<PAGE>

                                                                    EXHIBIT 4.2

                                     FORM OF
               CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
                     SERIES B PREFERRED STOCK OF NORTHROP
                                GRUMMAN CORPORATION

     Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Northrop Grumman Corporation, a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in Article
FOURTH of its Certificate of Incorporation, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, its Board of Directors has adopted the following resolution creating a
series of its Preferred Stock, par value $1.00 per share, designated as Series B
Convertible Preferred Stock:

     RESOLVED, that a series of the authorized Preferred Stock, par value $1.00
     per share, of the Corporation be hereby created, and that the designation
     and amount thereof and the voting powers, preferences and relative,
     participating, optional and other special rights of the shares of such
     series, and the qualifications, limitations or restrictions thereof are as
     follows:

     Section 1.  Designation and Amount.  The shares of such series shall be
                 ----------------------
designated as the "Series B Convertible Preferred Stock" (the "Series B
Convertible Preferred Stock") and the number of shares constituting such series
shall be 3,500,000.

     Section 2.  Dividends.  The holders of shares of Series B Convertible
                 ---------
Preferred Stock shall be entitled to receive cumulative cash dividends when, as
and if declared by the Board of Directors out of any funds legally available
therefor, at the rate per year herein specified, payable quarterly at the rate
of one-fourth of such amount on the fifteenth day (or, if such day is not a
business day, on the first business day thereafter) of January, April, July and
October in each year.  The rate of dividends shall [initially] be [$9.00] per
year per share/1/.  [Thereafter, the rate

----------------------------------

/1/  If the initial date of issue is after the 2001 annual meeting of
stockholders, this provision will be modified to reflect the vote at such
meeting.  If Stockholder Approval was obtained, the dividend rate shall be $7.00
per year and the provision relating to future Stockholder Approval will be
deleted.  If Stockholder Approval was not obtained, the initial dividend rate
shall be $9.00 per year and the provision for a future downward adjustment
following Stockholder Approval will be retained.

     If the initial date of issue is before the 2001 annual meeting, the initial
dividend rate shall be $7.00 per year. If Stockholder Approval is obtained at
the 2001 annual meeting, the dividend rate shall remain at such level. If
Stockholder Approval is not obtained at the 2001 annual meeting, the dividend
rate shall increase to $9.00 per year, after the October 2001 dividend payment
date, subject to future downward adjustment if Stockholder Approval is obtained.


<PAGE>

of dividends shall be reduced to $7.00 per year per share after the first
quarterly dividend payment following the date, if any, on which the stockholders
of the Corporation shall have approved the issuance of all common stock, par
value $1.00 per share, of the Corporation ("Common Stock") issuable upon
conversion of the Series B Convertible Preferred Stock (such stockholder
approval being referred to herein as the "Stockholder Approval").] [Thereafter,
the rate of dividends shall be increased to $9.00 per share per year after the
October 2001 dividend payment date if the stockholders of the Corporation shall
not have, prior to that time, approved the issuance of all Common Stock issuable
upon conversion of the Series B Convertible Preferred Stock.] [The rate of
dividends shall be decreased to $7.00 per share after the first quarterly
dividend payment date after Stockholder Approval is obtained.] Cash dividends
upon the Series B Convertible Preferred Stock shall commence to accrue and shall
be cumulative from the date of issuance.

     If the dividend for any dividend period shall not have been paid or set
apart in full for the Series B Convertible Preferred Stock, the deficiency shall
be fully paid or set apart for payment before (i) any distributions or
dividends, other than distributions or dividends paid in stock ranking junior to
the Series B Convertible Preferred Stock as to dividends, redemption payments
and rights upon liquidation, dissolution or winding up of the Corporation, shall
be paid upon or set apart for Common Stock or stock of any other class or series
of Preferred Stock ranking junior to the Series B Convertible Preferred Stock as
to dividends, redemption payments or rights upon liquidation, dissolution or
winding up of the Corporation; and (ii) any Common Stock or shares of Preferred
Stock of any class or series ranking junior to the Series B Convertible
Preferred Stock as to dividends, redemption payments or rights upon liquidation,
dissolution or winding up of the Corporation shall be redeemed, repurchased or
otherwise acquired for any consideration other than stock ranking junior to the
Series B Preferred Stock as to dividends, redemption payments and rights upon
liquidation, dissolution or winding up of the Corporation. No distribution or
dividend shall be paid upon, or declared and set apart for, any shares of
Preferred Stock ranking on a parity with the Series B Convertible Preferred
Stock as to dividends, redemption payments or rights upon liquidation,
dissolution or winding up of the Corporation for any dividend period unless at
the same time a like proportionate distribution or dividend for the same or
similar dividend period, ratably in proportion to the respective annual
dividends fixed therefor, shall be paid upon or declared and set apart for all
shares of Preferred Stock of all series so ranking then outstanding and entitled
to receive such dividend.

     Section 3.  Voting Rights.  Except as provided herein or as may otherwise
                 -------------
be required by law, the holders of shares of Series B Convertible Preferred
Stock shall not be entitled to any voting rights as stockholders with respect to
such shares.

     (a) So long as any shares of Series B Convertible Preferred Stock shall be
outstanding, the Corporation shall not, without the affirmative vote of the
holders of at least two-thirds of the aggregate number of shares of Series B
Convertible Preferred Stock at the time

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outstanding, by an amendment to the Restated Certificate of Incorporation, by
merger or consolidation, or in any other manner:

          (i)    authorize any class or series of stock ranking prior to the
     Series B Convertible Preferred Stock as to dividends, redemption payments
     or rights upon liquidation, dissolution or winding up of the Corporation;

          (ii)   alter or change the preferences, special rights, or powers
     given to the Series B Convertible Preferred Stock so as to affect such
     class of stock adversely, but nothing in this clause (ii) shall require
     such a class vote (x) in connection with any increase in the total number
     of authorized shares of Common Stock or Preferred Stock; (y) in connection
     with the authorization or increase in the total number of authorized shares
     of any class of stock ranking on a parity with the Series B Convertible
     Preferred Stock; or (z) in connection with the fixing of any of the
     particulars of shares of any other series of Preferred Stock ranking on a
     parity with the Series B Convertible Preferred Stock that may be fixed by
     the Board of Directors as provided in Article FOURTH of the Certificate of
     Incorporation; or

          (iii)  directly or indirectly purchase or redeem less than all of the
     Series B Convertible Preferred Stock at the time outstanding unless the
     full dividends to which all shares of the Series B Convertible Preferred
     Stock then outstanding shall then be entitled shall have been paid or
     declared and a sum sufficient for the payment thereof set apart.

     (b) If and whenever accrued dividends on the Series B Convertible Preferred
Stock shall not have been paid or declared and a sum sufficient for the payment
thereof set aside for six quarterly dividend periods (whether or not
consecutive), then and in such event, the holders of the Series B Convertible
Preferred Stock, voting separately as a class, shall be entitled to elect two
directors at any annual meeting of the stockholders or any special meeting held
in place thereof, or at a special meeting of the holders of the Series B
Convertible Preferred Stock called as hereinafter provided. Such right of the
holders of the Series B Convertible Preferred Stock to elect two directors may
be exercised until the dividends in default on the Series B Convertible
Preferred Stock shall have been paid in full or funds sufficient therefor set
aside; and when so paid or provided for, then the right of the holders of the
Series B Convertible Preferred Stock to elect such number of directors shall
cease, but subject always to the same provisions for the vesting of such voting
rights in the case of any such future default or defaults. At any time after
such voting power shall have so vested in the holders of the Series B
Convertible Preferred Stock, the Secretary of the Corporation may, and upon the
written request of the holders of record of ten percent (10%) or more in amount
of the Series B Convertible Preferred Stock then outstanding addressed to him at
the principal executive office of the Corporation shall, call a special meeting
of the holders of the Series B Convertible Preferred Stock for the election of
the directors to be elected by them as hereinafter provided, to be held within
sixty (60) days after delivery of such request and at the place and upon the
notice provided by law and in the bylaws of the Corporation for the holding of
meetings of stockholders; provided, however, that the Secretary shall not be
                          --------  -------
required to call such special meeting in the case of any such request received
less than ninety (90) days before the date fixed for the next ensuing annual
meeting of stockholders. If at any such annual or special meeting or any
adjournment thereof the holders of at least a majority of the Series B
Convertible Preferred Stock then outstanding and entitled to

                                       3
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vote thereat shall be present or represented by proxy, then, by vote of the
holders of at least a majority of the Series B Convertible Preferred Stock
present or so represented at such meeting, the then authorized number of
directors of the Corporation shall be increased by two, and the holders of the
Series B Convertible Preferred Stock shall be entitled to elect the additional
directors so provided for. The directors so elected shall serve until the next
annual meeting or until their respective successors shall be elected and shall
qualify; provided, however, that whenever the holders of the Series B
         -------- --------
Convertible Preferred Stock shall be divested of voting power as above provided,
the terms of office of all persons elected as directors by the holders of the
Series B Convertible Preferred Stock as a class shall forthwith terminate and
the number of the Board of Directors shall be reduced accordingly.

     (c) If, during any interval between any special meeting of the holders of
the Series B Convertible Preferred Stock for the election of directors to be
elected by them as provided in this Section 3 and the next ensuing annual
meeting of stockholders, or between annual meetings of stockholders for the
election of directors, and while the holders of the Series B Convertible
Preferred Stock shall be entitled to elect two directors, the number of
directors who have been elected by the holders of the Series B Convertible
Preferred Stock shall, by reason of resignation, death, or removal, be less than
the total number of directors subject to election by the holders of the Series B
Convertible Preferred Stock, (i) the vacancy or vacancies in the directors
elected by the holders of the Series B Convertible Preferred Stock shall be
filled by the remaining director then in office, if any, who was elected by the
holders of the Series B Convertible Preferred Stock, although less than a
quorum, and (ii) if not so filled within sixty (60) days after the creation
thereof, the Secretary of the Corporation shall call a special meeting of the
holders of the Series B Convertible Preferred Stock and such vacancy or
vacancies shall be filled at such special meeting.  Any director elected to fill
any such vacancy by the remaining director then in office may be removed from
office by vote of the holders of a majority of the shares of the Series B
Convertible Preferred Stock.  A special meeting of the holders of the Series B
Convertible Preferred Stock may be called by a majority vote of the Board of
Directors for the purpose of removing such director.  The Secretary of the
Corporation shall, in any event, within ten (10) days after delivery to the
Corporation at its principal office of a request to such effect signed by the
holders of at least ten percent (10%) of the outstanding shares of the Series B
Convertible Preferred Stock, call a special meeting for such purpose to be held
within sixty (60) days after delivery of such request; provided, however, that
                                                       --------  -------
the Secretary shall not be required to call such a special meeting in the case
of any such request received less than ninety (90) days before the date fixed
for the next ensuing annual meeting of stockholders.

     Section 4.  Redemption.
                 ----------

     (a) Shares of Series B Convertible Preferred Stock shall not be redeemable
except as follows:

          (i)  All, but not less than all, of the shares of Series B Convertible
     Preferred Stock shall be redeemed for cash in an amount equal to (X) if
     prior to Stockholder Approval, the greater of (a) the Liquidation Value
     plus all accrued and unpaid dividends with respect to such shares, whether
     or not declared, and (b) the Current Market Price of the number of shares
     of Common Stock which would be issued to such holders if all shares of
     Series B Convertible Preferred Stock were converted into Common Stock on
     the

                                       4
<PAGE>

     Redemption Date pursuant to Section 8; and (Y) after Stockholder
     Approval, the Liquidation Value plus all dividends with respect to such
     shares, whether or not declared, accrued and unpaid as of the Redemption
     Date, as defined below, on the first day after the twentieth anniversary of
     the initial issuance of the Series B Convertible Preferred Stock.

          (ii)  All, but not less than all, of the shares of Series B
     Convertible Preferred Stock may be redeemed at the option of the
     Corporation at any time after the seventh anniversary of the initial
     issuance of the Series B Convertible Preferred Stock.  Any redemption
     pursuant to this clause (ii) shall be solely for Common Stock of the
     Corporation and at the Redemption Date each holder of shares of Series B
     Convertible Preferred Stock shall be entitled to receive, in exchange and
     upon surrender of the certificate therefor, that number of fully paid and
     nonassessable shares of Common Stock determined by dividing (X) if prior to
     Stockholder Approval, the greater of (a) the Liquidation Value plus all
     accrued and unpaid dividends with respect to such shares, whether or not
     declared, and (b) the Current Market Price of the number of shares of
     Common Stock which would be issued if all shares of Series B Convertible
     Preferred Stock were converted into Common Stock pursuant to Section 8 on
     the Redemption Date; or (Y) if after Stockholder Approval, the Liquidation
     Value plus all accrued and unpaid dividends with respect to such shares,
     whether or not declared thereon to the Redemption Date, by (Z) the Current
     Market Price of the Common Stock as of the Redemption Date; provided,
                                                                 --------
     however, that if prior to the Redemption Date there shall have occurred a
     -------
     Transaction, as defined in Section 8(b)(iii), the consideration deliverable
     in any such exchange shall be the Alternate Consideration as provided in
     Section 12.

     (b) Notice of every mandatory or optional redemption shall be mailed at
least thirty (30) days but not more than fifty (50) days prior to the Redemption
Date to the holders of record of the shares of Series B Convertible Preferred
Stock so to be redeemed at their respective addresses as they appear upon the
books of the Corporation.  Each such notice shall specify the date on which such
redemption shall be effective (the "Redemption Date"), the redemption price or
manner of calculating the redemption price and the place where certificates for
the Series B Convertible Preferred Stock are to be surrendered for cancellation.

     (c) On the date that redemption is being made pursuant to paragraph (a) of
this Section 4, the Corporation shall deposit for the benefit of the holders of
shares of Series B Convertible Preferred Stock the funds, or stock certificates
for Common Stock, necessary for such redemption with a bank or trust company in
the Borough of Manhattan, the City of New York, having a capital and surplus of
at least $1,000,000,000.  Dividends paid on Common Stock held for the benefit of
the holders of shares of Series B Convertible Preferred Stock hereunder shall be
held for the benefit of such holders and paid over, without interest, on
surrender of certificates for the Series B Convertible Preferred Stock.  Any
monies or stock certificates so deposited by the Corporation and unclaimed at
the end of one year from the Redemption Date shall revert to the Corporation.
After such reversion, any such bank or trust company shall, upon demand, pay
over to the Corporation such unclaimed amounts or deliver such stock
certificates and thereupon such bank or trust company shall be relieved of all
responsibility in respect thereof and any holder of shares of Series B
Convertible Preferred Stock shall look only to the Corporation for the payment
of the redemption price. Any interest accrued on funds deposited

                                       5
<PAGE>

pursuant to this paragraph (c) shall be paid from time to time to the
Corporation for its own account.

     (d) Upon the deposit of funds or certificates for Common Stock pursuant to
paragraph (c) in respect of shares of Series B Convertible Preferred Stock being
redeemed pursuant to paragraph (a) of this Section 4, notwithstanding that any
certificates for such shares shall not have been surrendered for cancellation,
the shares represented thereby shall on and after the Redemption Date no longer
be deemed outstanding, and all rights of the holders of shares of Series B
Convertible Preferred Stock shall cease and terminate, excepting only the right
to receive the redemption price therefor.  Nothing in this Section 4 shall limit
the right of a holder to convert shares of Series B Convertible Preferred Stock
pursuant to Section 8 at any time prior to the Redemption Date, even if such
shares have been called for redemption pursuant to Section 4(a).

     (e) In connection with any redemption pursuant to clause (ii) of paragraph
(a) of this Section 4, no fraction of a share of common stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the
Redemption Date.

     Section 5.  Fundamental Change in Control.
                 -----------------------------

     (a) Not later than 10 business days following a Fundamental Change in
Control, as defined below, the Corporation shall mail notice to the holders of
Series B Convertible Preferred Stock stating that a Fundamental Change in
Control has occurred and advising such holders of their right to exchange (the
"Exchange Right") any and all shares of Series B Convertible Preferred Stock for
shares of Common Stock as provided herein; provided, however, that if prior to
                                           --------  -------
the Exchange Date (as defined below) there shall have occurred a Transaction, as
defined in Section 8(b)(iii), the consideration deliverable in any such exchange
shall be the Alternate Consideration as provided in Section 12.  Such notice
shall state: (i) the date on which such exchanges shall be effective (the
"Exchange Date"), which shall be the 21st business day from the date of giving
such notice; (ii) the number of shares of Common Stock (or Alternate
Consideration) for which each share of Series B Convertible Preferred Stock may
be exchanged; and (iii) the method by which each holder may give notice of its
exercise of the Exchange Right; and (iv) the method and place for delivery of
certificates for Series B Convertible Preferred Stock in connection with
exchanges pursuant hereto.  For a period of twenty (20) business days following
the notice provided herein, each holder of Series B Convertible Preferred Stock
may exercise the Exchange Right as provided herein.

     (b) Pursuant to the Exchange Right, each share of Series B Convertible
Preferred Stock shall be exchanged for that number of shares of Common Stock
determined by dividing an amount equal to (X) if prior to Stockholder Approval,
the greater of (a) the Liquidation Value plus all dividends accrued and unpaid
with respect to such share as of the Exchange Date, whether or not declared, and
(b) the Current Market Price of the number of shares of Common Stock which would
be issued if such share of Series B Convertible Preferred Stock were converted
into Common Stock pursuant to Section 8 on the Exchange Date; or (Y) if after
Stockholder Approval, the Liquidation Value plus all dividends accrued and
unpaid with respect

                                       6
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to such share as of the Exchange Date, whether or not declared, in each case by
the Current Market Price per share of Common Stock as of the Exchange Date.

     (c) The holder of any share of Series B Convertible Preferred Stock may
exercise the Exchange Right by surrendering for such purpose to the Corporation,
at its principal office or at such other office or agency maintained by the
Corporation for that purpose, a certificate or certificates representing the
shares of Series B Convertible Preferred Stock to be exchanged accompanied by a
written notice stating that such holder elects to exercise the Exchange Right as
to all or a specified number of such shares in accordance with this Section 5
and specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to which such holder is entitled to be
issued and such other customary documents as are necessary to effect the
exchange.  In case such notice shall specify a name or names other than that of
such holder, such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance in such name or names of shares of Common Stock to
which such holder has become entitled. Other than such taxes, the Corporation
will pay any and all issue and other taxes (other than taxes based on income)
that may be payable in respect of any issue or delivery of shares of Common
Stock to which such holder has become entitled on exchange of shares of Series B
Convertible Preferred Stock pursuant hereto.  As promptly as practicable, and in
any event within five (5) business days after the surrender of such certificate
or certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes (or the demonstration to the
satisfaction of the Corporation that such taxes have been paid), the Corporation
shall deliver or cause to be delivered certificates representing the number of
validly issued, fully paid and nonassessable shares of Common Stock to which the
holder of shares of Series B Convertible Preferred Stock so exchanged shall be
entitled.

     (d) From and after the Exchange Date, a holder of shares of Series B
Convertible Preferred Stock who has elected to exchange such shares for Common
Stock as herein provided shall have no voting or other rights with respect to
the shares of Series B Convertible Preferred Stock subject thereto, other than
the right to receive the Common Stock provided herein upon delivery of the
certificate or certificates evidencing shares of Series B Convertible Preferred
Stock.

     (e) In connection with the exchange of any shares of Series B Convertible
Preferred Stock, no fraction of a share of Common Stock shall be issued, but in
lieu thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the Exchange Date.

     (f) The Corporation shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of the Exchange
Rights provided herein, such number of shares of Common Stock as shall from time
to time be sufficient to effect the exchange provided herein.  The Corporation
shall from time to time, in accordance with the laws of Delaware, increase the
authorized amount of Common Stock if at any time the number of authorized shares
of Common Stock remaining unissued shall not be sufficient to permit the
exchange of all then outstanding shares of Series B Convertible Preferred Stock.

                                       7
<PAGE>

     (g) As used herein, the term "Fundamental Change in Control" shall mean any
merger, consolidation, sale of all or substantially all of the Corporation's
assets, liquidation or recapitalization (other than solely a change in the par
value of equity securities) of the Common Stock in which more than one-third of
the previously outstanding Common Stock shall be changed into or exchanged for
cash, property or securities other than capital stock of the Corporation or
another corporation ("Non Stock Consideration").  For purposes of the preceding
sentence, any transaction in which shares of Common Stock shall be changed into
or exchanged for a combination of Non Stock Consideration and capital stock of
the Corporation or another corporation shall be deemed to have involved the
exchange of a number of shares of Common Stock for Non Stock Consideration equal
to the total number of shares exchanged multiplied by a fraction in which the
numerator is the Fair Market Value of the Non Stock Consideration and the
denominator is the Fair Market Value of the total consideration in such
exchange, each as determined by a resolution of the Board of Directors of the
Corporation.

     Section 6.  Reacquired Shares.  Any shares of Series B Convertible
                 -----------------
Preferred Stock converted, redeemed, exchanged, purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof.  All such shares shall upon their
cancellation, and upon the filing of an appropriate certificate with the
Secretary of State of the State of Delaware, become authorized but unissued
shares of Preferred Stock, par value $1.00 per share, of the Corporation and may
be reissued as part of another series of Preferred Stock, par value $1.00 per
share, of the Corporation subject to the conditions or restrictions on issuance
set forth herein.

     Section 7.  Liquidation, Dissolution or Winding Up.
                 --------------------------------------

     (a) Except as provided in paragraph (b) of this Section 7, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (i) to the holders of shares of
capital stock of the Corporation ranking junior as to dividends, redemption
payments and rights upon liquidation, dissolution or winding up of the
Corporation to the Series B Convertible Preferred Stock unless, prior thereto,
the holders of shares of Series B Convertible Preferred Stock shall have
received (X) if prior to Stockholder Approval, the greater of (a) the
Liquidation Value plus all accrued and unpaid dividends with respect to such
shares, whether or not declared, and (b) the amount which would be distributed
to such holders if all shares of Series B Convertible Preferred Stock had been
converted into Common Stock pursuant to Section 8; and (Y) after Stockholder
Approval, the Liquidation Value plus all accrued and unpaid dividends with
respect to such shares, whether or not declared or (ii) to the holders of shares
of capital stock ranking on a parity with the Series B Convertible Preferred
Stock as to dividends, redemption payments and rights upon liquidation,
dissolution or winding up of the Corporation, except distributions made ratably
on the Series B Convertible Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.  The Liquidation
Value shall be $100.00 per share.

     (b) If the Corporation shall commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or State bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the

                                       8
<PAGE>

Corporation or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or State bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Corporation or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and on
account of any such event the Corporation shall liquidate, dissolve or wind up,
no distribution shall be made (i) to the holders of shares of capital stock of
the Corporation ranking junior to the Series B Convertible Preferred Stock as to
dividends, redemption payments and rights upon liquidation, dissolution or
winding up of the Corporation unless, prior thereto, the holders of shares of
Series B Convertible Preferred Stock shall have received (X) if prior to
Stockholder Approval, the greater of (a) the Liquidation Value plus all accrued
and unpaid dividends with respect to such shares, whether or not declared, and
(b) the amount which would be distributed to such holders if all shares of
Series B Convertible Preferred Stock had been converted into Common Stock
pursuant to Section 8; and (Y) after Stockholder Approval, the Liquidation Value
plus all accrued and unpaid dividends with respect to such shares, whether or
not declared, or (ii) to the holders of shares of capital stock ranking on a
parity with the Series B Convertible Preferred Stock as to dividends, redemption
payments and rights upon liquidation, dissolution or winding up of the
Corporation, except distributions made ratably on the Series B Convertible
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.

     (c) Neither the consolidation, merger or other business combination of the
Corporation with or into any other Person or Persons nor the sale of all or
substantially all of the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 7.

     Section 8.  Conversion.  Subject to the condition that the Stockholder
                 ----------
Approval shall first have been obtained, each share of Series B Convertible
Preferred Stock shall be convertible, at any time, at the option of the holder
thereof into the right to receive shares of Common Stock, on the terms and
conditions set forth in this Section 8.

     (a) Subject to the provisions for adjustment hereinafter set forth, each
share of Series B Convertible Preferred Stock shall be converted into the right
to receive a number of fully paid and nonassessable shares of Common Stock,
which shall be equal to the Liquidation Value divided by the Conversion Price,
as herein defined.  Initially the Conversion Price shall be 127% of
$______________./2/  The Conversion Price shall be subject to adjustment as
provided in this Section 8.

     (b) The Conversion Price shall be subject to adjustment from time to time
as follows:

----------------------

/2/  The blank will be filled with an amount equal to the Average Parent Price,
as defined in the Amended and Restated Agreement and Plan of Merger.

                                       9
<PAGE>

          (i)  In case the Corporation shall at any time or from time to time
     declare a dividend, or make a distribution, on the outstanding shares of
     Common Stock in shares of Common Stock or subdivide or reclassify the
     outstanding shares of Common Stock into a greater number of shares or
     combine or reclassify the outstanding shares of Common Stock into a smaller
     number of shares of Common Stock, or shall declare, order, pay or make a
     dividend or other distribution on any other class or series of capital
     stock, which dividend or distribution includes Common Stock then, and in
     each such case, the Conversion Price shall be adjusted to equal the number
     determined by multiplying (A) the Conversion Price immediately prior to
     such adjustment by (B) a fraction, the denominator of which shall be the
     number of shares of Common Stock outstanding immediately after such
     dividend, distribution, subdivision or reclassification, and the numerator
     of which shall be the number of shares of Common Stock outstanding
     immediately before such dividend, distribution, subdivision or
     reclassification.  An adjustment made pursuant to this clause (i) shall
     become effective (A) in the case of any such dividend or distribution,
     immediately after the close of business on the record date for the
     determination of holders of shares of Common Stock entitled to receive such
     dividend or distribution, or (B) in the case of any such subdivision,
     reclassification or combination, at the close of business on the day upon
     which such corporate action becomes effective.

          (ii) In case the Corporation shall at any time or from time to time
     declare, order, pay or make a dividend or other distribution (including,
     without limitation, any distribution of stock, evidences of indebtedness or
     other securities, cash or other property or rights or warrants to subscribe
     for securities of the Corporation or any of its Subsidiaries by way of
     distribution, dividend or spinoff, but excluding regular ordinary cash
     dividends as may be declared from time to time by the Corporation) on its
     Common Stock, other than a distribution or dividend of shares of Common
     Stock that is referred to in clause (i) of this paragraph (b), then, and in
     each such case, the Conversion Price shall be adjusted to equal the number
     determined by multiplying (A) the Conversion Price immediately prior to the
     record date fixed for the determination of stockholders entitled to receive
     such dividend or distribution by (B) a fraction, the denominator of which
     shall be the Current Market Price per share of Common Stock on the last
     Trading Day on which purchasers of Common Stock in regular way trading
     would be entitled to receive such dividend or distribution and the
     numerator of which shall be the Current Market Price per share of Common
     Stock on the first Trading Day on which purchasers of Common Stock in
     regular way trading would not be entitled to receive such dividend or
     distribution (the "Ex-dividend Date"); provided that the fraction
     determined by the foregoing clause (B) shall not be greater than 1.  An
     adjustment made pursuant to this clause (ii) shall be effective at the
     close of business on the Ex-dividend Date.  If the Corporation completes a
     tender offer or otherwise repurchases shares of Common Stock in a single
     transaction or a related series of transactions, provided such tender offer
     or offer to repurchase is open to all or substantially all holders of
     Common Stock (not including open market or other selective repurchase
     programs), the Conversion Price shall be adjusted as though (A) the
     Corporation had effected a reverse split of the Common Stock to reduce the
     number of shares of Common Stock outstanding from (x) the number
     outstanding immediately prior to the completion of the tender offer or the
     first repurchase for which the adjustment is being made to (y) the number
     outstanding

                                       10
<PAGE>

     immediately after the completion of the tender offer or the last
     repurchase for which the adjustment is being made and (B) the Corporation
     had paid a dividend on the Common Stock outstanding immediately after
     completion of the tender offer or the last repurchase for which the
     adjustment is being made in an aggregate amount equal to the aggregate
     consideration paid by the Corporation pursuant to the tender offer or the
     repurchases for which the adjustment is being made (the "Aggregate
     Consideration"); provided that in no event shall the Conversion Price be
     increased as a result of the foregoing adjustment. In applying the first
     two sentences of this Section 8(b)(ii) to the event described in clause (B)
     of the preceding sentence, the Current Market Price of the Common Stock on
     the date immediately following the closing of any such tender offer or on
     the date of the last repurchase shall be taken as the value of the Common
     Stock on the Ex-Dividend Date, and the value of the Common Stock on the day
     preceding the Ex-Dividend Date shall be assumed to be equal to the sum of
     (x) the value on the Ex-Dividend Date and (y) the per share amount of the
     dividend described in such clause (B) computed by dividing the Aggregate
     Consideration by the number of shares of Common Stock outstanding after the
     completion of such tender offer or repurchase. In the event that any of the
     consideration paid by the Corporation in any tender offer or repurchase to
     which this Section 8(b)(ii) applies is in a form other than cash, the value
     of such consideration shall be determined by an independent investment
     banking firm of nationally recognized standing to be selected by the Board
     of Directors of the Corporation.

          (iii) In case at any time the Corporation shall be a party to any
     transaction (including, without limitation, a merger, consolidation, sale
     of all or substantially all of the Corporation's assets, liquidation or
     recapitalization (other than solely a change in the par value of equity
     securities) of the Common Stock and excluding any transaction to which
     clause (i) or (ii) of this paragraph (b) applies) in which the previously
     outstanding Common Stock shall be changed into or exchanged for different
     securities of the Corporation or common stock or other securities of
     another corporation or interests in a noncorporate entity or other property
     (including cash) or any combination of any of the foregoing (each such
     transaction being herein called the "Transaction"), then each Share of
     Series B Convertible Preferred Stock then outstanding shall thereafter be
     convertible into, in lieu of the Common Stock issuable upon such conversion
     prior to consummation of such Transaction, the kind and amount of shares of
     stock and other securities and property receivable (including cash) upon
     the consummation of such Transaction by a holder of that number of shares
     of Common Stock into which one share of Series B Convertible Preferred
     Stock would have been convertible (without giving effect to any restriction
     on convertibility) immediately prior to such Transaction including, on a
     pro rata basis, the cash, securities or property received by holders of
     Common Stock in any such transaction.  The Corporation shall not be a party
     to a Transaction that does not expressly contemplate and provide for the
     foregoing.

          (iv)  If any event occurs as to which the foregoing provisions of this
     Section 8(b) are not strictly applicable but the failure to make any
     adjustment to the Conversion Price or other conversion mechanics would not
     fully and equitably protect the conversion rights of the Series B Preferred
     Stock in accordance with the essential intent and principles of such
     provisions, then in each such case the Board of Directors of the
     Corporation shall make such appropriate adjustments to the Conversion Price
     or other

                                       11
<PAGE>

     conversion mechanics (on a basis consistent with the essential intent
     and principles established in this Section 8) as may be necessary to fully
     and equitably preserve, without dilution or diminution, the conversion
     rights of the Series B Convertible Preferred Stock.

     (c) If any adjustment required pursuant to this Section 8 would result in
an increase or decrease of less than 1% in the Conversion Price, the amount of
any such adjustment shall be carried forward and adjustment with respect thereto
shall be made at the time of and together with any subsequent adjustment, which,
together with such amount and any other amount or amounts so carried forward,
shall aggregate at least 1% of the Conversion Price.

     (d) The Board of Directors may at its option increase the number of shares
of Common Stock into which each share of Series B Convertible Preferred Stock
may be converted, in addition to the adjustments required by this Section 8, as
shall be determined by it (as evidenced by a resolution of the Board of
Directors) to be advisable in order to avoid or diminish any income deemed to be
received by any holder for federal income tax purposes of shares of Common Stock
or Series B Convertible Preferred Stock resulting from any events or occurrences
giving rise to adjustments pursuant to this Section 8 or from any other similar
event.

     (e) The holder of any shares of Series B Convertible Preferred Stock may
exercise his right to receive in respect of such shares the shares of Common
Stock or other property or securities, as the case may be, to which such holder
is entitled by surrendering for such purpose to the Corporation, at its
principal office or at such other office or agency maintained by the Corporation
for that purpose, a certificate or certificates representing the shares of
Series B Convertible Preferred Stock to be converted, accompanied by a written
notice stating that such holder elects to convert all or a specified number of
such shares in accordance with this Section 8 and specifying the name or names
in which such holder wishes the certificate or certificates for shares of Common
Stock or other property or securities, as the case may be, to which such holder
is entitled to be issued and such other customary documents as are necessary to
effect the conversion.  In case such notice shall specify a name or names other
than that of such holder, such notice shall be accompanied by payment of all
transfer taxes payable upon the issuance in such name or names of shares of
Common Stock or other property or securities, as the case may be, to which such
holder has become entitled.  Other than such taxes, the Corporation will pay any
and all issue and other taxes (other than taxes based on income) that may be
payable in respect of any issue or delivery of shares of Common Stock or such
other property or securities, as the case may be, to which such holder has
become entitled on conversion of Series B Convertible Preferred Stock pursuant
hereto.  As promptly as practicable, and in any event within five (5) business
days after the surrender of such certificate or certificates and the receipt of
such notice relating thereto and, if applicable, payment of all transfer taxes
(or the demonstration to the satisfaction of the Corporation that such taxes
have been paid), the Corporation shall deliver or cause to be delivered
certificates representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock to which the holder of shares of
Series B Convertible Preferred Stock so converted shall be entitled or such
other property or assets, as the case may be, to which such holder has become
entitled.  The date upon which a holder delivers to the Corporation a notice of
conversion and the accompanying documents referred to above is referred to
herein as the "Conversion Date."

                                       12
<PAGE>

     (f) From and after the Conversion Date, a holder of shares of Series B
Convertible Preferred Stock shall have no voting or other rights with respect to
the shares of Series B Convertible Stock subject thereto, other than the right
to receive upon delivery of the certificate or certificates evidencing shares of
Series B Convertible Preferred Stock as provided by paragraph 8(e), the
securities or property described in this Section 8.

     (g) In connection with the conversion of any shares of Series B Convertible
Preferred Stock, no fraction of a share of Common Stock shall be issued, but in
lieu thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the day on which such
shares of Series B Convertible Preferred Stock are deemed to have been
converted.

     (h) Upon conversion of any shares of Series B Convertible Preferred Stock,
if there are any accrued but unpaid dividends thereon, the Corporation shall, at
its option, either pay the same in cash or deliver to the holder an additional
number of fully paid and nonassessable shares of Common Stock determined by
dividing the amount of such accrued and unpaid dividends by the Conversion
Price.

     (i) The Corporation shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Series B Convertible Preferred Stock, such number of
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of Series B Convertible Preferred
Stock. The Corporation shall from time to time, in accordance with the laws of
Delaware, increase the authorized amount of Common Stock if at any time the
number of authorized shares of Common Stock remaining unissued shall not be
sufficient to permit the conversion at such time of all then outstanding shares
of Series B Convertible Preferred Stock.

     Section 9.  Reports as to Adjustments.  Whenever the Conversion Price is
                 -------------------------
adjusted as provided in Section 8 hereof, the Corporation shall (i) promptly
place on file at its principal office and at the office of each transfer agent
for the Series B Convertible Preferred Stock, if any, a statement, signed by an
officer of the Corporation, setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the new Conversion Price, and (ii) promptly mail to the holders
of record of the outstanding shares of Series B Convertible Preferred Stock at
their respective addresses as the same shall appear in the Corporation's stock
records a notice stating that the number of shares of Common Stock into which
the shares of Series B Convertible Preferred Stock are convertible has been
adjusted and setting forth the new Conversion Price (or describing the new
stock, securities, cash or other property) as a result of such adjustment, a
brief statement of the facts requiring such adjustment and the computation
thereof, and when such adjustment became effective.

     Section 10.  Definitions.  For the purposes of the Certificate of
                  -----------
Designations, Preferences and Rights of Series B Convertible Redeemable
Preferred Stock which embodies this resolution:

     "Current Market Price" per share of Common Stock on any date for all
purposes of Section 8 shall be deemed to be the closing price per share of
Common Stock on the date

                                       13
<PAGE>

specified. For all other purposes hereunder, "Current Market Price" on any date
shall be deemed to be the average of the closing prices per share of Common
Stock for the five (5) consecutive trading days ending two trading days prior to
such date. The closing price for each day shall be the last sale price, regular
way or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Stock is
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use, or, if on any such date the Common Stock is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors. If the Common Stock is not publicly
held or so listed or publicly traded, "Current Market Price" shall mean the Fair
Market Value per share as determined in good faith by the Board of Directors of
the Corporation.

     "Fair Market Value" means the amount which a willing buyer would pay a
willing seller in an arm's-length transaction as determined in good faith by the
Board of Directors of the Corporation, unless otherwise provided herein.

     "Person" means any individual, firm, corporation or other entity, and shall
include any successor (by merger or otherwise) of such entity.

     "Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.

     Section 11.  Rank. The Series B Convertible Preferred Stock shall, with
                  ----
respect to payment of dividends, redemption payments and rights upon
liquidation, dissolution or winding up of the Corporation, rank (i) prior to the
Common Stock of the Corporation and any class or series of Preferred Stock which
provides by its terms that it is to rank junior to the Series B Preferred Stock
and (ii) on a parity with each other class or series of Preferred Stock of the
Corporation.

     Section 12.  Alternate Consideration.  For purposes of determining the
                  -----------------------
consideration payable upon exercise of the optional redemption provided in
Section 4(a)(ii) and upon the exercise of the Exchange Right provided in Section
5, if there shall have occurred a Transaction, as defined in Section 8(b)(iii),
the Common Stock that would otherwise have been issued to a holder of Series B
Convertible Preferred Stock for each share of Series B Convertible Preferred
Stock pursuant to Section 4(a)(ii) or Section 5, as applicable, shall be deemed
to instead be the kind and amount of shares of stock or other securities and
property receivable (including cash)

                                       14
<PAGE>

upon consummation of such Transaction (the "Alternate Consideration") in respect
of the Common Stock that would result in the Fair Market Value of such Alternate
Consideration, measured as of the Redemption Date or Exchange Date, as
applicable, being equal to (X) if prior to Stockholder Approval, the greater of
(a) the Liquidation Value plus all dividends accrued and unpaid with respect to
such share of Series B Convertible Preferred Stock, whether or not declared,
measured as of the Redemption Date or the Exchange Date, as applicable, and (b)
the Fair Market Value of the kind and amount of shares of stock and other
securities and property receivable (including cash) pursuant to Section
8(b)(iii) which would have been issued if such share of Series B Convertible
Preferred Stock had been converted pursuant to Section 8 immediately prior to
the consummation of the Transaction; or (Y) if after Stockholder Approval, the
Liquidation Value plus all dividends accrued and unpaid with respect to such
share of Series B Convertible Preferred Stock, whether or not declared, measured
as of the Redemption Date or Exchange Date, as applicable. In the event the
subject Transaction provides for an election of the consideration to be received
in respect of the Common Stock, then each holder of Series B Convertible
Preferred Stock shall be entitled to make a similar election with respect to the
Alternate Consideration to be received by it under Section 4(a)(ii) or Section
5, as applicable. Any determination of the Fair Market Value of any Alternate
Consideration (other than cash) shall be determined by an independent investment
banking firm of nationally recognized standing selected by the Board of
Directors of the Corporation. The Fair Market Value of any Alternate
Consideration that is listed on any national securities exchange or traded on
the NASDAQ National Market shall be deemed to be the Current Market Price of
such Alternate Consideration.

                                       15
<PAGE>

     IN WITNESS WHEREOF, NORTHROP GRUMMAN CORPORATION has caused this
Certificate of Designations, Preferences and Rights of Series B Convertible
Preferred Stock to be duly executed by its ___________ and attested to by its
Secretary this ___ day of ______________, 2001.

                              NORTHROP GRUMMAN CORPORATION


                              By: __________________________________
                              Name:


ATTEST:

By:  __________________________________
Name:

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