunaud, Mercadiers & Carreras 100 New Wood Road
100 Boulevard Malesherbes Watertown, CT 06795-3347 Switzerland
75017 Paris, France
Litton Precision Products S.p.A. Litton Saudi Arabia Limited
Viale Fulvio Testi 126 P.O. Box 7949
I-20092 Cinisello Balsamo Jeddah 21472 Saudi Arabia
Milan Italy
Litton Systems Canada Limited Litton Systems GmbH
25 City View Drive Postfach 774
Toronto, Ontario M9W 5A7 Canada 79007 Freiburg Germany
Litton Technology Corporation Ltd. Litton U.K. Limited
P.O. Box 309, Ugland House 118 Burlington Road
South Church Street, George Town New Malden
Grand Cayman, Cayman Islands British Surrey KT3 4NR England
West Indies
Litton Winchester Retconn (M) Sdn. Bhd. Litton-Westrex Company, Japan
462, Block-J, MK12, Jalan Permatang Hibiya Park Building
Damar Laut 8-1, 1-Chome
Penang 11960 Malaysia Switzerland Yurakucho, Chiyoda-ku
Tokyo 101-0054 Japan
New Britain Do Brasil Industria E Sperry Marine A/S ( Denmark)
Comercio Ltd. Kromann & Munter
Avenida Paulista, 1159 14 Rodhuspladsen
Suite 1516 1550 Copenhagen, Denmark
Sao Paulo, Brasil
Sperry Marine Belgium N.V. Tarutin Kester Co., Ltd.
J. English Straat 54 2-20-11, Yokokawa 2-Chome
B-2140 Borgerhout Sumida-ku
Belgium Tokyo 130 Japan
B-1200 Brussels, Belgium
TEC Electrical Components Group Limited TEC Electrical Components Limited
4-5 Progress Way 4-5 Progress Way
Enfield, Middlesex Enfield, Middlesex
U.K. U.K.
Technologie Estrie Inc. Teldix GmbH
30 Aeroport Street Grenzhoefer Weg 36
Bromont, Quebec 69123 Heidelberg, Germany
Canada JOE 1LO Postfach 10 56 08
D-69046 Heidelberg, Germany
VEAM Elektro-Anschlusstechnik GmbH VEAM S.r.L.
P.O. Box 1304 Via Statuto 2
D-Filderstadt 20020 Arese
Stuttgart, Germany Milan, Italy
6
The following are the wholly and partially-owned U.S. subsidiaries of Litton
Industries, Inc.
Advanced Information Systems Avondale Enterprises, Inc.
1500 PRC Drive 5100 River Road
McLean, VA 22102 Avondale, LA 70094
Avondale Gulfport Marine, Inc. Avondale Industries of New York, Inc.
13303 Industrial Seaway Road 5100 River Road
Gulfport, MS 39503 Avondale, LA 70094
Avondale Industries, Inc. Avondale Land Management Company
5100 River Road 5100 River Road
Avondale, LA 70094 Avondale, LA 70094
Avondale Properties, Inc. Avondale Services Corporation
5100 River Road 5100 River Road
Avondale, LA 70094 Avondale, LA 70094
Avondale Technical Services Avondale Transportation Company, Inc.
5100 River Road 5100 River Road
Avondale, LA 70094 Avondale, LA 70094
Business Equipment, Inc. Crawford Technical Services, Inc.
21240 Burbank Boulevard 5100 River Road
Woodland Hills, CA 91367-6675 Avondale, LA 70094
Cresticon, Inc. Erie Marine, Inc.
21240 Burbank Blvd. P.O. Box 6241
Woodland Hills, CA 91367-6675 Erie, PA 16512
Genco Industries of Lufkin, Inc. Genco Industries
5100 River Road 5100 River Road
Avondale, LA 70094 Avondale, LA 70094
Ingalls Industrial Products Corporation Ingalls International Shipbuilding Corporation
P.O. Box 149 1000 Litton Access Road
Pascagoula, MS 39568 P.O. Box 149
Pascagoula, MS 39568-0149
Ingalls Shipbuilding, Inc. Kentron Pakistan, Inc.
1000 Litton Access Road 1500 PRC Drive
Pascagoula, MS 39568-0149 McLean, VA 22102
Litton Advanced Systems, Inc. Litton Emerge, Inc.
5115 Calvert Road 55 Walkers Brook Drive
College Park, MD 20740 Reading, MA 01867-3297
Litton Enterprise Solutions, Inc. Litton Industries, Inc.
5490 Canoga Ave. 21240 Burbank Blvd.
Woodland Hills, CA 91367-6619 Woodland Hills, CA 91367-6675
Litton Integrated Systems Corporation Litton International Development Corp.
21240 Burbank Blvd. 29851 West Agoura Road
Woodland Hills, CA 91367-6675 Agoura Hills, CA 91301-0500
7
Litton Marine Systems, Inc. Litton Oversea Enterprise Corporation
1070 Seminole Trail 21240 Burbank Blvd
Charlottesville, VA 22901-2891 Woodland Hills, CA 91367-6675
Litton Pacific Systems Limited Litton Ship Systems Full Service Center, Inc.
21240 Burbank Blvd. 1000 Litton Access Road
Woodland Hills, CA 91367-6675 Pascagoula, MS 39568
Litton Systems International, Inc. Litton Systems Worldwide, Inc.
21240 Burbank Blvd. 5500 Canoga Avenue
Woodland Hills, CA 91367-6675 Woodland Hills, CA 91367-6698
Litton Systems Inc. Litton Worldwide Services, Inc.
21240 Burbank Blvd. 21050 Burbank Blvd.
Woodland Hills, CA 91367-6675 Woodland Hills, CA 91367-6675
M&D Steel Fabrication, Inc. Openware, Inc.
5100 River Road 1500 PRC Drive
Avondale, Louisiana 70094 McLean, VA 22102
Planning Research Corporation PRC Commercial Systems, Inc.
International, Ltd. 1500 PRC Drive
1500 PRC Drive McLean, VA 22102
McLean, VA 22102
PRC Engineering Systems, Inc. PRC, Inc.
1500 PRC Drive 1500 PRC Drive
McLean, VA 22102 McLean, VA 22102
PRC Public Sector, Inc. PRC Service Center Organization
1500 PRC Drive 1500 PRC Drive
McLean, VA 22102 McLean, VA 22102
PRC Standard Systems Organization PRC Technology Services 1 of Virginia, Inc.
12005 Sunrise Valley Drive 1500 PRC Drive
Reston, VA 20191-3423 McLean, VA 22102
PRC Technology Services 2, Inc. PRCA, L.L.C.
1500 PRC Drive 1500 PRC Drive
McLean, VA 22102 McLean, VA 22102
Sol-Tex Mineral Company, Inc. TASC Acquisition Corporation
21240 Burbank Blvd. 21240 Burbank Blvd.
Woodland Hills, CA 91367-6675 Woodland Hills, CA 91367-6675
TASC Services Corporation TASC, Inc.
55 Walkers Brook Drive 4801 Stonecroft Blvd.
Reading, MS 01867-3297 Chantilly, VA 20151-3822
Technical Systems, Inc. Westrex Company, Asia
21240 Burbank Blvd. 21240 Burbank Blvd.
Woodland Hills, CA 91367-6675 Woodland Hills, CA 91367-6675
8
Westrex Company, Italy Sperry Marine FSC, Inc.
Litton Industries, Inc. ABN AMRO Trust Company (Virgin Islands) Inc.
21240 Burbank Blvd. Guardian Building
Woodland Hills, CA 91367-6675 Havensight, 2nd Floor
St. Thomas, Virgin Islands 00801
9
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Northrop Grumman Corporation on Form S-4 of our report dated January 24, 2001,
except for the subsequent events footnote, as to which the date is March 1,
2001, appearing in the Annual Report on Form 10K/A of Northrop Grumman Systems
Corporation (formerly Northrop Grumman Corporation) for the year ended December
31, 2000 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Los Angeles, California
March 4, 2002
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Northrop Grumman Corporation on Form S-4 of our report dated October 10, 2000,
appearing in the Annual Report on Form 10-K of Litton Industries, Inc. for the
year ended July 31, 2000 and to the reference to us under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Los Angeles, California
March 4, 2002
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this offer to exchange of our report dated February 2, 2001,
included in Newport News Shipbuilding Inc.'s Form 10-K for the year ended
December 31, 2000, and to all references to our Firm included in this offer to
exchange.
/S/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Vienna, Virginia
March 4, 2002
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Richard B. Waugh, Jr., W. Burks
Terry and John H. Mullan with full power to act alone, as his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933, as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each
of which shall be deemed an original, but which taken together, shall constitute
one instrument.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Kent Kresa Chairman of the Board and Chief Executive March 1, 2002
- ------------------------------ Officer and Director (Principal
Kent Kresa Executive Officer)
/s/ Ronald D. Sugar President and Chief Operating Officer and March 1, 2002
- ------------------------------ Director
Ronald D. Sugar
/s/ Richard B. Waugh, Jr. Corporate Vice President and Chief March 1, 2002
- ------------------------------ Financial Officer (Principal Financial
Richard B. Waugh, Jr. Officer)
/s/ Sandra J. Wright Corporate Vice President and Controller March 1, 2002
- ------------------------------ (Principal Accounting Officer)
Sandra J. Wright
Signature Title Date
--------- ----- ----
/s/ John T. Chain, Jr. Director March 1, 2002
- ------------------------------------
John T. Chain, Jr.
/s/ Lewis W. Coleman Director March 1, 2002
- ------------------------------------
Lewis W. Coleman
/s/ Vic Fazio Director March 1, 2002
- ------------------------------------
Vic Fazio
/s/ Phillip Frost Director March 1, 2002
- ------------------------------------
Phillip Frost
/s/ Charles R. Larson Director March 1, 2002
- ------------------------------------
Charles R. Larson
/s/ Jay H. Nussbaum Director March 1, 2002
- ------------------------------------
Jay H. Nussbaum
/s/ Aulana L. Peters Director March 1, 2002
- ------------------------------------
Aulana L. Peters
/s/ John Brooks Slaughter Director March 1, 2002
- ------------------------------------
John Brooks Slaughter
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
TRW Inc.
for
Shares of Common Stock
of
Northrop Grumman Corporation
Valued at $47.00
subject to the procedures and limitations described in the Offer to Exchange
and this Letter of Transmittal.
THE OFFER AND ASSOCIATED WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MARCH 29, 2002, UNLESS THE OFFER IS EXTENDED.
The Exchange Agent for the Offer is:
EQUISERVE TRUST COMPANY
By Mail: By Hand: By Overnight Delivery:
EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY
P.O. Box 43034 c/o Securities Transfer and 40 Campanelli Drive
Providence, RI 02940-3034 Reporting Services, Inc. Braintree, Massachusetts 02184
100 William Street--Galleria
New York, New York 10038
Delivery of this Letter of Transmittal to an address other than as set forth
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of
Transmittal is completed. You must sign this Letter of Transmittal in the
appropriate space provided therefor, with signature guarantee if required, and
complete the substitute form W-9 set forth below. See Instruction 9.
DESCRIPTION OF COMMON SHARES TENDERED
- -----------------------------------------------------------------------------------------------------
Name(s) and address(es) of registered Common Share Certificates and Common Share(s)
holder(s)(Please fill in, if blank, exactly as tendered (attach additional list if necessary).
name(s) appear(s) onCommon Share Certificate(s)) See Instruction 3
- ----------------------------------------------------------------------------------------------------
Total Number of Number of
Common Shares Common
Common Share Represented by Share(s)
Certificate Number(s)* Certificate(s) Tendered**
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Total Common Shares
* Need not be completed by shareholders delivering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Common Shares
evidenced by any certificates delivered to the Exchange Agent are being
tendered. See Instruction 4.
BOOK-ENTRY (DRIP)
The number of Common Shares that are maintained in the dividend
reinvestment plan and hereby tendered is .
This Letter of Transmittal is to be completed by shareholders, either if
Common Share Certificates (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Exchange, as referred to
below) is utilized, if tenders of Common Shares (as defined below) are to be
made by book-entry transfer into the account of EquiServe Trust Company, as
Exchange Agent (the "Exchange Agent"), at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in the
section titled "The Offer to Exchange--Procedure for Tendering" of the Offer to
Exchange (as defined below). Shareholders who tender Common Shares by
book-entry transfer are referred to herein as "Book-Entry Shareholders."
Shareholders whose Common Share Certificates are not immediately available or
who cannot deliver their Common Share Certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date (as defined
in the Offer to Exchange), or who cannot complete the procedure for book-entry
transfer on a timely basis, must tender their Common Shares according to the
guaranteed delivery procedure set forth in the section titled "The Offer to
Exchange--Guaranteed Delivery" of the Offer to Exchange. See Instruction 2.
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Exchange Agent.
SPECIAL TENDER INSTRUCTIONS
[_] CHECK HERE IF COMMON SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER COMMON SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ________________________________________
Account Number: _________________________________________________________
Transaction Code Number: ________________________________________________
[_] CHECK HERE IF COMMON SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (please enclose a photocopy of such notice of guaranteed
delivery):
Name(s) of Registered Owner(s): _________________________________________
Window Ticket Number (if any): __________________________________________
Date of Execution of Notice of Guaranteed Delivery: _____________________
Name of Institution that Guaranteed Delivery: ___________________________
Account Number: _________________________________________________________
Transaction Code Number: ________________________________________________
2
NOTE: SIGNATURES MUST BE PROVIDED ON PAGE 7
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Northrop Grumman Corporation, a Delaware
corporation ("Northrop Grumman"), the above described shares of common stock,
par value $0.625 per share (the "Common Shares," and the certificates
representing such Common Shares, the "Common Share Certificates") of TRW Inc.,
an Ohio corporation (the "Company"), for shares of common stock of Northrop
Grumman, par value $1.00 per share (the "Northrop Grumman Shares," and the
certificates representing such Northrop Grumman Shares, the "Northrop Grumman
Share Certificates"), valued at $47.00, upon the terms and subject to the
conditions set forth in the Offer to Exchange, dated March 4, 2002 (the "Offer
to Exchange"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (the "Letter of Transmittal," which, together with the Offer to
Exchange, as each may be amended or supplemented from time to time,
collectively constitute the "Offer"); provided, however, the Common Shares
delivered herewith are being tendered only if the provisions of Chapter 1704 of
the Ohio Revised Code (the "Ohio business combination law") are not applicable
to the Offer or found to be invalid. By receiving this Letter of Transmittal,
Northrop Grumman shall have no right whatsoever to acquire the shares if the
provisions of the Ohio business combination law are applicable to the Offer.
The Northrop Grumman Shares issued pursuant to the Offer will not bear any
interest and will be reduced by the applicable withholding taxes.
Subject to, and effective upon, acceptance for exchange of the Common Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Northrop Grumman
all right, title and interest in and to all of the Common Shares that are being
tendered hereby and any and all Common Shares or other securities issued, paid
or distributed or issuable, payable or distributable in respect of such Common
Shares on or after March 4, 2002, and prior to the transfer to the name of
Northrop Grumman (or a nominee or transferee of Northrop Grumman) on the
Company's stock transfer records of the Common Shares tendered herewith
(collectively, a "Distribution"). The undersigned hereby irrevocably appoints
the Exchange Agent the true and lawful agent, attorney-in-fact and proxy of the
undersigned with respect to such Common Shares (and any Distribution), with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) to (a) deliver such Common Share
Certificates (and any Distribution) or transfer ownership of such Common Shares
(and any Distribution) on the account books maintained by the Book-Entry
Transfer Facility, together, in either case, with appropriate evidences of
transfer, to the Exchange Agent for the account of Northrop Grumman, (b)
present such Common Shares (and any Distribution) for transfer on the books of
the Company, and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Common Shares (and any Distribution), all in
accordance with the terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints designees of Northrop Grumman as such
undersigned's agents, attorneys-in-fact and proxies, with full power of
substitution, to the full extent of the undersigned's rights with respect to
the Common Shares (and any Distribution) tendered by the undersigned and
accepted for exchange by Northrop Grumman. All such powers of attorney and
proxies shall be considered irrevocable (once the appointment is effective) and
coupled with an interest. Such appointment will be effective when, and only to
the extent that, Northrop Grumman deposits the Northrop Grumman Shares with the
Exchange Agent. Upon such acceptance for exchange, all prior powers of
attorney, proxies and consents given by the undersigned with respect to such
Common Shares (and any Distribution) will be revoked without further action,
and no subsequent powers of attorney and proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of Northrop Grumman will, with respect to the
Common Shares (and any Distribution) for which such appointment is effective,
be empowered to exercise all voting and other rights of the undersigned as they
in their sole discretion may deem proper at any annual or special meeting of
Company shareholders or any adjournment or postponement thereof, by written
consent in lieu of any such meeting or otherwise. Northrop Grumman reserves the
right to require that, in order for the Common Shares to be deemed validly
tendered, immediately upon Northrop Grumman's acceptance of such Common Shares,
Northrop Grumman be able to exercise full voting rights with respect to such
Common Shares (and any Distribution), including, without limitation, voting at
any meeting of shareholders. However, prior to acceptance for exchange by
Northrop Grumman in accordance with the terms of the Offer to Exchange,
Northrop Grumman shall have no voting rights as a result of the tender of the
Common Shares.
3
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the undersigned's
Common Shares (and any Distribution) tendered hereby, and (b) when the Common
Shares are accepted for exchange by Northrop Grumman, Northrop Grumman will
acquire good, marketable and unencumbered title to the Common Shares (and any
Distribution), free and clear of all liens, restrictions, charges and
encumbrances. The undersigned further represents and warrants that the Common
Shares (and any distribution) tendered hereby will not be subject to any
adverse claim and will not have been transferred to Northrop Grumman in
violation of any contractual or other restriction on the transfer thereof. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Exchange Agent or Northrop Grumman to be necessary or desirable
to complete the sale, assignment and transfer of the Common Shares (and any
Distribution) tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Exchange Agent for the account of Northrop Grumman
any and all Distributions in respect of the Common Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance or appropriate assurance thereof, Northrop Grumman will be, subject
to applicable law, entitled to all rights and privileges as the owner of any
such Distribution and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by Northrop Grumman
in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of, the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Common Shares made pursuant to the Offer are irrevocable (once
the appointment is effective), except that Common Shares tendered pursuant to
the Offer may be withdrawn at any time prior to the Expiration Date, and,
unless theretofore accepted for exchange by Northrop Grumman pursuant to the
Offer, may also be withdrawn at any time after May 3, 2002. See the section
titled "The Offer to Exchange--Withdrawal Rights" of the Offer to Exchange.
The undersigned understands that tenders of Common Shares pursuant to any of
the procedures described in the section titled "The Offer to
Exchange--Procedure for Tendering" of the Offer to Exchange and in the
instructions hereto will constitute a binding agreement between the undersigned
and Northrop Grumman upon the terms and subject to the conditions set forth in
the Offer, including the undersigned's representation that the undersigned owns
the Common Shares being tendered.
Unless otherwise indicated herein under "Special Issuance Instructions,"
please issue the Northrop Grumman Share Certificate(s) or transfer ownership of
such Northrop Grumman Shares on the account books maintained by the Book-Entry
and issue a check in lieu of fractional shares if applicable in the name(s) of
the registered holder(s) appearing under "Description of Common Shares
Tendered." If applicable, return any certificate(s) for Common Shares not
tendered or not accepted for exchange in the name(s) of the registered
holder(s) appearing under "Description of Common Shares Tendered." Similarly,
unless otherwise indicated herein under "Special Delivery Instructions," please
mail the Northrop Grumman Share Certificate(s), a check in lieu of fractional
shares if applicable and/or return any certificate(s) for Common Shares not
tendered or not accepted for exchange (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Common Shares Tendered." In the event that the "Special
Issuance Instructions" are completed, please issue the Northrop Grumman Share
Certificate(s), transfer ownership of such Northrop Grumman Shares on the
account books maintained by the Book-Entry, issue a check in lieu of fractional
shares if applicable and/or return any certificate(s) for Common Shares not
tendered or not accepted for exchange to the person or persons so indicated.
Similarly, in the event that the "Special Delivery Instructions" are completed,
please deliver such Northrop Grumman Certificate(s), a check in lieu of
fractional shares and/or such Common Share Certificates to the person or
persons so indicated. Unless otherwise indicated herein under "Special Issuance
Instructions," please credit any Common Shares tendered herewith by book-entry
transfer that are not accepted for exchange by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
Northrop Grumman has no obligation pursuant to the "Special Issuance
Instructions" to transfer any Common Shares from the name(s) of the registered
holder(s) thereof if Northrop Grumman does not accept for exchange any of the
Common Shares so tendered.
4
[_] CHECK HERE IF ANY COMMON SHARE CERTIFICATES REPRESENTING COMMON SHARES THAT
YOU OWN HAVE BEEN LOST, STOLEN OR DESTROYED AND SEE INSTRUCTION 11.*
Number of Common Shares represented by lost, stolen or destroyed Common
Share Certificates: ____________
* YOU MUST CONTACT THE TRANSFER AGENT TO HAVE ALL LOST COMMON SHARE
CERTIFICATES REPLACED IF YOU WANT TO TENDER SUCH COMMON SHARES. SEE
INSTRUCTION 11 FOR CONTACT INFORMATION FOR THE TRANSFER AGENT.
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the issuance of Northrop Grumman Share
Certificate(s), or transfer of ownership of such Northrop Grumman Shares on
the account books maintained by the Book Entry, a check in lieu of fractional
shares if applicable and/or return or issuance any certificate(s) for Common
Shares tendered or not accepted for exchange are to be issued in the name of
someone other than the undersigned or if Common Shares tendered by book-entry
transfer that are not accepted for exchange are to be returned by credit to an
account maintained at the Book-Entry Transfer Facility other than that
designated above.
Issue [_] Northrop Grumman Share Certificate
[_] Check
[_] Common Share Certificate(s) to:
Name _______________________________________________________________________
(Please Print)
Address ____________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
______________________________________________________________________________
(Tax Identification or Social Security Number)
(See Substitute Form W-9 Included Herein)
[_] Credit Common Shares tendered by book-entry transfer that are not accepted
for exchange to the Book Entry Transfer Facility account set forth below:
______________________________________________________________________________
______________________________________________________________________________
(Book Entry Transfer Facility Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the Northrop Grumman Share Certificate(s), a check
in lieu of fractional shares if applicable and/or any certificate(s) for
Common Shares not tendered or not accepted for exchange are to be issued in
the name of someone other than the undersigned or to the undersigned at an
address other than that shown above.
Issue [_] Northrop Grumman Share Certificate
[_] Check
[_] Common Share Certificate(s) to:
Name _______________________________________________________________________
(Please Print)
Address ____________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
______________________________________________________________________________
(Tax Identification or Social Security Number)
(See Substitute Form W-9 Included Herein)
5
SIGN HERE
AND COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Holder(s) (See guarantee requirement below)
Dated: __________________________________________________________, 2002
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Common Share Certificate(s). If signed by person(s) to whom the Common Shares
represented hereby have been assigned or transferred as evidenced by
endorsement or stock powers transmitted herewith, the signatures must be
guaranteed. If signature is by an officer on behalf of a corporation or by an
executor, administrator, trustee, guardian, attorney, agent or any other
person acting in a fiduciary or representative capacity, please provide the
following information. See Instructions 2, 3 and 5.)
Name(s): __________________________________________________________________
--------------------------------------------------------------------
(Please Print)
Capacity (full title): ____________________________________________________
Address: __________________________________________________________________
--------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number: ___________________________________________
Tax Identification or
Social Security Number: __________________________________________________
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1, 2 AND 5)
Authorized Signature: _____________________________________________________
Name: _____________________________________________________________________
(Please Print)
Capacity (full title): ____________________________________________________
Name of Firm: _____________________________________________________________
Address: _________________________________________________________________
-------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number: ___________________________________________
Dated: _______________________________________________________, 2002
6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal if: (a) this Letter of Transmittal is signed by the
registered holder(s) of Common Shares (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Common
Shares) tendered herewith, unless such holder(s) has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" or (b) such Common Shares are tendered for the account of a firm
which is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of a recognized Medallion Program
approved by the Securities Transfer Association Inc., including the Securities
Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program
(SEMP) and the New York Stock Exchange Medallion Signature Program (MSP), or
any other "eligible guarantor institution" (as defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934) (each of the foregoing, an "Eligible
Institution"). In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter
of Transmittal.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by shareholders either if Common Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if tenders are to be made
pursuant to the procedure for tender by book-entry transfer set forth in the
section titled "The Offer to Exchange--Procedure for Tendering" of the Offer to
Exchange. Common Share Certificates evidencing tendered Common Shares, or
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
Common Shares into the Exchange Agent's account at the Book-Entry Transfer
Facility, as well as this Letter of Transmittal (or a facsimile hereof),
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message in connection with a book-entry transfer, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at one of its addresses set forth herein on or prior to the
Expiration Date. Shareholders whose Common Share Certificates are not
immediately available, who cannot deliver their Common Share Certificates and
all other required documents to the Exchange Agent on or prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their Common Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in the section titled "The Offer to
Exchange--Guaranteed Delivery" of the Offer to Exchange. Pursuant to such
procedure: (a) such tender must be made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Northrop Grumman, must be received
by the Exchange Agent on or prior to the Expiration Date; and (c) the Common
Share Certificates (or a Book-Entry Confirmation) representing all tendered
Common Shares in proper form for transfer, in each case, together with this
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry delivery, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent within three
New York Stock Exchange trading days after the date of execution of such Notice
of Guaranteed Delivery. If Common Share Certificates are forwarded separately
in multiple deliveries to the Exchange Agent, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) must accompany each
such delivery.
The method of delivery of this Letter of Transmittal, Common Share
Certificates and all other required documents, including delivery through the
Book-Entry Transfer Facility, is at the option and risk of the tendering
shareholder, and the delivery will be deemed made only when actually received
by the Exchange Agent (including, in the case of book-entry transfer, by
Book-Entry Confirmation). If delivery is by mail, registered mail with return
receipt requested and properly insured is recommended. In all cases, sufficient
time should be allowed to ensure timely delivery. No alternative, conditional
or contingent tenders will be accepted and no fractional Common Shares will be
purchased. All tendering shareholders, by execution of this Letter of
Transmittal (or a facsimile hereof if by an Eligible Institution), waive any
right to receive any notice of the acceptance of their Common Shares for
exchange.
3. Inadequate Space. If the space provided herein is inadequate, the
Common Share Certificate numbers and/or the number of Common Shares and any
other required information should be listed on a separate signed schedule
attached hereto.
7
4. Partial Tenders (Not Applicable to Shareholders Who Tender by Book-Entry
Transfer). If fewer than all the Common Shares evidenced by any Common Share
Certificate submitted are to be tendered, fill in the number of Common Shares
which are to be tendered in the box entitled "Number of Common Shares Tendered"
in the "Description of Common Shares Tendered." In such cases, the Exchange
Agent, on your behalf, will request that the Company's Transfer Agent (as
defined below) issue to you, unless otherwise provided in the appropriate box
on this Letter of Transmittal, new Common Share Certificates for the Common
Shares that were evidenced by your old Common Share Certificates, but were not
tendered by you, as soon as practicable after the Expiration Date. All Common
Shares represented by Common Share Certificates delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Common
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the Common Share Certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the Common Shares tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal. If any
of the tendered Common Shares are registered in different names on several
Common Share Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
Common Share Certificates.
If this Letter of Transmittal or any Common Share Certificates or stock
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to Northrop Grumman of their authority so to act
must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Common Shares listed and transmitted hereby, no endorsements of Common Share
Certificates or separate stock powers are required unless exchange is to be
made to, or Common Share Certificates for Common Shares not tendered or not
purchased are to be issued in the name of, a person other than the registered
holder(s). In such latter case, signatures on such Common Share Certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Common Share Certificate(s) listed, the Common
Share Certificate(s) must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered
holder(s) appear on the Common Share Certificate(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Northrop Grumman will pay any stock transfer taxes with respect to the
transfer and sale of Common Shares to it or its order pursuant to the Offer.
If, however, the Northrop Grumman Share Certificate(s) is to be made to, or
transfer of ownership of such Northrop Grumman Shares on the account books
maintained by the Book-Entry is to be registered under, and/or a check in lieu
of fractional shares if applicable is to be made to, or if Common Share
Certificates for Common Shares not tendered or accepted for exchange are to be
registered in the name of any person other than the registered holder(s), or if
tendered Common Share Certificates are registered in the name of any person
other than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder(s) or such
person) payable on account of the transfer to such person will be deducted from
the money to be paid in lieu of fractional shares, if any, and/or from the
value of the exchange consideration, unless satisfactory evidence of the
payment of such taxes or an exemption therefrom is submitted. Except as
otherwise provided in this Instruction 6, it will not be necessary for transfer
tax stamps to be affixed to the Common Share Certificate(s) listed in this
Letter of Transmittal.
7. Special Issuance and Delivery Instructions. If a check is to be issued
in the name of a person other than the signer of this Letter of Transmittal,
and/or if Northrop Grumman Share Certificate is to be issued to or the transfer
of the Northrop Grumman Shares is to be registered in the name of a person
other than the signer of this Letter of Transmittal, the appropriate boxes on
this Letter of Transmittal must be completed. Similarly, if any Common Share
Certificates for Common Shares not tendered or not accepted for exchange are to
be returned to a person other than the signer of this Letter of Transmittal, the
8
appropriate boxes on this Letter of Transmittal must be completed.
Additionally, if (i) the Northrop Grumman Share Certificate(s), (ii) a check in
lieu of fractional shares if applicable and/or (iii) any Common Share
Certificates are to be returned to a person other than the person(s) signing
this Letter of Transmittal or to an address other than that shown in this
Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must
be completed. A Book-Entry Shareholder may request that Common Shares not
accepted for exchange be credited to such account maintained at the Book-Entry
Transfer Facility as such Book-Entry Shareholder may designate under "Special
Issuance Instructions." If no such instructions are given, such Common Shares
not accepted for exchange will be returned by crediting the account at the
Book-Entry Transfer Facility designated above.
8. Waiver of Conditions. The conditions of the Offer may be waived by
Northrop Grumman in whole or in part at any time and from time to time in its
sole discretion.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. federal income
tax law, a shareholder whose tendered Common Shares are accepted for exchange
pursuant to the Offer may be subject to backup withholding at a rate of 31% on
all reportable payments received pursuant to the Offer. To prevent backup
withholding on such payments, the shareholder is required to notify the
Exchange Agent of the shareholder's current taxpayer identification number
("TIN") by completing the enclosed Substitute Form W-9, certifying that the TIN
provided on that form is correct (or that such shareholder is awaiting a TIN),
and that (i) the shareholder has not been notified by the Internal Revenue
Service that the shareholder is subject to backup withholding as a result of
failure to report interest or dividends or (ii) after being so notified, the
Internal Revenue Service has notified the shareholder that the shareholder is
no longer subject to backup withholding. If the Exchange Agent is not provided
with the correct TIN, such shareholder may be subject to a $50 penalty imposed
by the Internal Revenue Service and reportable payments that are made to such
shareholder with respect to Common Shares pursuant to the Offer will be subject
to backup withholding (see below).
Each shareholder is required to give the Exchange Agent the TIN (e.g.,
Social Security number or employer identification number) of the record holder
of the Common Shares. If the Common Shares are registered in more than one name
or are not registered in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report. A shareholder who
does not have a TIN may check the box in Part 3 of the Substitute Form W-9 if
such shareholder has applied for a number or intends to apply for a TIN in the
near future. If the box in Part 3 is checked, the shareholder must also
complete the "Certificate of Awaiting Taxpayer Identification Number" below in
order to avoid backup withholding. If the box is checked, reportable payments
that are received pursuant to the Offer will be subject to backup withholding
unless the shareholder has furnished the Exchange Agent with his or her TIN by
the time such payment is made. Moreover, if that box is checked and the
shareholder has not furnished its TIN within 60 days thereafter, 31% of all
dividend payments made to the shareholder will be withheld. A shareholder who
checks the box in Part 3 in lieu of furnishing such shareholder's TIN should
furnish the Exchange Agent with such shareholder's TIN as soon as it is
received.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements.
To avoid possible erroneous backup withholding, a shareholder who is exempt
from backup withholding should complete the Substitute Form W-9 by providing
his or her correct TIN, signing and dating the form, and writing exempt on the
face of the form. A shareholder who is a foreign individual or a foreign entity
should also submit to the Exchange Agent a properly completed Form W-8,
Certificate of Foreign Status (which the Exchange Agent will provide upon
request), signed under penalty of perjury, attesting to the shareholder's
exempt status. Shareholders are urged to consult their own tax advisors to
determine whether they are exempt from these backup withholding and reporting
requirements.
If backup withholding applies, the Exchange Agent is required to withhold
31% of the reportable payments that are made to the shareholder pursuant to the
Offer. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained by filing a tax return with the Internal Revenue Service.
9
10. Requests for Assistance or Additional Copies. Questions or requests
for assistance may be directed to the Dealer Manager or the Information Agent
at their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Exchange, this Letter of Transmittal and the Notice of
Guaranteed Delivery also may be obtained from the Information Agent, Dealer
Manager or from your broker, dealer, commercial bank, trust company or other
nominee.
11. Lost, Destroyed or Stolen Certificates. If any Common Share
Certificate has been lost, destroyed or stolen, the shareholder should promptly
notify National City Bank or such other transfer agent appointed by the Company
(the "Transfer Agent") at the address and telephone number provided to the
shareholder by the Transfer Agent. The shareholder then will be instructed as
to the steps that must be taken in order to replace the Common Share
Certificate. This Letter of Transmittal and related documents cannot be
processed until the lost Shares have been replaced.
12. Book-Entry (DRIP). If any Common Shares are held in the Company's
dividend reinvestment plan, you must complete the "Book-Entry (DRIP)" section
at the bottom of the front page.
Important: This Letter of Transmittal (or a facsimile hereof), together with
Common Share Certificates or confirmation of book-entry transfer or the Notice
of Guaranteed Delivery, and all other required documents, must be received by
the Exchange Agent on or prior to the Expiration Date.
10
EQUISERVE TRUST COMPANY
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN IN _________________________
Form W-9 THE BOX AT THE RIGHT AND CERTIFY BY Social Security Number
SIGNING AND DATING BELOW. OR
Department of the Treasury
Internal Revenue Service _________________________
Employer Identification Number
EquiServe Trust Company'sRequest for ----------------------------------------------------------------------------------
TaxpayerIdentification Number ("TIN") Part 2--Certification--Under penalties
of perjury, I certify that:
(1) The number shown on this form is my
correct Taxpayer Identification Number
(or I am waiting for a number to be
issued to me); and
(2) I am not subject to backup withholding
because (a) I am exempt from backup
withholding, or (b) I have not been
notified by the Internal Revenue
Service ("IRS") that I am subject to
backup withholding as a result of a
failure to report all interest or
dividends, or (c) the IRS has notified
me that I am no longer subject to
backup withholding, and
(3) I am a U.S. person (including a U.S. resident alien).
----------------------------------------------------------------------------------
Certification Instructions--You must cross Part 3--Awaiting TIN [_]
out item (2) above if you have been
notified by the IRS that you are subject
to backupwithholding because you failed
to report all interest and dividends
on your tax return. However, if after
being notified by the IRS that you were
subject to backup withholding you received
another notification from the IRS stating
that you are no longer subject to
backupwithholding, do not cross out such
item (2).
Signature: _________________________________________________________________
Name: ____________________________________________ Date: ___________________
Address: ___________________________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% ON REPORTABLE PAYMENTS TO YOU PURSUANT TO THE OFFER OR WITH
RESPECT TO ANY SUBSEQUENT DIVIDEND PAYMENTS MADE TO YOU BY NORTHROP
GRUMMAN. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number: (x) 31%
of all reportable payments made to me pursuant to the Offer will be withheld
if I do not provide a TIN by the time of payment and (y) 31% of all dividend
payments made to me by Northrop Grumman will be withheld unless a TIN is
provided within 60 days.
Signature: __________________________________ Date:__________, 2002
11
Questions and requests for assistance may be directed to the Information
Agent or Dealer Manager at their respective addresses and telephone numbers set
forth below. Additional copies of the Offer to Exchange, this Letter of
Transmittal or other related tender offer materials may be obtained from the
Information Agent, Dealer Manager or from your broker, dealer, commercial bank,
trust company or nominee.
The Information Agent for the Offer is:
D. F. King & Co., Inc.
U.S. and Canada Europe
77 Water Street No. 2 London Wall
Buildings, 2nd Floor
New York, New York 10005 London Wall
Banks and Brokers Call London, EC2M 5PP, United
Collect: 1-212-269-5550 Kingdom
All Others Call Toll
Free: 1-800-755-7250 Tel.: +(44) 207 920 9700
The Dealer Manager for the Offer is:
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Call Toll Free: (888) 328-4596
12
LETTER OF TRANSMITTAL
To Tender Shares of Serial Preference Stock II
of
TRW Inc.
for
Shares of Common Stock
of
Northrop Grumman Corporation
valued at $47.00 multiplied by the then-effective conversion rate of the
applicable Series of Serial Preference Stock II, in each case subject to the
procedures and limitations described in the Offer to Exchange and this Letter
of Transmittal.
THE OFFER AND ASSOCIATED WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY
TIME, ON FRIDAY, MARCH 29, 2002, UNLESS THE OFFER IS EXTENDED.
The Exchange Agent for the Offer is:
EQUISERVE TRUST COMPANY
By Mail: By Hand: By Overnight Delivery:
Equiserve Trust Company Equiserve Trust Company Equiserve Trust Company
P.O. Box 43034 c/o Securities Transfer and 40 Campanelli Drive
Providence, RI 02940-3034 Reporting Services, Inc. Braintree, Massachusetts 02184
100 William Street--Galleria
New York, New York 10038
Delivery of this Letter of Transmittal to an address other than as set forth
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of
Transmittal is completed. You must sign this Letter of Transmittal in the
appropriate space provided therefor, with signature guarantee if required, and
complete the substitute form W-9 set forth below. See Instruction 9.
DESCRIPTION OF PREFERENCE SHARES
TENDERED
- --------------------------------------------------------------------------------------------------
Name(s) and address(es) of
Registered Holder(s) Preference Share Certificate(s)
(Please fill in, if blank, exactly and Preference Shares Tendered
as name(s) appear(s) on (Attach additional list if necessary)
Preference Share Certificate(s)) See Instruction 3.
- --------------------------------------------------------------------------------------------------
Total Number of
Preference Shares
Preference Share Represented by Number of Preference
Certificate Number(s)* Certificate(s) Shares Tendered**
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
Total Preference
Shares
- -------------------------------------------------------------------------------------------------
* Need not be completed by shareholders delivering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Preference Shares
evidenced by any certificates delivered to the Exchange Agent are being
tendered. See Instruction 4.
This Letter of Transmittal is to be completed by shareholders, either if
Preference Share Certificates (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in the Offer to Exchange, as referred
to below) is utilized, if tenders of Preference Shares (as defined below) are
to be made by book-entry transfer into the account of EquiServe Trust Company,
as Exchange Agent (the "Exchange Agent"), at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in the
section titled "The Offer to Exchange--Procedure for Tendering" of the Offer to
Exchange (as defined below). Shareholders who tender Preference Shares by
book-entry transfer are referred to herein as "Book-Entry Shareholders."
Shareholders whose Preference Share Certificates are not immediately available
or who cannot deliver their Preference Share Certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date (as
defined in the Offer to Exchange), or who cannot complete the procedure for
book-entry transfer on a timely basis, must tender their Preference Shares
according to the guaranteed delivery procedure set forth in the section titled
"The Offer to Exchange--Guaranteed Delivery" of the Offer to Exchange. See
Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
SPECIAL TENDER INSTRUCTIONS
[_] CHECK HERE IF PREFERENCE SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER PREFERENCE SHARES BY BOOK-ENTRY
TRANSFER):
Name of Tendering Institution: ___________________________________________
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
[_] CHECK HERE IF PREFERENCE SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (please enclose a photocopy of such notice of guaranteed
delivery):
Name(s) of Registered Owner(s): __________________________________________
Window Ticket Number (if any): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Institution that Guaranteed Delivery: ____________________________
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
2
NOTE: SIGNATURES MUST BE PROVIDED ON PAGE 7
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Northrop Grumman Corporation, a Delaware
corporation ("Northrop Grumman"), the above described shares of (a) Cumulative
Serial Preference Stock II, $4.40 Convertible Series 1, no par value per share
(the "Series 1 Shares") of TRW Inc., an Ohio corporation (the "Company") and
(b) Cumulative Serial Preference Stock II, $4.50 Convertible Series 3, no par
value per share (the "Serial 3 Shares" and, together with the Series 1 Shares,
"Preference Shares," and the certificates representing such Preference Shares,
the "Preference Share Certificates") of the Company, for shares of Northrop
Grumman common stock, par value $1.00 per share (the "Northrop Grumman Shares,"
and the certificates representing such Northrop Grumman Shares, the "Northrop
Grumman Share Certificates"), valued at $47.00 multiplied by the effective
conversion rate of the applicable Preference Shares, upon the terms and subject
to the conditions set forth in the Offer to Exchange, dated March 4, 2002 (the
"Offer to Exchange"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (the "Letter of Transmittal,'' which, together with the
Offer to Exchange, as each may be amended or supplemented from time to time,
collectively constitute the "Offer"); provided, however, the Preference Shares
delivered herewith are being tendered only if the provisions of Chapter 1704 of
the Ohio Revised Code (the "Ohio business combination law") are not applicable
to the Offer or found to be invalid. By receiving this Letter of Transmittal,
Northrop Grumman shall have no right whatsoever to acquire the Preference
Shares if the provisions of the Ohio business combination law are applicable to
the Offer. The Northrop Grumman Shares issued pursuant to the Offer will not
bear any interest and will be reduced by the applicable withholding taxes.
Subject to, and effective upon, acceptance for exchange of the Preference
Shares tendered herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Northrop Grumman all right, title and interest in and to all of the Preference
Shares that are being tendered hereby and any and all Preference Shares or
other securities issued, paid or distributed or issuable, payable or
distributable in respect of such Preference Shares on or after March 4, 2002,
and prior to the transfer to the name of Northrop Grumman (or a nominee or
transferee of Northrop Grumman) on the Company's stock transfer records of the
Preference Shares tendered herewith (collectively, a "Distribution"). The
undersigned hereby irrevocably appoints the Exchange Agent the true and lawful
agent, attorney-in-fact and proxy of the undersigned with respect to such
Preference Shares (and any Distribution), with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest) to (a) deliver such Preference Share Certificates (and any
Distribution) or transfer ownership of such Preference Shares (and any
Distribution) on the account books maintained by the Book-Entry Transfer
Facility, together, in either case, with appropriate evidences of transfer, to
the Exchange Agent for the account of Northrop Grumman, (b) present such
Preference Shares (and any Distribution) for transfer on the books of the
Company, and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Preference Shares (and any Distribution), all in
accordance with the terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints designees of Northrop Grumman as such
undersigned's agents, attorneys-in-fact and proxies, with full power of
substitution, to the full extent of the undersigned's rights with respect to
the Preference Shares (and any Distribution) tendered by the undersigned and
accepted for exchange by Northrop Grumman. All such powers of attorney and
proxies shall be considered irrevocable (once the appointment is effective) and
coupled with an interest. Such appointment will be effective when, and only to
the extent that, Northrop Grumman deposits the Northrop Grumman Shares with the
Exchange Agent. Upon such acceptance for exchange, all prior powers of
attorney, proxies and consents given by the undersigned with respect to such
Preference Shares (and any Distribution) will be revoked without further
action, and no subsequent powers of attorney and proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of Northrop Grumman will, with respect to the
Preference Shares (and any Distribution) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned as they in their sole discretion may deem proper at any annual or
special meeting of Company shareholders or any adjournment or postponement
thereof, by written consent in lieu of any such meeting or otherwise. Northrop
Grumman reserves the right to require that, in order for the Preference Shares
to be deemed validly tendered, immediately upon Northrop Grumman's acceptance
of such Preference Shares, Northrop Grumman be able to exercise full voting
rights with respect to such Preference Shares (and any Distribution),
including, without limitation, voting at any
3
meeting of shareholders. However, prior to acceptance for exchange by Northrop
Grumman in accordance with the terms of the Offer to Exchange, Northrop Grumman
shall have no voting rights as a result of the tender of the Preference Shares.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the undersigned's
Preference Shares (and any Distribution) tendered hereby, and (b) when the
Preference Shares are accepted for exchange by Northrop Grumman, Northrop will
acquire good, marketable and unencumbered title to the Preference Shares (and
any Distribution), free and clear of all liens, restrictions, charges and
encumbrances. The undersigned further represents and warrants that the Common
Shares (and any distribution) tendered hereby will not be subject to any
adverse claim and will not have been transferred to Northrop Grumman in
violation of any contractual or other restriction on the transfer thereof. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Exchange Agent or Northrop Grumman to be necessary or desirable
to complete the sale, assignment and transfer of the Preference Shares (and any
Distribution) tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Exchange Agent for the account of Northrop Grumman
any and all Distributions in respect of the Preference Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance or appropriate assurance thereof, Northrop Grumman will be, subject
to applicable law, entitled to all rights and privileges as the owner of any
such Distribution and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by Northrop Grumman
in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of, the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Preference Shares made pursuant to the Offer are irrevocable
(once the appointment is effective), except that Preference Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration
Date, and, unless theretofore accepted for exchange by Northrop Grumman
pursuant to the Offer, may also be withdrawn at any time after May 3, 2002. See
the section titled "The Offer to Exchange--Withdrawal Rights" of the Offer to
Exchange.
The undersigned understands that tenders of Preference Shares pursuant to
any of the procedures described in the section titled "The Offer to
Exchange--Procedure for Tendering" of the Offer to Exchange and in the
instructions hereto will constitute a binding agreement between the undersigned
and Northrop Grumman upon the terms and subject to the conditions set forth in
the Offer, including the undersigned's representation that the undersigned owns
the Preference Shares being tendered.
Unless otherwise indicated herein under "Special Issuance Instructions,"
issue the Northrop Grumman Share Certificate(s) or transfer ownership of such
Northrop Grumman Shares on the account books maintained by the Book-Entry and
issue a check in lieu of fractional shares if applicable in the name(s) of the
registered holder(s) appearing under "Description of Preference Shares
Tendered." If applicable, return any certificate(s) for Preference Shares not
tendered or not accepted for exchange in the name(s) of the registered
holder(s) appearing under "Description of Preference Shares Tendered."
Similarly, unless otherwise indicated herein under "Special Delivery
Instructions," please mail the Northrop Grumman Share Certificate(s), a check
in lieu of fractional shares if applicable and/or return any certificate(s) for
Preference Shares not tendered or not accepted for exchange (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Preference Shares Tendered." In the event that
the "Special Issuance Instructions" are completed, please issue the Northrop
Grumman Share Certificate(s) or transfer ownership of such Northrop Grumman
Shares on the account books maintained by the Book-Entry, issue a check in lieu
of fractional shares if applicable and/or return any certificate(s) for
Preference Shares not tendered or not accepted for exchange to the person or
persons so indicated. Similarly, in the event that the "Special Delivery
Instructions" are completed, please deliver such Northrop Grumman
Certificate(s), a check in lieu of fractional shares and/or such Preference
Share Certificates to the person or persons so indicated. Unless otherwise
indicated herein under "Special Issuance Instructions," please credit any
Preference Shares tendered herewith by book-entry transfer that are not
accepted for exchange by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Northrop Grumman has
no obligation pursuant to the "Special Issuance Instructions," to transfer any
Preference Shares from the name(s) of the registered holder(s) thereof if
Northrop Grumman does not accept for exchange any of the Preference Shares so
tendered.
4
[_] CHECK HERE IF ANY PREFERENCE SHARE CERTIFICATES REPRESENTING PREFERENCE
SHARES THAT YOU OWN HAVE BEEN LOST, STOLEN OR DESTROYED AND SEE INSTRUCTION
11.*
Number of Preference Shares represented by lost, stolen or destroyed
Preference Share Certificates:____________
* YOU MUST CONTACT THE TRANSFER AGENT TO HAVE ALL LOST PREFERENCE SHARE
CERTIFICATES REPLACED IF YOU WANT TO TENDER SUCH PREFERENCE SHARES. SEE
INSTRUCTION 11 FOR CONTACT INFORMATION FOR THE TRANSFER AGENT.
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the issuance of Northrop Grumman Share
Certificate(s) or transfer of ownership or such Northrop Grumman Shares on the
account books maintained by the Book-Entry, a check in lieu of fractional
shares if applicable and/or return or issuance any certificate(s) for
Preference Shares tendered or not accepted for exchange are to be issued in
the name of someone other than the undersigned or if Preference Shares
tendered by book-entry transfer that are not accepted for payment are to be
returned by credit to an account maintained at the Book-Entry Transfer
Facility other than that designated above.
Issue [_] Check and/or
[_] Preference Share Certificate(s) to:
Name: ______________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
______________________________________________________________________________
(Tax Identification or Social Security No.)
(See Substitute Form W-9 Included Herein)
[_] Credit Preference Shares tendered by book-entry transfer that are not
accepted for payment to the Book Entry Transfer Facility the account set
forth below:
______________________________________________________________________________
______________________________________________________________________________
(Book Entry Transfer Facility Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the Northrop Grumman Share Certificate(s), a check
in lieu of fractional shares if applicable and/or any certificate(s) for
Preference Shares not tendered or not accepted for exchange are to be issued
in the name of someone other than the undersigned or to the undersigned at an
address other than that shown above.
Issue [_] Check and/or
[_] Preference Share Certificate(s) to:
Name: ______________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
______________________________________________________________________________
(Tax Identification or Social Security No.)
(See Substitute Form W-9 Included Herein)
5
SIGN HERE
(And Complete Accompanying Substitute Form W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Holder(s) (See guarantee requirement below)
Dated: __________________________________________________________, 2002
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Preference Share Certificate(s). If signed by person(s) to whom the
Preference Shares represented hereby have been assigned or transferred as
evidenced by endorsement or stock powers transmitted herewith, the signatures
must be guaranteed. If signature is by an officer on behalf of a corporation
or by an executor, administrator, trustee, guardian, attorney, agent or any
other person acting in a fiduciary or representative capacity, please provide
the following information. (See Instructions 2, 3 and 5.)
Name(s): __________________________________________________________________
--------------------------------------------------------------------
(Please Print)
Capacity (full title): ____________________________________________________
Address: __________________________________________________________________
--------------------------------------------------------------------
(Zip Code)
Area Code and Telephone No.: ______________________________________________
Tax Identification or
Social Security No.: _____________________________________________________
GUARANTEE OF SIGNATURE(S) (See Instructions 1, 2 And 5)
Authorized Signature: _____________________________________________________
Name: _____________________________________________________________________
(Please Print)
Capacity (full title): ____________________________________________________
Name of Firm: _____________________________________________________________
Address: _________________________________________________________________
-------------------------------------------------------------------
(Zip Code)
Area Code and Telephone No.: ______________________________________________
Dated: _______________________________________________________, 2002
6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal if: (a) this Letter of Transmittal is signed by the
registered holder(s) of Preference Shares (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Preference
Shares) tendered herewith, unless such holder(s) has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" or (b) such Preference Shares are tendered for the account of a
firm which is a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of a recognized Medallion
Program approved by the Securities Transfer Association Inc., including the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange
Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature
Program (MSP), or any other "eligible guarantor institution" (as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934) (each of the foregoing,
an "Eligible Institution"). In all other cases, all signatures on this Letter
of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5
of this Letter of Transmittal.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by shareholders either if Preference Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if tenders are to be made
pursuant to the procedure for tender by book-entry transfer set forth in the
section titled "The Offer to Exchange--Procedures for Tendering" of the Offer
to Exchange. Preference Share Certificates evidencing tendered Preference
Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of Preference Shares into the Exchange Agent's account at the
Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a
facsimile hereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at one of its addresses set forth herein on
or prior to the Expiration Date. Shareholders whose Preference Share
Certificates are not immediately available, who cannot deliver their Preference
Share Certificates and all other required documents to the Exchange Agent on or
prior to the Expiration Date or who cannot complete the procedure for delivery
by book-entry transfer on a timely basis may tender their Preference Shares by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedure set forth in the section titled "The Offer
to Exchange--Guaranteed Delivery" of the Offer to Exchange. Pursuant to such
procedure: (a) such tender must be made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Exchange, must be received by the
Exchange Agent on or prior to the Expiration Date; and (c) the Preference Share
Certificates (or a Book-Entry Confirmation) representing all tendered
Preference Shares in proper form for transfer, in each case, together with this
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry delivery, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent within three
New York Stock Exchange trading days after the date of execution of such Notice
of Guaranteed Delivery. If Preference Share Certificates are forwarded
separately in multiple deliveries to the Exchange Agent, a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) must accompany
each such delivery.
The method of delivery of this Letter of Transmittal, Preference Share
Certificates and all other required documents, including delivery through the
Book-Entry Transfer Facility, is at the option and risk of the tendering
shareholder, and the delivery will be deemed made only when actually received
by the Exchange Agent (including, in the case of book-entry transfer, by
Book-Entry Confirmation). If delivery is by mail, registered mail with return
receipt requested and properly insured is recommended. In all cases, sufficient
time should be allowed to ensure timely delivery. No alternative, conditional
or contingent tenders will be accepted and no fractional Preference Shares will
be purchased. All tendering shareholders, by execution of this Letter of
Transmittal (or a facsimile hereof if by an Eligible Institution), waive any
right to receive any notice of the acceptance of their Preference Shares for
payment.
3. Inadequate Space. If the space provided herein is inadequate, the
Preference Share Certificate numbers and/or the number of Preference Shares and
any other required information should be listed on a separate signed schedule
attached hereto.
7
4. Partial Tenders (Not Applicable to Shareholders Who Tender by Book-Entry
Transfer). If fewer than all the Preference Shares evidenced by any Preference
Share Certificate submitted are to be tendered, fill in the number of
Preference Shares which are to be tendered in the box entitled "Number of
Preference Shares Tendered" in the "Description of Preference Shares Tendered."
In such cases, the Exchange Agent, on your behalf, will request that the
Company's Transfer Agent (as defined below) issue to you, unless otherwise
provided in the appropriate box on this Letter of Transmittal, new Preference
Share Certificates for the Preference Shares that were evidenced by your old
Preference Share Certificates, but were not tendered by you, as soon as
practicable after the Expiration Date. All Preference Shares represented by
Preference Share Certificates delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the
Preference Shares tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the Preference Share Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Preference Shares tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal. If
any of the tendered Preference Shares are registered in different names on
several Preference Share Certificates, it will be necessary to complete, sign
and submit as many separate Letters of Transmittal as there are different
registrations of Preference Share Certificates.
If this Letter of Transmittal or any Preference Share Certificates or stock
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to Northrop Grumman of their authority so to act
must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Preference Shares listed and transmitted hereby, no endorsements of Preference
Share Certificates or separate stock powers are required unless payment is to
be made to, or Preference Share Certificates for Preference Shares not tendered
or not purchased are to be issued in the name of, a person other than the
registered holder(s). In such latter case, signatures on such Preference Share
Certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Preference Share Certificate(s) listed, the
Preference Share Certificate(s) must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name(s) of the registered
holder(s) appear on the Preference Share Certificate(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Northrop Grumman will pay any stock transfer taxes with respect to the
transfer and sale of Preference Shares to it or its order pursuant to the
Offer. If, however, the Northrop Grumman Share Certificate(s) is to be made to
or transfer of ownership of such Northrop Grumman Shares on the account books
maintained by the Book-Entry is to be registered under and/or a check in lieu
of fractional shares if applicable is to be made to, or if Preference Share
Certificates for Preference Shares not tendered or accepted for exchange are to
be registered in the name of any person other than the registered holder(s), or
if tendered Preference Share Certificates are registered in the name of any
person other than the person(s) signing this Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holder(s) or
such person) payable on account of the transfer to such person will be deducted
from the money to be paid in lieu of fractional shares if any and/or from the
value of the exchange consideration, if applicable, unless satisfactory
evidence of the payment of such taxes or an exemption therefrom is submitted.
Except as otherwise provided in this Instruction 6, it will not be necessary
for transfer tax stamps to be affixed to the Preference Share Certificate(s)
listed in this Letter of Transmittal.
7. Special Issuance and Delivery Instructions. If a check is to be issued
in the name of a person other than the signer of this Letter of Transmittal,
and/or if Northrop Grumman Share Certificate(s) is to be issued to, or the
transfer of the Northrop Grumman Shared is to be registered in the name of a
person other that the signer of this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed. Similarly, if any
Preference Share Certificates for
8
Preference Shares not tendered or not accepted for exchange are to be returned
to a person other than the signer of this Letter of Transmittal, the
appropriate boxes on this Letter of Transmittal must be completed.
Additionally, if (i) the Northrop Grumman Share Certificate(s), (ii) a check in
lieu of fractional shares if applicable and/or (iii) any Preference Share
Certificates are to be returned to a person other than the person(s) signing
this Letter of Transmittal or to an address other that that shown in this
Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must
be completed. A Book-Entry Shareholder may request that Preference Shares not
accepted for exchange be credited to such account maintained at the Book-Entry
Transfer Facility as such Book-Entry Shareholder may designate under "Special
Issuance Instructions." If no such instructions are given, such Preference
Shares not accepted for exchange will be returned by crediting the account at
the Book-Entry Transfer Facility designated above.
8. Waiver of Conditions. The conditions of the Offer may be waived by
Northrop Grumman in whole or in part at any time and from time to time in its
sole discretion.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. federal income
tax law, a shareholder whose tendered Preference Shares are accepted for
exchange pursuant to the Offer may be subject to backup withholding at a rate
of 31% on all reportable payments received pursuant to the Offer. To prevent
backup withholding on such payments, the shareholder is required to notify the
Exchange Agent of the shareholder's current taxpayer identification number
("TIN") by completing the enclosed Substitute Form W-9, certifying that the TIN
provided on that form is correct (or that such shareholder is awaiting a TIN),
and that (i) the shareholder has not been notified by the Internal Revenue
Service that the shareholder is subject to backup withholding as a result of
failure to report interest or dividends or (ii) after being so notified, the
Internal Revenue Service has notified the shareholder that the shareholder is
no longer subject to backup withholding. If the Exchange Agent is not provided
with the correct TIN, such shareholder may be subject to a $50 penalty imposed
by the Internal Revenue Service and reportable payments that are made to such
shareholder with respect to Preference Shares pursuant to the Offer will be
subject to backup withholding (see below).
Each shareholder is required to give the Exchange Agent the TIN (e.g.,
Social Security number or employer identification number) of the record holder
of the Preference Shares. If the Preference Shares are registered in more than
one name or are not registered in the name of the actual owner, consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which number to report. A
shareholder who does not have a TIN may check the box in Part 3 of the
Substitute Form W-9 if such shareholder has applied for a number or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder must also complete the "Certificate of Awaiting Taxpayer
Identification Number'' below in order to avoid backup withholding. If the box
is checked, reportable payments that are received pursuant to the Offer will be
subject to backup withholding unless the shareholder has furnished the Exchange
Agent with his or her TIN by the time such payment is made. Moreover, if that
box is checked and the shareholder has not furnished its TIN within 60 days
thereafter, 31% of all dividend payments made to the shareholder will be
withheld. A shareholder who checks the box in Part 3 in lieu of furnishing such
shareholder's TIN should furnish the Exchange Agent with such shareholder's TIN
as soon as it is received.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements.
To avoid possible erroneous backup withholding, a shareholder who is exempt
from backup withholding should complete the Substitute Form W-9 by providing
his or her correct TIN, signing and dating the form, and writing exempt on the
face of the form. A shareholder who is a foreign individual or a foreign entity
should also submit to the Exchange Agent a properly completed Form W-8,
Certificate of Foreign Status (which the Exchange Agent will provide upon
request), signed under penalty of perjury, attesting to the shareholder's
exempt status. Shareholders are urged to consult their own tax advisors to
determine whether they are exempt from these backup withholding and reporting
requirements.
If backup withholding applies, the Exchange Agent is required to withhold
31% of the reportable payments that are made to the shareholder pursuant to the
Offer. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained by filing a tax return with the Internal Revenue Service.
9
10. Requests for Assistance or Additional Copies. Questions or requests
for assistance may be directed to the Dealer Manager or the Information Agent
at their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Exchange, this Letter of Transmittal and the Notice of
Guaranteed Delivery also may be obtained from the Information Agent, Dealer
Manager or from your broker, dealer, commercial bank, trust company or other
nominee.
11. Lost, Destroyed or Stolen Certificates. If any Preference Share
Certificate has been lost, destroyed or stolen, the shareholder should promptly
notify the National City Bank or such other transfer agent appointed by the
Company (the "Transfer Agent") at the address and telephone number provided to
the shareholder by the transfer agent. The shareholder then will be instructed
as to the steps that must be taken in order to replace the Preference Share
Certificate. This Letter of Transmittal and related documents cannot be
processed until the lost Preference Share Certificate has been replaced.
Important: This Letter of Transmittal (or a facsimile hereof), together with
Preference Share Certificates or confirmation of book-entry transfer or the
Notice of Guaranteed Delivery, and all other required documents, must be
received by the Exchange Agent on or prior to the Expiration Date.
10
EQUISERVE TRUST COMPANY
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR
Form W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number
SIGNING AND DATING BELOW.
______________________________
________________________________________________________________________________
Part 2--Certification--Under penalties of perjury, I certify that:
Department of the Treasury
Internal Revenue Service (1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a failure
to report interest or dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding, and
(3) I am a U.S. person (including a U.S. resident alien).
________________________________________________________________________________
EquiServe Trust Company's Request for Certification Instructions--You must cross [_] Part 3--
Taxpayer Identification Number ("TIN") out item (2) above if you have been Awaiting TIN
notified by the IRS that you are subject
to backup withholding because you failed
to report all interest and dividends on
your tax return. However, if after being
notified by the IRS that you were subject
to backup withholding you received another
notification from the IRS stating that you
are no longer subject to backup withholding,
do not cross out such item (2).
Signature: _________________________________
Name: ____________________ Date: ___________
Address: ___________________________________
(Please Print)
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% ON REPORTABLE PAYMENTS TO YOU PURSUANT TO THE OFFER OR WITH
RESPECT TO ANY SUBSEQUENT DIVIDEND PAYMENTS MADE TO YOU BY NORTHROP
GRUMMAN. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number: (x) 31%
of all reportable payments made to me pursuant to the Offer will be withheld
if I do not provide a TIN by the time of payment and (y) 31% of all dividend
payments made to me by Northrop Grumman will be withheld unless a TIN is
provided within 60 days.
Signature: __________________ Date:______________, 2002
11
Questions and requests for assistance may be directed to the Information
Agent or Dealer Manager at their respective addresses and telephone numbers set
forth below. Additional copies of the Offer to Purchase, this Letter of
Transmittal or other related tender offer materials may be obtained from the
Information Agent, Dealer Manager or from your broker, dealer, commercial bank,
trust company or nominee.
The Information Agent for the Offer is:
D. F. King & Co., Inc.
U.S. and Canada Europe
77 Water Street No. 2 London Wall
Buildings, 2nd floor
New York, New York 10005 London Wall
Banks and Brokers Call London EC2M SPP, United
Collect: 1-212-269-5550 Kingdom
All Others Call Toll
Free: 1-800-755-7250 Tel.: +(44) 207 920 9700
The Dealer Manager for the Offer is:
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Call Toll Free: (888) 328-4596
12
NORTHROP GRUMMAN CORPORATION
Notice of Guaranteed Delivery
(Not To Be Used For Signature Guarantees)
for
Tender of Shares of Common Stock
of
TRW INC.
for
Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
Valued at $47.00
subject to the procedures and limitations described
in the Offer to Exchange and the related Letter of Transmittal
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.625 per share (the "Common
Shares," and the certificates representing such Common Shares, the "Common
Share Certificates") of TRW Inc., an Ohio corporation (the "Company"), are not
immediately available or time will not permit the Common Share Certificates and
all required documents to reach the Exchange Agent (as defined in the Offer to
Exchange) on or prior to the Expiration Date (as defined in the Offer to
Exchange) or if the procedures for delivery by book-entry transfer, as set
forth in the Offer to Exchange, cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile transmission or mailed to the Exchange Agent according to the
guaranteed delivery procedure set forth in the section titled "The Offer to
Exchange--Guaranteed Delivery" of the Offer to Exchange.
The Exchange Agent for the Offer is:
EQUISERVE TRUST COMPANY
By Mail: By Hand: By Overnight Delivery:
EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY
P.O. Box 43034 c/o Securities Transfer and 40 Campanelli Drive
Providence, RI Reporting Services, Inc. Braintree, Massachusetts
02940-3034 100 William Street--Galleria 02184
New York, New York 10038
By Facsimile Transmission: Confirm Receipt of
(Eligible Institutions Facsimile
Only) by Telephone Only:
(781) 575-4826 (781) 575-4816
or
(781) 575-4827
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX IN THE LETTER OF TRANSMITTAL.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
Ladies and Gentlemen:
The undersigned hereby tenders to Northrop Grumman Corporation, a Delaware
corporation ("Northrop Grumman") in accordance with the terms and subject to
the conditions set forth in Northrop Grumman's Offer to Exchange, dated March
4, 2002 (the "Offer to Exchange"), and in the related Letter of Transmittal
(the "Letter of Transmittal," which, together with the Offer to Exchange, as
each may be amended or supplemented from time to time, collectively
constitute the "Offer"), receipt of which is hereby acknowledged, the number
of Common Shares indicated below pursuant to the procedures for guaranteed
delivery set forth in the section titled "The Offer to Exchange--Guaranteed
Delivery" of the Offer to Exchange.
Certificate Nos. (If Available): _________________________________________
Number of Common Shares: __________________________________________________
(Check the following box if Common Shares will be tendered by book-entry
transfer) [_]
Account Number: ___________________________________________________________
Dated: _____________________________________________________ , 2002
Name(s) of Record Holder(s): ______________________________________________
(Please type or print)
Address(es): ______________________________________________________________
Zip Code: _________________________________________________________________
Area Code and Tel. No(s): _________________________________________________
Signature(s): _____________________________________________________________
2
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of a recognized Medallion
Program approved by the Securities Transfer Association Inc., including the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange
Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature
Program (MSP), or any other "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934 ("Exchange Act"), (a)
represents that the above named person(s) "own(s)" the Common Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under Exchange Act, (b)
represents that such tender of Common Shares complies with Rule 14e-4 under
the Exchange Act, and (c) guarantees to deliver to the Exchange Agent either
the Common Share Certificates evidencing all tendered Common Shares, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the
Offer to Exchange) with respect to such Common Shares, in either case,
together with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Exchange) in the case of a
book-entry delivery, and any other required documents, all within three New
York Stock Exchange trading days after the date hereof. The eligible
guarantor institution that completes this form must communicate the guarantee
to the Exchange Agent and must deliver the Letter of Transmittal and Common
Share Certificates to the Exchange Agent within the time period indicated
herein. Failure to do so may result in financial loss to such eligible
guarantor institution.
Name of Firm: _____________________________________________________________
Authorized Signature: _____________________________________________________
Name: _____________________________________________________________________
(Please Print or Type)
Title: ____________________________________________________________________
Address: __________________________________________________________________
Zip Code: _________________________________________________________________
Area Code and Telephone Number: ___________________________________________
Dated: ________________________________________________________ , 2002
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
NORTHROP GRUMMAN CORPORATION
Notice of Guaranteed Delivery
(Not To Be Used For Signature Guarantees)
for
Tender of Shares of Serial Preference Stock II
of
TRW INC.
for
Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
valued at $47.00 multiplied by the then-effective conversion rate of the
applicable Series of Serial Preference Stock II, in each case subject to the
procedures and limitations described in the Offer to Exchange and the related
Letter of Transmittal.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates
representing shares of Cumulative Serial Preference Stock II, $4.40 Convertible
Series 1, no par value per share, of TRW, Inc., an Ohio corporation (the
"Company"), and Cumulative Serial Preference Stock II, $4.50 Convertible Series
3, no par value per share, of the Company (together, the "Preference Shares,"
and the certificates representing such Preference Shares, the "Preference Share
Certificates"), are not immediately available or time will not permit the
Preference Share Certificates and all required documents to reach the Exchange
Agent (as defined in the Offer to Exchange) on or prior to the Expiration Date
(as defined in the Offer to Exchange) or if the procedures for delivery by
book-entry transfer, as set forth in the Offer to Exchange, cannot be completed
on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand,
transmitted by facsimile transmission or mailed to the Exchange Agent according
to the procedure set forth in the section titled "The Offer to
Exchange--Guaranteed Delivery" of the Offer to Exchange.
The Exchange Agent for the Offer is:
EQUISERVE TRUST COMPANY
By Mail: By Hand: By Overnight Delivery:
EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY
P.O. Box 43034 c/o Securities Transfer 40 Campanelli Drive
Providence, RI and Braintree, Massachusetts
02940-3034 Reporting Services, Inc. 02184
100 William
Street--Galleria
New York, New York 10038
By Facsimile Transmission: Confirm Receipt of
(Eligible Institutions Facsimile
Only) by Telephone Only:
(781) 575-4826 (781) 575-4816
or
(781) 575-4827
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX IN THE LETTER OF TRANSMITTAL.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
Ladies and Gentlemen:
The undersigned hereby tenders to Northrop Grumman Corporation, a Delaware
corporation ("Northrop Grumman"), in accordance with the terms and subject to
the conditions set forth in the Offer to Exchange, dated March 4, 2002 (the
"Offer to Exchange"), and in the related Letter of Transmittal (the "Letter
of Transmittal," which, together with the Offer to Exchange, as each may be
amended or supplemented from time to time, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Preference
Shares indicated below pursuant to the procedures for guaranteed delivery set
forth in the section titled "The Offer to Exchange--Guaranteed Delivery" of
the Offer to Exchange.
Series 1 Certificate Nos. (If Available): _________________________________
Number of Series 1 Preference Shares: _____________________________________
Series 3 Certificate Nos. (If Available): _________________________________
Number of Series 3 Preference Shares: _____________________________________
(Check the following box if Preference Shares will be tendered by book-entry
transfer) [_]
Account Number: __________________________________________________________
Dated: __________________________________________________________, 2002
Name(s) of Record Holder(s): ______________________________________________
(Please type or print)
Address(es): ______________________________________________________________
Zip Code: _________________________________________________________________
Area Code and Tel. No(s): _________________________________________________
Signature(s): _____________________________________________________________
2
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of a recognized Medallion
Program approved by the Securities Transfer Association Inc., including the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange
Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature
Program (MSP), or any other "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934 ("Exchange Act"), (a)
represents that the above named person(s) "own(s)" the Preference Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under Exchange
Act, (b) represents that such tender of Preference Shares complies with Rule
14e-4 under the Exchange Act, and (c) guarantees to deliver to the Exchange
Agent either the Preference Share Certificates evidencing all tendered
Preference Shares, in proper form for transfer, or a Book-Entry Confirmation
(as defined in the Offer to Exchange) with respect to such Preference Shares,
in either case, together with the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined in the Offer to Exchange) in the
case of a book-entry delivery, and any other required documents, all within
three New York Stock Exchange trading days after the date hereof. The
eligible guarantor institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the Letter of Transmittal
and Preference Share Certificates to the Exchange Agent within the time
period indicated herein. Failure to do so may result in financial loss to
such eligible guarantor institution.
Name of Firm: _____________________________________________________________
Authorized Signature: _____________________________________________________
Name: _____________________________________________________________________
(Please Print or Type)
Title: ____________________________________________________________________
Address: __________________________________________________________________
Zip Code: _________________________________________________________________
Area Code and Telephone No.: ______________________________________________
Dated: __________________________________________________________, 2002
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
SALOMON SMITH BARNEY INC.
Offer to Exchange Each Outstanding Share of Common Stock of
TRW INC.
for
Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
Valued at $47.00
and
Each Outstanding Share of Serial Preference Stock II
of
TRW INC.
for Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
in each case subject to the procedures and limitations described in
the Offer to Exchange and the related Letter of Transmittal.
THE OFFER AND ASSOCIATED WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, MARCH 29, 2002, UNLESS THE OFFER IS EXTENDED.
March 4, 2002
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged to act as Dealer Manager in connection with the third
party tender offer by Northrop Grumman Corporation, a Delaware corporation
("Northrop Grumman"), to exchange all of the outstanding shares of common
stock, par value $0.625 per share (the "Common Shares'' and the certificates
representing such Common Shares, the "Common Share Certificates") of TRW Inc.,
an Ohio corporation (the "Company"), for shares of common stock of Northrop
Grumman, par value $1.00 per share (the "Northrop Grumman Shares" and the
certificates representing such Northrop Grumman Shares, the "Northrop Grumman
Share Certificates"), valued at $47.00, upon the terms and subject to the
conditions set forth in the Offer to Exchange dated as of March 4, 2002 (the
"Offer to Exchange") and in the related Letter of Transmittal for the Common
Shares and all of the outstanding shares of Cumulative Serial Preference Stock
II, $4.40 Convertible Series 1, no par value per share of the Company, and
Cumulative Serial Preference Stock II, $4.50 Convertible Series 3, no par value
per share, of the Company (together, the "Preference Shares'' and the
certificates representing such Preference Shares, the "Preference Share
Certificates"), for Northrop Grumman Shares valued at $47.00 multiplied by the
effective conversion rate of the applicable Preference Share subject to the
procedures and limitations described in the Offer to Exchange and the related
Letter of Transmittal for the Preference Shares (each individually, "Letter of
Transmittal,'' which, together with the Common Share Letter of Transmittal and
the Offer to Exchange, as each may be amended or supplemented from time to
time, collectively constitute the "Offer"). The Northrop Grumman Shares issued
pursuant to the Offer will not bear any interest and will be reduced by the
applicable withholding taxes.
The Offer is conditioned upon, among other things:
(i) there being validly tendered and not properly withdrawn prior to the
expiration of the Offer a number of shares of Common Shares and
Preference Shares which, together with any Common Shares that Northrop
Grumman beneficially owns for its own account, will constitute at least
a majority of the total outstanding Common Shares on a fully-diluted
basis;
(ii) the expiration or termination of any applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements as of 1976, as amended,
Council Regulation (EEC) No. 4064/89 of the Council of the European
Union and, any other applicable similar foreign laws or regulations;
(iii) the requisite approval of the Company's shareholders under the Ohio
control share acquisition law or Northrop Grumman's being satisfied, in
its sole discretion, that such law is inapplicable or invalid;
(iv) the expiration or termination of the waiting period during which the
Ohio Division of Securities may suspend the Offer under Title 17 of the
Ohio Revised Code, without the occurrence of any suspension or Northrop
Grumman's being satisfied, in its sole discretion, that such law is
inapplicable or invalid;
(v) the approval of issuance of shares of Northrop Grumman Common Stock
pursuant to the Offer by the stockholders of Northrop Grumman;
(vi) the Company's not having entered into or effectuated any other agreement
or transaction with any person or entity having the effect of impairing
Northrop Grumman's ability to acquire the Company or otherwise
diminishing the value of the acquisition of the Company; and
(vii) the registration statement relating to the Northrop Grumman Shares
having become effective.
For your information and for forwarding to your clients for whom you hold
Common Shares and/or Preference Shares registered in your name or in the name
of your nominee or who hold Common Shares and/or Preference Shares registered
in their own names, we enclose the following documents:
1. Offer to Exchange dated March 4th, 2002.
2. Letter of Transmittal to tender Common Shares for your use and for the
information of your clients who hold Common Shares. Facsimile copies of the
Letter of Transmittal may be used to tender Common Shares.
3. Letter of Transmittal to tender Preference Shares for your use and for
the information of your clients who hold Preference Shares. Facsimile copies
of the Letter of Transmittal may be used to tender Preference Shares.
4. Two separate Letters to Clients, which may be sent to your clients for
whose account you hold Common Shares or Preference Shares, as the case may
be, registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer.
5. Notice of Guaranteed Delivery to be used to accept the Offer if Common
Share Certificates are not immediately available or time will not permit the
Common Share Certificates and all required documents to reach the Exchange
Agent on or prior to the Expiration Date (as defined in the Offer to
Exchange) or if the procedures for delivery by book-entry transfer, as set
forth in the Offer to Exchange, cannot be completed on a timely basis.
6. Notice of Guaranteed Delivery to be used to accept the Offer if
Preference Share Certificates are not immediately available or time will not
permit the Preference Share Certificates and all required documents to reach
the Exchange Agent on or prior to the Expiration Date or if the procedures
for delivery by book-entry transfer, as set forth in the Offer to Exchange,
cannot be completed on a timely basis.
7. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
8. Return envelope addressed to EquiServe Trust Company, as Exchange
Agent.
In accordance with the terms and subject to the satisfaction or waiver
(where applicable) of the conditions to the Offer, Northrop Grumman will be
deemed to have accepted for exchange (and thereby purchased), Common Shares and
Preference Shares validly tendered and not properly withdrawn prior to the
Expiration Date if, as and when Northrop Grumman gives oral or written notice
to the Exchange Agent of Northrop Grumman's acceptance for exchange of the
tenders of such
2
Common Shares and Preference Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, issuance of Northrop Grumman Shares in
exchange for Common Shares and Preference Shares accepted for exchange pursuant
to the Offer will be made only after timely receipt by the Exchange Agent of
(1) the Common Share Certificates, the Preference Share Certificates or a
Book-Entry Confirmation (as defined in the Offer to Exchange) of a book-entry
transfer of such Common Shares and/or Preference Shares into the Exchange
Agent's account at the Book-Entry Transfer Facility (as defined in the
applicable Letter of Transmittal) pursuant to the procedures set forth in the
section titled "The Offer to Exchange--Procedure for Tendering" of the Offer to
Exchange; (2) the Letter of Transmittal to tender Common Shares and/or the
Letter of Transmittal to tender Preference Shares (or a facsimile thereof)
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Exchange) in lieu of such Letters of Transmittal; and (3) any other
documents required under the applicable Letters of Transmittal.
Northrop Grumman will not pay any commissions or fees to any broker, dealer
or other person (other than the Exchange Agent, the Information Agent and the
Dealer Manager, as described in the Offer to Exchange) in connection with the
solicitation of tenders of Common Shares and Preference Shares pursuant to the
Offer. Northrop Grumman will, however, upon request, reimburse you for
customary clerical and mailing expenses incurred by you in forwarding any of
the enclosed materials to your clients.
Northrop Grumman will pay any stock transfer taxes with respect to the
transfer and sale of Common Shares and/or Preference Shares to it or to its
order pursuant to the Offer, except as otherwise provided in Instruction 6 of
each of the enclosed Letters of Transmittal.
Your prompt action is requested. We urge you to contact your clients as
promptly as possible. Please note that Offer and withdrawal rights expire at
12:00 midnight, New York City time, on Friday, March 29, 2002, unless the Offer
is extended.
In order for a shareholder of the Company to take advantage of the Offer,
the Letters of Transmittal to tender Common Shares or Preference Shares (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message in lieu of the Letter of Transmittal) and any other documents
required by the Letters of Transmittal should be sent to the Exchange Agent and
Common Share Certificates and Preference Share Certificates should be
delivered, or Common Shares and Preference Shares should be tendered pursuant
to the procedure for book-entry transfer, all in accordance with the
instructions set forth in the applicable Letter of Transmittal and the Offer to
Exchange.
Holders of Common Shares and/or Preference Shares whose Common Share
Certificates and/or Preference Share Certificates are not immediately available
or who cannot deliver their Common Share Certificates and/or Preference Share
Certificates and all other required documents to the Exchange Agent on or prior
to the Expiration Date of the Offer, or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis, must tender their Common
Shares and/or Preference Shares according to the guaranteed delivery procedures
set forth in the section titled "The Offer to Exchange--Guaranteed Delivery" of
the Offer to Exchange.
Inquiries you may have with respect to the Offer should be addressed to the
Information Agent or the Dealer Manager at its addresses and telephone numbers
set forth on the back page of the prospectus. Requests for copies of the Offer
to Exchange, the Letters of Transmittal and all other tender offer materials
may be directed to the Information Agent.
Very truly yours,
SALOMON SMITH BARNEY INC.
Enclosures
Nothing contained herein or in the enclosed documents shall constitute you
or any other person as an agent of Northrop Grumman, the Exchange Agent, the
Information Agent, the Dealer Manager or any affiliate of any of them, or
authorize you or any other person to make any statement or use any document on
behalf of any of them in connection with the Offer other than the enclosed
documents and the statements contained therein.
3
NORTHROP GRUMMAN CORPORATION
Offer to Exchange Each Outstanding Share Of Common Stock
of
TRW INC.
for
Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
Valued at $47.00
subject to the procedures and limitations described
in the Offer to Exchange and the related Letter of Transmittal
THE OFFER AND ASSOCIATED WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, MARCH 29, 2002, UNLESS THE OFFER IS EXTENDED.
March 4, 2002,
To Our Clients:
Enclosed for your consideration is an Offer to Exchange, dated March 4, 2002
(the "Offer to Exchange") and the related Letter of Transmittal (the "Letter of
Transmittal," which, together with the Offer to Exchange, as each may be
amended or supplemented from time to time, collectively constitute the "Offer")
relating to the third party tender offer by Northrop Grumman Corporation, a
Delaware corporation ("Northrop Grumman"), to exchange all of the outstanding
shares of common stock of TRW Inc., an Ohio corporation (the "Company") par
value $0.625 per share (the "Common Shares," and the certificates representing
such Common Shares, the "Common Share Certificates"), for shares of Northrop
Grumman's common stock, par value $1.00 per share (the "Northrop Grumman
Share"), valued at $47 per Common Share (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer. The Northrop Grumman Shares
issued pursuant to the Offer will not bear any interest and will be reduced by
the applicable withholding taxes.
We are the holder of record of Common Shares held by us for your account.
The Letter of Transmittal is furnished to you for your information only and
cannot be used by you to tender Common Shares held by us for your account. A
tender of such Common Shares can be made only by us as the holder of record and
pursuant to your instructions.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Common Shares held by us for your
account, in accordance with the terms and subject to the conditions set forth
in the Offer.
Your attention is directed to the following:
1. The Common Share exchange ratio is based on the average of the closing
sale prices for Northrop Grumman Shares on the New York Stock Exchange as
reported in The Wall Street Journal over the five consecutive trading days
ending immediately prior to the second trading day before Northrop Grumman
completes the Offer, but in no event will the exchange ratio be more than
.4563 ($47.00/$103.00) or less than .4159 ($47.00/$113.00).
2. The Offer is being made for all outstanding Common Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on March 29, 2002, unless the Offer is extended.
4. Tendering shareholders will not be obligated to pay any commissions or
fees to any broker, dealer or other person or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes with
respect to the transfer and exchange of Common Shares to Northrop Grumman or
to its order pursuant to the Offer.
5. The Offer is conditioned upon, among other things: (i) there being
validly tendered and not properly withdrawn prior to the expiration or
termination of the Offer a number of Common Shares, Cumulative Serial
Preference Stock II, $4.40 Convertible Series 1, no par value per share of
the Company, and Cumulative Serial Preference Stock II, $4.50 Convertible
Series 3, no par value per share of the Company, (together, the "Preference
Shares"), which represents at least a majority of the total outstanding
Common Shares on a fully-diluted basis; (ii) the expiration or termination
of any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements as of 1976, as amended, Council Regulation (EEC) No. 4064/89 of
the Council of the European Union, and any other applicable similar foreign
laws or regulations; (iii) the requisite approval of the Company's
shareholders under the Ohio control share acquisition law or Northrop
Grumman's being satisfied, in its sole discretion, that such law is
inapplicable or invalid; (iv) the expiration or termination of the waiting
period during which the Ohio Division of Securities may suspend the Offer
under Title 17 of the Ohio Revised Code, without the occurrence of any
suspension or Northrop Grumman's being satisfied, in its sole discretion,
that such law is inapplicable or invalid; (v) the approval of issuance of
shares of the stockholders of Northrop Grumman Shares pursuant to the offer
by Northrop Grumman; (vi) the Company's not having entered into or
effectuated any other agreement or transaction with any person or entity
having the effect of impairing Northrop Grumman's ability to acquire the
Company or otherwise diminishing the value of the acquisition of the
Company; and (vii) the registration statement relating to the Northrop
Grumman Shares having become effective. The Offer also is subject to other
terms and conditions.
6. Cash will be paid in lieu of any fractional shares.
If you wish to have us tender any or all of the Common Shares held by us for
your account, please instruct us by completing, executing and returning to us
the instruction form contained in this letter. If you authorize a tender of
your Common Shares, all such Common Shares will be tendered unless otherwise
specified in your instruction form. Your instructions should be forwarded to us
in ample time to permit us to submit a tender on your behalf on or prior to the
expiration of the Offer.
2
NORTHROP GRUMMAN CORPORATION
Instructions With Respect To The Offer To Exchange
Each Outstanding Share of Common Stock
of
TRW INC.
for
Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
Valued at $47.00
subject to the procedures and limitations described in
the Offer to Exchange and the Letter of Transmittal
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Exchange, dated March 4, 2002 (the "Offer to Exchange") and the related Letter
of Transmittal (the "Letter of Transmittal," which, together with the Offer to
Exchange, as each may be amended or supplemented from time to time,
collectively constitute the "Offer") relating to the third party tender offer
by Northrop Grumman Corporation, a Delaware corporation ("Northrop Grumman"),
to exchange all of the outstanding shares of common stock of TRW Inc., an Ohio
corporation (the "Company") par value $0.625 per share (the "Common Shares"),
for shares of Northrop Grumman's common stock, par value $1.00 per share (the
"Northrop Grumman Shares"), valued at $47 per Common Share, upon the terms and
subject to the conditions set forth in the Offer. The Northrop Grumman Shares
issued pursuant to the Offer will not bear any interest and will be reduced by
the applicable withholding taxes.
This will instruct you to tender to Northrop Grumman the number of Common
Shares indicated below (or, if no number is indicated below, all Common Shares)
which are held by you for the account of the undersigned, upon the terms and
subject to the conditions set forth in the Offer to Exchange and in the Letter
of Transmittal furnished to the undersigned.
Number of Common Shares Common Shares*
to be Tendered:
--------------
-------------------------
SIGN BELOW
-----------------------------
Signature(s)
-----------------------------
Please print name(s)
-----------------------------
Address
-----------------------------
Account Number
-----------------------------
Area Code and Telephone
Number
-----------------------------
Taxpayer Identification Number(s) or
Social Security Number(s)
Dated: _____ , 2002
- --------
* Unless otherwise indicated, it will be assumed that all of your Common
Shares held by us for your account are to be tendered.
NORTHROP GRUMMAN CORPORATION
Offer To Exchange Each Outstanding Share
of
Serial Preference Stock II
of
TRW INC.
for
Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
valued at $47.00 multiplied by the then-effective conversion rate of the
applicable Series of Serial Preference Stock II, in each case subject to the
procedures and limitations described in the Offer to Exchange and the related
Letter of Transmittal.
THE OFFER AND ASSOCIATED WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, MARCH 29, 2002, UNLESS THE OFFER IS EXTENDED.
March 4, 2002,
To Our Clients:
Enclosed for your consideration is an Offer to Exchange, dated March 4, 2002
(the "Offer to Exchange") and the related Letter of Transmittal (the "Letter of
Transmittal," which, together with the Offer to Exchange, as each may be
amended or supplemented from time to time, collectively constitute the "Offer")
relating to the third party tender offer by Northrop Grumman Corporation, a
Delaware corporation ("Northrop Grumman"), to exchange all of the outstanding
shares of Cumulative Serial Preference Stock II, $4.40 Convertible Series 1, no
par value per share, and Cumulative Serial Preference Stock II, $4.50
Convertible Series 3, no par value per share, (the "Preference Shares'' and the
certificates representing such Preference Shares, the "Preference Share
Certificates") of TRW Inc., an Ohio Corporation ("the Company"), for shares of
common stock of Northrop Grumman, par value $1.00 per share (the "Northrop
Grumman Shares"), valued at $47.00 multiplied by the effective conversion rate
of the applicable Preference Share subject to the procedures and limitations
("Preference Share Exchange Ratio") described in the Offer. The number of
Northrop Grumman Shares issued pursuant to the Offer will not bear any interest
and will be reduced by the applicable withholding taxes.
We are the holder of record of Preference Shares held by us for your
account. The Letter of Transmittal is furnished to you for your information
only and cannot be used by you to tender Preference Shares held by us for your
account. A tender of such Preference Shares can be made only by us as the
holder of record and pursuant to your instructions.
1
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Preference Shares held by us for your
account, in accordance with the terms and subject to the conditions set forth
in the Offer.
Your attention is directed to the following:
1. The Preference Share Exchange Ratio is based on the average of the
closing sale prices for Northrop Grumman Shares on the New York Stock
Exchange as reported in The Wall Street Journal over the five consecutive
trading days ending immediately prior to the second trading day before
Northrop Grumman completes the Offer, but in no event will the exchange rate
be more than .4563 ($47.00/$103.00) or less than .4159 ($47.00/$113.00).
2. The Offer is being made for all outstanding Preference Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, March 29, 2002, unless the Offer is extended.
4. Tendering shareholders will not be obligated to pay any commissions or
fees to any broker, dealer or other person or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes with
respect to the transfer and exchange of Preference Shares to Purchaser or to
its order pursuant to the Offer.
5. The Offer is conditioned upon, among other things: (i) there being
validly tendered and not properly withdrawn prior to the expiration or
termination of the Offer a number of shares of common stock, par value
$0.625 per share of the Company (the "Common Shares''), and Preference
Shares, which represents at least a majority of the total outstanding Common
Shares on a fully-diluted basis; (ii) the expiration or termination of any
applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements as of 1976, as amended, Council Regulation (EEC) No. 4064/89 of
the Council of the European Union, and any other applicable similar foreign
laws or regulations; (iii) the requisite approval of the Company's
shareholders under the Ohio control share acquisition law or Northrop
Grumman's being satisfied, in its sole discretion, that such law is
inapplicable or invalid; (iv) the expiration or termination of the waiting
period during which the Ohio Division of Securities may suspend the Offer
under Title 17 of the Ohio Revised Code, without the occurrence of any
suspension or Northrop Grumman's being satisfied, in its sole discretion,
that such law is inapplicable or invalid; (v) the approval of issuance of
shares of the Northrop Grumman Shares pursuant to the Offer by the
stockholders of Northrop Grumman; (vi) the Company's not having entered into
or effectuated any other agreement or transaction with any person or entity
having the effect of impairing Northrop Grumman's ability to acquire the
Company or otherwise diminishing the value of the acquisition of the
Company; and (vii) the registration statement relating to the Northrop
Grumman Shares having become effective. The Offer also is subject to other
terms and conditions.
6. Cash will be paid in lieu of any fractional Shares.
If you wish to have us tender any or all of the Preference Shares held by us
for your account, please instruct us by completing, executing and returning to
us the instruction form contained in this letter. If you authorize a tender of
your Preference Shares, all your Preference Shares will be tendered unless
otherwise specified in such instruction form. Your instructions should be
forwarded to us in ample time to permit us to submit a tender on your behalf on
or prior to the expiration of the Offer.
2
NORTHROP GRUMMAN CORPORATION
Instructions With Respect To The Offer To Exchange
Offer To Exchange Each Outstanding Share
of
Serial Preference Stock II
of
TRW INC.
for
Shares of Common Stock
of
NORTHROP GRUMMAN CORPORATION
Valued at $47.00 Multiplied by the Effective Conversion Rate of the applicable
Preference Share subject to the procedures and limitations described in the
Offer to Exchange and the related Letter of Transmittal.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Exchange, dated March 4, 2002, and the related Letter of Transmittal, relating
to the third party tender offer by Northrop Grumman Corporation, a Delaware
corporation ("Northrop Grumman"), to exchange all of the outstanding shares of
Cumulative Serial Preference Stock II, $4.40 Convertible Series 1, no par value
per share, and Cumulative Serial Preference Stock II, $4.50 Convertible Series
3, no par value per share, (the "Preference Shares") of TRW Inc. ("the
Company"), for shares of common stock of Northrop Grumman, par value $1.00 per
share (the "Northrop Grumman Shares"), valued at $47.00 multiplied by the
effective conversion rate of the applicable preference share subject to the
procedures and limitations described in the Offer. The Northrop Grumman Shares
issued pursuant to the Offer will not bear any interest and will be reduced by
the applicable withholding taxes.
This will instruct you to tender to Northrop Grumman the number of
Preference Shares indicated below (or, if no number is indicated below, all
Preference Shares) which are held by you for the account of the undersigned,
upon the terms and subject to the conditions set forth in the Offer to Exchange
and in the related Letter of Transmittal furnished to the undersigned.
Number of Series 1 Number of Series 3
Preference Shares to be Preference Shares be
Tendered*: Tendered*:
--------------------- ---------------------
SIGN BELOW
-----------------------------
Signature(s)
-----------------------------
Please print name(s)
-----------------------------
Address
-----------------------------
Account Number
-----------------------------
Area Code and Telephone Number
-----------------------------
Taxpayer Identification Number(s) or
Social Security Number(s)
Dated: ______________________ , 2002
- --------
* Unless otherwise indicated, it will be assumed that all of your Preference
Shares held by us for your account are to be tendered.
3
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer
- -- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- --------------------------------------------------------------------------------------------------------------
Give the
SOCIAL SECURITY
For this type of account: number of:
- --------------------------------------------------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the
account or, if combined
funds, the first individual on
the account(1)
3. Custodian account of a minor (Uniform Gift to Minors Act) Gift to Minors The minor(2)
Act)
4. a. The usual revocable savings trust account (grantor is also trustee) The grantor-trustee(1)
b. So-called trust account that is not a legal or valid trust The actual owner(1)
under State law
5. Sole proprietorship account The owner(3)
- --------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
Give the EMPLOYER
IDENTIFICATION
For this type of account: number of:
--------------------------------------------------------------------
6. Sole proprietorship account The owner(3)
7. A valid trust, estate, or pension trust Legal entity(4)
8. Corporate account The corporation
9. Association, club, religious, charitable, The organization
educational or other tax--exempt
organization account
10. Partnership account The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a state or local
government, school district or prison)
that receives agricultural program
payments
--------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number.
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title).
Note: If no name is circled when there is more than one name listed, the number
will be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
How to Obtain a TIN
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card for
individuals, or Form SS-4, Application for Employer Identification Number (for
business and other entities), or Form W-7, Application for IRS Individual
Taxpayer Identification Number (for certain resident aliens), at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
If you return the Substitute Form W-9 with the "Awaiting TIN" box checked in
Part 3, you must provide the payer with a Certificate of Awaiting Taxpayer
Identification Number and, within 60 days, a TIN. If you do not provide the TIN
by the date of payment, 30% of all reportable payments will be withheld. If
your certified TIN is received within the 60-day period and you were not
subject to backup withholding during that period, the amounts withheld will be
refunded to you. If no certified TIN is provided to the payer within 60 days,
the amounts withheld will be paid to the IRS.
As soon as you receive your TIN, complete another Substitute Form W-9, include
your TIN, sign and date the form, and give it to the payer.
For interest, dividends and broker transactions, you must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to a payer, you must
cross out item 2 in the certification before signing the form.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments by the
Payer include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7) if the
account satisfies the requirements of Section 401(f)(2).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States or any
political subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S.,
the District of Columbia or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
. A futures commission merchant registered with the Commodity Futures Trading
Commission.
. A middleman known in the investment community as a nominee or custodian.
. A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident alien partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(K) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You are
subject to information reporting if this interest is $600 or more and is
paid in the course of the payer's trade of business and backup withholding
if you have not provided your correct TIN to the payer.
. Payments of tax-exempt interest (including exempt interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage or student loan interest paid to you.
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TIN,
WRITE "EXEMPT" ON THE FACE OF THE FORM IN PART 2, SIGN AND DATE THE FORM, AND
RETURN IT TO THE PAYER.
Certain payments, other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049,
6050A and 6050N and the regulations thereunder.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest or other payments to give their correct TIN to payers who must report
the payments to the IRS. The IRS uses the numbers for identification purposes
and to help verify the accuracy of tax returns. The IRS may also provide this
information to the Department of Justice for civil and criminal litigation and
to cities, states and the District of Columbia to carry out their tax laws.
Payers must be given the TIN whether or not recipients are required to file tax
returns. Payers must generally withhold 30% of taxable interest, dividend and
certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish TIN.--If you fail to furnish your correct
TIN to a payer, you are subject to a penalty of $50 for each such failure
unless your failure is due to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) Misuse of TINS.--If the payor discloses or uses TINs in violation of
Federal law, the payor may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
Telephone: STATE OF OHIO File No.
(614) 644-7381 Department of Commerce
Division of Securities
77 South High Street,
22nd Floor,
Columbus, Ohio 43215
FORM 041
FILING OF INFORMATION PERTAINING TO A CONTROL BID
Pursuant to Section 1707.041 of the Revised Code of Ohio
Division Record
Do Not Fill In Date Checked By Notation
-------------------------------------------------
Received by Division
-------------------------------------------------
Record Made
-------------------------------------------------
Other Filings under this
Section by this Offeror:
File No.
-------------------------------------------------
File No.
INSTRUCTIONS: Responses may be made either directly on this form, by reference
to documents and exhibits filed with this form, or a combination
of both. If the space provided on this form is inadequate for
full response, or if response will be made by referring to a
document or exhibit filed with this form, attach an exhibit
numbered to correspond to the number of the item being answered,
and note the reference to the exhibit in the space provided. If
the exhibit consists of more than one page, indicate the
relevant page number(s). If there is more than one Offeror, each
Offeror should fill out Part Two of this form. Please DO NOT
LEAVE ANY ITEM BLANK. If an item will not be answered, note
either that the item is not applicable (NA), or, if reasonable
investigation of information actually or publicly available to
the Offeror has not revealed the answer, that the answer is
unknown (UK).
PART ONE: SUBJECT COMPANY EXHIBIT REFERENCES
- --------------------------------------------------------------------------------------------------------
1. State the name and principal place of business of the Subject Exhibit A 1707.01(Y)(1)
Company, including the street address, telephone number and
facsimile number. State the name, address, telephone number and
facsimile number of the Subject Company's legal counsel:
2. State the location of the principal executive office of the Subject Exhibit A 1707.01(Y)(1)
Company, including the address, telephone number and facsimile
number:
3. State the form of organization of the Subject Company, the date on Exhibit A 1707.041(A)(2)(h)
which it was formed, and jurisdiction in which it was organized: 1707.23(A)
4. Indicate if the Subject Company is any of the following: 1707.041(C)
A banking corporation subject to regulation by the Ohio Division of 1707.01(M)
Financial Institutions 1707.01(O)
[_] YES [_] NO
A savings and loan association subject to regulation by the Ohio
Division of Financial Institutions.
[_] YES [_] NO
A public utility corporation subject to regulation by the Ohio Public
Utilities Commission
[_] YES [_] NO
5. Identify the current executive officers and directors of the Subject Exhibit A 1707.01(Y)
Company, including the title, city and state of residence and 1707.041(A)(2)(h)
beneficial share ownership of each person: 1707.23(A)
6. Describe each of the Subject Company's outstanding securities Exhibit A 1707.01(Y)
(include all kinds and classes of stocks, bonds, debentures, 1707.041(A)(2)(h)
promissory notes, warrants, options, or other securities), authorized 1707.23(A)
by the Articles of Incorporation or other document of the Subject
Company, and the terms of each security. For EACH security, state
the number or amount authorized, the number or amount
outstanding, the market on which it is traded, its trading symbol, and
the name and address of its transfer agent:
7. The Subject Company has ______ (Number) record and Exhibit A 1707.01(Y)(1)
(Number) beneficial holders, respectively, of its equity securities. 1707.01(Z)
____ (Number), or ____%, of the record and beneficial holder, are 1707.01(BB)
residents of Ohio and their ownership constitutes ____% of the 1707.23(A)
record and ____% of the beneficial holders of such equity securities,
respectively.
8. State the approximate fair market value, in dollars, of the assets Exhibit A 1707.01(Y)(1)
located in Ohio which the Subject Company owns or controls: 1707.23(A)
9. Describe the location and general character of the principal physical Exhibit A 1707.041(A)(2)(d)
properties of the Subject Company and its subsidiaries: 1707.041(A)(2)(h)
1707.23(A)
10. State the locations in Ohio where the Subject Company has Exhibit A 1707.041(A)(2)(d)
employees, and the approximate number of employees in each 1707.23(A)
location:
COM 4522 (1-99)
2
PART TWO: OFFEROR EXHIBIT REFERENCES
- ------------------------------------------------------------------------------------------------------------------
11. State the name and principal place of business of the Offeror, Exhibit A 1707.01(W)
including its street address and telephone number: 1707.041(A)(2)(b)
1707.041(A)(2)(g)
12. State the form of organization of the Offeror (e.g., partnership, Exhibit A 1707.01(W)
corporation, association), the date on which it was formed, and 1707.041(A)(2)(g)
jurisdiction in which it was organized (including country and
state, province, or other political subdivision):
13. Indicate if the Offeror is any of the following: 1707.041(C)
A banking corporation subject to regulation by the Ohio Division 1707.01(M)
of Financial Institutions 1707.01(O)
[_] YES [_] NO
A savings and loan association subject to regulation by the Ohio
Division of Financial Institutions
[_] YES [_] NO
A public utility corporation subject to regulation by the Ohio
Public Utilities Commission
[_] YES [_] NO
14. Identify the executive officers and directors (or partners, if the Exhibit A 1707.01(W)
Offeror is a partnership, or other similar persons if the Offeror is 1707.041(A)(2)(g)
in another form or entity) of the Offeror for the past three years,
including the title, term of office, and city and state of residence
of each person (in an exhibit, supply a biography for all persons
identified in this item):
15. Describe each of the Offeror's outstanding securities (include all Exhibit A 1707.01(W)
kinds and classes of stocks, bonds, debentures, promissory notes, 1707.041(A)(2)(c)
warrants, options, or other securities), authorized by the Articles 1707.041(A)(2)(g)
of Incorporation or other document of the Offeror, and the terms
of each security. For EACH security, state the number or amount
authorized, the number or amount outstanding, the market on
which it is traded, its trading symbol, and the name and address
of its transfer agent:
16. List the subsidiaries and affiliates of the Offeror, including its Exhibit A 1707.01(W)
name, form of organization, the jurisdiction in which it was 1707.041(A)(2)(g)
organized and, if different, the jurisdiction of its principal 1707.041(A)(2)(h)
executive offices and the owner and percentage of ownership of
each subsidiary and affiliate:
17. Describe the location and general character of the principal Exhibit B (Northrop 1707.01(W)
physical properties of the Offeror, including those of the related 10-K/A): Item 2. 1707.041(A)(2)(g)
entities described in item No. 16: Properties (p. 2-3)
18. Describe any pending legal proceedings, other than routine Exhibit B (Northrop 1707.01(W)
litigation to which the Offeror, including the related entities 10-K/A): Item 3. 1707.041(A)(2)(g)
described in Item No. 16, is a party or of which any of their Legal Proceedings
property is the subject: (p. 4)
3
PART TWO: OFFEROR EXHIBIT REFERENCES
- ------------------------------------------------------------------------------------------------------------------
19. Describe the business done and projected by the Offeror, Exhibit B (Northrop 1707.01(W)
including the related entities described in Item 16, and the 10-K/A): Item 1. 1707.041(A)(2)(g)
general development of such business over the past three years: Business (p. 1).
20. Describe the approximate amount of any material interest, direct Exhibit A 1707.01(W)
or indirect, of any of the directors or officers of the Offeror in 1707.041(A)(2)(g)
any material transaction during the past three years, or in any
proposed material transaction to which the Offeror, including the
related entities described in Item No. 16, was or is to be a party:
21. Identify all persons and entities, including the city and state of Exhibit A 1707.01(A)(2)(b)
legal and actual residence or location, on whose behalf the 1707.041(A)(2)(e)
acquisition of any equity security of the Subject Company has
been or is to be effected, and describe the securities of the
Subject Company of which each is the beneficial or record
owner, or which each has a right to acquire, directly or indirectly,
and the amount of each type of security owned by each person or
entity (in an exhibit, supply the background for all persons
identified in this item):
22. If the Offeror is also the Subject Company, is there a pending 1707.041(V)(1)(b)
control bid by a person other than the issuer?
[_] YES [_] NO
If "yes," answer both of the following:
Will the number of issued and outstanding shares of the Subject
Company be reduced by more than 10%?
[_] YES [_] NO
State the name(s) of other Offeror(s) and the date(s) on which the
control bid(s) commenced:
- ------------------------------------------------------------------------------------------------------------------
PART THREE: CONTROL BID EXHIBIT REFERENCES
- ------------------------------------------------------------------------------------------------------------------
23. Describe the equity securities of the Subject Company for which Exhibit A 1707.01(V)(1)(a)
the offer will be made, and the percentage of ownership of each 1707.01(BB)
class of which the Offeror would directly or indirectly be the 1707.041(A)(2)(b)
beneficial owner after the purchase: 1707.041(A)(2)(f)
1707.23(A)
24. Give the aggregate value of the securities of the Subject Exhibit A 1707.01(V)(1)(a)
Company for which a purchase offer is being made (include the 1707.041(A)(2)(c)
number of each type of security to be acquired and the price to be 1707.23(A)
paid for each interest):
25. Describe the terms of the control bid, including the consideration Exhibit A 1707.041(A)(2)(c)
to be paid for each class of security of the Subject Company. If 1707.23(A)
any of the consideration is cash, describe the source and amount
of funds to be used. If any of the consideration is other than cash,
describe the consideration, including any security, which is being
offered, and its value (in an exhibit, describe the method of
determining the value of any such consideration).
26. State the aggregate value of all the consideration to be given for Exhibit A 1707.041(A)(2)(c)
securities of the Subject Company: 1707.23(A)
4
- --------------------------------------------------------------------------------------------------------------------
PART THREE: CONTROL BID EXHIBIT REFERENCES
- --------------------------------------------------------------------------------------------------------------------
27. State any plans or proposals that the Offeror, upon gaining Exhibit A 1707.041(A)(2)(d)
control, may have to liquidate the Subject Company, sell its 1707.23(A)
assets, effect a merger or consolidation of it, establish, terminate,
convert, or amend employee benefit plans, close any plant or
facility of the Subject Company or of any of its subsidiaries or
affiliates, change or reduce the work force of the Subject
Company or any of its subsidiaries or affiliates, or make any
other major change in its business, corporate structure,
management personnel, or policies of employment:
28. State the particulars as to any contracts, arrangements, or Exhibit A 1707.041(A)(2)(f)
understandings to which any person named in response to Items
14, 16, or 21, or the Offeror, is a party with respect to any equity
security of the subject company, including transfers of any equity
security, joint ventures, loan or option arrangements, puts and
calls, guarantees of loan, guarantees against loss, guarantees of
profits, division of losses or profits, or the giving or withholding
of proxies, naming the persons with whom such contracts,
arrangements, and under-standings have been entered:
29. Provide the name, address, and telephone number of any Ohio- Exhibit A 1707.041(B)(1)
licensed securities dealer(s) to be used in connection with the 1707.14(A)
control bid: 1707.01(E)
- --------------------------------------------------------------------------------------------------------------------
PART FOUR: MISCELLANEOUS EXHIBIT REFERENCES
- --------------------------------------------------------------------------------------------------------------------
30. Describe the manner in which the Offeror is sending or Exhibit A 1707.041(A)(1)
delivering the material items of the proposed offer and the 1707.041(A)(2)(h)
materials specified in R.C. (S)1707.041(A)(2) to the Offerees: 1707.23(A)
31. Attach the following materials:
Copies of the prospectuses, brochures, advertisements, circulars, Exhibit A 1707.041(A)(2)(a)
letters, or other documents and information necessary for the Exhibit C
Offeror to make a fair, full and effective disclosure to an offeree
of information material to a decision to accept or reject the offer.
The Offeror's financial statements for the current period and for Exhibit D 1707.041(A)(2)(g)
the three most recent annual accounting periods.
32. Pursuant to R.C. (S)1707.23(A), attach the materials listed below:
All filings, if any, made by the Offeror during the last twelve Exhibit E 1707.23(A)
months with the U.S. Securities and Exchange Commission
pursuant to Sections 12 and 13 of the Securities and Exchange
Act of 1934, 15 U.S.C. (S)(S)78l and 78m.
All filings, if any, made by the Subject Company during the last Exhibit F 1707.23(A)
twelve months with the U.S. Securities and Exchange
Commission pursuant to Sections 12 and 13 of the Securities
Exchange Act of 1934, 15 U.S.C. (S)(S)78l and 78m
- --------------------------------------------------------------------------------------------------------------------
(NOTE: The materials listed in Item 32 are not being requested pursuant to R.C. (S)1707.041(A), and the Offeror
is therefore not required to furnish the materials to Offerees under that section, although it may if it chooses.)
- ---------------------------------------------------------------------------------------------------------------------
33. Provide the name of an individual (including the title, company or form with which the individual is
associated, complete address, telephone number, and relationship of the individual to the Offeror) whom
the Division may contact regarding this filing:
John L. Filippone, Esq. (Attorney for the Offeror)
Gibson, Dunn & Crutcher LLP
333 S. Grand Ave.
Los Angeles, CA 90071
(213) 229-7000
5
CERTIFICATION
I certify that I am an officer, partner, or other person authorized to act as
an agent of the Offeror and authorized to execute and file this Form 041 on
behalf of the Offeror. I further certify that a copy of the information
specified in R.C. (S)1707.041(A)(2) has been delivered, by personal service, to
the Subject Company at its principal office not later than the time of the
filing with the Division of Securities. I further certify that copies of the
information specified in R.C. (S)1707.041(A)(2) have been delivered to any
other Offeror.
\s\
------------------------- ---------------------------
Signature Date
W. Burks Terry, Esq. March 2, 2002
------------------------- ---------------------------
Title Street Address
Corporate Vice President c/o Northrop Grumman,
and General Counsel 1840 Century Park East
------------------------- ---------------------------
Company or Firm City, State ZIP...
Northrop Grumman Los Angeles, California
Corporation 90067......
------------------------- ---------------------------
Relationship to Offeror Telephone Number Facsimile
Number......
Executive Officer (310) 201-3418 (310)
556-4558......
6
ACQUIRING PERSON STATEMENT
This Acquiring Person Statement (this "Statement"), dated as of March 4,
2002, is being delivered to the principal executive offices of TRW Inc., an
Ohio corporation (the "Company") at 1900 Richmond Road, Cleveland, Ohio 44124
on behalf of Northrop Grumman Corporation, a Delaware corporation (the
"Acquiring Person")./(1)/ The Acquiring Person is delivering this Statement
pursuant to Section 1701.831 of Title 17 of the Ohio Revised Code in connection
with the Acquiring Person's exchange offer (the "Offer") for all outstanding
shares of capital stock of the Company pursuant to the Offer to Exchange filed
by the Acquiring Person as a part of the Registration Statement on Form S-4
filed with the Securities and Exchange Commission on March 4, 2002 (as amended
from time to time, the "Offer to Exchange"), a copy of which is attached as
Exhibit A hereto and incorporated herein by this reference. The principal
executive office of the Acquiring Person is 1840 Century Park East, Los
Angeles, California 90067.
The Acquiring Person currently owns, directly and indirectly, four shares of
the outstanding capital stock of the Company. On the terms and subject to the
conditions set forth in the Offer to Exchange and the related Letters of
Transmittal, the Acquiring Person proposes to exchange shares of common stock
of the Acquiring Person for up to 100% of the outstanding shares of the capital
stock of the Company, which consists of Common Stock, $0.625 par value per
share ("Common Shares"), Cumulative Serial Preference Stock II, $4.40
Convertible Series 1, no par value per share ("Series 1 Shares") and Cumulative
Serial Preference Stock II, $4.50 Convertible Series 3, no par value per share
("Series 3 Shares"). If consummated, the proposed transaction (the "Control
Share Acquisition") would result in the acquisition of a majority or more of
the voting power of the capital stock of the Company as described in Section
1701.01(Z)(1)(c) of Title 17 of the Ohio Revised Code.
Based on the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001, as of November 2, 2001 there were 126,286,307 Common Shares
issued and outstanding. Based on the Company's Definitive Proxy Statement
relating to its 2001 Annual Meeting of Shareholders filed on March 21, 2001, as
of February 9, 2001 there were 31,710 Series 1 Shares and 59,216 Series 3
Shares issued and outstanding. Pursuant to the Offer to Exchange, each Company
shareholder may exchange (i) each Common Share for a number of shares of the
Acquiring Person's common stock equal to $47.00 per Common Share divided by the
average of the closing sale prices for a share of the Acquiring Person's common
stock on the New York Stock Exchange as reported in the Wall Street Journal
over the five consecutive trading days ending immediately prior to the second
trading day before the Acquiring Person completes the Offer; provided, however,
that in no event will the number of shares of the Acquiring Person's common
stock exchanged for each Common Share be more than .4563 ($47.00/$103) or less
than .4159 ($47.00/$113) (such number, the "Exchange Rate"), (ii) each Series 1
Share for a number of shares of the Acquiring Person's common stock equal to
the Exchange Rate multiplied by the then effective conversion rate for Series 1
Shares and (iii) each Series 3 Share for a number of shares of the Acquiring
Person's common stock equal to the Exchange Rate multiplied by the then
effective conversion rate for Series 3 Shares. As of March 13, 2001, the
conversion rate for Series 1 Shares was 8.8 Common Shares for each Series 1
Share and the conversion rate for the Series 3 Shares was 7.448 Common Shares
for each Series 3 Share, calculated as provided in the Company's Amended
Articles of Incorporation.
- --------
/(1)/ Notwithstanding the making and delivery of this Statement, the Acquiring
Person reserves all rights to (i) challenge the constitutionality,
validity and/or legality of all or any part of Section 1701.831 and
related provisions of the Ohio Revised Code and the application of such
provisions to the Acquiring Person's acquisition of capital stock of the
Company or the Offer to Exchange (as defined herein) and/or (ii) seek an
amendment to the Articles of Incorporation or Regulations of the Company
to provide that Section 1701.831 and related provisions of the Ohio
Revised Code do not apply to control share acquisitions of capital stock,
including, but not limited to, pursuant to the Offer to Exchange.
1
The purpose of the Offer is for the Acquiring Person to acquire control of,
and ultimately the entire equity interest in, the Company. Promptly after the
completion of the Offer, and subject to the requirements of applicable law, the
Acquiring Person intends to seek to have the Company complete a merger with the
Acquiring Person or a wholly owned subsidiary of the Acquiring Person in which
each outstanding share of capital stock of the Company (except for treasury
shares of the Company and shares beneficially owned directly or indirectly by
the Acquiring Person for its own account) would be converted into the right to
receive shares of the Acquiring Person's common stock at the same Exchange Rate
as used in the Offer to Exchange, subject to dissenters' rights available under
Ohio law. For a more detailed description of the terms and conditions of the
Control Share Acquisition, reference is made to the information set forth in
the Offer to Exchange.
The Acquiring Person hereby represents that, if consummated, the proposed
Control Share Acquisition will not be contrary to applicable law and that the
Acquiring Person has the financial capacity to fully consummate such proposed
Control Share Acquisition upon the terms and subject to the conditions
described herein and in the Offer to Exchange and the related Letters of
Transmittal. The facts upon which the foregoing representations are based are
set forth in the Offer to Exchange.
IN WITNESS WHEREOF, Northrop Grumman Corporation has caused this Acquiring
Person Statement to be executed by its duly authorized officer as of the date
first set forth above.
NORTHROP GRUMMAN CORPORATION
By: -----------------------------------
Name: W. Burks Terry, Esq.
Title: Corporate Vice President and
General Counsel
2
Contact: Frank Moore (Media) (310) 201-3335
Gaston Kent (Investors) (310) 201-3423
For Immediate Release
NORTHROP GRUMMAN COMMENCES EXCHANGE OFFER FOR ALL OUTSTANDING SHARES OF TRW INC.
AT $47 PER COMMON SHARE
LOS ANGELES - March 3, 2002 - Northrop Grumman Corporation (NYSE:NOC)
announced today that it has commenced an exchange offer for all outstanding
shares of common stock and preference stock of TRW Inc. (NYSE:TRW).
Each share of TRW common stock may be exchanged for a number of shares
of common stock of Northrop Grumman equal to $47. The exact exchange ratio will
be determined by dividing the average of the closing price of Northrop Grumman
common stock for the five consecutive trading days ending immediately prior to
the second trading day prior to the expiration of the offer, but in no event
will the number of Northrop Grumman shares exchanged be more than 0.4563
($47/$103) or less than 0.4159($47/$113). Each share of TRW's Series 1
preference stock II and Series 3 preference stock II may be exchanged for a
number of Northrop Grumman shares equal to the exchange rate described above
multiplied by the effective conversion rate for the shares of preference stock.
The offer to exchange and withdrawal rights will expire at 12:00 midnight, New
York City time, on March 29, 2002, unless extended.
NORTHROP GRUMMAN IS FILING A REGISTRATION STATEMENT AND A TENDER OFFER
STATEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO THE OFFER
TO EXCHANGE, WHICH CONTAIN
IMPORTANT INFORMATION. TRW SHAREHOLDERS SHOULD READ THESE DOCUMENTS, COPIES OF
WHICH MAY BE OBTAINED WITHOUT CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION'S
WEBSITE AT WWW.SEC.GOV. COPIES OF THE OFFERING MATERIALS MAY ALSO BE OBTAINED
FROM D.F. KING & CO., INC., THE INFORMATION AGENT FOR THE OFFER TO EXCHANGE, AT
800-755-7520.
Kent Kresa, chairman and chief executive officer of Northrop Grumman,
stated "We have not received a substantive response from TRW regarding our
February 21 letter to enter into negotiations for a proposed business
combination. We continue to believe that such a transaction would be in the best
interests of both companies' shareholders. Accordingly, we are moving ahead to
make this offer available to TRW shareholders and to initiate all the steps that
are necessary to see it through to conclusion, including requesting that the TRW
board of directors call the special meeting of shareholders required under Ohio
law to authorize our acquisition of TRW shares. We expect that the TRW
shareholders will respond favorably. In addition, we are filing a lawsuit in
Ohio challenging elements of its anti-takeover laws."
Mr. Kresa added, "as we stated on February 22, the proposed strategic
combination of Northrop Grumman and TRW will create a third major contributor to
the nation's satellite and missile defense requirements. Following completion of
the acquisition, we intend to promptly separate TRW's automotive business from
the rest of the combined company either through a sale to a third party or
parties or a spin off to the shareholders of the combined companies," Kresa
added.
2
Mr. Kresa noted that Northrop Grumman remains willing to entertain
negotiations with TRW regarding a transaction and would welcome the opportunity
to consider non-public information about TRW in order to consider any enhanced
values that might be demonstrated by such information.
TRW provides advanced-technology products and services for the
aerospace, information systems and automotive markets worldwide. The company
generated year-end 2001 sales of $16.4 billion.
Northrop Grumman Corporation is an $18 billion, global defense company
with its worldwide headquarters in Los Angeles. Northrop Grumman provides
technologically advanced, innovative products, services and solutions in defense
and commercial electronics, systems integration, information technology and
nuclear and non-nuclear shipbuilding and systems. With nearly 100,000 employees
and operations in 44 states and 25 countries, Northrop Grumman serves U.S. and
international military, government and commercial customers.
3
Note: Certain statements and assumptions in this release contain or are based on
"forward-looking" information (that the company believes to be within the
definition in the Private Securities Litigation Reform Act of 1995) and involve
risks and uncertainties. Such "forward-looking" information includes the
statements above as to the impact of the proposed acquisition on revenues and
earnings. Such statements are subject to numerous assumptions and uncertainties,
many of which are outside the company's control. These include governmental
regulatory processes, the company's ability to successfully integrate the
operations of TRW, achieve a successful transaction or other resolution with
respect to the TRW automotive sector, assumptions with respect to future
revenues, expected program performance and cash flows, the outcome of
contingencies including litigation, environmental remediation, divestitures of
businesses, and anticipated costs of capital investments. The company's
operations are subject to various additional risks and uncertainties resulting
from its position as a supplier, either directly or as subcontractor or team
member, to the U.S. Government and its agencies as well as to foreign
governments and agencies; actual outcomes are dependent upon factors, including,
without limitation, 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; acquisition or termination of government
contracts; the outcome of political and legal processes; legal, financial, and
governmental risks related to international transactions and global needs for
military aircraft, military and civilian electronic systems and support and
information technology; as well as other economic, political and technological
risks and uncertainties and other risk factors set out in the company's filings
from time to time with the Securities and Exchange Commission, including,
without limitation, the company's reports on Form 10-K and Form 10-Q.
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell shares of TRW or Northrop Grumman. Should any such offer be commenced,
Northrop Grumman will file and deliver all forms, notices and documents required
under state and federal law.
# # #
4
A registration statement relating to the securities proposed to be issued in the
Offer has been filed with the Securities and Exchange Commission but has not yet
become effective. Such securities may not be issued nor may offers to receive
such securities be accepted prior to the time the registration statement becomes
effective. This announcement is neither an offer to sell nor the solicitation of
an offer to buy such securities nor shall there be any sale thereof in any state
in which such offer, solicitation or sale, or the timing thereof, would be
unlawful. In those jurisdictions where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Northrop Grumman by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Exchange
Each Outstanding Share of Common Stock
of
TRW Inc.
for
Shares of Common Stock of Northrop Grumman Corporation valued at $47.00
and
Each Outstanding Share of Serial Preference Stock II
of
TRW Inc.
for
Shares of Common Stock of Northrop Grumman Corporation valued at $47.00
multiplied by the then-effective conversion rate of the applicable
Series of Serial Preference Stock II,
in each case subject to the procedures and limitations
described in the Offer to Exchange and the related Letters of Transmittal
by
Northrop Grumman Corporation
Each Common Share may be exchanged for a number of shares of Northrop
Grumman's common stock equal to $47.00 per Common Share divided by the average
of the closing sale prices of Northrop Grumman common stock on the New York
Stock Exchange as reported in The Wall Street Journal over the five consecutive
trading days ending immediately prior to the second trading day prior to the
expiration of the Offer (the "Exchange Ratio"), but in no event will the
Exchange Ratio be more than 0.4563 ($47.00/$103.00) or less than 0.4159
($47.00/$113.00). Each Series 1 Share and each Series 3 Share of Serial
Preference Stock II may be exchanged for a number of shares of Northrop
Grumman's common stock equal to the then-effective conversion rate for such
preferred shares multiplied by the Exchange Ratio. As of March 13, 2001, TRW
reported that the conversion rate for the Series 1 Shares was 8.8 Common Shares
for each Series 1 Share and the conversion rate for the Series 3 Shares was
7.448 Common Shares for each Series 3 Share, calculated as provided in TRW's
Amended Articles of Incorporation. The Offer is made upon the terms and subject
to the conditions set forth in the Offer to Exchange, dated March 4, 2002 (the
"Offer to Exchange") and in the related Letters of Transmittal (the terms and
conditions set forth in the Offer to Exchange and the Letters of Transmittal, as
each may be amended or supplemented from time to time, collectively constitute
the "Offer"). Holders of Shares will not receive any fractional shares of
Northrop Grumman common stock. Instead, they will receive cash in an amount
equal to the value of the fractional Northrop Grumman shares they otherwise
would have been entitled to receive. As used herein, the term "Common Shares"
refers to shares of common stock of TRW, $0.625 par value per share, the term
"Series 1 Shares" refers to shares of Cumulative Serial Preference Stock II,
$4.40 Convertible Series 1 of TRW, no par value per share, the term "Series 3
Shares" refers to shares of Cumulative Serial Preference Stock II, $4.50
Convertible Series 3 of TRW, no par value per share, and the term "Shares"
refers to Common Shares, Series 1 Shares and Series 3 Shares, collectively. In
order to permit Northrop Grumman to disseminate the Offer to Exchange, Northrop
Grumman will request a list of TRW's shareholders of record and security
position listings.
If TRW shareholders of record tender Shares, they will not be obligated
to pay any charges or expenses of EquiServe Trust Company (the "Exchange Agent")
or any brokerage commissions. Except as set forth in the instructions to the
Letters of Transmittal, transfer taxes on the exchange of Shares pursuant to the
Offer to Exchange will be paid by Northrop Grumman or on its behalf.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MARCH 29, 2002, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The purpose of the Offer is for Northrop Grumman to acquire control of,
and ultimately the entire equity interest in, TRW. Northrop Grumman intends
promptly after the completion of the Offer to seek to have TRW complete a merger
with Northrop Grumman or a wholly owned subsidiary of Northrop Grumman in which
each outstanding share of capital stock of TRW (except for treasury shares of
TRW and Shares beneficially owned directly or indirectly by Northrop Grumman for
its own account) would be converted into the right to receive shares of Northrop
Grumman common stock at the same exchange ratio as provided in the Offer to
Exchange, subject to dissenters' rights under Ohio law.
The rights of Northrop Grumman stockholders differ in certain material
respects from the rights of TRW shareholders as described in the Offer to
Exchange. Among other things, the rights of TRW shareholders are governed by
Ohio corporate law and the rights of Northrop Grumman stockholders are governed
by Delaware corporate law.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THE TENDER OF
ENOUGH SHARES SO THAT, AFTER THE COMPLETION OF THE OFFER, NORTHROP GRUMMAN OWNS
A NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES THAT NORTHROP GRUMMAN
BENEFICIALLY OWNS FOR ITS OWN ACCOUNT, CONSTITUTES A MAJORITY OF THE TOTAL
OUTSTANDING COMMON SHARES ON A FULLY DILUTED BASIS, (2) THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENT ACT OF 1976, AS AMENDED, COUNCIL REGULATION (EEC) NO.
4064/89 OF THE COUNCIL OF THE EUROPEAN UNION AND ANY OTHER APPLICABLE SIMILAR
FOREIGN LAWS OR REGULATIONS, (3) THE REQUISITE APPROVAL OF TRW'S SHAREHOLDERS
UNDER THE OHIO CONTROL SHARE ACQUISITION LAW OR NORTHROP GRUMMAN'S BEING
SATISFIED, IN ITS SOLE DIS-CRETION, THAT SUCH LAW IS INAPPLICABLE OR INVALID,
(4) THE EXPIRATION OR TERMINATION OF THE WAITING PERIOD DURING WHICH THE OHIO
DIVISION OF SECURITIES MAY SUSPEND THE OFFER UNDER TITLE 17 OF THE OHIO REVISED
CODE, WITHOUT THE OCCURRENCE OF ANY SUCH SUSPENSION, OR NORTHROP GRUMMAN'S BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT SUCH LAW IS INAPPLICABLE OR INVALID, (5)
THE APPROVAL OF THE ISSUANCE OF SHARES OF NORTHROP GRUMMAN COMMON STOCK PURSUANT
TO THE OFFER TO EXCHANGE AND THE PROPOSED MERGER BY THE STOCKHOLDERS OF NORTHROP
GRUMMAN, (6) TRW'S NOT HAVING ENTERED INTO OR EFFECTUATED ANY OTHER AGREEMENT OR
TRANSACTION WITH ANY PERSON OR ENTITY HAVING THE EFFECT OF IMPAIRING NORTHROP
GRUMMAN'S ABILITY TO ACQUIRE TRW OR OTHERWISE DIMINISHING THE VALUE OF THE
ACQUISITION OF TRW AND (7) THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, RELATING TO THE SECURITIES TO BE ISSUED IN THE OFFER,
HAVING BECOME EFFECTIVE. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS
DESCRIBED IN THE OFFER AND THE RELATED LETTERS OF TRANSMITTAL.
Tender of Shares pursuant to the Offer will only become effective, and
Northrop Grumman shall have the right to acquire tendered Shares, only at such
time as Section 1704 of Title 17 of the Ohio Revised Code shall not prohibit or
delay the contemplated merger. No tender of Shares shall be effective, and
Northrop Grumman shall have no right to acquire tendered Shares, prior to such
time.
For purposes of the Offer, Northrop Grumman will be deemed to have
accepted for exchange Shares validly tendered and not withdrawn if and when
Northrop Grumman notifies the Exchange Agent of Northrop Grumman's acceptance
for exchange of the tenders of those Shares pursuant to the Offer. The Exchange
Agent will act as agent for tendering shareholders for the purpose of receiving
Northrop Grumman common stock (including cash to be paid in lieu of fractional
shares of Northrop Grumman common stock) and transmitting the stock and cash to
shareholders. Pursuant to the Offer, the Exchange Agent will deliver shares of
Northrop Grumman common stock and cash to be paid in lieu of fractional shares
of Northrop Grumman common stock in exchange for Shares as soon as practicable
after receipt of such notice from Northrop Grumman. Upon the terms and subject
to the conditions of the Offer, the exchange of Shares accepted for exchange
pursuant to the Offer will be made by deposit of certificates representing
shares of Northrop Grumman common stock exchangeable therefor (or cash payable
in lieu of fractional shares) with the Exchange Agent. In all cases, delivery of
certificates representing shares of Northrop Grumman common stock (and cash paid
in lieu of fractional shares) issued pursuant to the Offer will be made only
after timely receipt by the Exchange Agent of (i) certificates representing the
Shares or a Book-Entry Confirmation (as defined in the Offer to Exchange) with
respect to such Shares, (ii) a duly executed Letter of Transmittal to tender
Shares or an agent's message in connection with a book-entry transfer and (iii)
any other documents or instruments required by such Letter of Transmittal.
Under no circumstances will any interest be paid on cash amounts
payable in lieu of fractional shares, regardless of any extension of the offer
or any delay in making such payment.
The Offer and the merger are expected to qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code provided that
certain factual assumptions are satisfied. If the transactions so qualify,
holders of Shares generally will not recognize any gain or loss for United
States federal income tax purposes on the exchange of their Shares for Northrop
Grumman common stock in the Offer and the merger, except for any gain or loss
attributable to the receipt of cash in lieu of a fractional share of Northrop
Grumman common stock.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission and other applicable law, Northrop Grumman expressly
reserves the right, in its sole discretion, at any time or from time to time, to
extend the period of time during which the Offer remains open by giving oral or
written notice of such extension to the Exchange Agent. Any such extension will
be followed as promptly as practicable with a public announcement thereof not
later than 9:00 a.m., New York City time, on the next business day after the
scheduled expiration date. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering shareholder to withdraw tendered Shares.
Shares tendered pursuant to the Offer may be withdrawn at any time
prior to the expiration of the Offer. Following the expiration of the Offer,
such tenders are irrevocable, except that they may be withdrawn at any time
after Friday, May 3, 2002, unless accepted for payment prior to such date as
provided in the Offer to Exchange.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal containing the information and satisfying the requirements
set forth in the Offer to Exchange must be timely received by the Exchange Agent
at one of its addresses set forth on the back cover of the Offer to Exchange.
The signature(s) on the notice of withdrawal must be guaranteed by a financial
institution that is a participant in the Securities Transfer Agents Medallion
Program (an "Eligible Institution") unless such Shares have been tendered for
the account of any Eligible Institution. Shares properly withdrawn will be
deemed not to have been validly tendered for purposes of the Offer. However,
shareholders may re-tender withdrawn Shares prior to the expiration date by
following the procedures discussed in the Offer. Northrop Grumman will decide
all questions as to the form and validity of any notice of withdrawal in its
sole and absolute discretion.
Northrop Grumman may elect to provide a subsequent offering period of
up to 20 business days after the acceptance of Shares pursuant to the Offer if
the requirements under Rule 14d-11 of the General Rules and Regulations under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), have
been met. Shareholders will not have the right to withdraw Shares tendered in
the subsequent offering period, if any.
The information required to be disclosed by paragraph (d)(1) of Rule
14d-6 of the Exchange Act is contained in the Offer to Exchange and is
incorporated herein by this reference.
The Offer to Exchange, the related Letters of Transmittal and other
relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the shareholder list for the Shares or, if applicable,
who are listed as participants in a clearing agency's security position listing
for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO EXCHANGE AND THE LETTERS OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER. SUCH DOCUMENTS MAY BE EXAMINED AT THE WEB SITE OF THE
SECURITIES AND EXCHANGE COMMISSION AT WWW.SEC.GOV.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth below. Shareholders may request additional copies of
the Offer to Exchange, the related Letters of Transmittal and other tender offer
materials from the Information Agent, the Dealer Manager or their broker,
dealer, commercial bank or trust company. Such additional copies will be
furnished at Northrop Grumman's expense. No fees or commissions will be paid to
brokers, dealers or other persons (other than the Information Agent and the
Dealer Manager) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer to Exchange is:
D. F. King & Co., Inc.
U.S. and Canada Europe
77 Water Street No. 2 London Wall Buildings, 2nd Floor
New York, New York 10005 London Wall
Banks and Brokers Call Collect: 1-212-269-5550 London EC2M 5PP, United Kingdom
All Others Call Toll-Free: 1-800-755-7250 Tel.: +(44) 207 920 9700
The Dealer Manager for the Offer is:
Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
Call Toll-Free: (888) 328-4596
March 4, 2002
