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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from Commission file number
to 1-3229
NORTHROP GRUMMAN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-1055798
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 Century Park East
Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 553-6262
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $1 par value New York Stock Exchange
Pacific Stock Exchange
Securities Registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
As of March 10, 1995, 49,314,939 shares of Common Stock were
outstanding, and the aggregate market value of the Common Stock (based
upon the closing price of the stock on the New York Stock Exchange) of
the Registrant held by nonaffiliates was approximately $2,300 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1995 Annual Meeting of
Stockholders. Part III
NORTHROP GRUMMAN CORPORATION
PART I
Item 1. Business
Northrop Corporation was incorporated in Delaware in 1985.
Effective May 18, 1994 Northrop Corporation was renamed Northrop
Grumman Corporation. Northrop Grumman is an advanced technology
company operating in the aerospace industry. The company designs,
develops and manufactures aircraft, aircraft subassemblies and
electronic systems for military and commercial use and designs and
develops, operates and supports computer systems for scientific and
management information.
Additional information required by this Item is contained in Part
II Item 7 of this Annual Report on Form 10-K.
NORTHROP GRUMMAN CORPORATION
Item 2. Properties
The major locations, general status of the company's interest in
the property and identity of the industry segments which use the
property described, are indicated in the following table.
Location Property Interest
Anaheim, California(1)(5)(a)(b)(e) Owned
Arlington, Virginia(5)(a) Leased
Benton Township, Pennsylvania (2)(b) Leased
* Bethpage, New York (1)(2)(3)(5)(a)(b)(c)(d) Owned and leased
Bridgeport, West Virginia (2)(b) Owned
Calverton, New York (1)(2)(a)(b)(c) Owned and leased
Carson, California(1)(c) Leased
Compton, California(1)(b)(c) Leased
Commerce, California(1)(c) Leased
Dallas, Texas (1)(a)(b) Owned and leased
Edwards Air Force Base, California(1) Leased
Elk Grove, Illinois(2)(a)(b)(c)(d) Leased
El Segundo, California(1)(4)(a)(b)(c)(d) Owned and leased
Fairborn, Ohio (3)(a)(c) Leased
Gardena, California(1)(2)(a)(b)(c) Owned and leased
Glen Arm, Maryland (1)(b) Owned
Grand Prairie, Texas (1)(a)(b)(c)(d) Owned and leased
Great River, New York (2)(a)(b) Owned
Hawthorne, California(1)(2)(4)(5)(a)(b)(c)(d) Owned and leased
* Hicksville, New York (1)(2)(a)(c)(d) Owned
Holtsville, New York (5)(a) Owned
Hondo, Texas(1)(e) Leased
Houston, Texas (3)(a) Leased
Huntington Station, New York (2)(a) Leased
Irvine, California (2)(d) Leased
Kent, Washington(1)(c) Leased
Lake Charles, Louisiana (1)(a)(b)(c) Leased
Lawton, Oklahoma (3)(a) Owned and leased
Lexington, Maine (1)(a)(c) Owned and leased
Los Angeles, California(1)(5)(a)(b)(c)(d) Leased
Mayfield, Pennsylvania (1)(b) Owned and leased
Melbourne, Florida (2)(a)(b) Owned and leased
Milledgeville, Georgia (1)(b)(c) Owned and leased
Montebello, California(1)(c) Leased
Montgomery, Pennsylvania (1)(b) Owned
Newbury Park, California(5)(a)(b)(c)(d) Owned
New Town, North Dakota(2)(a)(b)(c) Owned and leased
Norwood, Massachusetts(2)(a)(b)(c)(d) Owned and leased
Palmdale, California(1)(a)(b)(c)(d)(e) Owned and leased
Perry, Georgia(1)(4)(a)(b)(c) Owned
Pico Rivera, California(1)(3)(a)(b)(c)(d) Owned and leased
Rolling Hills Estates, California(5)(a)(d) Owned
Rolling Meadows, Illinois(2)(a)(b)(c)(d) Owned and leased
Sherman, Texas (1)(b) Owned
St. Augustine, Florida (1)(a)(b)(c) Owned and leased
Stuart, Florida (1)(b)(c) Owned and leased
Sturgis, Michigan (1)(a)(b)(c) Owned and leased
Titusville, Florida (3)(a) Leased
Torrance, California(1)(a)(b)(c) Owned and leased
Vinton, Virginia (1)(b) Owned
Warner Robins, Georgia(2)(a)(b) Owned
Warren, Michigan(1)(3)(a)(b)(c)(d) Leased
Woodbury, New York (3)(5)(a) Leased
__________
* Certain portions of the properties at each of these locations are
leased or subleased to others. The company believes that in the
aggregate the property covered by such leases or subleased to others
is not material compared to the property actually utilized by the
company in its business.
NORTHROP GRUMMAN CORPORATION
Following each described property are numbers indicating the
industry segments utilizing the property:
(1) Military and Commercial Aircraft
(2) Electronics and Systems Integration
(3) Data Systems and Other Services
(4) Missiles and Unmanned Vehicle Systems
(5) General Corporate Asset
Following each described property are letters indicating the
types of facilities located at each location:
(a) office
(b) manufacturing
(c) warehouse
(d) research and testing
(e) other
Government-owned facilities used or administered by the company
consist of 9.4 million square feet at various locations across the
United States.
The company believes its properties are well-maintained and in
good operating condition. Under present business conditions and the
company's volume of business, productive capacity is currently in
excess of requirements.
NORTHROP GRUMMAN CORPORATION
Item 3. Legal Proceedings
False Claims Act Litigation
On June 9, 1987, a Complaint, entitled U.S. ex rel, David Peterson
and Jeff Kroll v. Northrop Corporation, was filed in the U.S. District
Court for the Central District of California alleging violations by the
company of the False Claims Act in connection with the operation of
petty cash funds, inspection, testing, and pricing for the MX
Peacekeeper Missile program. On September 1, 1989, the government
intervened and reduced the scope of the lawsuit by filing an amended
complaint. The amended complaint does not completely specify the total
amount being sought but, rather, seeks damages in excess of $1.2
million. On May 7, 1990, the Court ruled that the original plaintiffs
may proceed with portions of the lawsuit that the government declined
to include in the amended complaint. The court recently granted
summary judgment for the company on the government's allegations
related to petty cash, integrated test stations, extended work week and
experimental change orders. Trial on the remaining allegations could
occur in late 1995.
The company has been named a defendant in a lawsuit filed in the
U.S. District Court for the Central District of California, entitled
Janssen v. Northrop, pursuant to the False Claims Act relating to the
company's pricing of subassemblies for the F/A-18 Hornet Jet. On
April 9, 1990, the U.S. Department of Justice intervened in the lawsuit
and filed an amended complaint. The amended complaint, which seeks
unspecified damages and penalties, alleges common law fraud, unjust
enrichment, and mistake of fact in connection with purported false
statements regarding labor hours, cost of materials and total dollar
costs that were required for Northrop to manufacture F/A-18 Hornet Jet
subassemblies. In May 1992, the U.S. Government filed an additional
complaint containing allegations substantially identical to those
contained in the April 9, 1990 amended complaint. This complaint seeks
damages relating to foreign military sales of the F/A-18 Hornet Jet.
The parties have agreed to submit this matter to binding arbitration.
In addition, the company is a party to a number of civil actions
brought by private parties alleging violation of the False Claims Act
in which the government has declined to intervene. These actions,
which have been previously reported, relate to the MX Peacekeeper
Missile, the Air Launched Cruise Missile and the Advanced Technology
Bomber (B-2) programs. In a number of these actions, plaintiffs also
allege employment related claims including claims of wrongful
termination. Damages sought include claims for compensatory and
punitive damages. A number of these civil actions were initially
reported when it was unclear what position, if any, the government
would take in the litigation. In light of the government's decision
not to intervene or otherwise pursue the litigation, as well as the amounts
involved, the cases will not be individually reported. Further, the
company learns from time to time that it has been named as a defendant
in lawsuits which are filed under seal pursuant to the False Claims
Act. Since these matters remain under seal, the company does not
possess sufficient information to accurately report on the particular
allegations.
Walsh, et al. v. Northrop Grumman Corporation
In November, 1994, a class action complaint was filed against Northrop
Grumman Corporation, Grumman Corporation, Renso Caporali, Howard J.
Dunn, Jr., Robert Denien and Robert E. Foster in the U.S. District
Court for the Eastern District of New York, Case No. CV 94-5105 (Platt
C.J.). The individual plaintiffs purport to represent a class of
Grumman Corporation employees who directly or beneficially owned
Grumman stock and who were eligible to participate in Grumman's
Severance Plan prior to the merger with Northrop. A first amended
complaint was filed on November 29 alleging that Grumman Corporation's
March 8 and April 4, 1994 Form 14D-9 filings with the Securities and
Exchange Commission incorporated a statement concerning the Grumman
Severance Plan which violated Sections 10(b), and 14 (e) of the
Securities and Exchange Act of 1934, and Rule 10b-5. The complaint
also contains a cause of action for equitable estoppel based upon the
same statement and plaintiffs' alleged reliance thereon. The complaint
also alleges that the trustees of Grumman's Investment Plan violated
their fiduciary obligations by voting the Plan's shares in favor of the
merger without consulting the class members. The complaint seeks an
order enjoining defendants from amending or discontinuing the Severance
Plan for a period of thirty (30) months from the date of the merger and
an order mandating that defendants permit class members who have
accepted voluntary termination with severance pay to rescind their
elections. On December 8, 1994, the court denied plaintiffs'
application for a preliminary injunction but declined to dismiss the
action. Plaintiffs filed a motion to amend their complaint to add a
claim for damages based on post-acquisition changes to the Grumman
pension plan. The hearing on the motion to amend and for class
certification is scheduled for April 7, 1995. Absent dispositive
motions, this matter will proceed to trial in late 1995 or early 1996.
The defendants intend to vigorously defend this litigation and the
Company does not expect this matter to have a material adverse effect
on its financial condition.
GENERAL
The company, as a government contractor, is from time to time
subject to U.S. Government investigations relating to its operations.
Government contractors that are found to have violated the False Claims
Act, or are indicted or convicted for violations of other Federal laws,
or are considered not to be responsible contractors may be suspended or
debarred from government contracting for some period of time. Such
convictions could also result in fines. Given the company's dependence
on government contracting, suspension or debarment could have a
material adverse effect on the company.
NORTHROP GRUMMAN CORPORATION
Executive Officers of the Registrant
The following individuals were the elected officers of the
company as of February 16, 1995:
Business
Experience
Name Age Office Held Since Last Five Years
Kent Kresa 56 Chairman, President 1990 President and Chief
and CEO Executive Officer;
Prior to September
1990, President and
COO.
Herbert W. Anderson 55 Corporate Vice 1995 Vice President and Deputy
President and General Manager, Data
General Manager, Systems and Services
Data Systems & Division; Prior to 1994,
Services Division Vice President and Center
General Manager of Northrop
Information Services
Center; Prior to 1990,
Vice President Information
Resource Management, B-2
Program
Ralph D. Crosby, Jr. 47 Corporate Vice 1994 Vice President Business and
President and Advanced Systems
General Manager, Development at B-2
B-2 Division Division; Prior
to 1992, Vice President
Business Development and
Administration; Prior to
1991, Vice President and
Manager of Northrop
Washington Office
Marvin Elkin 58 Corporate Vice 1994 Corporate Vice
President President and Administration
Chief Human and Services; prior to
Resources and 1991 Vice President,
Administrative Materiel and Services
Officer
Sheila M. Gibbons 63 Corporate Vice 1992 Vice President and
President and Secretary
Secretary
Nelson F. Gibbs 57 Corporate Vice 1992 Vice President and
President and Controller; Prior
Controller to 1991, Partner,
Deloitte & Touche LLP
John E. Harrison 59 Corporate Vice 1995 Senior Vice President
President and and General Manager,
General Manager, Electronics Programs,
Electronics and Aerospace and Electronics
Systems Integration Group; Prior to
Division 1992, President,
Electronics Division,
Grumman Corporation
Robert W. Helm 43 Corporate Vice 1994 Vice President,
President, Legislative Affairs
Government Relations
Charles L. Jones, Jr.53 Corporate Vice 1992 Vice President, Quality
President, Operations; Prior to
Quality Operations 1991 Vice President
and Manager Operations,
Electronics Division; Prior
to 1990, Vice President and
Manager, Product Assurance
and Productivity
Richard R. Molleur 62 Corporate Vice 1991 Senior Vice President
President and and General Counsel;
General Counsel Prior to 1991, Partner,
Winston & Strawn
Albert F. Myers 49 Corporate Vice 1994 Vice President, Business
President Strategy; Prior to 1992,
and Treasurer Vice President, Test
Operations at B-2 Division
James G. Roche 55 Corporate Vice 1993 Corporate Vice President
President and Advanced Development and
Chief Advanced Planning Officer; Prior to
Development and 1992, Vice President,
Planning and Public Advanced Development and
Affairs Officer Planning; Prior to 1991
Vice President and Special
Assistant to the Chairman,
President and CEO.
Wallace G. Solberg 63 Corporate Vice 1994 Corporate Vice President
President and General
and General Manager, Manager-Aircraft Division;
Military Aircraft Prior to 1991, Vice
Division President and General
Manager, Electronics
Systems Division; Prior to
1990, Vice President and
General Manager, Defense
Systems Division.
Richard B. Waugh, Jr. 51 Corporate Vice 1993 Vice President, Taxes,
President and Risk Management and
Chief Financial Business Analysis
Officer
Max T. Weiss 72 Corporate Vice 1995 Corporate Vice President
President and General Manager
and Deputy General Electronics Systems
Manager, Electronics Division; Prior to
and Systems Integration December 1991, Vice
Division President - General
Technology and Advanced
Development; Prior to
July 1991, Vice President -
Technology; Prior to 1990,
Vice President-Technical,
Electronics Systems Group
Gordon L. Williams 62 Corporate Vice 1994 President & CEO, Vought
President Aircraft Company; Prior
and General Manager, to 1992, President,
Commercial Aircraft Aircraft Division,
Division LTV Aerospace & Defense
NORTHROP GRUMMAN CORPORATION
Item 4. Submission of Matters to a Vote of Security Holders
No information is required in response to this Item.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The information required by this Item is contained in Part II,
Item 8 of this Annual Report on Form 10-K.
Item 6. Selected Financial Data
The information required by this Item is contained in Part II,
Item 7 of this Annual Report on Form 10-K.
NORTHROP GRUMMAN CORPORATION
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Business Conditions
Northrop Grumman's industry segments - military and commercial
aircraft, electronics and systems integration, data systems and other
services, and missiles and unmanned vehicle systems (MUVS) - are each a
factor in the broadly defined aerospace industry. While Northrop
Grumman is subject to the usual vagaries of the marketplace, it is also
affected by the unique characteristics of the aerospace industry and by
certain elements peculiar to its own business mix.
In the second quarter of 1994 the company purchased the
outstanding common stock of Grumman Corporation (Grumman) for $2.1
billion. Northrop Corporation was renamed Northrop Grumman Corporation
effective May 18, 1994. In August 1994 the company purchased the
remaining 51 percent interest in Vought Aircraft Company (Vought) for
$130 million. The company had purchased a 49 percent interest in
Vought in 1992. As a result of these acquisitions the company
reorganized, effective January 1, 1995, into five operating divisions -
B-2 Division, Military Aircraft Division, Commercial Aircraft Division,
Electronics and Systems Integration Division and the Data Systems and
Services Division.
Northrop Grumman is one of about a dozen major companies in the
industry that compete for the relatively small number of large, long-
term programs that characterize both the defense and commercial
segments of the aerospace business. It is common in the aerospace
industry for work on major programs to be shared between a number of
companies. A company competing to be a prime contractor can turn out
to be a subcontractor. It is not uncommon to compete with customers,
and to simultaneously be both a supplier to and customer of a given
competitor. Boeing, Lockheed Martin and McDonnell Douglas are the
largest companies in the aerospace industry at this time. Northrop
Grumman also competes against many other companies for a relatively
large number of smaller programs, notably in the electronics areas.
Competition is intense, yet the nature of major aerospace programs,
conducted under binding contracts, allows companies that perform well
to benefit from a level of program continuity unknown in many
industries. Thus, intense competition and long operating cycles are
both characteristic of the industry's - and Northrop Grumman's -
business.
The B-2 bomber, for which the company is the prime contractor, is
Northrop Grumman's largest program. The B-2 Division is responsible
for final assembly of the B-2's airframe and systems integration (in
Palmdale, California), and the manufacture of the fuselage and parts of
the B-2's navigation and electronic warfare/situation awareness system.
Major subcontractors include Boeing, which makes the aft center
section, outboard wing sections, landing gear and fuel system, and GM
Hughes, which produces the radar systems. The Air Force currently
plans to operate two B-2 bomber squadrons of eight aircraft each with
an additional four aircraft available to fill in for those in depot for
periodic maintenance.
The company's Military Aircraft Division (MAD), headquartered in
Hawthorne, California, is the principal subcontractor on the McDonnell
Douglas F/A-18 program. The F/A-18 is a fighter/ground-attack aircraft
that can carry either one or two crew members. It is principally
deployed by the U.S. Navy on aircraft carriers, but several other
nations have purchased the aircraft and use it as a land-based combat
aircraft. The company builds approximately 40 percent of the aircraft
including the center and aft fuselage sections and vertical tails. Of
the versions of the F/A-18 currently in production, the C is a single-
seat combat aircraft that was first delivered to the Navy in 1987 and
the D is a two-seat version principally used for training. The F/A-
18E/F is an improved version of the F/A-18C/D under development for the
U.S. Navy as its next generation multi-mission aircraft.
NORTHROP GRUMMAN CORPORATION
MAD also produces aerial targets, principally the BQM-74/Chuker.
The BQM-74 series has been in production since the 1960s. It is used
by the Navy for air defense training, gunnery practice and weapon
system evaluation. The company builds the airframe and the electronics
that are used to guide the drone with the drone's engine being produced
by Williams International.
The Commercial Aircraft Division (CAD) supplies portions of the
Boeing 747, 757, 767 and 777 jetliners, the Gulfstream IV and V
business jets, and the McDonnell Douglas C-17. Northrop Grumman has
been a principal airframe subcontractor for the Boeing 747 jetliner
since the program began in 1966. The company produces the fuselage and
aft body section for the 747 as well as cargo and passenger doors, the
vertical and horizontal body stabilizers, floor beams and smaller
structural components. The majority of this work is performed at CAD's
primary production sites in Hawthorne, California; Grand Prairie,
Texas; Stuart, Florida; and Perry, Georgia. CAD manufactures engine
nacelles for the Gulfstream IV and other business jets and recently
initiated production of the wings for Gulfstream's newest business jet,
the Gulfstream V. CAD also produces the tail section, engine nacelles
and control surfaces for the McDonnell Douglas C-17 program, the U.S.
Air Force's most advanced airlifter, at various locations. The work
performed on the Gulfstream IV and V, 757, 767, 777 and some of the
components of the 747 and the C-17 were added as a result of the
Grumman and Vought acquisitions.
The Northrop Grumman designed and built all-weather E-2C Hawkeye
Airborne Early Warning Command and Control aircraft has been in active
service with the U.S. Navy since 1973 and is also employed by the air
forces of five other nations. The E-2C is produced by the company's
Electronics and Systems Integration Division (ESID).
ECM denotes electronic countermeasures equipment manufactured by
the ESID - Rolling Meadows Site. The largest program in this business
area is the AN/ALQ-135, which is an internally mounted radar jammer
deployed on F-15 fighter aircraft as part of that aircraft's Tactical
Electronic Warfare System. The AN/ALQ-162 Shadowbox is a jammer built
specifically to counter continuous wave radars. The AN/ALQ-162 has
been installed on the AV-8B and certain foreign F/A-18 aircraft. It is
also being deployed on U.S. Army helicopters and special mission
aircraft and it has been sold to the air forces of three other nations.
ESID also produces the E-8 Joint Surveillance Target Attack Radar
System (Joint STARS). Joint STARS detects, locates, classifies, tracks
and targets potentially hostile ground movement in all weather. It is
designed to operate around the clock, in constant communication through
secure data links with air force command posts, army mobile ground
stations or centers of military analysis far from the point of
conflict. The Joint STARS platform is a remanufactured Boeing 707-300
airframe. The 707 is remanufactured at Northrop Grumman's Lake
Charles, Louisiana site. Final installation of electronics and testing
are performed at the ESID - Integration and Test Facility in Melbourne,
Florida.
The ESID-Hawthorne Site, as the prime contractor to the U.S. Army,
is developing a "brilliant" anti-armor submunition, designated as BAT,
with production scheduled to commence in 1998. BAT is a three foot
long, 44 pound, wide-area-attack submunition that will be used to
disable and destroy armored vehicles and trucks. BATs are meant to be
carried and dispensed by a larger missile. BATs are designed to be
ejected over an armored vehicle column or attacking formation. Each
BAT has an infrared sensor that can home in on the heat generated by a
vehicle's engine, and an acoustic sensor that can home in on the noise
created by the tank or truck's engine.
NORTHROP GRUMMAN CORPORATION
Northrop Grumman's Data Systems and Services Division (DSSD)
designs, develops, operates and supports computer systems for
scientific and management information. Services provided include
systems integration, systems service, information conversion and
training for federal, state and local governments and private industry.
DSSD also provides military base support functions and aircraft
maintenance at a number of U.S. Government facilities.
Tables of contract acquisitions, sales and funded order backlog by
major program follow and complement industry segment data. B-2, F/A-
18, Boeing Jetliners (the 747, 757, 767 and 777) and C-17 are currently
the major programs of the military and commercial aircraft industry
segment. E-2C Hawkeye, ECM, E-8 Joint STARS and BAT are included in the
electronics and systems integration industry segment. The DSSD is the
major component of the data systems and other services industry
segment. The Tri-Service Standoff Attack Missile (TSSAM), the segment's
principal program, and aerial targets are included in the company's
MUVS industry segment. The "all other" category includes the balance
of the company's numerous other contracts, classified and unclassified.
NORTHROP GRUMMAN CORPORATION
Exhibit 10(a)
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of May 11, 1994, between
NORTHROP CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Company")
and each of the Banks party to the Credit Agreement referred to
below.
The Company, the Banks and the Administrative Agent are
parties to a Credit Agreement dated as of April 15, 1994, as
amended and restated as of April 18, 1994 (as heretofore modified
and supplemented and in effect on the date hereof, the "Credit
Agreement"), providing, subject to the terms and conditions
thereof, for loans to be made by said Banks to the Company in an
aggregate principal amount not exceeding $2,800,000,000. The
Company and the Banks wish to amend the Credit Agreement in
certain respects, and accordingly, the parties hereto hereby
agree as follows:
Section 1. DEFINITIONS. Except as otherwise defined
in this Amendment No. 1, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. AMENDMENTS. Subject to the satisfaction of
the conditions precedent specified in Section 4 below, but
effective as of the date of this Amendment No. 1, the Credit
Agreement shall be amended as follows:
Section 2.01. References in the Credit Agreement to
"this Agreement" and "the Notes" shall be deemed to be references
to the Credit Agreement as amended hereby, and to the Notes
(including the New Notes under and as defined in Section 4.02
hereof), respectively.
Section 2.02. Section 1.01 of the Credit Agreement
shall be amended by amending the following definitions to read in
their entirety as follows:
"Prime Rate" shall mean the arithmetic mean (rounded,
if necessary, to the nearest 1/16 of 1%), as determined by the
Administrative Agent, of the rate of interest from time to time
announced by each Reference Bank at its principal office as its
prime commercial lending rate.
"Revolving Credit Commitment" shall mean, for each
Revolving Credit Bank, the obligation of such Bank to make
Revolving Loans in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set opposite the
name of such Bank on Schedule I hereto under the caption
"Revolving Credit Commitment" (as the same may be reduced from
time to time pursuant to Section 2.04 hereof). The original
aggregate principal amount of the Revolving Credit Commitments is
$800,000,000.
"Term Loan Commitment" shall mean, for each Term Loan
Bank, the obligation of such Bank to make one or more Term Loans
in an aggregate amount up to but not exceeding the amount set
opposite the name of such Bank on Schedule I hereto under the
caption "Term Loan Commitment" (as the same may be reduced from
time to time pursuant to Section 2.04 hereof). The original
aggregate principal amount of the Term Loan Commitments is
$2,000,000,000.
"Term Loan Commitment Termination Date" shall mean
September 1, 1994.
Section 2.03. References in Section 3.01(c) of the
Credit Agreement to "$110,000,000" and "$220,000,000" are amended
to read as "$100,000,000" and "$200,000,000", respectively.
Section 2.04. Schedule I attached to the Credit
Agreement is deleted and Schedule I attached to this Amendment
No. 1. is substituted therefor.
Section 3. Representations and Warranties. The
Company represents and warrants to the Banks that the
representations and warranties set forth in Section 7 of the
Credit Agreement are true in all material respects on the date of
this Amendment No. 1 as if made on and as of the date of this
Amendment No. 1.
Section 4. Condition Precedent. As provided in
Section 2 above, the amendments to the Credit Agreement set forth
in said Section 2 shall become effective, as of the date of this
Amendment No. 1, upon the satisfaction of the following
conditions precedent:
4.01. Execution by All Parties. This Amendment No. 1
shall have been executed and delivered by the Company and each of
the Banks.
4.02. Notes. The Company shall have delivered to the
Administrative Agent for each Bank, in exchange for the Term Note
and Revolving Note heretofore delivered to such Bank pursuant to
Section 2.08(a) of the Credit Agreement, a new Term Note and a
new Revolving Note, each dated the date of the Notes being
exchanged, payable to such Bank in a principal amount equal to
the amount of the Term Loan Commitment and the Revolving Loan
Commitment, respectively, set forth opposite such Bank's name in
Schedule I attached hereto and otherwise duly completed, and each
of such Term Notes and Revolving Notes delivered to the Banks
shall constitute a "Note" under the Credit Agreement as amended
hereby.
Section 5. Miscellaneous. Except as herein provided,
the Credit Agreement shall remain unchanged and in full force and
effect. This Amendment No. 1 may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same amendatory instrument and any of the parties hereto
may execute this Amendment No. 1 by signing any such counterpart.
This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the day
and year first above written.
NORTHROP CORPORATION
By___________________________
Title:
THE BANKS
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
Title:
CHEMICAL BANK
By
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By____________________________
Title:
BANK OF MONTREAL
By__________________________
Title:
THE BANK OF NEW YORK
By___________________________
Title:
THE BANK OF NOVA SCOTIA
By_________________________
Title:
By_________________________
Title:
BANKERS TRUST COMPANY
By_______________________
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE
By___________________________
Title:
CITICORP USA, INC.
By___________________________
Title:
CREDIT LYONNAIS CAYMANISLAND
BRANCH
By__________________________
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By_________________________
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA
By_________________________
Title:
By_________________________
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
By___________________________
Title:
NATIONSBANK OF TEXAS, N.A.
By_________________________
Title:
NATIONAL WESTMINSTER BANK PLC
LOS ANGELES OVERSEAS BRANCH
By___________________________
Title:
ROYAL BANK OF CANADA
By____________________________
Title:
SOCIETE GENERALE
By___________________________
Title:
CREDIT SUISSE
By_________________________
Title:
By_________________________
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By___________________________
Title:
NBD BANK, N.A.
By____________________________
Title:
THE SUMITOMO BANK, LIMITED
LOS ANGELES BRANCH
By___________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By___________________________
Title:
BANCO CENTRAL
HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By___________________________
Title:
LLOYDS BANK PLC
By___________________________
Title:
MELLON BANK, N.A.
By_________________________
Title:
SHAWMUT BANK, N.A.
By___________________________
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By___________________________
Title:
J.P. MORGAN DELAWARE
By____________________________
Title:
SCHEDULE I
TERM LOAN REVOLVING LOAN TOTAL
BANKS COMMITMENTS COMMITMENTS COMMITMENTS
The Chase Manhattan
Bank (National Assn) $96,428,571.47 $38,571,428.53 $135,000,000
Chemical Bank 96,428,571.46 38,571,428.54 135,000,000
Bank of American National
Trust and Savings Assn 85,714,285.71 34,285,714.29 120,000,000
Bank of Montreal 85,714,285.71 34,285,714.29 120,000,000
The Bank of New York 85,714,285.71 34,285,714.29 120,000,000
The Bank of Nova Scotia 85,714,285.71 34,285,714.29 120,000,000
Bankers Trust Company 85,714,285.71 34,285,714.29 120,000,000
Canadian Imperial Bank of
Commerce 85,714,285.71 34,285,714.29 120,000,000
Citicorp USA, Inc. 85,714,285.71 34,285,714.29 120,000,000
Credit Lyonnais
Cayman Island Branch 85,714,285.71 34,285,714.29 120,000,000
First National Bank
of Chicago 85,714,285.71 34,285,714.29 120,000,000
First Interstate Bank of
California 85,714,285.71 34,285,714.29 120,000,000
The Long-Term Credit Bank
of Japan, Lts., Los
Angeles Agency 85,714,285.71 34,285,714.29 120,000,000
NationsBank of Texas,
N.A. 85,714,285.71 34,285,714.29 120,000,000
National Westminster Bank
Plc Los Angeles
Overseas Branch 85,714,285.71 34,285,714.29 120,000,000
Royal Bank of Canada 85,714,285.71 34,285,714.29 120,000,000
Societe Generale 85,714,285.71 34,285,714.29 120,000,000
Credit Suisse 64,285,714.29 25,714,285.71 90,000,000
The Industrial Bank of
Japan, Limited, Los
Angeles Agency 64,285,714.29 25,714,285.71 90,000,000
NBD Nank, N.A. 64,285,714.29 25,714,285.71 90,000,000
The Sumitomo Bank,
Limited, Los Angeles
Branch 64,285,714.29 25,714,285.71 90,000,000
Morgan Guaranty Trust
Company of New York 57,142,857.14 22,857,142.86 80,000,000
Banco Central Hispano-
americano, San Fran-
cisco Agency 35,714,285.71 14,285,714.29 50,000,000
Lloyds Bank Plc 35,714,285.71 14,285,714.29 50,000,000
Mellon Bank, N.A. 35,714,285.71 14,285,714.29 50,000,000
Shawmut Bank, N.A. 35,714,285.71 14,285,714.29 50,000,000
Wachovia Bank of
Georgia, N.A. 35,714,285.71 14,285,714.29 50,000,000
J.P. Morgan Delaware 28,571,428.57 11,428,571.43 40,000,000
TOTAL $2,000,000,000 $800,000,000 $2,800,000,000
NORTHROP GRUMMAN CORPORATION
AMENDMENT NO. 2
Dated as of December 9, 1994
TO
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 15, 1994
Amended and Restated as of April 18, 1994
$1,800,000,000
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
CHEMICAL BANK
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Co-Agents
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as Administrative Agent
AMENDMENT NO. 2 dated as of December 9, 1994, between
NORTHROP GRUMMAN CORPORATION (formerly named Northrop
Corporation), a corporation duly organized and validly existing
under the laws of the State of Delaware (the "Company") and each
of the Banks party to the Credit Agreement referred to below.
The Company, the Banks and the Administrative Agent are
parties to an Amended and Restated Credit Agreement dated as of
April 15, 1994, as amended and restated as of April 18, 1994 (as
heretofore modified and supplemented and in effect on the date
hereof, the "Credit Agreement"), providing, subject to the terms
and conditions thereof, for loans to be made by said Banks to the
Company in an aggregate principal amount not exceeding
$2,800,000,000. Pursuant to Section 2.01.A.(a) of the Credit
Agreement, the Company borrowed $2,000,000,000 of the Term Loans,
$1,000,000,000 of which has been prepaid and $1,000,000,000 is
the aggregate remaining balance of the Term Loans. The Company
and the Banks wish to amend the Credit Agreement in certain
respects, and accordingly, the parties hereto hereby agree as
follows:
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 2, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of
the conditions precedent specified in Section 4 below, but
effective as of the date of this Amendment No. 2, the Credit
Agreement shall be amended as follows:
Section 2.01. References in the Credit Agreement to
"this Agreement" shall be deemed to be references to the Credit
Agreement as amended hereby.
Section 2.02. Section 1.01 of the Credit Agreement
shall be amended by adding the following definitions in their
appropriate alphabetic order:
"Amendment No. 2" shall mean Amendment No. 2 dated as
of December 9, 1994 to this Agreement.
"Special Charges" shall mean pre-tax non-cash charges
to income on or before June 30, 1996 up to but not exceeding
$500,000,000 in the aggregate in connection with (i) the
Company's early retirement incentive program implemented on
October 1, 1994 and (ii) the sale or intended sale of plant
and equipment.
Section 2.03. Section 1.01 of the Credit Agreement
shall be amended by amending the following definitions to read in
their entirety as follows:
"Applicable Facility Fee Rate" with respect to the
Revolving Credit Commitments, and "Applicable Margin" for
each Type of Syndicated Loan, shall mean: (a) during the
period from the date Amendment No. 2 becomes effective to
December 31, 1994, (i) the Applicable Facility Fee Rate
shall be 0.1750%, (ii) the Revolving Loan Applicable Margin
for Base Rate Loans shall be 0% and for Eurodollar Loans
shall be 0.2500% and (iii) the Term Loan Applicable Margin
for Base Rate Loans shall be 0% and for Eurodollar Loans
shall be 0.4250%, and (b) during each Quarterly Period
occurring after December 31, 1994, provided that the
Administrative Agent shall have received (i) the financial
statements described in Section 8.01 hereof as at and for
the fiscal period ending on the preceding Quarterly Date and
(ii) the certificate required to be delivered under
Section 8.01(h) hereof, the respective rates set forth below
opposite the range of the Leverage Ratio set forth below
which encompasses the Leverage Ratio set forth in such
certificate delivered under Section 8.01(h) hereof
(provided, further, that if the Company shall fail to
deliver such financial statements and certificate, the
"Applicable Facility Fee Rate" with respect to the Revolving
Credit Commitments, and the "Applicable Margin" for each
Type of Syndicated Loan, during such Quarterly Period shall
be determined as if the relevant Leverage Ratio were greater
than 65%):
REVOLVING CREDIT COMMITMENTS TERM LOAN COMMITMENTS
APPLICABLE MARGIN APPLICABLE MARGIN
Applicable
Range of Facility Base Rate Eurodollar Base Rate Eurodollar
Leverage Ratio Fee Rate Loan Loan Loan Loan
Greater than 0.2250% 0% 0.3750% 0% 0.6000%
or equal to 65%
Less than 65% 0.1750% 0% 0.2500% 0% 0.4250%
but greater than
or equal to 50%
Less than 50% 0.1250% 0% 0.2250% 0% 0.3500%
but greater than
or equal to 40%
Less than 40% 0.1000% 0% 0.2000% 0% 0.3000%
but greater than
or equal to 30%
Less than 30% 0.0850% 0% 0.1650% 0% 0.2500%
provided that, during any period that the Company does not have
senior unsecured long term public debt that is rated at least
Baa3 or BBB-, respectively, by Moody's Investors Service, Inc.
(or any successor thereto) or by Standard & Poor's Ratings Group
(or any successor thereto), the Applicable Facility Fee Rate
shall be 0.3000% and the Applicable Margin for Eurodollar Loans
shall be 0.7000% for Revolving Loans and 1.0000% for Term Loans.
"Consolidated Shareholders' Equity" shall mean the
amount of shareholders' equity of the Company and the
Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) plus the
cumulative after-tax reduction in consolidated net
income of the Company and the Subsidiaries resulting
from Special Charges.
"Net Income" shall mean, for the Company and the
Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) for any fiscal period,
an amount equal to the consolidated net income for, but
before being reduced by the after-tax effect of any Special
Charges taken in, such fiscal period.
"Principal Payment Dates" shall mean the Quarterly
Dates falling on or nearest to March 31, June 30,
September 30 and December 31 of each year, commencing with
September 30, 1995 through and including March 31, 1999.
Section 2.04. Section 2.10(b) of the Credit Agreement
shall be amended by revising the first parenthetical therein to
read in its entirety as follows: "(other than (x) the Loans and
(y) borrowings under unsecured short-term credit lines)".
Section 2.05. Section 3.01(c) of the Credit Agreement
shall be amended to read in its entirety as follows:
"(c) The Company hereby promises to pay to the
Administrative Agent for account of the Banks the aggregate
principal amount of the Term Loans outstanding on the
effective date of Amendment No. 2 in 15 consecutive
quarterly installments payable on the Principal Payment
Dates, each of the first 14 installments being in the
aggregate amount of $62,500,000 and the last installment
being in the aggregate amount of $125,000,000; provided
that, if after the effective date of Amendment No. 2 the
Company repays the Refinanced Indebtedness of Grumman in
full, then (i) first, the remaining installments shall be
reduced by an amount equal to the amount of such repayment
in the direct order of their maturity and (ii) then the
remaining installments (after giving effect to the
reductions referred to in clause (i)) shall be increased
ratably by an aggregate amount equal to the amount of such
repayment."
Section 2.06. Section 8.08 of the Credit Agreement
shall be amended by revising clause (b) thereof to read in its
entirety as follows: "the cumulative sum of 50% of Net Income
for each fiscal quarter of the Company (for which purpose Net
Income that is not a positive number for any such fiscal quarter
shall be deemed to be Net Income of zero) commencing with the
fiscal quarter ending on March 31, 1994 (determined on a
consolidated basis without duplication in accordance with GAAP)".
Section 2.07. Section 8.09 of the Credit Agreement
shall be amended by changing the percentage "30%" appearing
therein to "40%".
Section 2.08. Section 8.10 of the Credit Agreement
shall be amended by deleting the word "unless" appearing in
clause (a) thereof and substituting therefor the words "so long
as".
Section 2.09. Section 8.12(c) of the Credit Agreement
shall be amended by deleting the parenthetical appearing therein.
Section 2.10. Section 10.10 of the Credit Agreement
shall be amended to read in its entirety as follows:
"10.10 Co-Agents. The Co-Agents identified on the
front page of this Agreement or of any amendment thereto
shall have no duties or responsibilities hereunder other
than as Banks hereunder or, in the case of Chase, as
Administrative Agent."
Section 3. Representations and Warranties. The
Company represents and warrants to the Banks that the
representations and warranties set forth in Section 7 of the
Credit Agreement are true in all material respects on the date of
this Amendment No. 2 as if made on and as of the date of this
Amendment No. 2.
Section 4. Condition Precedent. As provided in
Section 2 above, the amendments to the Credit Agreement set forth
in said Section 2 shall become effective, as of the date of this
Amendment No. 2, upon this Amendment No. 2 being executed and
delivered by the Company and each of the Banks and consented to
by Grumman Corporation.
Section 5. Miscellaneous. Except as herein provided,
the Credit Agreement shall remain unchanged and in full force and
effect. This Amendment No. 2 may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same amendatory instrument and any of the parties hereto
may execute this Amendment No. 2 by signing any such counterpart.
This Amendment No. 2 shall be governed by, and construed in
accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed and delivered as of the day
and year first above written.
NORTHROP GRUMMAN CORPORATION
By___________________________
Title:
THE BANKS
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By____________________________
Title:
CHEMICAL BANK
By__________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By____________________________
Title:
BANK OF MONTREAL
By__________________________
Title:
THE BANK OF NEW YORK
By___________________________
Title:
THE BANK OF NOVA SCOTIA
By_________________________
Title:
By_________________________
Title:
BANKERS TRUST COMPANY
By_______________________
Title:CANADIAN IMPERIAL BANK OF
COMMERCE
By___________________________
Title:
CITICORP USA, INC.
By___________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By__________________________
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By_________________________
Title:
FIRST INTERSTATE BANK OF
CALIFORNIA
By_________________________
Title:
By_________________________
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
By___________________________
Title:
NATIONSBANK OF TEXAS, N.A.
By_________________________
Title:
NATIONAL WESTMINSTER BANK PLC
LOS ANGELES OVERSEAS BRANCH
By___________________________
Title:
ROYAL BANK OF CANADA
By____________________________
Title:
SOCIETE GENERALE
By___________________________
Title:
CREDIT SUISSE
By_________________________
Title:
By_________________________
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By___________________________
Title:
NBD BANK, N.A.
By____________________________
Title:
THE SUMITOMO BANK, LIMITED
LOS ANGELES BRANCH
By___________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By___________________________
Title:
BANCO CENTRAL
HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By___________________________
Title:
LLOYDS BANK PLC
By___________________________
Title:
MELLON BANK, N.A.
By_________________________
Title:
SHAWMUT BANK, N.A.
By___________________________
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By___________________________
Title:
J.P. MORGAN DELAWARE
By____________________________
Title:
CONSENT:
GRUMMAN CORPORATION TORONTO DOMINION (TEXAS) INC.
By___________________________ By___________________________
Title:
DRESDNER BANK AG,
LOS ANGELES AGENCY AND
GRAND CAYMEN BRANCH
By___________________________
Title:
By___________________________
Title:
EXHIBIT 10(b)
PROMISSORY NOTE
$25,000,000.00 October 10, 1994
FOR VALUE RECEIVED, the undersigned, NORTHROP GRUMMAN CORPORATION
(the "Borrower"), hereby promises to pay to the order of Wachovia
Bank of Georgia, N.A. (the "Bank"), or any branch, office, or agency
of the Bank, the lesser of:
(a) the principal sum of U.S. $25,000,000.00 ; or
(b) the aggregate unpaid principal amount of all Advances made by
the Bank to the Borrower and endorsed on the reverse of this
Note and made a part hereof.
Such principal amount shall be due and payable, with respect to any
Advance, on the earlier of (a) the maturity date of such Advance or
(b) one (1) business day following the date on which the Bank makes
demand for payment hereunder. The Borrower promises to pay interest
(computed for the actual number of days elapsed on the basis of a
year of 360 days, which results in greater interest than if a 365 day
year were used) in respect of the unpaid principal amount hereof from
the date of each Advance until paid, at such rates as shall be agreed
upon from time to time between the Borrower and the Bank and endorsed
on the reverse hereof. Interest shall be payable at the maturity of
each Advance and calculated as to each interest period from and
including the first day thereof, but not including the last day
thereof. Interest not paid when due shall thereafter bear like
interest as the principal.
The Bank is authorized and directed to endorse on the reverse hereof
the date, amount, interest rate, and maturity date of each Advance
made by the Bank to the Borrower hereunder, as well as the date and
the amount of each payment of the principal amount of, and interest
on, such Advances; provided, however, that the failure by the Bank to
make such endorsement shall not relieve the Borrower of any of its
obligations hereunder.
Both principal and interest are payable in lawful money of the United
States of America at the office of the Bank located at 191 Peachtree
Street, Atlanta, Georgia, 30303 .
The Borrower promises to pay the cost of collection, including
reasonable attorney's fees (including, without limitation, the
reasonable estimate of the allocated cost of in-house legal staff and
counsel).
The makers and endorsers severally waive presentment of the payment,
protest, notice of protest, and notice of non-payment of this Note.
This Note and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the
State of California.
NORTHROP GRUMMAN CORPORATION
By: ________________________
James L. Sanford
Assistant Treasurer
EXHIBIT 10(g)
AMENDMENT TO
NORTHROP CORPORATION
BOARD OF DIRECTORS RETIREMENT PLAN
This amendment to the Northrop Corporation Board of Directors
Retirement Plan is intended to reflect the name change of
Northrop Corporation to Northrop Grumman Corporation and to add a
change of control provision:
1. The name of the Plan shall be amended, to reflect the name
change of Northrop Corporation to Northrop Grumman Corporation,
as follows:
Northrop Grumman Corporation Board of Directors Retirement Plan
2. A new subsection 1.12 shall be added as follows:
1.12 "Change of Control" shall have the meaning set forth in
Section 4.04.
3. A new subsection 4.04 shall be added as follows:
4.04 VESTING OF BENEFIT
In the event of a Change of Control, all Outside Directors
serving on the Board of Directors at the time of the Change of
Control shall be immediately vested and entitled to an Annual
Benefit Amount for each year (or if less than one year, for each
fraction of a year to the nearest quarter) of consecutive
service. For purposes of this Plan, Change of Control herein
shall be deemed to have occurred if any of the following events
occur:
(1) any "person," as such term is used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended
("Exchange Act") or any successor provisions, other than a
trustee or other fiduciary holding securities under the Plan or
any other employee benefit plan of the Company or an Affiliate,
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act or any successor provision), directly or
indirectly, of securities of the Company representing fifteen
percent (15%) or more of the combined voting power of the
Company's then outstanding securities (unless the event causing
the fifteen (15%) threshold to be crossed is an acquisition of
securities directly from the Company).
(2) during any period of two consecutive years (not including
any period prior to the adoption of this Trust Agreement),
individuals who at the beginning of such period constitute the
Board of Directors of the Company ("the Board"), and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a
transaction described in paragraph (1) or (3) of this paragraph
(d)) whose nomination by the Board or election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously so approved (the "Continuing
Directors"), cease for any reason to constitute at least a
majority thereof.
(3) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation.
(4) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition of the Company of all or substantially all of the
Company's assets.
Transactions described in this paragraph 4.04 shall not
constitute Changes in Control if, immediately prior to the change
in ownership, merger, consolidation, sale or other disposition,
liquidation or change in the Board, the Board shall pass
resolution approved by a vote of the majority of the Continuing
Directors to the effect that it has determined that such
transaction does not constitute a Change in Control within the
intention of this paragraph 4.04. In addition, for purposes of
this paragraph 4.04, if a Change in Control has occurred, no
subsequent event shall result in another Change in Control.
EXHIBIT 10(o)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
1. PARTIES: The parties to this First Amendment to
Employment Agreement ("Amendment") are Northrop Corporation
("Northrop") and Oliver C. Boileau ("Executive").
2. RECITALS: This Amendment is made with reference to the
following facts:
2.1 On October 18, 1989 Northrop and Executive entered into
an Employment Agreement ("Agreement"), a copy of which is attached
hereto as Exhibit A and incorporated herein by reference.
2.2 Pursuant to the terms of the Agreement, Executive was
employed by Northrop to serve as the President and General Manager
of Northrop's B-2 Division from December 11, 1989 to December 10,
1994.
2.3 Northrop has recently acquired the Grumman Corporation
("Grumman"), and now wishes Executive to serve as President of
Grumman effective immediately.
2.4 Northrop wishes to provide certain additional benefits to
Executive in consideration for his agreement to serve in this
critical new assignment.
2.5 Accordingly, subject to the approval of Northrop's Board
of Directors, the parties hereby agree to amend the Agreement,
pursuant to Section 12 thereof, in accordance with the amendments
set forth below.
3. TERM: Section 2 of the Agreement is hereby amended to
extend the expiration date of the Agreement from December 10, 1994
to and including January 31, 1995.
4. POSITION AND DUTIES: Section 3 of the Agreement is hereby
amended by adding the following sentence at the end thereof:
"For the period April 19, 1994 through January 31, 1995,
Executive shall serve as President of Grumman in addition to
his other job duties."
5. SALARY: Section 4 of the Agreement is hereby amended by
adding the following sentence at the end thereof:
"For the period April 19, 1994 through January 31, 1995,
Executive shall be paid a base salary of $41,667 per month,
equivalent to $500,000 per year."
6. LONG TERM INCENTIVE PLAN: Section 6 of the Agreement is
hereby amended by adding the following sentence at the end thereof:
"In consideration for his acceptance of the Grumman
assignment, Northrop's management shall recommend to the
Northrop Board of Directors that Executive receive 15,000
Northrop stock options pursuant to the terms of Northrop's
1993 Long Term Incentive Stock Plan, with all of the options
to vest on January 31, 1995."
7. NEW SECTION: The Agreement is hereby amended by adding
the following new Section 8.5 immediately following Section 8,
"Housing Assistance":
"8.5 SPECIAL HOUSING AND EXPENSE PROVISIONS FOR GRUMMAN
ASSIGNMENT: In consideration of Executive's acceptance of the
Grumman assignment, he will be provided with the following
special benefits:
8.5.1 Northrop will purchase Executive's home in Long Beach,
California for $1,025,000 in accordance with the valuation
determined by the Los Angeles County Assessor for 1993.
8.5.2 Northrop will provide Executive with a furnished
condominium or town house in the Long Island area at
Northrop's expense through January 31, 1995.
8.5.3 It is anticipated that Executive will arrange for the
transportation of his household goods and automobiles from his
current home in Long Beach to locations in Wyoming and St.
Louis, Missouri prior to May 31, 1994. Northrop will
reimburse Executive for the actual and reasonable cost of
transporting these goods, as well as for transporting certain
personal effects to Long Island. In addition, Northrop will
reimburse Executive for the actual and reasonable cost
incurred by him for storing household goods in St. Louis and
Wyoming through January 31, 1995.
8.5.4 Executive will be provided with an automobile in Long
Island at Northrop's expense through January 31, 1995. At
Northrop's option, it will either pay to transport Executive's
current company provided automobile to Long Island or lease a
comparable automobile for him.
8.5.5 It is anticipated that Executive may be required to
stay at a hotel for a short period of time prior to moving
into the Northrop provided condominium or town house. In such
event, Northrop will reimburse Executive for actual and
reasonable living expenses.
8.5.6 Northrop will reimburse Executive for the following
miscellaneous costs incurred by him in connection with his
Grumman assignment:
(i) the differential between the state and local income taxes
paid by him for tax year 1994 as a result of this assignment
and those which would have been paid by him had he remained in
California. This differential shall be provided to Executive
on a "grossed up" basis, with the "grossed up" amount to be
based on the highest statutory tax rate for each jurisdiction.
(ii) actual and reasonable accounting fees incurred by
Executive for preparing his 1994 California, New York and
federal tax returns.
(iii) actual and reasonable costs for the connection of
utility services (telephone, gas, electric, water, and cable
television) at the condominium or town house to be provided to
Executive.
(iv) actual and reasonable monthly utility costs incurred by
Executive at the Northrop provided condominium or town house
for telephone, gas, electric, water, and cable television."
DATED:____________________ OLIVER C. BOILEAU
By________________________________________
DATED:____________________ NORTHROP CORPORATION
By_____________________________
Marvin Elkin
Corporate Vice President and Chief Human
Resources and Administrative Officer
EXHIBIT 10(q)
STOCK PLAN FOR AMENDMENT TO 1993 NON-EMPLOYEE DIRECTORS
8. Grants
The annual cash retainer payable to each Eligible Director for
services as a director, excluding any fees payable for meetings
of the Board or Board committees or for extraordinary services,
shall be payable partly in shares of common stock as provided
under the Plan. Accordingly, for Plan purposes only, the amount
of the annual retainer payable to each Eligible Director in cash
shall be reduced by 30%. As soon as practicable, but no later
than 30 days following the end of each calendar year of the Plan,
each Eligible Director shall automatically be granted a number of
shares of common stock having a Fair Market Value equal to 30% of
the annual retainer earned for the prior year ("stock retainer
portion"). Notwithstanding the foregoing, for the first calendar
year of the Plan in which the amount of the annual retainer
payable in cash or stock is adjusted, each Eligible Director
shall receive an adjusted payment in shares under this Section 8
as is appropriate.
EXHIBIT 10(s)
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of October 14,
1993, by and between Vought Aircraft Company, a Delaware
corporation ("Vought"), and Gordon L. Williams ("Williams"), an
individual residing in Tarrant County, Texas.
WHEREAS, Vought desires to continue to employ Williams and
Williams desires to continue to be employed by Vought upon the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, it is agreed as follows:
1. Employment
Vought hereby offers to continue to employ Williams as
President and Chief Executive Officer, and Williams hereby
accepts continued employment by Vought, upon the terms and
conditions herein set forth.
2. Term
The term of this Agreement shall commence as of October
14, 1993, and, subject to the provisions of paragraph 6 below,
shall expire on January 1, 1996, unless sooner terminated as
hereinafter set forth.
3. Duties
Williams will, during the term hereof:
(a) Faithfully and diligently do and perform all such
acts and duties and furnish such services as the Board of
Directors of VAC Acquisition Corp., parent company of Vought
("VAC Board"), or the Board of Directors of Vought ("Vought
Board") shall direct, and do and perform all acts in the
ordinary course of Vought's business (within such limits as
the VAC Board or the Vought Board may prescribe) necessary
and conducive to Vought's best interests; and
(b) Devote his full time, energy and skill to the
business of Vought and to the promotion of Vought's best
interests, except for vacations and absences made necessary
because of illness.
4. Compensation
(a) Subject to the provisions of subparagraph 4(b) and
paragraph 5 below, Vought shall pay to Williams for all
services to be performed by him during the term of this
Agreement: (i) a fixed salary at the rate of $309,276.00
per annum through December 31, 1993, and $420,000.00 per
annum effective January 1, 1994, payable in periodic
payments in accordance with Vought's practices for other
executive and managerial employees, as such practices may be
determined from time to time. The Vought Board (or its
delegate) or VAC Board (or its delegate), as the case may
be, will review such fixed salary annually and, in its
discretion, may grant increases thereof based upon Williams'
performance; and (ii) any additional incentive compensation
under the Vought Aircraft Variable Incentive Compensation
Plan or any successor or replacement plan ("Variable
Compensation Plan") as the VAC Board (or its delegate) in
its discretion may from time to time determine. Williams
shall be assigned a target level of 60% for purposes of the
Variable Compensation Plan, which target level may be
increased by the VAC Board (or its delegate) in its
discretion.
All such payments will be subject to such
deductions as may be required to be made pursuant to law,
government regulation or order, or by agreement with, or
consent of, Williams.
(b) If Williams incurs a disability during the term of
this Agreement which would make him eligible to receive the
disability benefits provided for under the Vought Aircraft
Supplemental Executive Retirement Plan and Vought's
disability income plan, then the payment of Williams' fixed
salary pursuant to subparagraph 4(a) above shall be
suspended for the period of time during which Williams
remains entitled to the payment of such disability benefits.
Williams' fixed salary and/or incentive
compensation payable pursuant to subparagraph 4(a) above
shall be reduced by the amount of any annuity payments made
to Williams during the term of this Agreement under the
Vought Aircraft Supplemental Executive Retirement Plan, in
the manner determined by the Compensation Committee of the
VAC Board (or its successor) in its sole and absolute
discretion.
(c) In addition to the payments set forth above,
Vought agrees that during the term of this Agreement: (i)
Williams shall continue to be a participant in the Vought
Aircraft Supplemental Executive Retirement Plan (or any
successor or replacement plan with substantially identical
benefits); (ii) Williams shall be entitled to participate in
any group life insurance, medical, dental, disability,
vacation, pension, profit sharing or other employee benefit
plan, compensation program, or perquisites maintained by
Vought during the term of this Agreement and which is
available to officers of Vought, but excluding, however, the
LTV Key Employee Retention Plan and the Vought Key Employee
Retention Plan; and (iii) Williams shall be entitled to
reimbursement by Vought for all reasonable expenses actually
and necessarily incurred by him on its behalf in the course
of his employment hereunder.
5. Termination
(a) If Williams' employment with Vought shall
terminate for "cause," or due to death, retirement or
voluntary termination (except for "good reason" as defined
in subparagraph (b) below), then all obligations of Vought
hereunder shall terminate; provided, however, that any
portion of Williams' fixed salary pursuant to subparagraph
4(a) above which is earned but unpaid as of the date of
death shall be paid to the duly appointed personal
representative of Williams' estate; and further provided,
however, that participation in the Vought Aircraft Salaried
Health Care Plan (or any successor or replacement plan) as
amended from time to time, shall be continued for the
remainder of the lives of Williams and Williams' legally
recognized spouse on the effective date of this Agreement.
For purposes of this Agreement, "cause" shall be deemed to
exist upon (i) the willful and continued failure by Williams
to perform substantially the duties of his position (other
than any actual or anticipated failure resulting from
termination by Williams for "good reason") or (ii) the
willful engaging by Williams in conduct which is
demonstrably injurious to Vought, monetarily or otherwise.
Solely for purposes of determining "cause," an act or
failure to act by Williams shall be deemed "willful" if
done, or omitted to be done, by him in bad faith and without
reasonable belief that such act or omission was in the best
interest of Vought. The Executive Committee of the VAC
Board shall have the sole discretion to determine in good
faith whether the conditions constituting a termination for
cause have occurred.
(b) In the event of (i) a reduction in Williams' fixed
salary and/or target level percentage established pursuant
to subparagraph 4(a), (ii) a material adverse alteration or
diminution of Williams' position, duties, responsibilities,
reporting relationships, authority or status (including
corresponding perquisites) from those in effect, or
otherwise accorded to Williams, on the effective date of
this Agreement, or (iii) the failure of Vought to obtain an
agreement from any successor to expressly assume and agree
(by an instrument in writing) to perform the obligations to
Williams under this Agreement, any of which occurs without
the express written consent of Williams, then Williams shall
have the right to terminate employment with Vought for "good
reason" and thereby be entitled to the benefits described in
subparagraph 5(c) below.
(c) If Williams' employment with Vought shall
terminate for "good reason" as described in subparagraph (b)
above, or other than for cause, retirement or voluntary
termination (except for "good reason"), or death, then
Williams shall be entitled to (i) payment of any portion
of his fixed salary established pursuant to subparagraph
4(a) which is earned but unpaid as of the date of
termination; (ii) continued payment of Williams' then
current base salary increased by that percentage equal to
150% of Williams' then current target level percentage
under the Variable Compensation Plan, in substantially equal
amounts payable in arrears at regular payroll intervals
through the earlier of (A) the end of the 12-month period
following termination of employment, or (B) the Expiration
Date, and thereafter Williams' then current base salary
increased by that percentage equal to Williams' then current
target level percentage under the Variable Compensation
Plan, in substantially equal amounts payable in arrears at
regular payroll intervals through the Expiration Date,
provided, however, that such payments shall abate (x) to the
extent of any and all compensation earned by Williams in the
course of employment with a subsequent employer (including
self-employment which commences subsequent to Williams'
termination of employment), without regard to the time of
payment of such compensation, and (y) in their entirety as
of Williams' date of death, except that any payment for the
payroll period in which Williams dies shall be prorated
through such date of death; (iii) continued participation in
the Vought Aircraft Salaried Health Care Plan (or any
successor or replacement plan) as amended from time to time,
for the remainder of the lives of Williams and Williams'
legally recognized spouse on the effective date of this
Agreement; (iv) continued participation in the Vought
Aircraft Supplemental Executive Retirement Plan (or any
successor or replacement plan with substantially identical
benefits) through January 1, 1996, including the purchase of
annuities from time to time pursuant to the terms of such
plan; and (v) continued participation in any life insurance
plan, health care plan, and health care flexible spending
account maintained from time to time by Vought to the same
extent and at the same level of participant contributions
("Employee Cost"), if any, as if Williams had not had a
termination of employment (or if such participation is not
possible under the terms of any such plan, Williams shall be
provided by Vought with benefits or a cash payment or
payments sufficient to enable him to obtain benefits which
are comparable to the coverage provided by such plan, in
each case subject to payment by Williams of the Employee
Cost) until Williams becomes eligible for benefits under any
employee welfare benefit plan(s), as defined in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as
amended, in connection with new employment, or until January
1, 1996, if earlier.
6. Consulting Services
(a) Upon termination of Williams' employment for
reasons other than "cause" or death, Vought at its sole
discretion may retain Williams as an independent consultant,
and not as an employee, for the period of twelve consecutive
months following termination of employment ("Consulting
Period").
(b) During the Consulting Period:
(i) Williams will devote his best efforts to his
position as an independent consultant and will faithfully
perform such duties as determined by the Vought Board or the
VAC Board. Williams will render to Vought such services of
an advisory or consultative nature as Vought may reasonably
request, so that Vought may continue to have the benefit of
Williams' experience and special knowledge of the affairs of
Vought and of Williams' reputation and contacts.
(ii) During the Consulting Period, Williams will
neither serve as a consultant to nor as an employee,
officer, director or agent of any person, firm or
corporation who is in competition with Vought without the
prior written consent of Vought as given through the Vought
Board, which consent shall not be unreasonably withheld.
(c) Williams will be available for advice and counsel
to the officers and directors of Vought at all reasonable
times by telephone, letter, or, upon receipt of five days'
written notice from Vought, in person; provided, however,
Williams shall neither be obligated to render in excess of 5
days of service during any month, nor in excess of 60 days
of service during the entire Consulting Period. Williams
shall not be obligated to render any consulting services
during any period when he is unable to do so due to illness,
disability or injury, and Williams' inability to do so shall
not affect his right to receive the compensation described
in subparagraph 6(d) below during the Consulting Period.
(d) Vought agrees to pay Williams for rendering
consulting services and for merely being available to render
services hereunder, at the rate of $10,000 per month through
the earlier of (i) the end of the Consulting Period, or (ii)
the date of Williams' death, except that any payment for the
period in which Williams dies shall be prorated through such
date of death.
(e) Williams shall be entitled to reimbursement during
the Consulting Period for all reasonable and customary
expenses actually incurred by him in the performance of his
duties hereunder.
7. Complete Agreement
This Agreement represents the complete agreement and
understanding between Vought and Williams pertaining to the
subject matter contained herein, and supersedes all prior
agreements or understandings, written or oral, between the
parties with respect to such subject matter, except, however, the
Stock Appreciation Right Agreement dated as of September 1, 1992
by and between Vought and Williams. No attempted modification or
waiver of any of the provisions hereof shall be binding on either
party unless in writing and signed by both Vought and Williams.
8. Assignment
This Agreement is personal to Williams and shall not be
assigned by him. Vought may assign this Agreement without
Williams' consent to any other entity succeeding to all or
substantially all of the assets or business of Vought, whether by
merger, consolidation, acquisition or otherwise. This Agreement
shall be binding upon Vought, its successors and permitted
assigns, and Williams.
9. Applicable Law
This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties have executed this Agreement
on October _____, 1993.
GORDON L. WILLIAMS VOUGHT AIRCRAFT COMPANY
__________________________ By:___________________________
J. P. Carr
Senior Vice President -
Administration and Support
EXHIBIT 10(t)
NORTHROP GRUMMAN CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Plan Design Outline
PLAN PURPOSE:
To provide executives with a capital accumulation opportunity
through deferrals of compensation that is disallowed for tax
deduction under IRS Code Section 162(m)
PLAN YEAR: January 1 to December 31
ADMINISTRATIVE COMMITTEE:
The Compensation and Management Development Committee of the
Board of Directors will administer the Plan
ELIGIBILITY FOR PARTICIPATION:
Selected employees of Northrop Grumman designated by the
Committee
SOURCES OF DEFERRALS:
Compensation that is disallowed for tax deduction under IRS Code
Section 162(m)
DEFERRAL ACCOUNT:
Amounts of compensation deferrals and investment returns thereon
will be credited to a participant's Deferral Account
INTEREST CREDITING RATE:
Interest will be credited to the Account Balance at a rate equal
to 115% of the fourth quarter monthly rate of Moody's Average
Corporate Bond rate for each Plan year
VESTING:
Deferral amounts and investment return credited to Deferral
Account are always 100% vested
Page 2
DISTRIBUTION OF ACCOUNT BALANCES:
In the event of retirement or long-term disability, the normal
form of distribution will be lump sum, 5 or 10 years
In the event of any other termination of employment, the
distribution will be in a single lump sum
RISK OF LOSS:
In the event of the Company's bankruptcy or insolvency, amounts
deferred under the Plan and earnings on these amounts are treated
as Company assets and the rights of Plan Participants would be no
greater than those of general creditors of the Company
PLAN AMENDMENT AND TERMINATION:
Board of Directors may amend or terminate the Plan at any time
but may not reduce benefits
Page 3
NORTHROP GRUMMAN CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Election Form
I hereby elect to participate in the Northrop Grumman Corporation
Executive Deferred Compensation Plan (the "Plan").
ELECTION TO DEFER COMPENSATION:
____ I hereby irrevocably elect to defer 100% of
compensation that is disallowed for tax
deduction under IRS Code Section 162(m) for
the year 1995.
ELECTION TO RECEIVE BENEFIT AMOUNTS:
I hereby irrevocably elect to receive my distribution from the
Plan in one of the following payment forms. Please check one.
_____ Lump Sum
_____ Annual Installments Of:
_____ 5 years
_____ 10 years
I understand that the Company's obligation to pay benefits under
the Plan will be that of an unfunded and unsecured promise of the
Company to pay benefits in the future, and my rights to benefits
under the Plan will be no greater than those of the Company's
unsecured general creditors.
____________________________________ ______________________
Employee Name (please print or type) Social Security Number
____________________________________ ______________________
Signature Date
EXHIBIT 10(u)
NORTHROP GRUMMAN
TRANSITION PROJECT INCENTIVE PLAN
1. Purpose
The purpose of the Northrop Grumman Transition Project Incentive
Plan (the "Plan") is to impel leadership, decisions and actions of
managers to reduce costs of operations and promote consolidations
and efficiencies with respect to the acquisition of Grumman
Corporation by Northrop Grumman Corporation ("Company").
Accomplishing this purpose while maintaining long-term high
performance and meeting customer requirements will add
significantly to total shareholder value.
2. Term
The Plan shall become effective upon approval by the Northrop
Grumman Board of Directors ("Board") and compensate managers
according to stated provisions for verified cost reductions
attained during the "Plan Measurement Period," defined as the
period between 1 July 1994 and 31 December 1995. This interval
spans the crucial time from commencement of the opportunity for
Northrop Grumman management to affect change in the operations of
Grumman Corporation, to the time by which the purpose of the Plan
must be accomplished. The Plan shall terminate at the close of
business on 1 March 1996. After termination of the Plan, no future
awards may be granted but previously granted awards may be paid if
they are outstanding in accordance with the terms and conditions of
the Plan.
3. Plan Administration
The Compensation and Management Development Committee ("Committee")
of the Board shall be responsible for administration of the Plan.
The Committee shall have full and exclusive power to administer the
plan and to adopt such rules, regulations and guidelines--
consistent with the bylaws of the Corporation--for carrying out the
Plan as it may deem necessary and proper, all of which power shall
be exercised in the best interests of the Company and in keeping
with the objectives of the Plan. This power includes, but is not
limited to, establishing all awards terms and conditions and
adopting Plan modifications, amendments and procedures.
4. Eligibility
Employees in management positions of the Company designated by the
Chief Executive Officer as participants shall be eligible to
receive awards under the Plan. "Employees" shall include persons
on the active payroll of the Company during the term of the Plan
Measurement Period. "Management" shall include any Employee in a
position classification titled manager, director or vice president.
Eligible Managers shall be assigned to one of two groups designated
i) "Senior Executive Group" and ii) "Executive Group." Assignment
to the Senior Executive Group shall be limited to twenty (20)
Managers. Payments of awards under the Plan on a pro rata basis to
participants who, during the Measurement Period, become disabled or
who terminate for any reason--including retirement and resignation-
- -shall be at the sole discretion of the Committee and the Board in
accordance with provisions of Section 5.
5. Awards
Awards under the Plan to elected officers of the Company, including
the Chief Executive Officer, shall be reviewed by the Committee and
submitted for approval to the Board. The Committee shall submit to
the Board its recommendation for award under the Plan to the Chief
Executive Officer. The Board, absent employee directors, shall
determine all such awards to elected officers, including the Chief
Executive Officer. The Committee shall determine awards under the
Plan to each other participant. Recommendations for awards and
justifications under the Plan shall be submitted to the Committee
by the Chief Executive Officer within the term of the Plan. Such
awards will be in cash payment to designated recipients before 31
March 1996, net of tax withholding and other deductions and
adjustments consistent with Company policy and payroll practices.
Awards to all participants may not exceed the amount determined by
calculations defined in Section 7 below. Within this limitation,
individual awards under the Plan may vary at the discretion of the
Committee and the Board.
6. Justification for Awards
Awards under the Plan may be granted by the Committee only for
Verified Cost Savings. "Verified Cost Savings" are dollar value
reductions in Company expense that are reflected in official
financial records of the Company in areas such as, but not limited
to, plant, equipment, real estate, production and overhead costs,
scrap, surplus, inventory, debt and capital cost. The Chief
Executive Office shall only submit to the Committee recommendations
for awards under the Plan that are authenticated and corroborated
by tangible, measured dollar value savings instituted and affected
by Plan participants. Notwithstanding this or such other
justifications or assertions of savings attributed to Plan
participants, the decisions of the Committee and the Board as to
Verified Cost Savings, awards and any other factual matters under
the Plan shall not be subject to review or appeal by participants
or any other persons.
7. Award Schedule
When determined by the Committee, awards under the Plan are paid
according to a schedule establishing a defined fraction of total
cost savings payable. The Awards Schedule is derived by the
following formula: (Savings > $250M) X Percentage to Margin X
Performance Coefficient X Percentage Share, where: i) "Savings >
$250M" equals Verified Cost Savings under the Plan exceeding
$250,000,000, and a value that defines the term "Qualified Cost
Savings;" ii) "Percentage to Margin" equals the percentage of
Qualified Cost Savings for the Measurement Period reflected in the
Company's profit in its official financial records; iii)
"Performance Coefficient" equals a percentage of Qualified Cost
Savings eligible for payment to participants; and iv) "Percent
Share" equals the percentage of the product of i, ii and iii to be
distributed among participants of the Senior Executive Group and
the Executive Group. For purposes of this Plan, Percentage to
Margin shall equal 40%. For Qualified Costs Savings greater than
$250,000,000 and less than $260,000,000, Performance Coefficient
shall equal 10%; for Qualified Costs Savings greater than
$260,000,000 but less than $275,000,000, Performance Coefficient
shall equal 15%; for Qualified Costs Savings greater than
$275,000,000 but less than $300,000,000, Performance Coefficient
shall equal 20%; for Qualified Costs Savings greater than
$300,000,000, Performance Coefficient shall equal 25%; for
Qualified Costs Savings greater than $350,000,000, Performance
Coefficient shall equal 0%. Finally, Percent Share shall equal 40%
for the Senior Executive Group and 60% for the Executive Group.
For illustration, the Appendix contains a graphical representation
of Plan awards at the thresholds of saving defined above for an
assumed number of participants.
8. Adjustments and Reorganizations
In the event the Company undergoes a change in control (as defined
by the Committee), or is not the surviving company in a merger or
consolidation with another company or in the event of a liquidation
or reorganization of the Company during the Term of the Plan, the
Committee may provide for adjustments and settlements of awards as,
and at a time, it deems appropriate.
9. Plan Amendment or Termination
Notwithstanding any other provision of the Plan, the Plan may be
amended or terminated by the Committee in its sole and absolute
discretion. Nothing herein creates or shall be deemed to create a
vested right in any participant.
10. Company Benefit Programs
Awards under the Plan shall be deemed a part of a participants
incentive or bonus compensation for purposes of calculating payment
of benefits from any Company benefit plan.
11. Unfunded Plan
Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust
or separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any participant or
other person.
12. Future Rights
No person shall have any claim or rights to be granted an award
under the Plan, and no participant shall have any rights under the
Plan to be retained in the employ of the Company.
13. Governing Law
The validity, construction and effect of the Plan and any action
taken or relating to the Plan shall be determined in accordance
with the laws of the State of California and applicable Federal
Law.
14. Successors and Assigns
The Plan shall be binding on all successors and assigns of a
participant, including, without limitation, the estate of such
participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative
of a participant's creditors.
APPENDIX
GRAPHIC PRESENTATION OF TRANSITION PROJECT INCENTIVE PLAN AWARDS AT
THE THRESHOLDS OF SAVINGS AS DESCRIBED IN CLAUSE 7 OF THE PLAN.
THE GRAPH ILLUSTRATES EXAMPLES OF AVERAGE INDIVIDUAL PAYOUTS AT
VARYING COST SAVINGS:
GROUP A GROUP B
SAVINGS SENIOR EXECUTIVES EXECUTIVES
(in millions) (in thousands) (in thousands)
Less than 250 0 0
260 8.0 2.4
275 26.0 7.8
300 66.0 19.8
325 116.0 34.8
350 166.0 49.8
EXHIBIT 21
Significant Subsidiaries of Registrant as of December 31, 1994
SIGNIFICANT SUBSIDIARIES: INCORPORATED IN:
Grumman Corporation New York
Grumman Aerospace Corporation New York
Grumman Data Systems Corporation Delaware
Note: The other subsidiaries of the Registrant are not
"significant subsidiaries", as defined by Rule 1.02 of Regulation
S-X, and therefore are not listed herein.
EXHIBIT 24
POWER OF ATTORNEY IN CONNECTION WITH THE
1994 ANNUAL REPORT ON FORM 10-K
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
directors and officers of NORTHROP GRUMMAN CORPORATION, a
Delaware corporation, does hereby appoint RICHARD R. MOLLEUR and
SHEILA M. GIBBONS, and each of them as his agents and attorneys-
in-fact (the "Agents"), in his respective name and in the
capacity or capacities indicated below to execute and/or file the
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 (the "Report") under the Securities Exchange Act of 1934, as
amended (the "Act"), and any one or more amendments to any part
of the Report that may be required to be filed under the Act
(including the financial statements, schedules and all exhibits
and other documents filed therewith or constituting a part
thereof) and to any part or all of any amendment(s) to the
Report, whether executed and filed by the undersigned or by any
of the Agents. Further, each of the undersigned does hereby
authorize and direct the Agents to take any and all actions and
execute and file any and all documents with the Securities and
Exchange Commission (the "Commission"), which they deem necessary
or advisable to comply with the act and the rules and regulations
or orders of the Commission adopted or issued pursuant thereto,
to the end that the Report shall be properly filed under the Act.
Finally, each of the undersigned does hereby ratify each and
every act and documents which the Agents may take, execute or
file pursuant thereto with the same force and effect as though
such action had been taken or such document had been executed or
filed by the undersigned, respectively.
This Power of Attorney shall remain in full force and effect
until revoked or superseded by written notice filed with the
Commission.
IN WITNESS THEREOF, each of the undersigned has subscribed these
presents this
15th day of March, 1995.
__________________________ Chairman of the Board, President
Kent Kresa and Chief Executive Officer and
Director (Principal Executive
Officer)
__________________________ Director
Jack R. Borsting
__________________________ Director
John T. Chain, Jr.
__________________________ Director
Jack Edwards
__________________________ Director
Barbara C. Jordan
__________________________ Director
Aulana L. Peters
__________________________ Director
John E. Robson
__________________________ Director
Richard M. Rosenberg
__________________________ Director
William F. Schmied
__________________________ Director
Brent Scowcroft
__________________________ Director
John Brooks Slaughter
__________________________ Director
Wallace C. Solberg
__________________________ Director
Richard J. Stegemeier
__________________________ Corporate Vice President
Richard B. Waugh, Jr. and Chief Financial Officer
(Principal Financial Officer)
__________________________ Corporate Vice President
Nelson F. Gibbs and Controller
(Principal Accounting Officer)