Exhibit 10(aa)
LITTON INDUSTRIES, INC. RESTORATION PLAN 2
Amended and Restated Effective as of January 1, 2005

 

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TABLE OF CONTENTS

             
Introduction
        1  
 
            Article I — Definitions     1  
1.01
  Active Participant     1  
1.02
  Affiliated Companies     1  
1.03
  Avondale Plan     1  
1.04
  Board of Directors     1  
1.05
  Code     1  
1.06
  Company     1  
1.07
  ERISA     1  
1.08
  FSSP     2  
1.09
  Grandfathered Amounts     2  
1.10
  Key Employee     2  
1.11
  Ingalls Salaried Plan     2  
1.12
  Participant     2  
1.13
  Payment Date     2  
1.14
  Pension Plan and Pension Plans     2  
1.15
  Plan     3  
1.16
  Plan Year     3  
1.17
  Program     3  
1.18
  Retirement Plan     3  
1.19
  Retirement Plan B     3  
1.20
  Separation from Service or Separates from Service     3  
1.21
  Termination of Employment     4  
 
            Article II — General Provisions     5  
2.01
  In General     5  
2.02
  Forms and Times of Benefit Payments     5  
2.03
  Mandatory Cashout     6  
2.04
  Optional Payment Forms     6  
2.05
  Beneficiaries and Spouses     7  
2.06
  Amendment and Plan Termination     8  
2.07
  Not an Employment Agreement     8  
2.08
  Assignment of Benefits     8  
2.09
  Nonduplication of Benefits     8  
2.10
  Funding     9  

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2.11
  Construction     9  
2.12
  Governing Law     9  
2.13
  Actions By Company     10  
2.14
  Plan Representatives     10  
2.15
  Number     10  
 
            Article III — Lump Sum Election     11  
3.01
  In General     11  
3.02
  Retirees Election     11  
3.03
  Retirees Lump Sum     12  
3.04
  Actives Election     14  
3.05
  Actives Lump Sum—Retirement Eligible     15  
3.06
  Actives Lump Sum—Not Retirement Eligible     16  
3.07
  Calculation of Lump Sum     17  
3.08
  Spousal Consent     19  
 
            Appendix A — Litton Restoration Program — June 1, 2001 through
June 30, 2003     20  
A.01
  Purpose     20  
A.02
  Definitions     20  
A.03
  Eligibility     21  
A.04
  Amount of Benefit     21  
A.05
  Preretirement Surviving Spouse Benefit     23  
A.06
  Plan Termination     24  
A.07
  Retirement Plan Benefits     24  
 
            Appendix B — Litton Cash Balance Restoration Program     26  
B.01
  Purpose     26  
B.02
  Eligibility     26  
B.03
  Amount of Benefit     26  
B.04
  Preretirement Survivor Benefit     27  
B.05
  Plan Termination     27  
B.06
  Retirement Plan Benefits     27  
 
            Appendix C — 2005-2007 Transition Rules     29  
C.01
  Election     29  
C.02
  2005 Commencements     29  
C.03
  2006 and 2007 Commencements     30  
 
            Appendix D — Post 2007 Distribution of 409A Amounts     31  
D.01
  Time of Distribution     31  
D.02
  Special Rule for Key Employees     31  

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D.03
  Forms of Distribution     31  
D.04
  Death     32  
D.05
  Actuarial Assumptions     32  
D.06
  Accelerated Lump Sum Payouts     32  
D.07
  Effect of Early Taxation     34  
D.08
  Permitted Delays     34  
D.09
  Special Tax Distribution     34  

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INTRODUCTION
     The Litton Industries, Inc. Restoration Plan 2 (the “Plan”), is hereby
amended and restated effective as of January 1, 2005. This restatement amends
the Plan as originally effective April 3, 2001 to address the requirements of
Code section 409A and certain other changes.
     The Plan is intended to comply with Code section 409A and official guidance
issued thereunder (except for Grandfathered Amounts). Notwithstanding any other
provision of this Plan, this Plan shall be interpreted, operated and
administered in a manner consistent with this intention.
ARTICLE I
Definitions
The terms in this Article have the following meanings when capitalized:

1.01   Active Participant. This term is defined in Section 3.04(a).   1.02  
Affiliated Companies. 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 also include
other entities.   1.03   Avondale Plan. The Avondale Industries, Inc.
Non-Represented Employees’ Pension Plan.   1.04   Board of Directors. The Board
of Directors of Northrop Grumman Corporation.   1.05   Code. The Internal
Revenue Code of 1986, as amended.   1.06   Company. Litton Industries, Inc.  
1.07   ERISA. The Employee Retirement Income Security Act of 1974, as amended.

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1.08   FSSP. The Northrop Grumman Financial Security and Savings Program.   1.09
  Grandfathered Amounts. Plan benefits that were earned and vested as of
December 31, 2004 within the meaning of Code section 409A and official guidance
thereunder.   1.10   Key Employee. An employee treated as a “specified employee”
under Code section 409A(a)(2)(B)(i) of the Company or the Affiliated Companies
(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 Code section 409A, provided that in determining the
compensation of individuals for this purpose, the definition of compensation in
Treas. Reg. § 1.415(c)-2(d)(3) shall be used. Such determination shall be
effective for the twelve (12) month period commencing on April 1 of the
following year.   1.11   Ingalls Salaried Plan. The Ingalls Shipbuilding, Inc.
Salaried Employees’ Retirement Plan.   1.12   Participant. Any employee of the
Company who is eligible for benefits under a particular Program and has not
received full payment under the Program. However, no employees of the Component
Technologies Sector or Premier America Credit Union may be Participants.   1.13
  Payment Date. The 1st of the month coincident with or following the later of
(a) the date the Participant attains age 55, or (b) the date the Participant
Separates from Service.   1.14   Pension Plan and Pension Plans. Any of the
following:

  (a)   The Northrop Grumman Retirement Plan     (b)   The Northrop Grumman
Retirement Plan—Rolling Meadows Site

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  (c)   The Northrop Grumman Retirement Value Plan (effective as of January 1,
2000)     (d)   The Northrop Grumman Electronics Systems — Space Division
Salaried Employees’ Pension Plan (effective as of the Aerojet Closing Date)    
(e)   The Northrop Grumman Electronics Systems — Space Division Union Employees’
Pension Plan (effective as of the Aerojet Closing Date)

    “Aerojet Closing Date” means the Closing Date specified in the April 19,
2001 Asset Purchase Agreement by and Between Aerojet-General Corporation and
Northrop Grumman Systems Corporation.

1.15   Plan. The Litton Industries, Inc. Restoration Plan 2.   1.16   Plan Year.
A 12-month period ending on December 31.   1.17   Program. One of the
eligibility and benefit structures described in the Appendices.   1.18  
Retirement Plan and Retirement Plans.

  (a)   For periods after April 3, 2001 and before July 1, 2003, the FSSP,
Retirement Plan “B,” and the Ingalls Salaried Plan. Appendix A provides the
Program for this period.     (b)   For periods after June 30, 2003, Retirement
Plan “B,” the Avondale Plan, and the Ingalls Salaried Plan. Appendix B provides
the Program for this period.

1.19   Retirement Plan “B.” This term refers to the benefit structure described
in the plan document entitled Northrop Grumman Retirement Plan “B” or one of its
predecessor plans. It does not include any benefit structures described in other
plan documents, even if part of the legal plan named Northrop Grumman Retirement
Plan “B” (for example, Northrop Grumman Retirement Plan “A,” the Ingalls
Salaried Plan, and the Avondale Plan).

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1.20   Separation from Service or Separates from Service. A “separation from
service” within the meaning of Code section 409A.   1.21   Termination of
Employment. Complete termination of employment with the Affiliated Companies.

  (a)   If a Participant ceases to perform services for one Affiliated Company
to begin performing services for another, he or she will not have a Termination
of Employment.     (b)   A Participant will have a Termination of Employment if
he or she leaves the Affiliated Companies because the affiliate he or she works
for ceases to be an Affiliated Company because it is sold or spun off.

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ARTICLE II
General Provisions

2.01   In General. The Plan contains two different benefit Programs, which are
described in Appendices A and B. Appendices A and B provide the eligibility
conditions and the amount of benefits payable under the Programs.

  (a)   See Appendix A for the Program that applies to benefits earned for
services performed after April 3, 2001 and before July 1, 2003.     (b)   See
Appendix B for the Program that applies to benefits earned for services
performed after June 30, 2003.

2.02   Forms and Times of Benefit Payments. Unless a Program provides rules
concerning the form and timing of benefit payments, the Company will determine
the form and timing of benefit payments in its sole discretion, except where a
lump sum election under Article III applies.       For payments made to
supplement those of a particular tax-qualified retirement or savings plan, the
Company will only select among the options available under that plan, using the
same actuarial adjustments used in that plan, except in cases of lump sums.    
  Whenever the present value of the amount payable under the Plan does not
exceed $10,000, it will be paid in the form of a single lump sum as of the first
of the month following Termination of Employment. The lump sum will be
calculated using the factors and methodology described in Section 3.07 below.
(See Section 2.03 for the rule that applies as of January 1, 2008.)       No
payments will commence under this Plan until a Participant’s Termination of
Employment, even if benefits have commenced under a Retirement Plan for
Participants over age 701/2.

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    The distribution rules of this Section only apply to Grandfathered Amounts.
See Appendix C and Appendix D for the rules that apply to other benefits earned
under the Plan.   2.03   Mandatory Cashout. Notwithstanding any other provision
in the Plan, Participants with Grandfathered Amounts who have not commenced
payment of such benefits prior to January 1, 2008 will be subject to the
following rules:

  (a)   Post-2007 Terminations. Participants who have a Termination of
Employment after 2007 will receive a lump sum distribution of the present value
of their Grandfathered Amounts within two months of Termination of Employment
(without interest), if such present value is below the Code section 402(g) limit
in effect at the Termination of Employment.     (b)   Pre-2008 Terminations.
Participants who had a Termination of Employment before 2008 will receive a lump
sum distribution of the present value of their Grandfathered Amounts within two
months of the time they commence payment of their underlying qualified pension
plan benefits (without interest), if such present value is below the Code
section 402(g) limit in effect at the time such payments commence.

    For purposes of calculating present values under this Section, the actual
assumptions and calculation procedures for lump sum distributions under the
Northrop Grumman Pension Plan shall be used.   2.04   Optional Payment Forms.
Participants with Grandfathered Amounts shall be permitted to elect (a) or
(b) below:

  (a)   To receive their Grandfathered Amounts in any form of distribution
available under the Plan at October 3, 2004, provided that form remains
available under the underlying qualified pension plan at the time payment of the
Grandfathered Amounts commences. The conversion factors for these distribution
forms will be

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      based on the factors or basis in effect under this Plan on October 3,
2004.     (b)   To receive their Grandfathered Amounts in any life annuity form
not included in (a) above but included in the underlying qualified pension plan
distribution options at the time payment of the Grandfathered Amounts commences.
The conversion factors will be based on the following actuarial assumptions:

  Interest Rate:   6%     Mortality Table:   RP-2000 Mortality Table projected
15 years for future standardized cash balance factors

2.05   Beneficiaries and Spouses. The Participant may designate a beneficiary if
the Company selects a form of payment that includes a survivor benefit. The
Participant may change this designation at any time before benefits commence. A
beneficiary designation must be in writing and will be effective only when
received by the Company.       The beneficiary of a Participant who is married
on the date his or her benefits are scheduled to commence will be the
Participant’s spouse unless some other beneficiary is named with spousal
consent. To be effective, spousal consent must be submitted in writing before
benefits commence and must be witnessed by a Plan representative or notary
public. Spousal consent is not necessary if the Company determines that there is
no spouse or that the spouse cannot be found.       With respect to Programs
designed to supplement tax-qualified retirement or savings plans, the
Participant’s spouse will be the spouse as determined under the underlying
tax-qualified plan.       Otherwise, the Company has full discretionary
authority to determine the identity of the Participant’s spouse.       The
distribution rules of this Section only apply to Grandfathered Amounts. See
Appendix C and Appendix D for the rules that apply to other benefits earned
under the Plan.

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2.06   Amendment and Plan Termination. The Company may, in its sole discretion,
terminate, suspend or amend this Plan at any time or from time to time, in whole
or in part for any reason. This includes the right to amend or eliminate any of
the provisions of the Plan with respect to lump sum distributions, including any
lump sum calculation factors, whether or not a Participant has already made a
lump sum election. Notwithstanding the foregoing, no amendment or termination of
the Plan shall reduce the amount of a Participant’s accrued benefit under the
Plan as of the date of such amendment or termination.       No amendment of the
Plan shall apply to the Grandfathered Amounts, unless the amendment specifically
provides that it applies to such amounts. The purpose of this restriction is to
prevent a Plan amendment from resulting in an inadvertent “material
modification” to the Grandfathered Amounts.       The Company may, in its sole
discretion, seek reimbursement from the Company’s tax-qualified plans to the
extent this Plan pays tax-qualified plan benefits to which Participants were
entitled or became entitled under the tax-qualified plans.   2.07   Not an
Employment Agreement. Nothing contained in this Plan gives any Participant the
right to be retained in the service of the Company, nor does it interfere with
the right of the Company to discharge or otherwise deal with Participants
without regard to the existence of this Plan.   2.08   Assignment of Benefits. A
Participant, surviving spouse or beneficiary 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 legal process or to attachment or
garnishment by a Participant’s creditors.   2.09   Nonduplication of Benefits.
This Section applies if, despite Section 2.08, 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 amounts due a Participant or

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    beneficiary under this Plan will be reduced by the actuarial value of the
payments made to another person or entity with respect to that Participant or
beneficiary.

      The actuarial value of lump sums will be determined using the factors and
methodology described in Section 3.07 below. In all other cases, actuarial value
will be determined using the actuarial assumptions in the underlying Retirement
Plan.         In dividing a Participant’s benefit between the Participant and
another person or entity, consistent actuarial assumptions and methodologies
will be used so that there is no increased actuarial cost to the Company.

2.10   Funding. Participants have the status of general unsecured creditors of
the Company, and the Plan constitutes a mere promise by the Company to pay
benefits in the future. The Company may, but need not, fund benefits under the
Plan through a trust. If it does so, any trust created by the Company and any
assets held by the trust to assist it in meeting its obligations under the Plan
will conform to the terms of the model trust, as described in Internal Revenue
Service Revenue Procedure 92-64, but only to the extent required by Internal
Revenue Service Revenue Procedure 92-65. The Company and Participants intend
that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA.
      Any funding of benefits under this Plan will be in the Company’s sole
discretion. The Company may set and amend the terms under which it will fund and
may cease to fund at any time.   2.11   Construction. The Company has full
discretionary authority to determine eligibility and to construe and interpret
the terms of the Plan, including the power to remedy possible ambiguities,
inconsistencies or omissions.   2.12   Governing Law. This Plan is governed by
the law of the State of California, except to the extent superseded by federal
law.

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2.13   Actions By Company. The Company’s powers under the Plan will be exercised
by written resolution of the Board of Directors or its delegate. The Board may
by written resolution delegate any of the Company’s powers under the Plan and
any such delegations may provide for subdelegations, also by written resolution.
  2.14   Plan Representatives. Those authorized to act as Plan representatives
will be designated in writing by the Board of Directors or its delegate.   2.15
  Number. The singular, where appearing in this Plan, will be deemed to include
the plural, unless the context clearly indicates the contrary.

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ARTICLE III
Lump Sum Election
     This Article only applies with respect to Grandfathered Amounts. See
Appendix C and Appendix D for the distribution rules that apply to other
benefits earned under the Plan.

3.01   In General. This Article provides the rules under which Participants may
elect to receive their Plan benefits in a lump sum. Except as provided in
Section 3.07, this Article does not apply to Active Participants (as defined in
Section 3.04) whose benefits are automatically payable in lump sum form under
Article II.       This Article will not apply if a particular Program so
provides.   3.02   Retirees Election. Participants and Participants’
beneficiaries already receiving monthly benefits under the Plan at its inception
will be given a one-time opportunity to elect a lump sum payout of future
benefit payments.

  (a)   The election must be made within a 45-day period determined by the
Company. Within its discretion, the Company may delay the commencement of the
45-day period in instances where the Company is unable to timely communicate
with a particular payee.     (b)   The determination as to whether a payee is
already receiving monthly benefits will be made at the beginning of the 45-day
period.     (c)   An election to take a lump sum must be accompanied by a waiver
of the existing retiree medical benefits by those Participants (and their
covered spouses or surviving spouses) entitled either to have such benefits
entirely paid for by the Company or to receive such benefits as a result of
their classification as an employee under Executive Class Code II.

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      Following the waiver, waiving Participants (and covered spouses or
surviving spouses) will be entitled to the coverage offered to employees who are
eligible for Senior Executive Retirement Insurance Benefits in effect as of
July 1, 1993. The cost charged to the retirees for this coverage will be
determined as if the retiree had been employed 20 or more years by the Company.

  (d)   If the person receiving payments as of the beginning of the 45-day
period dies before electing a lump sum, his or her beneficiary, if any, may not
elect a lump sum.     (e)   Elections to receive a lump sum (and waivers under
(c)) must be made in writing and must include spousal consent if the payee
(whether the Participant or beneficiary) is married. Elections and spousal
consent must be witnessed by a Plan representative or a notary public.     (f)  
An election (with spousal consent, where required) to receive the lump sum made
at any time during the 45-day period will be irrevocable. If no proper election
has been made by the end of the 45-day period, payments will continue unchanged
in the monthly form that previously applied.

3.03   Retirees Lump Sum. If a retired Participant or beneficiary makes a valid
election under Section 3.02 within the 45-day period, monthly payments will
continue in the previously applicable form for 12 months (assuming the payees
live that long).

  (a)   As of the first of the 13th month, the present value of the remaining
benefit payments will be paid in a single lump sum to the Participant, if alive,
or, if not, to the beneficiary under the previously applicable form of payment.
    (b)   No lump sum payment will be made if:

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  (1)   The Participant is receiving monthly benefit payments in a form that
does not provide for survivor benefits and the Participant dies before the lump
sum payment is due.     (2)   The Participant is receiving monthly benefit
payments in a form that does provide for survivor benefits, but the Participant
and beneficiary die before the lump sum payment is due.

  (c)   The following rules apply where payment is being made in the form of a
10-year certain and continuous life annuity option:

  (1)   If the Participant is deceased at the commencement of the 45-day
election period, the surviving beneficiary may not make the election if there
are less than 13 months left in the 10-year certain period.     (2)   If the
Participant elects the lump sum and dies before the first of the 13th month and:

  (A)   if the 10-year certain period has already ended, all monthly payments
will cease at the Participant’s death and no lump sum will be paid;     (B)   if
the 10-year certain period ends after the Participant’s death and before the
beginning of the 13th month, monthly payments will end at the end of the 10-year
certain period and no lump sum will be paid; and     (C)   if the 10-year
certain period ends after the beginning of the 13th month, monthly payments will
continue through the 12th month, and a lump sum equal to the present value of
the remaining benefit payments will be paid as of the first of the 13th month.

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3.04   Actives Election. Active Participants may elect to have their benefits
paid in the form of a single lump sum under this Section.

  (a)   A Participant is an Active Participant if he or she is still employed by
the Affiliated Companies on or after the beginning of the initial 45-day period
referred to in Section 3.02.     (b)   An election to take a lump sum may be
made at any time during the 60-day period before Termination of Employment and
covers both—

  (1)   Benefits payable to the Participant during his or her lifetime, and    
(2)   Survivor benefits (if any) payable to the Participant’s beneficiary,
including preretirement death benefits (if any) payable to the Participant’s
spouse.

  (c)   An election does not become effective until the earlier of:

  (1)   the Participant’s Termination of Employment, or     (2)   the
Participant’s death.

      A Participant’s election may be revoked before it is effective.         A
Participant’s election will never take effect if the Participant does not have a
Termination of Employment within 60 days after making the election.     (d)   An
election may only be made once. It cannot be made again if it fails to become
effective after 60 days or is revoked before becoming effective.     (e)   No
election can be made after a Participant’s Termination of Employment.

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  (f)   If a Participant dies before making a lump sum election, his or her
spouse may not make a lump sum election with respect to any benefits that may be
due the spouse.     (g)   Elections to receive a lump sum must be made in
writing and must include spousal consent if the Participant is married.
Elections and spousal consent must be witnessed by a Plan representative or
notary public.

3.05   Actives Lump Sum—Retirement Eligible. If a Participant with a valid lump
sum election in effect under Section 3.04 has a Termination of Employment after
he or she is entitled to commence benefits under the Retirement Plans, payments
will be made in accordance with this Section.

  (a)   Monthly benefit payments will be made for up to 12 months, commencing
the first of the month following Termination of Employment. Payments will be
made:

  (1)   for a Participant who is not married on the date benefits are scheduled
to commence, based on a straight life annuity for the Participant’s life and
ceasing upon the Participant’s death should he or she die before the 12 months
elapse, or     (2)   for a Participant who is married on the date benefits are
scheduled to commence, based on a joint and survivor annuity form—

  (A)   with the survivor benefit equal to 50% of the Participant’s benefit;    
(B)   with the Participant’s spouse as the survivor annuitant;     (C)  
determined by using the contingent annuitant option factors used to convert
straight life annuities to 50% joint and survivor annuities under the Northrop
Grumman Retirement Plan “B”; and

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  (D)   with all payments ceasing upon the death of both the Participant and his
or her spouse should they die before the 12 months elapse.

  (b)   As of the first of the 13th month, the present value of the remaining
benefit payments will be paid in a single lump sum. Payment of the lump sum will
be made to the Participant if he or she is still alive, or, if not, to his or
her surviving spouse, if any.     (c)   No lump sum payment will be made if:

  (1)   The Participant is receiving monthly benefit payments in the form of a
straight life annuity and the Participant dies before the time the lump sum
payment is due.     (2)   The Participant is receiving monthly benefit payments
in a joint and survivor annuity form and the Participant and his or her spouse
both die before the time the lump sum payment is due.

  (d)   A lump sum will be payable to a Participant’s spouse as of the first of
the month following the date of the Participant’s death, if:

  (1)   the Participant dies after making a valid lump sum election but before
commencement of any benefits under this Plan;     (2)   the Participant is
survived by a spouse who is entitled to a preretirement surviving spouse benefit
under this Plan; and     (3)   the spouse survives to the first of the month
following the date of the Participant’s death.

3.06   Actives Lump Sum—Not Retirement Eligible. If a Participant with a valid
lump sum election in effect under Section 3.04 has a Termination of Employment
before he or she is entitled to

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    commence benefits under the Retirement Plans, payments will be made in
accordance with this Section.

  (a)   No monthly benefit payments will be made.     (b)   Following
Termination of Employment, a single lump sum payment of the benefit will be made
on the first of the month following 12 months after the date of the
Participant’s Termination of Employment.     (c)   A lump sum will be payable to
a Participant’s spouse as of the first of the month following the date of the
Participant’s death, if:

  (1)   the Participant dies after making a valid lump sum election but before
commencing benefits under this Plan;     (2)   the Participant is survived by a
spouse who is entitled to a preretirement surviving spouse benefit under this
Plan; and     (3)   the spouse survives to the first of the month following the
date of the Participant’s death.

  (d)   No lump sum payment will be made if the Participant is unmarried at the
time of death and dies before the time the lump sum payment is due.

3.07   Calculation of Lump Sum. The factors to be used in calculating the lump
sum are as follows:

      Interest: Whichever of the following two rates that produces the smaller
lump sum:

  (1)   the discount rate used by the Company for purposes of Statement of
Financial Accounting Standards No. 87 of the Financial Accounting Standards
Board as disclosed in the Company’s annual report to shareholders for the year
end immediately preceding the date of distribution, or

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  (2)   the applicable interest rate that would be used to calculate a lump sum
value for the benefit under the Retirement Plans.

      Mortality: The applicable mortality table that would be used to calculate
a lump sum value for the benefit under the Retirement Plans.         Increase in
Section 415 Limit: 4% per year.         Age: Age rounded to the nearest month on
the date the lump sum is payable.

    The annuity to be converted to a lump sum will be the remaining annuity
currently payable to the Participant or his or her beneficiary at the time the
lump sum is due.

      For example, assume a Participant is receiving benefit payments in the
form of a 50% joint and survivor annuity.         If the Participant and the
survivor annuitant are both still alive when the lump sum payment is due, the
present value calculation will be based on the remaining benefits that would be
paid to both the Participant and the survivor in the annuity form.         If
only the survivor is alive, the calculation will be based solely on the
remaining 50% survivor benefits that would be paid to the survivor.         If
only the Participant is alive, the calculation will be based solely on the
remaining benefits that would be paid to the Participant.

    In the case of a Participant who dies before commencing benefits under this
Plan so that only a preretirement surviving spouse benefit (if any) is payable,
the lump sum will be based solely on the value of the preretirement surviving
spouse benefit.

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3.08   Spousal Consent. Spousal consent for the elections described above is not
necessary if the Company determines that there is no spouse or the spouse cannot
be located.

* * *
     IN WITNESS WHEREOF, this Amendment and Restatement is hereby executed by a
duly authorized officer on this 21st day of December, 2007.

            NORTHROP GRUMMAN CORPORATION
      By:   /s/ Debora L. Catsavas       Debora L. Catsavas        Vice
President, Compensation,
Benefits and HRIS   

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APPENDIX A
Litton Restoration Program — Post April 3, 2001 through June 30, 2003

A.01    Purpose. The purpose of this Program is simply to restore to employees
of the Company the benefits they lose under the Retirement Plans as a result of
the compensation limit in Code section 401(a)(17) and/or the limit on deferrals
in Code section 402(g), or any successor provisions. This Appendix applies to
benefits earned for service performed after April 3, 2001 and before July 1,
2003.   A.02    Definitions. The following terms have the meanings below for
purposes of this Appendix.

  (a)   Annual Compensation. Compensation paid during the calendar year, subject
to the following:

  (1)   For compensation paid before July 1, 2003, Annual Compensation means
“Compensation” as defined in the FSSP.     (2)   For compensation paid after
June 30, 2003, Annual Compensation means “Compensation” as defined in the
Northrop Grumman Savings Plan (NGSP) for participants who transfer to that plan
only in the year of transfer.     (3)   Compensation does not include retention
bonuses paid as a result of the acquisition of Litton Industries, Inc. by
Northrop Grumman Corporation.     (4)   Compensation does not include amounts
paid for service performed before January 1, 2001 or after December 31, 2003.  
  (5)   Transfers. For anyone who transferred from the FSSP to the NGSP before
2003, the rule under (1) applies to pre-transfer periods, and the rules under
(2) apply to periods after the transfer.

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  (b)   Annuity Equivalent. “Annuity Equivalent” determined in the same manner
as the prior version of this Program.

A.03    Eligibility. An employee of the Company or one of its subsidiaries is
eligible to receive a benefit under this Program if he or she:

  (a)   retires on or after May 1, 2001;     (b)   has vested in benefits under
one or more of the Retirement Plans that are reduced because of the application
of Code section 401(a)(17) and/or Code section 402(g); and     (c)   is not
eligible to receive a benefit under the Northrop Corporation Supplemental
Retirement Income Program for Senior Executives, the Litton Industries, Inc.
Restoration Plan, or any other plan or program that bars an employee from
participation in this Program.     (d)   Has deposited the maximum amount of
pretax Employee Deposits under the FSSP, including the Basic Contributions under
the NGSP in a transfer year (excluding any age 50 catch-up contributions).

A.04    Amount of Benefit.

  (a)   General. The benefit payable under this Program with respect to a
Participant who commences benefits during his or her lifetime is intended to
make up for the retirement benefit, if any, that would have been payable to the
Participant under the terms of a Retirement Plan, but for the restrictions of
Code sections 401(a)(17) and/or 402(g), or any successor section as those limits
are described by the applicable Retirement Plan.     (b)   Benefit Formula. The
benefit payable under this Program with respect to a Participant who commences
benefits during his or her lifetime equals the sum of all of his or her annual
Part I Excess Benefits and annual Part II

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      Excess Benefits for each year in which the individual was a Participant.  
  (c)   Part I Excess Benefit. A Participant’s annual Part I Excess Benefit
equals (4), where:

  (1)   equals the Participant’s Annual Compensation multiplied by 4%;     (2)  
equals the actual amount of the Participant’s pretax Employee Deposits under the
FSSP or Tax-Deferred Contributions under the NGSP for the Plan Year (as limited
by Code sections 401(a)(17) and/or 402(g));     (3)   equals (1) minus (2); and
    (4)   equals 85% of (3), minus the Annuity Equivalent of (3).

  (d)   Part II Excess Benefit. A Participant’s annual Part II Excess Benefit
equals (4), where:

  (1)   equals the Participant’s Annual Compensation multiplied by 6%;     (2)  
equals the actual amount of the Participant’s Matched Deposits under the FSSP
and Basic Contributions under the NGSP for the Plan Year (as limited by Code
sections 401(a)(17) and/or 402(g));     (3)   equals (1) minus (2);     (4)  
equals the Annuity Equivalent of 50% of (3).

  (e)   Partial Year 2003. Subsections (c) and (d) above are modified as
provided in this subsection for Participants who are eligible for an accrual
under this Program in Plan Year 2003.

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  (1)   The benefit will be calculated based on a full year of Annual
Compensation.     (2)   The total benefit in subsections (c) and (d) above are
offset by the benefit amount earned from July 1, 2003 to December 31, 2003 under
Appendix B.

  (f)   Vested Benefits. Benefits under this Program will only be paid to
supplement benefit payments actually made from a Retirement Plan. If benefits
are not payable under a Retirement Plan because the Participant has failed to
vest or for any other reason, no payments will be made under this Program with
respect to such Retirement Plan.     (g)   No duplication of benefits. In any
year in which a Participant earns benefits in two or more qualified defined
benefit plans, the benefits from this plan will be reduced for any restoration
plan benefits paid from the other defined benefit plan.

A.05    Preretirement Surviving Spouse Benefit. Preretirement surviving spouse
benefits will be payable under this Program on behalf of a Participant if such
Participant’s surviving spouse is eligible for benefits payable from a
Retirement Plan. The amount of the preretirement surviving spouse benefit is the
amount under A.04, adjusted as follows:

  (a)   Death on or After Normal Retirement Age. The Participant’s surviving
spouse will receive a 100% survivor annuity calculated assuming the employee
commenced receiving normal retirement benefits the day before death.     (b)  
Death on or After Early Retirement Age, But Before Normal Retirement Age. The
Participant’s surviving spouse will receive a 100% survivor annuity calculated
assuming the employee commenced receiving early retirement benefits the day
before death.     (c)   Death Before Early Retirement Age. The Participant’s
surviving spouse will receive a 100% survivor annuity

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      calculated assuming the employee terminated employment and survived to
normal (or early) retirement age and commenced receiving a joint and survivor
annuity.

    No benefit will be payable under this Program with respect to a spouse after
the death of that spouse.   A.06    Plan Termination. No further benefits may be
earned under this Program with respect to a particular Retirement Plan after the
termination of such Retirement Plan.   A.07    Retirement Plan Benefits. For
purposes of this Appendix, the term “Retirement Plan Benefits” generally means
the benefits actually payable to a Participant, spouse, beneficiary or
contingent annuitant under a Retirement Plan. However, this Program is only
intended to remedy pension reductions caused by the operation of section
401(a)(17) and/or 402(g) and not reductions caused for any other reason. In
those instances where pension benefits are reduced for some other reason, the
term “Retirement Plan Benefits” shall be deemed to mean the benefits that
actually would have been payable but for such other reason.       Examples of
such other reasons include, but are not limited to, the following:

  (a)   A reduction in pension benefits as a result of a distress termination
(as described in ERISA § 4041(c) or any comparable successor provision of law)
of a Retirement Plan. In such a case, the Retirement Plan Benefits will be
deemed to refer to the payments that would have been made from the Retirement
Plan had it terminated on a fully funded basis as a standard termination (as
described in ERISA § 4041(b) or any comparable successor provision of law).    
(b)   A reduction of accrued benefits as permitted under Code section 412(c)(8),
as amended, or any comparable successor provision of law.

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  (c)   A reduction of pension benefits as a result of payment of all or a
portion of a Participant’s benefits to a third party on behalf of or with
respect to a Participant.

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APPENDIX B
Litton Cash Balance Restoration Program

B.01    Purpose. The purpose of this Program is simply to restore to employees
of the Company the benefits they lose under Retirement Plan “B” and the Avondale
Plan after June 30, 2003 as a result of the compensation limit in Code section
401(a)(17) and/or the benefit limit in Code section 415(b), or any successor
provisions.   B.02    Eligibility. An employee of the Company is eligible to
receive a benefit under this Program if he or she:

  (a)   retires on or after July 1, 2003;     (b)   has vested in benefits under
Retirement Plan “B,” the Ingalls Salaried Plan, or the Avondale Plan that are
reduced because of the application of Code section 401(a)(17) and/or Code
section 415(b); and     (c)   is not eligible to receive a benefit under the
Northrop Corporation Supplemental Retirement Income Program for Senior
Executives or any other plan or program which bars an employee from
participation in this Program.

B.03    Amount of Benefit. The benefit payable under this Program with respect
to a Participant who commences benefits during his or her lifetime will equal
the retirement benefit, if any, that would have been payable to the Participant
under the terms of a Retirement Plan, but for the restrictions of Code section
401(a)(17) and/or Code section 415(b) (or any successor sections) as those
limits are described by the applicable Retirement Plan. “Compensation” is
defined by the pension plans and includes the amount that would have been
counted under the Qualified plans except that it was deferred under The Northrop
Grumman Deferred Compensation plan.       Benefits under this Program will only
be paid to supplement benefit payments actually made from Retirement Plan “B” or
the Avondale Plan. If benefits are not payable under Retirement

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    Plan “B” or the Avondale Plan because the Participant has failed to vest or
for any other reason, no payments will be made under this Program with respect
to those plans.   B.04    Preretirement Survivor Benefit. Preretirement survivor
benefits will be payable under this Program on behalf of a Participant if the
Participant’s beneficiary is eligible for benefits payable from Retirement Plan
“B” or the Avondale Plan. The benefit payable will be the amount that would have
been payable under the Retirement Plan but for the restrictions of section
401(a)(17) (or any successor section), as that limit is described in the
applicable Retirement Plan.       The benefit payable under this Program will be
paid in a lump sum to nonspouse beneficiaries and in either a lump sum or single
life annuity to spouse beneficiaries. Notwithstanding the foregoing, the timing
and form of the payment of benefits described in this Section that relate to
amounts other than Grandfathered Amounts shall be determined in accordance with
Appendix C and Appendix D.       The benefit payable under this Program will be
reduced by the combined amounts of the Retirement Plan Benefits and the Northrop
Grumman Corporation ERISA Supplemental Plan 1 benefits attributable to the
applicable Retirement Plan.       No benefit will be payable under this Program
with respect to a spouse after the death of that spouse.   B.05    Plan
Termination. No further benefits may be earned under this Program with respect
to a particular Retirement Plan after the termination of the Retirement Plan.  
B.06    Retirement Plan Benefits. For purposes of this Appendix, the term
“Retirement Plan Benefits” generally means the benefits actually payable to a
Participant, spouse, beneficiary or contingent annuitant under a Retirement
Plan. However, this Program is only intended to remedy pension reductions caused
by the operation of section 401(a)(17) and not reductions caused for any other
reason. Where pension benefits are reduced for some other reason, the term
“Retirement Plan

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    Benefits” shall be deemed to mean the benefits that actually would have been
payable but for such other reason.       Examples of such other reasons include,
but are not limited to, the following:

  (a)   A reduction in pension benefits as a result of a distress termination
(as described in ERISA § 4041(c) or any comparable successor provision of law)
of a Retirement Plan. In such a case, the Retirement Plan Benefits will be
deemed to refer to the payments that would have been made from the Retirement
Plan had it terminated on a fully funded basis as a standard termination (as
described in ERISA § 4041(b) or any comparable successor provision of law).    
(b)   A reduction of accrued benefits as permitted under Code section 412(c)(8),
as amended, or any comparable successor provision of law.     (c)   A reduction
of pension benefits as a result of payment of all or a portion of a
Participant’s benefits to a third party on behalf of or with respect to a
Participant.     (d)   No duplication of benefits. If the participant is
eligible for restoration plan benefits another Excess plan for the same period
of service, the benefit under this plan will be reduced accordingly to prevent a
duplication of benefits.

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APPENDIX C
2005-2007 Transition Rules
     This Appendix C provides the distribution rules that apply to the portion
of benefits under the Plan subject to Code section 409A for Participants with
benefit commencement dates after January 1, 2005 and before January 1, 2008.

C.01    Election. Participants scheduled to commence payments during 2005 may
elect to receive both pre-2005 benefit accruals and 2005 benefit accruals in any
optional form of benefit available under the Plan as of December 31, 2004.
Participants electing optional forms of benefits under this provision will
commence payments on the Participant’s selected benefit commencement date.  
C.02    2005 Commencements. Pursuant to IRS Notice 2005-1, Q&A-19 & Q&A-20,
Participants commencing payments in 2005 from the Plan may elect a form of
distribution from among those available under the Plan on December 31, 2004, and
benefit payments shall begin at the time elected by the Participant.

  (a)   Key Employees. A Key Employee Separating from Service on or after
July 1, 2005, with Plan distributions subject to Code section 409A scheduled to
be paid in 2006 and within six months of his date of Separation from Service,
shall have such distributions delayed for six months from the Key Employee’s
date of Separation from Service. The delayed distributions shall be paid as a
single sum with interest at the end of the six month period and Plan
distributions will resume as scheduled at such time. Interest shall be computed
using the retroactive annuity starting date rate in effect under the Northrop
Grumman Pension Plan on a month-by-month basis during such period (i.e., the
rate may change in the event the period spans two calendar years).
Alternatively, the Key Employee may elect under IRS Notice 2005-1, Q&A-20 to
have such distributions

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      accelerated and paid in 2005 without the interest adjustment, provided,
such election is made in 2005.     (b)   Lump Sum Option. During 2005, a
temporary immediate lump sum feature shall be available as follows:

  (i)   In order to elect a lump sum payment pursuant to IRS Notice 2005-1,
Q&A-20, a Participant must be an elected or appointed officer of the Company and
eligible to commence payments under the underlying qualified pension plan on or
after June 1, 2005 and on or before December 1, 2005;     (ii)   The lump sum
payment shall be made in 2005 as soon as feasible after the election; and    
(iii)   Interest and mortality assumptions and methodology for calculating lump
sum amount shall be based on the Plan’s procedures for calculating lump sums as
of December 31, 2004.

C.03    2006 and 2007 Commencements. Pursuant to IRS transition relief, for all
benefit commencement dates in 2006 and 2007 (provided election is made in 2006
or 2007), distribution of Plan benefits subject to Code section 409A shall begin
12 months after the later of: (a) the Participant’s benefit election date, or
(b) the underlying qualified pension plan benefit commencement date (as
specified in the Participant’s benefit election form). Payments delayed during
this 12-month period will be paid at the end of the period with interest.
Interest shall be computed using the retroactive annuity starting date rate in
effect under the Northrop Grumman Pension Plan on a month-by-month basis during
such period (i.e., the rate may change in the event the period spans two
calendar years).

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APPENDIX D
Post 2007 Distribution of 409A Amounts
     The provisions of this Appendix D shall apply only to the portion of
benefits under the Plan that are subject to Code section 409A with benefit
commencement dates on or after January 1, 2008. Distribution rules applicable to
the Grandfathered Amounts are set forth in Articles II and III, and Appendix C
addresses distributions of amounts subject to Code section 409A with benefit
commencement dates after January 1, 2005 and prior to January 1, 2008.

D.01    Time of Distribution. Subject to the special rules provided in this
Appendix D, distributions to a Participant of his vested retirement benefit
shall commence as of the Payment Date.   D.02    Special Rule for Key Employees.
If a Participant is a Key Employee and age 55 or older at his Separation from
Service, distributions to the Participant shall commence on the first day of the
seventh month following the date of his Separation from Service (or, if earlier,
the date of the Participant’s death). Amounts otherwise payable to the
Participant during such period of delay shall be accumulated and paid on the
first day of the seventh month following the Participant’s Separation from
Service, along with interest on the delayed payments. Interest shall be computed
using the retroactive annuity starting date rate in effect under the Northrop
Grumman Pension Plan on a month-by-month basis during such delay (i.e., the rate
may change in the event the delay spans two calendar years).   D.03    Forms of
Distribution. Subject to the special rules provided in this Appendix D, a
Participant’s vested retirement benefit shall be distributed in the form of a
single life annuity. However, a Participant may elect an optional form of
benefit up until the Payment Date. The optional forms of payment are:

  (a)   50% joint and survivor annuity     (b)   75% joint and survivor annuity
    (c)   100% joint and survivor annuity.

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    If a Participant is married on his Payment Date and elects a joint and
survivor annuity, his survivor annuitant will be his spouse unless some other
survivor annuitant is named with spousal consent. Spousal consent, to be
effective, must be submitted in writing before the Payment Date and must be
witnessed by a Plan representative or notary public. No spousal consent is
necessary if the Company determines that there is no spouse or that the spouse
cannot be found.   D.04    Death. If a married Participant dies before the
Payment Date, a death benefit will be payable to the Participant’s spouse
commencing 90 days after the Participant’s death. The death benefit will be a
single life annuity in an amount equal to the survivor portion of a
Participant’s vested retirement benefit based on a 100% joint and survivor
annuity determined on the Participant’s date of death. This benefit is also
payable to a Participant’s domestic partner who is properly registered with the
Company in accordance with procedures established by the Company.   D.05   
Actuarial Assumptions. Except as provided in Section D.06, all forms of payment
under this Appendix D shall be actuarially equivalent life annuity forms of
payment, and all conversions from one such form to another shall be based on the
following actuarial assumptions:

  Interest Rate:   6%     Mortality Table:   RP-2000 Mortality Table projected
15 years for future standardized cash balance factors

D.06    Accelerated Lump Sum Payouts.

  (a)   Post-2007 Separations. Notwithstanding the provisions of this
Appendix D, for Participants who Separate from Service on or after January 1,
2008, if the present value of (a) the vested portion of a Participant’s
retirement benefit and (b) other vested amounts under nonaccount balance plans
that are aggregated with the retirement benefit under Code section 409A,
determined on the first

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      of the month coincident with or following the date of his Separation from
Service, is less than or equal to $25,000, such benefit amount shall be
distributed to the Participant (or his spouse or domestic partner, if
applicable) in a lump sum payment. Subject to the special timing rule for Key
Employees under Section D.02, the lump sum payment shall be made within 90 days
after the first of the month coincident with or following the date of the
Participant’s Separation from Service.     (b)   Pre-2008 Separations.
Notwithstanding the provisions of this Appendix D, for Participants who Separate
from Service before January 1, 2008, if the present value of (a) the vested
portion of a Participant’s retirement benefit and (b) other vested amounts under
nonaccount balance plans that are aggregated with the retirement benefit under
Code section 409A, determined on the first of the month coincident with or
following the date the Participant attains age 55, is less than or equal to
$25,000, such benefit amount shall be distributed to the Participant (or his
spouse or domestic partner, if applicable) in a lump sum payment within 90 days
after the first of the month coincident with or following the date the
Participant attains age 55, but no earlier that January 1, 2008.     (c)  
Conflicts of Interest. The present value of a Participant’s vested retirement
benefit shall also be payable in an immediate lump sum to the extent required
under conflict of interest rules for government service and permissible under
Code section 409A.     (d)   Present Value Calculation. The conversion of a
Participant’s retirement benefit into a lump sum payment and the present value
calculations under this Section D.06 shall be based on the GATT assumptions in
effect under the Northrop Grumman Pension Plan, and will be based on the
Participant’s immediate benefit if the Participant is 55 or older at Separation
from Service. Otherwise, the calculation will be based on the benefit

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      amount the Participant will be eligible to receive at age 55.

D.07    Effect of Early Taxation. If the Participant’s benefits under the Plan
are includible in income pursuant to Code section 409A, such benefits shall be
distributed immediately to the Participant.   D.08    Permitted Delays.
Notwithstanding the foregoing, any payment to a Participant under the Plan shall
be delayed upon the Company’s reasonable anticipation of one or more of the
following events:

  (a)   The Company’s deduction with respect to such payment would be eliminated
by application of Code section 162(m); or     (b)   The making of the payment
would violate Federal securities laws or other applicable law;

    provided, that any payment delayed pursuant to this Section D.08 shall be
paid in accordance with Code section 409A.   D.09    Special Tax Distribution.
On the date a Participant’s retirement benefit is reasonably ascertainable
within the meaning of IRS regulations under Code section 3121(v)(2), an amount
equal to the Participant’s portion of the FICA tax withholding will be
distributed in a single lump sum payment. This payment will reduce the
Participant’s future benefit payments under the Plan. This reduction shall be
calculated using GATT assumptions in effect under the Northrop Grumman Pension
Plan and a cost of living adjustment of 4%.

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