Exhibit 10.3

 

SPECIAL OFFICER RETIREE MEDICAL PLAN

(As Amended and Restated Effective October 1, 2003)

 

ARTICLE 1

 

Eligibility and Benefits

 

1.01   Purpose. The purpose of the Special Officer Retiree Medical Plan (“Plan”)
is to provide lifetime retiree medical benefits to eligible elected officers of
Northrop Grumman Corporation (“the Company”) and their eligible dependents. This
Plan provides for the continuation of welfare benefits to a select group of
management or highly compensated employees within the meaning of Department of
Labor Regulation section 2520.104-24 and Sections 201, 301, and 401 of the
Employee Retirement Income Security Act.

 

1.02   Transition Rule. Vested Participants who have retired and commenced
benefits under the Plan prior to October 1, 2003 (“Retired Participants”) may
elect to continue to be covered by the provisions of the Plan as in effect prior
to October 1, 2003 (“Prior Plan”) or, effective January 1, 2004, to be covered
by the amended and restated Plan with Retired Participant contributions frozen
as of October 1, 2003. Such election shall be made pursuant to specified forms
and procedures. Participants who are actively employed by the Company on
September 30, 2003 shall have the right, if otherwise eligible for the Plan at
the time of retirement, to elect to be covered by the Prior Plan or the Plan as
in effect at the time of such Participant’s retirement. Such election shall be
made pursuant to specified forms and procedures. Any individual who is
designated as eligible to participate in the Plan on or after October 1, 2003,
shall be covered by the terms of the Plan as in effect at such time.

 

1.03   Eligibility. Eligibility for the Plan will be limited to those elected
officers who are designated as eligible to participate in the Plan by the
Company’s Board of Directors (“Board”) or the Compensation and Management
Development Committee (“Committee”) of the Board.

 

  (a)   An elected officer who is designated as eligible to participate in the
Plan is a “Participant” under the Plan.

 

  (b)   A Participant will become a “Vested Participant” under the Plan if he or
she has either five years of Vesting Service as an elected officer or 30 years
of total service with the Company and its affiliates. “Vesting Service” shall be
as defined in the Company’s supplemental executive retirement plan in which the
Vested Participant participates at the time the service is performed.

 

  (c)   The Board or Committee may revoke a Participant’s Plan eligibility
without such Participant’s consent. The Board or

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       Committee may revoke a Vested Participant’s Plan eligibility, provided
that such Participant or, after the Participant’s death, his or her spouse,
consents to the revocation.

 

1.04   Benefits. If a Vested Participant retires from the Company on or after
age 55 with 10 years of Vesting Service and enrolls for Medicare A and B
coverage when first eligible, the Company will provide the Vested Participant
(and eligible dependents) with a continuation of his or her executive medical
coverage commencing at retirement. The medical coverage shall be provided
pursuant to the terms of the Northrop Grumman Executive Medical Plan (“Medical
Plan”), as such Medical Plan is modified for active executives. Dependent
eligibility is determined pursuant to the terms of the Medical Plan.

 

  (a)   The Vested Participant shall be responsible for any participant cost
items, such as contributions, copayments, and deductibles, as described in the
Medical Plan; provided, however, that the level of participant contributions
will be frozen as of the Vested Participant’s retirement date. Continuation of
Medical Plan coverage will be provided for the life of the Vested Participant
and the life of his or her Surviving Spouse, if any. (For purposes of the Plan,
only a surviving spouse who is married to the Vested Participant both at the
time of termination of employment with the Company and its affiliates and at the
time of the Vested Participant’s death shall be considered a “Surviving
Spouse.”) Eligible dependent coverage will only be available during the life of
the Vested Participant and the life of his or her Surviving Spouse, if any.

 

  (b)   Following the death of a married Vested Participant or his or her
Surviving Spouse, the level of participant contributions for the survivor will
be adjusted to what they would have been for the Vested Participant for
individual coverage as of his or her retirement date.

 

  (c)   A Vested Participant may elect to commence continuation of his or her
Medical Plan coverage pursuant to this Plan only at such Participant’s
termination of employment due to retirement from the Company or an affiliate on
or after attainment of age 55 with at least 10 years of Vesting Service. If the
election to commence is not made at such time, the Vested Participant and his or
her dependents cease to be eligible for the Plan. No subsequent election will be
allowed.

 

  (d)  

Eligibility for the continuation of executive medical benefits pursuant to the
Plan shall cease if any payment required to be made

 

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by the Vested Participant or dependent (for example, participant contributions,
copayments or deductibles) is not timely paid.

 

1.05   Change in Control. Upon the occurrence of a “change in control” as
defined in the Company’s Change-In-Control Severance Plan (as in effect at such
time), each of the following shall occur:

 

  (a)   The Participant shall become a “Vested Participant.”

 

  (b)   The Plan may not be terminated or amended in any manner that adversely
affects the benefits of the Participant without his or her consent.

 

  (c)   All participant contributions, co-pays, deductibles and any other
participant or dependent cost items pursuant to the terms of the Medical Plan
shall be frozen as of the date of the change in control.

 

1.06   Claims and Appeals Procedures. A claim or appeal relating to the Plan
shall be subject to the claims and appeals procedures set forth in the Medical
Plan.

 

ARTICLE 2

 

General Provisions

 

2.01   Amendment and Plan Termination. Except as provided in Section 1.05(b),
the Company may amend or terminate the Plan at any time for any reason.

 

2.02   Assignment of Benefits. A Vested Participant or dependent may not, either
voluntarily or involuntarily, assign, anticipate, alienate, commute, sell,
transfer, pledge or encumber any benefits to which he or she is or may become
entitled under the Plan, nor may Plan benefits be subject to attachment or
garnishment by any of their creditors or to legal process. Notwithstanding the
foregoing, the Plan may provide Plan continuation coverage pursuant to a final
court order directing the Plan to provide such coverage.

 

2.03   Nonduplication of Benefits. This Section applies if the Company is
required to make payments under this Plan to a person or entity other than the
payees described in the Plan. In such a case, any coverage due the Participant
(or his or her dependent) under the Plan will be reduced by the actuarial value
of the coverage extended or payments made to such other person or entity.

 

 

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2.04   Medicare Primary. Medicare coverage is primary to coverage offered
pursuant to the Plan. Plan coverage shall be secondary to Medicare to the
maximum extent permissible under law.

 

2.05   Funding. Participants have the status of general unsecured creditors of
the Company and the Plan constitutes a mere promise by the Company to continue
eligibility for executive medical coverage pursuant to the terms of the Plan.

 

2.06   Construction. The Committee shall have full and sole discretionary
authority to determine eligibility, construe and interpret the terms of the
Plan, and determine factual issues, including the power to remedy possible
ambiguities, inconsistencies or omissions.

 

2.07   Governing Law. This Plan shall be governed by the law of the State of
California, except to the extent superseded by federal law.

 

2.08   Actions By Company. Any powers exercisable by the Company under the Plan
shall be utilized by written resolution adopted by the Committee or its
delegate. The Committee may by written resolution delegate any of its powers
under the Plan and any such delegations may provide for subdelegations, also by
written resolution.

 

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