Class Action Suit Filed Against Northrop Grumman Corporation and Its Board of Directors.

SAN DIEGO--(BUSINESS WIRE)--July 31, 1998--A class action has been commenced in the United States District Court for the Central District of California on behalf of all persons who were common shareholders of Northrop Grumman Corp. ("Northrop") (NYSE:NOC) at the time Northrop's April 1, 1996 and Jan. 27, 1998 Proxies were voted upon.

The complaint charges Northrop and its Board of Directors with violations of Section 14(a) of the Securities Exchange Act of 1934, by misuse of their control and directorial positions and Northrop's proxy process to bestow upon Northrop's top executives unprecedented gifts of corporate assets in connection with the abortive merger of Northrop and Lockheed Martin ("Lockheed"). On 7/3/97, Lockheed and Northrop jointly announced the acquisition of Northrop by Lockheed via a merger. Northrop's stock soared from the mid $80's in late 6/97, to an all-time high of $139 per share in 2/98, as Northrop's shareholders and the market were assured by defendants that they had looked at the antitrust issues of the merger and that there should be no issues regarding regulatory approval of the merger.

In fact, Northrop's top insiders knew or should have known from the outset that there were serious antitrust and regulatory problems with the merger and that it would be opposed by the federal government. On 1/23/98, key Northrop insiders were told during a meeting with top Departments of Defense ("DOD") and Justice ("DOJ") officials that the government was "fundamentally opposed" to the merger, making its opposition to the merger a certainty. Six Northrop insiders quickly sold off 75,963 shares of their Northrop stock (36%-54% of the stock they owned) between 1/26/98 and 2/26/98 at as high as $138+ per share, for $10+ million. Without disclosing the 1/23/98 meeting with DOD/DOJ officials or their stated opposition to the merger, defendants issued a 1/27/98 Proxy Statement to Northrop's shareholders seeking their vote to approve the Lockheed merger.

They proceeded to obtain Northrop stockholder approval of the merger on 2/26/98 without amending or supplementing the merger Proxy, a merger they knew would likely never be consummated. They did this because, due to an unusual definition of "change in control" in Northrop's stock option and stock award plans ("Stock Plans") for its top executives, they had surreptitiously obtained shareholder approval for via a 4/1/96 Proxy Statement, this vote alone would trigger $150-$160 million in stock awards and payments to Northrop's executives even if the merger itself never took place. On 3/9/98, just a few days after certain top Northrop insiders completed their insider selling and obtained Northrop shareholder approval of the merger, defendants revealed that there were significant regulatory problems with the merger and the DOD and DOJ were "fundamentally opposed" to the merger. Northrop's stock immediately dropped from $137-5/8 to $111-1/2 and fell to $89-1/2 when Northrop and Lockheed abandoned the merger.

Plaintiff seeks a recovery on behalf of all persons who were common shareholders of Northrop at the time the April 1, 1996 and January 27, 1998 Proxies were voted upon (the "Class"). The plaintiff is represented by several law firms, including Milberg Weiss Bershad Hynes & Lerach LLP, who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Milberg Weiss has been actively engaged in commercial litigation, emphasizing securities and antitrust class actions, for more than 30 years. The firm has offices in New York, San Diego, San Francisco and Los Angeles and is active in major litigation pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm to major positions in complex multi-district or consolidated litigations. Milberg Weiss has taken a lead role in numerous important actions on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total approximately $2 billion. Visit the firm's Web site at http://www.milberg.com.

If you are a member of the Class described above, you may, no later than 60 days from today, move the Court to serve as lead plaintiff of the Class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach, Alan Schulman or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at [e-mail].

    CONTACT:  Milberg Weiss Bershad Hynes & Lerach LLP
               William Lerach, 800/449-4900
               [e-mail]