Exhibit 1.1
EXECUTION COPY
NORTHROP GRUMMAN CORPORATION
Equity Security Units
Common Stock
Underwriting Agreement
Section 1. INTRODUCTORY. Northrop Grumman Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell from time to time, in
one or more series, on terms to be decided at the time of offering, (i) its
7.25% Equity Security Units (the "Underwritten Units") and, at the election of
the Underwriters (as defined below), an additional number of 7.25% Equity
Security Units (the "Option Units") to cover over-allotments and (ii) shares of
its common stock, par value $1.00 per share (the "Common Stock") (the
"Underwritten Shares") and, at the election of the Underwriters, an additional
number of shares of Common Stock to cover over-allotments (the "Option Shares").
Each Equity Security Unit will have a stated amount of $100.00 and will
initially be comprised of (a) a purchase contract (the "Purchase Contract")
under which the holder will purchase from the Company on November 16, 2004, a
number of shares (the "Issuable Common Stock") of Common Stock of the Company
equal to the Settlement Rate as set forth in the Purchase Contract Agreement (as
defined below) and (b) a 5.25% senior note due 2006 of the Company having a
principal amount of $100.00 (the "Debt Security"). The Underwritten Units and
the Option Units that the Underwriters elect to purchase pursuant to Section 3
hereof are collectively referred to as the "Units," and the Underwritten Shares
and the Option Shares that the Underwriters elect to purchase pursuant to
Section 3 hereof are collectively referred to as the "Shares." The Underwritten
Units and the Underwritten Shares are hereinafter referred to as the
"Underwritten Securities," and the Option Units and Option Shares are
hereinafter referred to as the "Option Securities."
In accordance with the terms of a Purchase Contract Agreement, to be dated
as of November 21, 2001 (the "Purchase Contract Agreement"), between the Company
and JPMorgan Chase Bank, as purchase contract agent (the "Purchase Contract
Agent"), the Debt Securities constituting a part of the Equity Security Units
will be pledged by the Purchase Contract Agent, on behalf of the holders of the
Equity Security Units, to The Bank of New York, as collateral agent (the
"Collateral Agent"), pursuant to a Pledge Agreement, to be dated as of November
21, 2001 (the "Pledge Agreement"), among the Company, the Purchase Contract
Agent, the Collateral Agent and The Bank of New York, as custodial agent (the
"Custodial Agent") and securities intermediary (the "Securities Intermediary"),
to secure the holders' obligation to purchase Issuable Common Stock under the
Purchase Contracts. The rights and obligations of a holder of Equity Security
Units in respect of Debt Securities (subject to the pledge thereof) and Purchase
Contracts will initially be evidenced by a Normal Units Certificate (as defined
in the Purchase Contract Agreement).
The Debt Securities will be issued pursuant to an Indenture (the
"Indenture"), to be dated as of November 21, 2001, between the Company and
JPMorgan Chase Bank, as Trustee (the "Trustee").
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Pursuant to a Remarketing Agreement (the "Remarketing Agreement") to be
entered into among the Company, the Purchase Contract Agent and a financial
institution to be selected by the Company to act as reset agent and remarketing
agent (together, the "Remarketing Agent"), the Debt Securities or other Pledged
Securities (as defined below) will be remarketed, subject to certain terms and
conditions.
As used in this Agreement, "Transaction Documents" shall mean,
collectively, the Purchase Contract Agreement, the Indenture, the Pledge
Agreement and the Remarketing Agreement. The Units and the Shares registered
under the Registration Statement (as defined in Section 13) are hereinafter
referred to as the "Registered Securities," and the Registered Securities
involved in any such offering are hereinafter referred to as the "Securities."
The firm or firms which agree to purchase the Securities are hereinafter
referred to as the "Underwriters" of such Securities, and the representative or
representatives of the Underwriters, if any, specified in a Terms Agreement
referred to in Section 3 are hereinafter referred to as the "Representatives,"
provided, however, that if the Terms Agreement does not specify any
representative of the Underwriters, the term "Representatives," as used in this
Agreement (other than in Sections 2(b), 6(c) and 7 and the second sentence of
Section 3), shall mean the Underwriters. Certain other capitalized terms used
herein are defined in Section 13 hereof.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each Underwriter that:
(a) A registration statement (No. 333-71290), including a Basic Prospectus
(as defined in Section 13), relating to the Registered Securities has been filed
with the Securities and Exchange Commission (the "Commission") and has become
effective; no order preventing or suspending the use of such prospectus has been
issued by the Commission and no proceeding for that purpose has been threatened
or initiated by the Commission. The Company may have filed one or more
amendments thereto, including a preliminary prospectus, each of which has been
previously furnished to the Representatives. The Company will next file with the
Commission one of the following: (1) after the effective date of such
registration statement, a final prospectus supplement relating to the Securities
in accordance with Rules 430A and 424(b), (2) prior to the effective date of
such registration statement, an amendment to such registration statement
(including the form of final prospectus supplement) or (3) a final prospectus in
accordance with Rules 415 and 424(b). In the case of clause (1), the Company has
included in such registration statement, as amended at its effective date, all
information (other than Rule 430A Information) required by the Act and the rules
and regulations of the Commission thereunder ("the Rules and Regulations")
thereunder to be included in such registration statement and the Prospectus. As
filed, such final prospectus supplement or such amendment and form of final
prospectus supplement or such final prospectus shall contain all Rule 430A
Information, together with all other such required information, and, except to
the extent the Representatives shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to the Representatives
prior to the execution of the Terms Agreement or, to the extent not completed at
such time, shall contain only such specific additional information and other
changes as the Company has advised the Representatives, prior to such time, will
be included or made therein. The
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Registration Statement, at the execution of the Terms Agreement, will meet the
requirements set forth in Rule 415(a)(1)(x).
(b) On its effective date, the Registration Statement conformed in all
respects to the requirements of the Act, the Trust Indenture Act of 1939, as
amended, (the "Trust Indenture Act") and the Rules and Regulations and did not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and on the date of each Terms Agreement referred to in Section
3, on each Closing Date and on any date on which Option Securities were
purchased (if not the Closing Date), the Registration Statement and the
Prospectus will conform in all respects to the requirements of the Act, the
Trust Indenture Act and the Rules and Regulations, and neither of such documents
will include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that the foregoing does not apply to statements
in or omissions from any of such documents based upon written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein.
(c) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act and the
Exchange Act, as applicable, the Trust Indenture Act and the Rules and
Regulations, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
(d) Each of the Company and its significant subsidiaries listed on Schedule
A hereto (each, a "Subsidiary" and, collectively, the "Subsidiaries") has been
duly organized, is validly existing as a corporation in good standing under the
laws of its jurisdiction of organization and has the requisite corporate power
and authority to carry on its business as currently being conducted, to own,
lease and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each jurisdiction
where the operation, ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not, singly or in the aggregate, have a material adverse effect
on the properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company and the Subsidiaries, taken as a
whole (a "Material Adverse Effect").
(e) All of the outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable, are
not subject to any preemptive rights and conform to the description thereof
contained in the Prospectus. All of the issued and outstanding shares of capital
stock of, or other ownership interest in, each Subsidiary have been duly and
validly authorized and issued and are fully paid and non-assessable and not
subject to any preemptive rights, and all of the shares of capital stock of, or
other ownership interests in, each Subsidiary are owned, directly or through
Subsidiaries, by the Company. Except as set forth in the Prospectus, all such
shares of capital stock are owned free and clear of any security interest,
mortgage, pledge, claim, lien or encumbrance (each, a "Lien"). There are no
outstanding subscriptions, rights, warrants, options, calls, convertible
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securities, commitments or sale or Liens related to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of, or other
ownership interest in, any Subsidiary.
(f) The Securities have been duly authorized and, when duly issued and
delivered against payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and free of
preemptive rights; the Securities, when so issued, delivered and sold, will
conform to the descriptions thereof contained in the Prospectus; the
stockholders of the Company have no preemptive rights with respect to the
Securities.
(g) The Units have been duly authorized and, when duly executed,
authenticated and delivered in accordance with the Indenture and paid for in
accordance with the terms of this Agreement, will constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and will be entitled to the benefits of, the Purchase Contract
Agreement; and the issuance of the Units is not subject to preemptive or other
similar rights;
(h) The Purchase Contract Agreement has been duly authorized by the Company
and, at the Closing Date, when duly executed and delivered by the Company and
assuming due authorization, execution and delivery thereof by the Purchase
Contract Agent, will constitute a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
and the Purchase Contract Agreement will conform in all material respects to the
description thereof contained in the Prospectus.
(i) The Purchase Contracts underlying the Units have been duly authorized
by the Company and, when duly executed, authenticated and delivered in
accordance with the Indenture and paid for in accordance with the terms of this
Agreement, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
the Purchase Contracts will conform in all material respects to the description
thereof contained in the Prospectus; and the issuance of the Purchase Contracts
is not subject to any preemptive or similar rights.
(j) The Remarketing Agreement has been duly authorized by the Company and,
at the date of the Remarketing Agreement and at the Remarketing Closing Date (as
defined in the Remarketing Agreement) when executed and delivered by the Company
and
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assuming due authorization, execution and delivery thereof by the Purchase
Contract Agent and the Remarketing Agent, will constitute a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and the Remarketing Agreement will conform in
all material respects to the description thereof contained in the Prospectus.
(k) The Pledge Agreement has been duly authorized by the Company and, at
the Closing Date, when executed and delivered by the Company and assuming due
authorization, execution and delivery thereof by the Collateral Agent and the
Purchase Contract Agent, will constitute a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered a proceeding in equity
or at law); and the Pledge Agreement will conform in all material respects to
the description thereof contained in the Prospectus.
(l) The Pledge Agreement creates, as collateral security for the
performance when due by the holders from time to time of the Units of their
respective obligations under the Purchase Contracts constituting part of such
Units, a legal, valid and perfected security interest (as defined in the Uniform
Commercial Code, as adopted and in effect in the State of New York (the "New
York UCC")) in favor of the Collateral Agent for the benefit of the Company, in
the right, title and interest of such holders in the securities and other assets
and interests pledged to the Collateral Agent pursuant to the Pledge Agreement
(the "Pledged Securities").
(m) The Indenture has been duly authorized by the Company, and, when duly
executed and delivered in accordance with its terms, will be a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and will conform in all material respects to
the description thereof in the Prospectus.
(n) When the Debt Securities are duly executed, authenticated and delivered
in accordance with the Indenture and paid for in accordance with the terms of
this Agreement, the Debt Securities will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and will be entitled to the benefits of the Indenture.
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(o) Each of the firms of accountants that has certified or shall certify
the applicable consolidated financial statements and supporting schedules of the
Company, filed or to be filed with the Commission as part of the Registration
Statement and the Prospectus or incorporated by reference therein are
independent public accountants with respect to the Company and the Subsidiaries,
as required by the Act. The consolidated historical and pro forma financial
statements, together with related schedules and notes, set forth in the
Prospectus and the Registration Statement or incorporated by reference therein
comply as to form in all material respects with the requirements of the Act.
Such historical financial statements fairly present the consolidated financial
position of the Company and the Subsidiaries at the respective dates indicated
and the results of their operations and their cash flows for the respective
periods indicated, in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout such periods. The other financial and
statistical information and data included in the Prospectus and in the
Registration Statement are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(p) No holder of any security of the Company has or will have any right to
require the registration of such security by virtue of any transaction
contemplated by this Agreement or the Transaction Documents.
(q) The Company has not (i) taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the initial filing of the Registration Statement (A)
sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Securities or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
Section 3. THE SECURITIES.
(a) Purchase and Offering of Securities. The obligation of the Underwriters
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to purchase the Securities will be evidenced by terms agreements substantially
in the form annexed hereto as Schedule I-A and I-B (each a "Terms Agreement") at
the time the Company determines to sell the Securities. The Terms Agreement will
incorporate by reference the provisions of this Agreement, except as otherwise
provided therein, and will specify the firm or firms which will be Underwriters,
the names of any Representatives, the number of Underwritten Units or
Underwritten Shares to be purchased by each Underwriter, the purchase price to
be paid by the Underwriters, the number of Option Units and/or Option Shares to
be purchased pursuant to an option granted by the Company to the Underwriters to
cover over-allotments (the "Over-Allotment Option"), if any, and the terms of
the Securities not already specified, including, but not limited to the terms of
the Debt Securities not already specified in the Indenture. The obligations of
the Underwriters to purchase the Securities will be several and not joint. It is
understood that the Underwriters propose to offer the Securities for sale as set
forth in the applicable Prospectus.
(b) Delivery and Payment. Delivery of and payment for the Underwritten
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Securities and the Option Securities (if any Over-Allotment Option is exercised
on or before
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the third Business Day prior to the Closing Date) shall be made on the date and
at the time specified in the Terms Agreement or at such time on such later date
not more than three Business Days after the foregoing date as the
Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
8 hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of such Securities shall be made to
the Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives of the
purchase price thereof to or upon the order of the Company by wire transfer
payable in same-day funds to an account specified by the Company. Delivery of
the Underwritten Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company ("DTC") unless the Representatives
shall otherwise instruct.
If any Over-Allotment Option is exercised after the third Business Day
prior to the Closing Date, the Company will deliver the Option Securities being
purchased (at the expense of the Company) to the Representatives, at their
addresses as indicated in the Terms Agreement, on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
Section 4. CERTAIN AGREEMENTS OF THE UNDERWRITERS. The Underwriters agree
to pledge, through the Purchase Contract Agent, to the Collateral Agent, on
behalf of the initial purchasers of the Units, the Debt Securities underlying
the Underwritten Units and the Option Units with respect to which the Company
and the Underwriters have entered into Purchase Contracts. Such pledge shall be
effected by the delivery to the Collateral Agent in New York by the Underwriters
of the Debt Securities to be pledged at the appropriate Closing Date in
accordance with the Pledge Agreement.
Section 5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees that it
will furnish to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement (including exhibits thereto)
and to each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each preliminary prospectus
and the Prospectus and any supplement thereto as the Representatives may
reasonably request. The Company further agrees that, in connection with each
offering of Securities:
(a) The Company will file the Prospectus with the Commission pursuant to
and in accordance with Rule 424(b)(2) (or, if applicable and if consented to by
the Representatives, subparagraph (5)) not later than the second business day
following the
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execution and delivery of the applicable Terms Agreement. The Company will use
its best efforts to cause the Registration Statement, if not effective at the
time of execution of the Terms Agreement, and any amendment thereof, to become
effective. Prior to the termination of the offering of the Securities, the
Company will not file any amendment of the Registration Statement or supplement
(including any final prospectus supplement) to the Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished the Representatives a
copy for their review prior to filing and will not file any such proposed
amendment or supplement to which the Representatives reasonably object. Subject
to the foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission pursuant
to the applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely filing.
The Company will promptly advise the Representatives (1) when the Registration
Statement, if not effective at the Execution Time (as defined in Section 13),
shall have become effective, (2) when the Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission pursuant to
Rule 424(b) or when any Rule 462(b) Registration Statement shall have been filed
with the Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been filed or
become effective, (4) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any additional
information, (5) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the institution or threatening
of any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Prospectus to comply with the Act, the Company will (i)
promptly notify the Representatives of such event, (ii) promptly prepare and
file with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance and
(iii) supply such number of copies of any such amended or supplemented
Prospectus to the Underwriters as they may reasonably request. Neither the
Representatives' consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(c) As soon as practicable following the issuance and sale of any of the
Registered Securities, the Company will make generally available to its security
holders and to the Representatives an earnings statement or statements of the
Company and its
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Subsidiaries which will comply with the provisions of Section 11(a) of the Act
and Rule 158 under the Act.
(d) The Company will use its best efforts to arrange for the qualification
of the Securities for sale under the laws of such jurisdictions as the
Representatives designate and to continue such qualifications in effect so long
as required for the distribution.
(e) During the period of 5 years after the date of the applicable Terms
Agreement, the Company will furnish to the Representatives and, upon request, to
each of the other Underwriters, if any, as soon as practicable after the end of
each fiscal year a copy of its annual report to stockholders for such year, and
the Company will furnish to the Representatives (i) as soon as available, a copy
of each report or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders, and (ii) from time
to time, such other information concerning the Company as the Representatives
may reasonably request.
(f) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing (or reproduction) and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each preliminary prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Registration Statement, each
preliminary prospectus, the Prospectus, and all amendments or supplements to any
of them, as may, in each case, be reasonably requested for use in connection
with the offering and sale of the Securities; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Securities,
including any stamp or transfer taxes in connection with the original issuance
and sale of the Securities; (iv) the printing (or reproduction) and delivery of
this Agreement, the Terms Agreement, any blue sky memorandum and all other
agreements or documents printed (or reproduced) and delivered in connection with
the offering of the Securities; (v) the registration of the Securities under the
Exchange Act and the listing of the Securities on the New York Stock Exchange;
(vi) any registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the Underwriters
relating to such registration and qualification); (vii) any filings required to
be made with the National Association of Securities Dealers, Inc. (including
filing fees and the reasonable fees and expenses of counsel for the Underwriters
relating to such filings); (viii) the transportation and other expenses incurred
by or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company; and (x) all other costs and expenses incident
to the performance by the Company of its obligations hereunder. It is
understood, however, that, except as provided in this Section 5, Section 7 and
Section 9 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
(g) For a period beginning at the date of the applicable prospectus
supplement with respect to a Terms Agreement and ending 90 days after such date,
without
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the prior consent of the Representatives, the Company will not offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, or file with
the SEC a registration statement under the Act relating to, shares of the
Company's common stock, securities convertible into or exchangeable or
exerciseable for any shares of the Company's common stock, enter into a
transaction that would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the Company's common stock, whether any such
aforementioned transaction is to be settled by delivery of any such securities
or cash, except (i) under the Company's stock option and other employee
incentive and benefit plans existing on the date of the applicable Terms
Agreement, (ii) Common Stock issued upon conversion of outstanding convertible
securities, (iii) currently contemplated issuance of the Company's Common Stock;
(iv) issuance of the Company's Common Stock as consideration in future
acquisitions, and (v) transfers of the Company's Common Stock to affiliates.
(h) The Company will use its best efforts to effect the listing
of (i) the Units, and (ii) Issuable Common Stock, on the New York Stock Exchange
(and such other exchanges or trading markets on which the Common Stock is then
listed or admitted for trading), and to cause the foregoing to be registered
under the Exchange Act.
(i) The Company agrees to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligations to issue the Issuable Common
Stock upon conversion of the Units.
Section 6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Securities
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) On or prior to the Execution Time, the Representatives shall
have received letters, dated the date of delivery thereof, of (i) Deloitte &
Touche LLP, with respect to the Company, Northrop Grumman Systems Corporation
and Litton Industries, Inc. and (ii) Arthur Andersen LLP, with respect to
Newport News Shipbuilding Inc., in each case confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating in effect that:
(i) In their opinion, the consolidated financial
statements and schedules examined by them and incorporated
by reference in the Registration Statement relating to the
Registered Securities, as amended at the date of such
letter, comply in form in all material respects with the
applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) They have performed procedures specified by the
American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement on Auditing Standards
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No. 71, "Interim Financial Information" on the unaudited
condensed consolidated financial statements incorporated by
reference in the Registration Statement;
(iii) On the basis of the procedures referred to in (ii)
above, and inquiries of officials of the relevant company
who have responsibility for financial and accounting
matters, nothing came to their attention that caused them
to believe that: (A) any modifications should be made to
the unaudited condensed consolidated financial statements
incorporated by reference in the Registration Statement for
them to be in conformity with GAAP, consistently applied,
or (B) such unaudited condensed financial statements
incorporated by reference in the Registration Statement do
not comply in form in all material respects with the
applicable accounting requirements of the Act and the
related published Rules and Regulations; and
(iv) On the basis of the review referred to in (ii) above,
a reading of the latest available interim financial
statements of the relevant company, inquiries of officials
of such company who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
A. the unaudited financial statements, if any, included in
the Prospectus and not covered by their letter
delivered pursuant to subsection (a) of this Section do
not comply in form in all material respects with the
applicable accounting requirements of the Act and the
related published Rules and Regulations or are not in
conformity with GAAP applied on a basis substantially
consistent with that of the audited financial
statements included in the Prospectus;
B. the unaudited capsule information, if any, included in
the Prospectus does not agree with the amounts set
forth in the unaudited consolidated financial
statements from which it was derived or was not
determined on a basis substantially consistent with
that of the audited financial statements included in
the Prospectus;
C. at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date
not more than five days prior to the Closing Date,
there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt
of such company and consolidated subsidiaries or, at
the date of the latest available balance sheet read by
such accountants, there was any decrease in
consolidated net current assets or net assets, as
11
compared with amounts shown on the latest balance sheet
included in the Prospectus; or
D. for the period from the date of the latest income statement
included in the Prospectus to the closing date of the latest
available income statement read by such accountants there were
any decreases, as compared with the corresponding period of the
previous year and with the period of corresponding length ended
the date of the latest income statement included in the
Prospectus, in consolidated net sales, net operating income,
income before extraordinary items or net income or in the ratio
of earnings to fixed charges; except in all cases set forth in
clauses (C) and (D) above for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(v) They have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
included in the Prospectus and not otherwise covered by their
letter delivered pursuant to subsection (a) of this Section (in
each case to the extent that such dollar amounts, percentages and
other financial information are derived from the general
accounting records of the relevant company and its subsidiaries
subject to the internal controls of the relevant company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in
such letter.
All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in the
Prospectus for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this Agreement. No
stop order suspending the effectiveness of the Registration Statement or of any
part thereof shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or any Underwriter,
shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement or, if
earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been: (i) (1) any change or
decrease referred to in paragraph (a) of this Section 6 or (2) any change, or
any development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto)
12
the effect of which, in any case referred to in clause (1) or (2) above, is, in
the sole judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto);
(ii) any decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating that does
not indicate the direction of the possible change; (iii) any suspension or
limitation in trading in the Company's Common Stock or Debt Securities by the
Commission or any suspension or limitation in trading in securities generally on
the New York Stock Exchange or in the over-the-counter market, or any setting of
minimum prices for trading on such exchange or market; (iv) any banking
moratorium declared by Federal or New York authorities; or (v) any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war, or other calamity or crisis the effect of which on financial
markets is such as to make it, in the sole judgment of the Representatives,
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any supplement
thereto).
(d) The Representatives shall have received an opinion, dated the
Closing Date, of Sheppard, Mullin, Richter & Hampton LLP, counsel for the
Company, in form and substance satisfactory to their counsel (the "Company
Attorney's Opinion") to the effect that:
(i) Each of the Company and its Subsidiaries has been duly
incorporated and is an existing corporation in good standing
under the laws of the state of its jurisdiction of
incorporation, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; and, to such counsel's knowledge, each of the
Company and its Subsidiaries is duly qualified to do business
as a foreign corporation in good standing in all other
jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification, except where the failure to qualify would
not have a Material Adverse Effect;
(ii) The Company has authorized capitalization as set forth in
the Prospectus;
(iii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is
required for the consummation of the transactions
contemplated by the Terms Agreement (including the provisions
of this Agreement) in connection with the issuance or sale of
the Securities by the Company and, in the case of the
issuance of the Units, the Transaction Documents, except such
as have been obtained and made under the Act and such as may
be required under state securities laws;
13
(iv) The execution, delivery and performance of the
Terms Agreement (including the provisions of this
Agreement) and, in the case of the issuance of Units,
the Transaction Documents, and the issuance and sale
of the Securities and, in the case of the issuance of
Units, the Issuable Common Stock, and compliance with
the terms and provisions thereof will not result in a
breach or violation of any of the terms and
provisions of, or constitute a default under, any
Federal, California, New York or Delaware statute,
or, to such counsel's knowledge, any rule, regulation
or order of any governmental agency or body or any
court having jurisdiction over the Company or any of
its properties, or the charter or by-laws of the
Company, and the Company has full power and authority
to authorize, issue and sell the Securities and, in
the case of the issuance of Units, the Issuable
Common Stock as contemplated by the Terms Agreement
(including the provisions of this Agreement);
(v) After inquiry of officials of the Company, such
counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company
or any of its Subsidiaries is a party or to which any
of their respective property is subject which is
required to be described in the Registration
Statement or the Prospectus or is required to be
filed as an exhibit and is not so described or filed
as required;
(vi) The Registration Statement has become effective
under the Act, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule
424(b) specified in such opinion on the date
specified therein, and, to the knowledge of such
counsel, no stop order suspending the effectiveness
of the Registration Statement or of any part thereof
has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated
under the Act, and the Registration Statement and the
Prospectus (other than the financial statements and
notes thereto and supporting schedules and other
financial and statistical information contained
therein as to which such counsel need express no
opinion) complied as to form in all material respects
with the requirements of the Act and the Rules and
Regulations; and
(vii) To such counsel's knowledge, after inquiry of
officials of the Company, no holder of any security
of the Company has any right to require registration
under the Registration Statement of shares of Common
Stock or any other security of the Company.
In the event the Securities are Units, the Company Attorney's
Opinion shall additionally be to the effect that:
(i) The Indenture has been duly authorized, executed and
delivered by the Company and has been duly qualified
under the Trust Indenture Act;
14
(ii) The Debt Securities have been duly authorized and, except in the case
of Debt Securities to be issued in connection with Option Units, duly
executed, authenticated, issued and delivered; the Indenture and the
Debt Securities, other than any Debt Securities to be issued in
connection with Option Units, constitute, and any Debt Securities to
be issued in connection with Option Units, when executed,
authenticated, issued and delivered in the manner provided in the
Indenture and sold pursuant to an Over-Allotment Option, will
constitute, valid and legally binding obligations of the Company
enforceable in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law); and the Debt Securities, when
so issued and delivered and sold, will conform in all material
respects to the description thereof contained in the Prospectus;
(iii) The Indenture conforms in all material respects to the description
thereof in, or incorporated by reference in, the Prospectus;
(iv) The statements set forth in the Prospectus under "Description of Debt
Securities" (or a similar heading or headings), insofar as they
purport to constitute summaries of certain terms of the Debt
Securities and the Indenture are accurate in all material respects;
(v) The Units being delivered at the Closing Date have been duly
authorized, executed, authenticated, issued and delivered and
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and are in the form
contemplated by, and are entitled to the benefits of, the Purchase
Contract Agreement; the Units conform in all material respects to the
description thereof contained in the Prospectus; and the issuance of
the Units is not subject to preemptive or other similar rights;
(vi) The Purchase Contract Agreement has been duly authorized, executed
and delivered by the Company and, assuming due authorization,
execution and delivery thereof by the Purchase Contract Agent,
constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, by general
equitable principles
15
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); and the Purchase Contract Agreement
conforms in all material respects to the description thereof
contained in the Prospectus;
(vii) The Purchase Contracts underlying the Units being delivered at the
Closing Date have been duly authorized, issued and delivered by the
Company and constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law), the Purchase Contracts conform in all material respects to the
description thereof contained in the Prospectus; and the issuance of
the Purchase Contracts is not subject to any preemptive or similar
rights;
(viii) The Remarketing Agreement has been duly authorized, executed and
delivered by the Company; the Remarketing Agreement conforms in all
material respects to the description thereof contained in the
Prospectus; and the Debt Securities will entitle the holders thereof
to the benefits of the Remarketing Agreement and the Purchase
Contract Agreement, in each case in respect of the remarketing
thereof;
(ix) The Pledge Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery thereof by the Collateral Agent and the Purchase
Contract Agent, constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law), and the Pledge Agreement conforms in all material respects to
the description thereof contained in the Prospectus;
(x) The statements set forth in the Prospectus under the captions
"Description of Units," insofar as they purport to constitute a
summary of the terms of the Transaction Documents, and "Description
of Capital Stock," insofar as they purport to constitute a summary of
the terms of the Common Stock, and under the captions, "U.S. Federal
Income Tax Consequences" and "Underwriting," insofar as they purport
to describe the provisions of the laws and documents referred to
therein, are accurate and complete in all material respects; and
16
(xi) The Units to be issued and sold pursuant to this Agreement and
the Terms Agreement have been approved for listing upon notice of
issuance on the New York Stock Exchange.
In the event the Securities are shares of Common Stock, the Company
Attorney's Opinion shall additionally be to the effect that:
(xii) The Common Stock conforms to the description thereof in, or
incorporated by reference into, the Prospectus and is not subject to
preemptive or other similar rights; and the information in the
Prospectus under "Description of Capital Stock" (or a similar
heading or headings), insofar as it purports to describe the
provisions of the laws and documents referred to therein, is
accurate and complete in all material respects; and
(xiii) The Shares to be issued and sold pursuant to this Agreement
and the applicable Terms Agreement has been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth in the
Terms Agreement, will be validly issued and fully paid and
non-assessable.
Such counsel shall also state that on the basis of their involvement
in the preparation of the Registration Statement and although they have not
verified the accuracy or completeness of the statements contained therein or in
any amendment thereto, nothing has come to the attention of such counsel which
causes them to believe that the Registration Statement or the Prospectus (other
than the financial statements and notes thereto and supporting schedules and
other financial and statistical information contained therein) contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
the case of the Prospectus in the light of the circumstances under which they
were made, not misleading; and such counsel does not know of any contracts or
documents of a character required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration Statement which are
not described and filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other financial data
contained in the Registration Statement or the Prospectus.
In rendering such opinion, such counsel shall opine as to the effect
of the federal laws of the United States, the internal laws of the States of
California and New York and the General Corporation Laws of the State of
Delaware. As to matters involving application of the laws of the State of New
York, to the extent specified in such opinion, such counsel may rely on the
opinion of other counsel of good standing believed to be reliable and who are
satisfactory to counsel for the Underwriters.
(e) The Representatives shall have received an opinion, dated the
Closing Date, of John H. Mullan, Esq., Corporate Vice President, Secretary and
Associate General
17
Counsel of the Company, in form and substance satisfactory to their counsel, to
the effect that:
(i) The execution, delivery and performance of the Terms
Agreement (including the provisions of this Agreement) and,
in the case of the issuance of the Units, the Transaction
Documents, and the issuance and sale of the Securities and,
in the case of the issuance of the Units, the Issuable
Common Stock, and compliance with the terms and provisions
thereof will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under,
any Federal, California, New York or Delaware statute or, to
such counsel's knowledge, any rule, regulation or order of
any governmental agency or body or any court having
jurisdiction over the Company or any of its properties or
any material agreement or instrument to which the Company is
a party or by which the Company is bound or to which any of
the properties of the Company is subject, or the charter or
by laws of the Company, and the Company has full power and
authority to authorize, issue and sell the Securities and,
in the case of the Units, the Issuable Common Stock, as
contemplated by the Terms Agreement (including the
provisions of this Agreement); and
(ii) Such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any
of its Subsidiaries is a party or to which any of their
respective property is subject which is required to be
described in the Registration Statement or the Prospectus
and is not so described, or of any contract or other
document which is required to be described in the
Registration Statement or the Prospectus or is required to
be filed as an exhibit to the Registration Statement which
is not described or filed as required.
In rendering such opinion, such counsel shall opine as to the effect
of the federal laws of the United States, the internal laws of the State of
California and New York and the General Corporation Laws of the State of
Delaware. As to matters involving application of the laws of the State of New
York, to the extent specified in such opinion, such counsel may rely on the
opinion of other counsel of good standing believed to be reliable and who are
satisfactory to counsel for the Underwriters.
(f) The Representatives shall have received from Cleary, Gottlieb,
Steen & Hamilton, counsel for the Underwriters, such favorable opinion or
opinions, dated the Closing Date, with respect to the incorporation of the
Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related matters they may require, and the Company shall
have furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass on such matters.
(g) The Representatives shall have received an opinion dated the
Closing Date of White & Case LLP, counsel to The Bank of New York, as Collateral
Agent, Custodial
18
Agent and Securities Intermediary (collectively, the "Agents"), in form and
substance reasonably satisfactory to the Representatives, to the effect that:
(i) The Bank of New York is a banking corporation duly
incorporated and validly existing under the laws of the
State of New York;
(ii) The execution, delivery and performance by the
Collateral Agent, the Custodial Agent and the Securities
Intermediary of the Pledge Agreement have each been duly
authorized by all necessary corporate action on the part of
each such Agent; the Pledge Agreement has been duly
executed and delivered by the Collateral Agent, the
Custodial Agent and the Securities Intermediary and
constitutes a valid and legally binding obligation of each
of the Agents, enforceable against such Agents in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles;
(iii) The execution, delivery and performance by the
Collateral Agent, the Custodial Agent and the Securities
Intermediary of the Pledge Agreement do not violate or
constitute a breach of the Articles of Incorporation or
By-Laws of any of such Agents; and
(iv) No consent of any federal or state banking authority is
required for the execution, delivery or performance by the
Agents of their respective obligations under the Pledge
Agreement.
(h) The Representatives shall have received an opinion dated
the Closing Date of Cravath, Swain & Moore, counsel to
JPMorgan Chase Bank, as Purchase Contract Agent and
Trustee, in form and substance reasonably satisfactory to
the Representatives, to the effect that:
(i) JPMorgan Chase Bank has been duly incorporated and is
validly existing as a banking corporation in good standing
under the laws of the State of New York;
(ii) JPMorgan Chase Bank has the corporate trust power and
authority to execute, deliver and perform its duties under
the Indenture, the Purchase Contract Agreement, the Pledge
Agreement and the Remarketing Agreement, has duly executed
and delivered the Indenture, the Purchase Contract
Agreement, the Pledge Agreement and the Remarketing
Agreement, and, insofar as the laws governing the trust
powers of JPMorgan Chase Bank are concerned and assuming
due authorization, execution and delivery thereof by the
other parties
19
thereto, each of the Indenture, the Purchase Contract Agreement,
the Pledge Agreement and the Remarketing Agreement constitutes a
legal, valid and binding agreement of JPMorgan Chase Bank,
enforceable against JPMorgan Chase Bank in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to
general principles of equity (including, without limitation,
concepts of materiality, reasonableness, good faith and fair
dealing), regardless of whether considered in a proceeding in
equity or at law;
(iii) no approval, authorization or other action by, or filing
with, any governmental authority of the United States of America
or the State of New York having jurisdiction over the trust
powers of JPMorgan Chase Bank is required in connection with the
execution and delivery by JPMorgan Chase Bank of the Indenture,
the Purchase Contract Agreement, the Pledge Agreement or the
Remarketing Agreement or the performance by JPMorgan Chase Bank
of its duties thereunder, except such as have been obtained,
taken or made;
(iv) the Equity Units issued on the date hereof have been duly
authenticated by JPMorgan Chase Bank, as Purchase Contract
Agent; and
(v) the Notes issued on the date hereof have been duly
authenticated by JPMorgan Chase Bank, as Trustee.
(i) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice-President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that the
representations and warranties of the Company in this Agreement and the Stock
Purchase Agreement are true and correct, that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, that no stop order suspending the
effectiveness of the Registration Statement or of any part thereof has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission and that, since the date of the most recent
financial statements included or incorporated by reference in the Prospectus
(exclusive of any Supplement thereto), there has been no material adverse effect
on the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any Supplement
thereto).
(j) The Representatives shall have received a letter dated the
Closing Date of (i) Deloitte & Touche LLP, with respect to the Company, Northrop
Grumman Systems Corporation and Litton Industries, Inc. and (ii) Arthur Andersen
LLP, with respect to Newport News Shipbuilding Inc., in each case confirming
that they are independent public accountants
20
within the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating in effect that:
(i) In their opinion, the consolidated financial statements and
schedule examined by them and incorporated by reference in the
Registration Statement relating to the Registered Securities, as
amended at the date of such letter, comply in form in all material
respects with the applicable accounting requirements of the Act and
the related published Rules and Regulations;
(ii) They have performed procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement on Auditing Standards
No. 71, "Interim Financial Information" on the unaudited condensed
consolidated financial statements incorporated by reference in the
Registration Statement;
(iii) On the basis of the procedures referred to in (ii) above, and
inquiries of officials of the relevant company who have
responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that: (A) any
modifications should be made to the unaudited condensed consolidated
financial statements incorporated by reference in the Registration
Statement for them to be in conformity with GAAP, consistently
applied, or (B) such unaudited condensed financial statements
incorporated by reference in the Registration Statement do not comply
in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations; and
(iv) On the basis of the review referred to in (ii) above, a reading
of the latest available interim financial statements of the relevant
company, inquiries of officials of such company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that:
A. the unaudited financial statements, if any, included in the
Prospectus and not covered by their letter delivered pursuant to
subsection (a) of this Section do not comply in form in all
material respects with the applicable accounting requirements of
the Act and the related published Rules and Regulations or are
not in conformity with GAAP applied on a basis substantially
consistent with that of the audited financial statements included
in the Prospectus;
B. the unaudited capsule information, if any, included in the
Prospectus does not agree with the amounts set forth in the
21
unaudited consolidated financial statements from which
it was derived or was not determined on a basis
substantially consistent with that of the audited
financial statements included in the Prospectus;
C. at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified
date not more than five days prior to the Closing Date,
there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt
of such company and consolidated subsidiaries or, at
the date of the latest available balance sheet read by
such accountants, there was any decrease in
consolidated net current assets or net assets, as
compared with amounts shown on the latest balance sheet
included in the Prospectus; or
D. for the period from the date of the latest income
statement included in the Prospectus to the closing
date of the latest available income statement read by
such accountants there were any decreases, as compared
with the corresponding period of the previous year and
with the period of corresponding length ended the date
of the latest income statement included in the
Prospectus, in consolidated net sales, net operating
income, income before extraordinary items or net income
or in the ratio of earnings to fixed charges; except in
all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are
described in such letter; and
(v) They have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information included in the Prospectus and not
otherwise covered by their letter delivered pursuant to
subsection (a) of this Section (in each case to the extent
that such dollar amounts, percentages and other financial
information are derived from the general accounting records
of the relevant company and its subsidiaries subject to the
internal controls of the relevant company's accounting
system or are derived directly from such records by analysis
or computation) with the results obtained from inquiries, a
reading of such general accounting records and other
procedures specified in such letter and have found such
dollar amounts, percentages and other financial information
to be in agreement with such results, except as otherwise
specified in such letter.
The Company will furnish the Representatives with such conformed
copies of such opinions, certificates, letters and documents as they reasonably
request.
(k) The Representatives shall have received the written
agreement of each of the persons specified in the applicable Terms Agreement, if
any, to the effect that each such person will not offer, sell, contract to sell
or otherwise dispose of, directly or indirectly,
22
or file with the SEC a registration statement under the Act relating to, shares
of the Company's common stock, securities convertible into or exchangeable or
exerciseable for any shares of the Company's common stock, enter into a
transaction that would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the Company's common stock, whether any such
aforementioned transaction is to be settled by delivery of any such securities
or cash in each case during a period of 90 days from the date of the prospectus
supplement with respect to the applicable Terms Agreement, without the
Representatives' prior written consent, other than sales by any such person
after 30 days from the commencement of such period of up to 50,000 shares of
Common Stock.
Section 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives, if any, specifically for use therein.
(b) Each Underwriter will, severally and not jointly, indemnify
and hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives, if any, specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page regarding delivery of the Securities and, under the heading "Underwriting"
or "Plan of Distribution," (i) the list of
23
Underwriters and their respective participation in the sale of the Securities,
(ii) the sentences related to concessions and reallowances and (iii) the
paragraph related to stabilization, syndicate covering transactions and penalty
bids in any preliminary prospectus supplement and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any preliminary prospectus supplement or the
Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. In case any such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any action or related actions in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
24
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering
of the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations; provided, however, that in no case shall any Underwriter (except
as may be provided in any agreement among underwriters relating to the offering
of the Securities) be responsible for any amount in excess of the underwriting
discount or commission applicable to the Securities purchased by such
Underwriter hereunder. The relative benefits received by the Company on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth on the cover
of the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each director, officer, employee or agent
of any Underwriter and to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
Section 8. DEFAULT OF UNDERWRITERS. If any Underwriter or
Underwriters default in their obligations to purchase Securities under the Terms
Agreement
25
and the number of Securities that such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total number of
Securities, the Representatives may make arrangements satisfactory to the
Company for the purchase of such Securities by other persons, including any of
the Underwriters, but if no such arrangements are made by the Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments under this Agreement and the Terms Agreement, to purchase
the Securities that such defaulting Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters so default and the number of Securities with
respect to which such default or defaults occur exceeds 10% of the total number
of Securities and arrangements satisfactory to the Representatives and the
Company for the purchase of such Securities by other persons are not made within
36 hours after such default, such Terms Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the Company, except as
provided in Section 9. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section.
The foregoing obligations and agreements set forth in this
Section will not apply if the Terms Agreement specifies that such obligations
and agreements will not apply.
Section 9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS.
The respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the Company or any of their respective
representatives, officers or directors or any controlling person and will
survive delivery of and payment for the Securities. The provisions of Section 7
and this Section 9 shall survive the termination or cancellation of this
Agreement. If the Terms Agreement is terminated or if for any reason the
purchase of the Securities by the Underwriters under the Terms Agreement is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5.
Section 10. NOTICES. All communications hereunder will be in
writing and, if sent to the Underwriters, will be mailed, delivered or
telegraphed and confirmed to them at their addresses furnished to the Company in
writing for the purpose of communications hereunder or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at Northrop Grumman
Corporation, 1840 Century Park East, Los Angeles, California 90067, Attention:
Corporate Secretary.
Section 11. SUCCESSORS. This Agreement will inure to the benefit
of and be binding upon the Company and such Underwriters as are identified in
Terms Agreements and their respective successors and the officers and directors
and controlling persons referred to in Section 7, and no other person will have
any right or obligation hereunder.
Section 12. APPLICABLE LAW. This Agreement and the Terms
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.
26
Section 13. CERTAIN DEFINITIONS. The terms which follow, when
used in this Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in
paragraph 2(a) above contained in the Registration Statement at its
effective date including any preliminary final prospectus.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date of the relevant Terms
Agreement.
"Prospectus" shall mean the prospectus supplement relating to the
Securities that was first filed pursuant to Rule 424(b) after the
execution of the Terms Agreement for such Securities, together with
the Basic Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 2(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or
such Rule 462(b) Registration Statement, as the case may be. Such term
shall include any Rule 430A Information deemed to be included therein
at the effective date of the Registration Statement as provided by
Rule 430A.
"Rule 415," "Rule 424," "Rule 430A" and "Rule 462" refer to such
rules under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement
referred to in Section 2(a) hereof.
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
NORTHROP GRUMMAN CORPORATION
By: /s/ John H. Mullan
--------------------------
Name: John H. Mullan
Title: Corporate Vice President
and Secretary
The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I-A and I-B hereto.
J.P. Morgan Securities Inc.
Salomon Smith Barney Inc.
SALOMON SMITH BARNEY INC.
By: /s/ John A. Chirico
-------------------------------
Name: John A. Chirico
Title: Director
J.P. MORGAN SECURITIES INC.
By: /s/ Christopher Casey
-------------------------------
Name: Christopher Casey
Title: Vice President
For themselves and the other several Underwriters, if any,
named in Schedule I-A and I-B to the foregoing Agreement.
Schedule I-A
NORTHROP GRUMMAN CORPORATION
8,000,000 Shares
Common Stock
($1 Par Value Per Share)
TERMS AGREEMENT
---------------
November 15, 2001
To: Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Attention: Treasurer
Dear Sirs:
We understand that Northrop Grumman Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell 8,000,000 shares of its Common Stock (the
"Underwritten Shares") at the Purchase Price below. Subject to the terms and
conditions set forth herein or incorporated by reference herein, the
underwriters named below (the "Underwriters") hereby offer to purchase such
Underwritten Shares. The Company also proposes to grant to the Underwriters an
option (the "Over-Allotment Option") to purchase severally and not jointly up to
1,200,000 additional shares of Common Stock at the Purchase Price below for the
purpose of covering sales in excess of the number of Underwritten Shares (the
"Option Shares" and, together with the Underwritten Shares, the "Shares").
The Shares to be purchased by the Underwriter(s) shall have the following terms:
(1) Public Offering Price: $88.50 per share
(2) Purchase Price: $85.181 per share
(3) Underwriting Discount: $3.319 per share
(4) Total Underwriting Discount, no exercise of Over-Allotment Option:
$26,552,000
(5) Total Underwriting Discount, full exercise of Over-Allotment Option:
$30,534,800
(6) Total Proceeds to Company: $681,448,000
(7) Closing Date, Time and Location: The Closing will take place at 9:30
a.m. (EST) on November 21, 2001 at the offices of Cleary, Gottlieb, Steen &
Hamilton, 153 E.53rd Street, New York, New York 10022.
(8) Representatives of the Underwriters: J.P. Morgan Securities Inc. and
Salomon Smith Barney Inc.
1
(9) Names of Persons specified pursuant to Section 6(k): the Directors and
Executive Officers of the Company
All of the provisions contained in the Underwriting Agreement, a copy of which
is attached hereto as Annex A, are herein incorporated by reference in their
entirety and shall be deemed to be a part of this Agreement to the same extent
as if such provisions had been set forth in full herein. Terms defined in such
document are used herein as therein defined. Each Underwriter severally agrees,
subject to the terms and provisions of this Terms Agreement, including the terms
and provisions incorporated by reference herein, to purchase from the Company
the number of the Underwritten Shares set forth opposite its name.
Number of Option Shares to
--------------------------
Total Number of be Purchased if
--------------- ---------------
Underwritten Shares Over-Allotment Option
------------------- ---------------------
Name to be Purchased Exercised In Full
---- --------------- -----------------
J.P. Morgan Securities Inc. 2,400,000 360,000
Salomon Smith Barney Inc. 2,400,000 360,000
Goldman, Sachs & Co. 580,000 87,000
Lehman Brothers Inc. 580,000 87,000
Merril Lynch, Pierce, Fenner &
Smith Incorporated 580,000 87,000
SG Cowen Securities 580,000 87,000
Corporation
First Union Securities, 320,500 48,075
Inc.
BNY Capital Markets, Inc. 186,500 27,975
Scotia Capital (USA) Inc. 186,500 27,975
BNP Paribas, London Branch 186,500 27,975
TOTAL 8,000,000 1,200,000
Any notice by the Company to the Underwriters pursuant to this Terms Agreement
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication addressed to the
Representatives in care of Salomon Smith Barney Inc., 388 Greenwich Street, New
York, New York 10013 or J.P. Morgan Securities Inc., 277 Park Avenue, New York,
New York 10017.
2
Please accept this offer by signing a copy of this Terms Agreement in the space
set forth below and returning the signed copy to us.
J.P. MORGAN SECURITIES INC.
By: /S/ Christopher Casey
------------------------------------
Name: Christopher Casey
Title: Vice President
SALOMON SMITH BARNEY INC.
By: /s/ John A. Chirico
------------------------------------
Name: John A. Chirico
Title: Director
On behalf of each of the Underwriters
Accepted:
NORTHROP GRUMMAN CORPORATION
By: /s/ John H. Mullan
------------------------------------
Name: John H. Mullan
Title: Corporate Vice President
and Secretary
Schedule I-B
NORTHROP GRUMMAN CORPORATION
Equity Security Units
TERMS AGREEMENT
---------------
November 15, 2001
To: Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Attention: Treasurer
Dear Sirs:
We understand that Northrop Grumman Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell 6,000,000 of its 7.25% Equity Security
Units (the "Underwritten Units") at the Purchase Price below. Subject to the
terms and conditions set forth herein or incorporated by reference herein, the
underwriters named below (the "Underwriters") hereby offer to purchase such
Underwritten Units. The Company also proposes to grant to the Underwriters an
option (the "Over-Allotment Option") to purchase severally and not jointly up to
900,000 additional 7.25% Equity Security Units at the Purchase Price below for
the purpose of covering sales in excess of the number of Underwritten Units (the
"Option Units" and, together with the Underwritten Units, the "Securities").
The Securities will initially consist of (a) contracts to purchase common stock
of the Company (the "Purchase Contracts") on November 16, 2004 (the "Stock
Purchase Date") to be issued under a Purchase Contract Agreement dated as of
November 21, 2001 (the "Purchase Contract Agreement") between the Company and
JPMorgan Chase Bank, as Purchase Contract Agent and (b) 5.25% Senior Notes (the
"Senior Notes") to be issued under an Indenture dated as of November 21, 2001
between the Company and JPMorgan Chase Bank, as trustee (the "Normal Units"),
and shall have the following terms:
(1) Title: 7.25 % Equity Security Units
(2) Payments: Quarterly
(3) Ranking: Senior
(4) Payment Dates: February 16, May 16, August 16 and November 16
(5) Public Offering Price: $100.00 per Unit
(6) Purchase Price: $ 97.00 per unit
(7) Total Underwriting Discount, no exercise of Over-Allotment Option:
$18,000,000
1
(8) Total Underwriting Discount, full exercise of Over-Allotment Option:
$20,700,000
(9) Total Proceeds to Company: $582,000,000
(10) Notes:
(i) Principal payment due date: November 16, 2006
(ii) Interest payment dates: February 16, May 16, August 16 and
November 16
(iii) Date from which interest payments accrue: November 21, 2001
(iv) First Interest Payment Date: February 16, 2002:
(11) Forward Purchase Contract:
(i) Stock Purchase Date: November 16, 2004
(ii) Contract Adjustment Payment Rate: 2.0%
(iii) Conversion Premium for Stock Settlement: 22%
(12) Closing Date, Time and Location: The Closing will take place at 9:30
a.m. (EST) on November 21, 2001 at the offices of Cleary, Gottlieb, Steen &
Hamilton, 153 E.53/rd/ Street, New York, New York 10022.
(13) Representatives of the Underwriters: J.P. Morgan Securities Inc. and
Salomon Smith Barney Inc.
(14) Names of persons specified pursuant to Section 6(k): the Directors and
Executive Officers of the Company
(15) Other Terms:
The Company will cause the certificates representing the Securities to be made
available for checking and packaging at least twenty-four hours prior to the
Closing Date with respect thereto at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Underwritten Units, 9:30 a.m., New York
City time, on November 21, 2001 or such other time and date as the
Representatives and the Company may agree upon in writing, and, with respect to
the Option Units, 9:30 a.m., New York time, on the date specified by the
Representatives in the written notice given by the Representatives of the
Underwriters' election to purchase such Option Units, or such other time and
date as the Representatives and the Company may agree in writing.
2
All of the provisions contained in the Underwriting Agreement, a copy of which
is attached hereto as Annex A, are herein incorporated by reference in their
entirety and shall be deemed to be a part of this Agreement to the same extent
as if such provisions had been set forth in full herein. Terms defined in such
document are used herein as therein defined. Each Underwriter severally agrees,
subject to the terms and provisions of this Terms Agreement, including the terms
and provisions incorporated by reference herein, to purchase from the Company
the number of the Underwritten Units set forth opposite its name.
Number of Option Units to be
Total Number of Underwritten Purchased if Over-Allotment
Name Units to be Purchased Option Exercised In Full
---- --------------------- ------------------------
J.P. Morgan Securities Inc. 2,400,000 360,000
Salomon Smith Barney Inc. 2,400,000 360,000
Goldman, Sachs & Co. 300,000 45,000
Lehman Brothers Inc. 300,000 45,000
Merrill Lynch, Pierce,
Fenner & Smith Incorporated 300,000 45,000
SG Cowen Securities 300,000 45,000
Corporation
TOTAL 6,000,000 900,000
Any notice by the Company to the Underwriters pursuant to this Terms Agreement
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication addressed to the
Representatives in care of Any notice by the Company to the Underwriters
pursuant to this Terms Agreement shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication addressed to the Representatives in care of Salomon Smith
Barney Inc., 388 Greenwich Street, New York, New York 10013 or J.P. Morgan
Securities Inc., 277 Park Avenue, New York, New York 10017
3
Please accept this offer by signing a copy of this Terms Agreement in the space
set forth below and returning the signed copy to us.
J.P. MORGAN SECURITIES INC.
By: /s/ Christopher Casey
-----------------------------------
Name: Christopher Casey
Title: Vice President
SALOMON SMITH BARNEY INC.
By: /s/ John A. Chirico
-----------------------------------
Name: John A. Chirico
Title: Director
On behalf of each of the Underwriters
Accepted:
NORTHROP GRUMMAN CORPORATION
By: /s/ John H. Mullan
------------------------------------
Name: John H. Mullan
Title: Corporate Vice President
and Secretary
Schedule A
"Subsidiaries"
Northrop Grumman Systems Corporation
Litton Industries, Inc.
Litton Systems, Inc.
Northrop Grumman Information Technology, Inc. (formerly Logicon, Inc.)