NORTHROP GRUMMAN CORPORATION
EQUITY GRANT PROGRAM FOR NON-EMPLOYEE DIRECTORS
UNDER THE
NORTHROP GRUMMAN 2011 LONG-TERM INCENTIVE STOCK PLAN
Amended and Restated Effective as of January 1, 2016

1.
Purpose

(a)    The purpose of the Northrop Grumman Corporation Equity Grant Program for
Non-Employee Directors (the “Program”) is to promote the long-term growth and
financial success of Northrop Grumman Corporation (the “Company”) by attracting
and retaining non-employee directors of outstanding ability and assisting the
Company in promoting a greater identity of interest between the Company’s
non-employee directors and its stockholders.
(b)    The Program is adopted and maintained under the Company’s 2011 Long-Term
Incentive Stock Plan and any successor equity compensation plan of the Company
(as each such plan may be amended from time to time, the “Equity Plan”). The
Program sets forth terms and conditions previously approved by the Company’s
Board of Directors (the “Board”) with respect to the compensation of Eligible
Directors (as defined below) for 2012 and will continue in effect for 2012 and,
as amended from time to time, in subsequent years unless and until otherwise
provided by the Company’s Board of Directors (the “Board”). The term “Stock
Units” as used in the Program and any provision of the Program applicable to
such Stock Units refers only to Stock Units that are credited under the Program
on or after January 1, 2012 (the “Effective Date”). The Program as in effect at
the time that Stock Units are awarded hereunder constitutes the award agreement
evidencing the terms and conditions of the awards applicable to such Stock
Units. This Program does not affect any stock units or other awards granted
prior to the Effective Date. Unless otherwise provided by the Board, no awards
will be granted to Eligible Directors under the Equity Plan on or after the
Effective Date other than as provided under this Program.
(c)    Effective January 1, 2015 the Program provides for alternative investment
options pursuant to Section 10 for certain compensation earned on or after
January 1, 2015.
2.
Term

The Program shall operate and shall remain in effect until terminated by action
of the Board.
3.
Program Operation

The Program and transactions hereunder in respect of Company equity securities
are intended to be exempt from Section 16(b) of the Securities Exchange Act of
1934 (the “1934 Act”) to the maximum extent possible under Rule 16b-3
promulgated thereunder. Except as specifically provided for herein, the Program
requires no discretionary action by any administrative body with regard to any
transaction under the Program. To the extent, if any, that any administrative or
interpretive actions are required under the Program, such actions shall be
undertaken by the Board or by the Compensation Committee of the Board (the
“Compensation Committee”).
4.
Eligibility

Only directors of the Company who are not employees of the Company or any
subsidiary of the Company (“Eligible Directors”) shall participate in the
Program.
5.
Shares of Common Stock Subject to the Program

Shares of common stock of the Company (“Common Stock”) that are paid in
settlement of Stock Units awarded under the Program shall be applied to reduce
the maximum number of shares of Common Stock remaining available for issuance
under the Equity Plan then in effect and giving effect to any applicable
fungible or premium share-counting rules of such plan.
6.
Adjustments and Reorganizations

(a)    Upon (or, as may be necessary to effect the adjustment, immediately prior
to): any reclassification, recapitalization, stock split (including a stock
split in the form of a stock dividend) or reverse stock split; any merger,
combination, consolidation, or other reorganization; any spin-off, split-up, or
similar extraordinary dividend distribution in respect of the Common Stock; or
any exchange of shares of Common Stock or other securities of the Company, or
any similar, unusual or extraordinary corporate transaction in respect of the
Common Stock; then the Board or Compensation Committee shall equitably and
proportionately adjust (1) the number and type of shares of Common Stock (or
other securities) that thereafter may be made the subject of Stock Units, (2)
the number, amount and type of shares of Common Stock (or other securities or
property) subject to any outstanding Stock Units, and/or (3) the securities,
cash or other property deliverable upon payment of any outstanding Stock Units,
in each case to the extent necessary to preserve (but not increase) the level of
incentives intended by this Program and the then-outstanding Stock Units. The
Board or Compensation Committee may also prospectively make such similar
appropriate adjustment in the calculation of Fair Market Value (as defined in
Section 7) as it deems necessary to preserve (but not increase) Eligible
Directors’ rights under the Program.
(b)    It is intended that, if possible, any adjustments contemplated by the
preceding Section 6(a) be made in a manner that satisfies applicable legal, tax
(including, without limitation and as applicable in the circumstances, Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”)) and
accounting (so as to not trigger any charge to earnings with respect to such
adjustment) requirements. Any good faith determination by the Board or
Compensation Committee as to whether an adjustment is required in the
circumstances pursuant to Section 6(a), and the extent and nature of any such
adjustment, shall be conclusive and binding on all persons.
7.
Fair Market Value

Fair Market Value for all purposes under the Program shall mean the NYSE closing
price of a share of Common Stock on the relevant date and if no shares of Common
Stock are traded on the NYSE on such date then the NYSE closing price on the
immediately preceding trading day.
8.
Annual Retainer; Grants of Stock Units

(a)    The Board (or applicable committee thereof) shall establish what portion
or amount, if any, of the annual retainer payable to each Eligible Director for
services as a director (the “Annual Retainer”) will be paid in the form of
shares of Common Stock (the “Stock Component”) and what portion or amount of the
Annual Retainer will be paid in cash (the “Cash Component”). The Stock Component
shall be compensation for services rendered for one year commencing with the
Company’s Annual Meeting of Shareholders (the “Service Year”). The Cash
Component shall be compensation for services rendered during the calendar year,
paid on a quarterly basis.
(b)    As of the close of business on the day of the Company’s Annual Meeting of
Shareholders, each Eligible Director’s account under the Program automatically
will be credited with a number of Stock Units equal to the Stock Component for
that Service Year divided by the Fair Market Value of a share of Common Stock on
that date (the “Automatic Stock Units”). As used herein, a “Stock Unit” is a
non-voting unit of measurement which is credited to a bookkeeping account and
deemed for purposes of the Program to be equivalent in value to one outstanding
share of Common Stock. The Stock Units shall be used solely as a device for the
determination of any payment to eventually be made to the Eligible Director
pursuant to Section 9. Automatic Stock Units will vest on the first anniversary
of the date of the Company’s Annual Meeting of Shareholders held for the year
for which such Stock Component was granted, and, absent a valid election in
accordance with Section 9(a), be payable on or within 30 days after the Eligible
Director’s Separation from Service. Should any individual cease to serve as a
director prior to the vesting date of his or her Automatic Stock Units on the
first anniversary date, such individual shall be entitled to a pro rata portion
of such Automatic Stock Units based on the number of calendar days that such
individual served as a director during the Service Year for which such Automatic
Stock Units were granted, which pro rata portion shall vest and become payable
on the same date(s) as otherwise would have applied with respect to such
Automatic Stock Units (including after giving effect to any election pursuant to
Section 9(a) hereof).
(c)    Absent a valid election in accordance with this Section 8(c), the Cash
Component of the Annual Retainer earned for each calendar quarter, as well as
any fees payable for service on Board committees, for service as lead
independent director or for extraordinary services (the “Other Annual
Retainers”) for such calendar quarter shall be payable to each Eligible Director
as of the last day of each calendar quarter during the relevant year. For any
Eligible Director who validly elects pursuant to this Section 8(c), all or any
portion of the Cash Component and the Other Annual Retainers shall be payable in
the form of a credit of Stock Units under the Program (collectively, the
“Elective Stock Units”), which shall be credited as of the date that such
amounts otherwise would have been payable in cash under the Program (each, a
“Crediting Date”). The number of Elective Stock Units to be credited pursuant to
such election on a Crediting Date shall be determined by dividing the portion of
the Annual Retainer and Other Annual Retainer that would have otherwise been
paid in cash to the Eligible Director for the corresponding calendar quarter but
for such an election by the Eligible Director, divided by the Fair Market Value
of a share of Common Stock on that Crediting Date. Any such election to receive
Elective Stock Units in lieu of a cash payment under the foregoing proviso must
be made on a form and in a manner prescribed by Company management prior to the
beginning of the calendar year to which such Cash Component or Other Annual
Retainers relate.
(d)    Should any individual become an Eligible Director after the beginning of
the Service Year or after the beginning of the calendar year, such Eligible
Director shall be entitled to a pro rata Annual Retainer, with the amount of the
Stock Component and the Cash Component proportionately reduced to reflect the
number of calendar days that have elapsed between the beginning of the Service
Year (with respect to the Stock Component) or the calendar year (with respect to
the Cash Component), respectively, and the effective date of the individual’s
election as an Eligible Director. Such pro-rated Stock Component shall be
credited as Automatic Stock Units as of the effective date of the individual’s
election as an Eligible Director and shall vest on the first anniversary of the
date of the Company’s most recent Annual Meeting of Shareholders. The number of
Automatic Stock Units so credited to the Eligible Director’s account shall be
equal to the pro-rated Stock Component divided by the Fair Market Value of a
share of Common Stock on the effective date of the Eligible Director’s election
to the Board. Such pro-rated Cash Component shall be paid on the date that the
relevant Cash Component would otherwise have been paid had the individual served
as an Eligible Director during the entire calendar year.
(e)    As a transition, each individual serving as an Eligible Director as of
January 1, 2016 shall be credited with a number of Automatic Stock Units as of
that date determined by dividing 138/363 of the Stock Component of the Annual
Retainer by the Fair Market Value of a share of Common Stock on January 1, 2016,
which Automatic Stock Units shall vest as of May 18, 2016 and shall be payable
as provided in Section 9(a), subject to any valid election made by an Eligible
Director pursuant to Section 9(a) no later than December 31, 2015.
9.
Payment of Stock Units

(a)    All Stock Units shall be paid in an equivalent number of shares of Common
Stock. All Stock Units shall be paid on or within 30 days after the Eligible
Director’s Separation from Service; provided, however, that an Eligible Director
may make an irrevocable election in advance to have all or any portion of any
Stock Units paid (A) upon the earlier of (i) the Eligible Director’s Separation
from Service or (ii) a calendar year specified by the Eligible Director in his
or her election (which year may be no earlier than the year after the relevant
year to which the deferred Annual Retainer or Other Annual Retainers, as the
case may be, relate), or (B) in the case of Automatic Stock Units, upon the
Automatic Stock Units’ vesting date. Notwithstanding the foregoing, no Automatic
Stock Units shall be paid before the date they otherwise vest pursuant to
Section 8. Any election to receive payment of Stock Units upon an event other
than Separation from Service must be made on a form and in a manner prescribed
by Company management by no later than December 31st of the calendar year before
the start of the relevant Service Year (that is, before the calendar year in
which the Eligible Director performs the services giving rise to Stock Units).
Notwithstanding the foregoing, an individual who first becomes an Eligible
Director on or after January 1 of a calendar year shall be permitted to make an
irrevocable election to receive payment of Automatic Stock Units upon an event
other than Separation from Service provided that such election is made within 30
days after the date the individual becomes an Eligible Director and such
election relates only to Automatic Stock Units attributable to services
performed after the election. If the Eligible Director makes such an election to
receive payment upon an event that is earlier than Separation from Service and
payment is triggered (1) by the occurrence of the specified calendar year, the
applicable Stock Units will generally be paid in January of such calendar year,
and shall in all cases be paid prior to the end of such calendar year, or (2)
upon vesting or Separation from Service, the applicable Stock Units shall be
paid on or within 30 days of such event.
(b)     Notwithstanding the foregoing Section 9(a), if an Eligible Director is a
Key Employee as of his Separation from Service, any payment triggered by the
Eligible Director’s Separation from Service shall be made on the first day of
the seventh month following the date of his or her Separation from Service (or,
if earlier, the date of his or her death). Such payment shall be subject to
adjustment as provided in Section 6 and shall be in complete satisfaction of
such Stock Units. For the avoidance of doubt, an Eligible Director shall
continue to be eligible to receive additional credits of Stock Units as dividend
equivalents pursuant to Section 12 during any period of time payment of the
Eligible Director’s Stock Units is delayed pursuant to this Section 9(b).
(c)    For purposes of this Program, the following terms shall have the meanings
indicated below:
Affiliated Company. The Company and any other entity related to the Company
under the rules of section 414 of the Code. The Affiliated Companies include
Northrop Grumman Corporation and its 80%-owned subsidiaries and may include
other entities as well.
Key Employee. A director or an employee treated as a “specified employee” under
Code section 409A(a)(2)(B)(i) of the Company or an Affiliated Company (i.e., a
key employee (as defined in Code section 416(i) without regard to paragraph (5)
thereof)) if the Company’s or an Affiliated Company’s stock is publicly traded
on an established securities market or otherwise. The Company shall determine in
accordance with a uniform Company policy which participants are Key Employees as
of each December 31 in accordance with IRS regulations or other guidance under
Section 409A. Such determination shall be effective for the twelve (12) month
period commencing on April 1 of the following year.
Separation from Service. A “separation from service” within the meaning of
Section 409A.
(d)    Section 6 of the 2011 Long-Term Incentive Stock Plan (addressing certain
change in control events) shall apply to the Stock Units; provided that no
modification to the timing of payment of the Stock Units shall be made unless
the requirements of Treas. Reg. Section 1.409A-3(j)(4)(ix) (“plan terminations
and liquidations”), or any successor provision thereto, are satisfied and such
modification would not result in any tax, penalty or interest under Section
409A.
10.
Elective Deferrals

(a)     Eligible Directors shall be provided with the opportunity to elect to
defer all or a portion of their Eligible Compensation, at the time and in the
form and manner set forth below. To be effective, any deferral election must be
filed by the deadline established by Company management, which shall be no later
than December 31st of the calendar year before the calendar year in which the
services giving rise to the Eligible Compensation to be deferred will be
performed. An individual who becomes an Eligible Director on or after January 1
of a calendar year shall not be eligible to defer any portion of Eligible
Compensation during that calendar year. Deferral election forms shall be in such
form, and shall be filed and revoked in such manner as Company management shall
from time to time determine. In addition, the Board may establish such minimum
deferral amounts, specified percentages of Eligible Compensation that may be
deferred, and similar requirements and limitations, as it may determine to be
appropriate for convenience of administration of the Program.
(b)    The Board shall cause Company management to establish and maintain an
Elective Deferral Account for each Eligible Director who elects to defer
Eligible Compensation earned on or after January 1, 2015, pursuant to Section
10(a) above. On the last day of each calendar quarter, the Elective Deferral
Account of each person who is an Eligible Director as of such date shall be
credited with his or her Elective Deferral Amount (if any) for such calendar
quarter.
(c)    Company management shall from time to time establish one or more
bookkeeping investment funds (each, an "Investment Fund") based upon such
criteria as it may from time to time determine. Company management shall
establish procedures to permit Eligible Directors to make Investment Elections
from time to time indicating in which of the available Investment Funds their
Elective Deferral Accounts shall be deemed invested. Company management shall
cause Eligible Director’s Elective Deferral Account to be adjusted upwards or
downwards, at such intervals as it may from time to time determine, to reflect
the net investment return (whether positive or negative) of the particular
Investment Fund(s) elected; provided, that no Elective Deferral Account may at
any time have a balance less than zero.
(d)    For purposes of this Program, the following terms shall have the meanings
indicated below:
Elective Deferral Account. A bookkeeping account for an Eligible Director
representing the Eligible Compensation that the Eligible Director has elected to
defer under Section 10(a) of the Program, as adjusted to reflect earnings,
losses, contributions and distributions in accordance with Section 10(c) and
Section 11 of the Program.
Elective Deferral Amount. An amount of Eligible Compensation that an Eligible
Director elects to defer under and in accordance with Section 10(a) of the
Program.
Eligible Compensation. With respect to any calendar quarter, the portion of an
Eligible Director’s Cash Component and Other Annual Retainers payable for such
quarter, less any portion of such amount for such quarter which the Eligible
Director elects to receive in the form of Elective Stock Units in accordance
with Section 8(c).
Investment Election. An election by an Eligible Director to have Elective
Deferral Amounts invested in an Investment Fund. Investment Elections shall be
made on a form and in the manner prescribed by Company management.
11.
Payment of Elective Deferrals

(a)    The balance of an Eligible Director’s Elective Deferral Account shall be
paid in a single distribution within 30 days following such Eligible Director’s
Separation from Service, unless: (i) the Eligible Director has elected an
alternative time of payment under Section 11(b) or (ii) a later date is required
by Section 11(e).
(b)    In lieu of the default time of payment set forth in Section 11(a), an
Eligible Director may elect to receive a distribution of all or a portion of his
Elective Deferral Account at the earlier of Separation from Service or a
calendar year specified by the Eligible Director. Any such election must be made
in accordance with the procedures set forth in Section 11(d). A distribution
scheduled to be made due to the Eligible Director’s Separation from Service
shall be made within 30 days of such Separation from Service. A distribution
scheduled to be made in a specified calendar year shall be made no later than
December 31st of such calendar year.
(c)    All distributions from an Eligible Director’s Elective Deferral Account
shall be made in cash.
(d)    Company management shall establish rules and procedures for an Eligible
Director to file a distribution election form on which such Eligible Director
may make a distribution election, subject to the following requirements and
restrictions:
(1)    A distribution election form must be filed by the deadline established by
Company management, which shall be no later than December 31st of the calendar
year before the calendar year in which the Eligible Director will perform the
services giving rise to the Annual Retainer (or Other Annual Retainer, if
applicable) to be deferred;
(2)    A distribution election applies only with respect to deferrals for the
calendar year for which the distribution election form is filed. If an Eligible
Director wishes to make a distribution election for amounts deferred in
subsequent calendar years, a new distribution election form must be filed for
each calendar year by the deadline described in Section 11(d)(1), above; and
(3)    A distribution election is irrevocable once the distribution election
form is filed.
In addition, Company management may establish rules for designating a
beneficiary, and such other rules, limitations and conditions as Company
management determines to be appropriate, subject to the requirements and
restrictions set forth above.
(e)    If an Eligible Director is a “specified employee” (as determined by the
Company in accordance with Section 409A(a)(2)(B) of the Code and Treas. Reg.
§ 1.409A-1(i)), any amount that becomes payable under this Section 11 as a
result of the Eligible Director’s Separation from Service shall be paid on the
later of (a) the payment date prescribed by this Section 11, and (b) the first
day of the seventh month that begins after the Eligible Director’s Separation
from Service.
(f)    If an Eligible Director dies before the balance of his Elective Deferral
Account is fully distributed, the remaining balance of the Eligible Director’s
Elective Deferral Account shall be distributed (in the form such balance would
have been paid to such Eligible Director) to his beneficiary within 90 days
after the Eligible Director’s death.
(g)    Section 6 of the Equity Plan (addressing certain change in control
events) shall apply to Elective Deferral Accounts; provided that no modification
to the timing of payment shall be made unless the requirements of Treas. Reg.
Section 1.409A-3(j)(4)(ix) (“plan terminations and liquidations”), or any
successor provision thereto, are satisfied and such modification would not
result in any tax, penalty or interest under Section 409A.
12.
Dividend Equivalents

No later than sixty (60) days following each date that the Company pays an
ordinary cash dividend on its outstanding Common Stock (if any ordinary cash
dividends are paid), for which the related record date occurs on or after the
Effective Date and prior to all of the Eligible Director’s Stock Units being
paid pursuant to Section 9, the Eligible Director’s Stock Unit account shall be
credited with additional Stock Units equal to (i) the number of outstanding and
unpaid Stock Units credited to such account as of such record date, multiplied
by (ii) the amount of the ordinary cash dividend paid by the Company on a share
of Common Stock, divided by (iii) the Fair Market Value of a share of the Common
Stock as of such record date. Any Stock Units credited pursuant to the foregoing
provisions of this Section 12 shall be subject to the same payment and other
terms and conditions as the original Stock Units to which they relate.
13.
Restrictions on Transfer

Stock Units shall be nontransferable and shall not be assignable, alienable,
saleable or otherwise transferable by an Eligible Director other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order. An Eligible Director may designate a beneficiary or
beneficiaries to receive any distributions under the Program, including
distributions of Elective Deferral Accounts, upon the death of the Eligible
Director.
14.
Issuance of Certificates

(a)    On each payment date described in Section 9, the Company shall deliver to
the Eligible Director a number of shares of Common Stock (either by delivering
one or more certificates for such shares or by entering such shares in book
entry form, as determined by the Company in its discretion) equivalent to the
number of Stock Units which are payable under the Program with respect to such
payment date.
(b)    Whenever under the terms of the Program a fractional share would be
required to be issued, the fractional share shall be rounded up to the next full
share.
(c)    All shares of Common Stock delivered under the Program shall be subject
to such stop-transfer orders and other restrictions as the Company may deem
advisable or legally necessary under any laws, statutes, rules, regulations and
other legal requirements, including those of any stock exchange upon which the
Common Stock is then listed and any applicable Federal, state or foreign
securities law.
(d)    Anything to the contrary herein notwithstanding, the Company shall not be
required to issue any shares of Common Stock under the Program if, in the
opinion of legal counsel, the issuance and delivery of such shares would
constitute a violation by the Eligible Director or the Company of any applicable
law or regulation of any governmental authority, including, without limitation,
Federal and state securities laws, or the regulations of any stock exchange on
which the Company’s securities may then be listed.
15.
Program Amendment

The Board may suspend or terminate the Program or any portion of the Program.
The Board may also amend the Program if deemed to be in the best interests of
the Company and its stockholders; provided, however, that (a) no such amendment
may impair any Eligible Director’s right regarding any outstanding grants or
Stock Units, Elective Deferral Accounts, or other right to receive shares or
cash payments under the Program without his or her consent, and (b) no such
amendment may cause the Program not to comply with Rule 16b-3, or any successor
rule, under the 1934 Act.
16.
Unfunded Program

The Program shall be unfunded and shall not create (or be construed to create) a
trust or a separate fund or funds. The Program shall not establish any fiduciary
relationship between the Company and any Eligible Director or other person. To
the extent any person holds any rights by virtue of an award granted under the
Program, such rights (unless otherwise determined by the Board) shall be no
greater than the rights of an unsecured general creditor of the Company.
17.
Future Rights

Neither the Program, nor the granting of Common Stock nor any other action taken
pursuant to the Program, shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will retain an Eligible
Director for any period of time, or at any particular rate of compensation.
Nothing in this Program shall in any way limit or affect the right of the Board
or the stockholders of the Company to remove any Eligible Director or otherwise
terminate his or her service as a director of the Company.
18.
Governing Law

The Program and all rights and obligations under the Program shall be governed
by, and construed in accordance with, the laws of the State of Delaware and
applicable Federal law.
19.
Successors and Assigns

The Program shall be binding on all successors and assigns of an Eligible
Director, including, without limitation, the estate of such Eligible Director
and the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Eligible Director’s creditors.
20.
Rights as a Stockholder

The Eligible Director in whose name any shares of Common Stock have been issued
pursuant to this Program shall have all of the rights of a stockholder with
respect to such shares, including the right to vote the Common Stock and receive
dividends and other distributions made on the Common Stock. Shares of Common
Stock issued in respect of Stock Units credited under the Program shall be fully
paid and non-assessable.
21.
Construction

The Program shall be construed and interpreted to comply with, and avoid any tax
or penalty or interest under, Section 409A. Notwithstanding Section 15 above,
the Company reserves the right to amend the Program and any outstanding grants
or deferrals under the Program to the extent it reasonably determines is
consistent with and necessary in order to preserve the intended tax consequences
of the Stock Units and amounts deferred in Elective Deferral Accounts, in light
of Section 409A and any regulations or other guidance promulgated thereunder.

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