exv10wxny






Exhibit 10(n)




NORTHROP GRUMMAN CORPORATION

JANUARY 2009 CHANGE IN CONTROL SEVERANCE PLAN





 









 








NORTHROP GRUMMAN CORPORATION

JANUARY 2009 CHANGE IN CONTROL SEVERANCE PLAN




Article 1. Establishment, Term, and Purpose




     1.1. Establishment of the Plan. Northrop Grumman Corporation (hereinafter referred to as the
“Company”) established a change in control severance plan known as the “Northrop Grumman
Corporation January 2009 Change in Control Severance Plan” (the “Plan”). The Plan is effective
January 1, 2009 (the “Effective Date”). The Plan supersedes the Northrop Grumman Corporation March
1, 2004 Change-in-Control Severance Plan in its entirety.



     1.2. Term of the Plan. This Plan will commence on the Effective Date and shall continue in
effect through December 31, 2009. However, at the end of such initial term and, if extended, at
the end of each additional year thereafter, the term of this Plan shall be extended automatically
for one (1) additional year, unless the Committee delivers written notice at least six (6) months
prior to the end of such term, or extended term, to each Participant that this Plan will not be
extended (a “Non-Renewal Notice”), and if such notice is timely given this Plan will terminate at
the end of the term then in progress; provided, however, that (i) this provision for automatic
extension shall have no application following a Change in Control of the Company and (ii) a
Non-Renewal Notice shall not be effective if delivered during the Protected Period corresponding to
a Change in Control. Delivery of a Non-Renewal Notice shall not constitute a repudiation or breach
of this Plan and shall not trigger any Participant’s right to benefits hereunder.



     However, in the event a Change in Control occurs during the initial or any extended term, this
Plan will remain in effect for the longer of: (i) twenty-four (24) months beyond the month in which
such Change in Control occurred; or (ii) until all obligations of the Company hereunder have been
fulfilled, and until all benefits required hereunder have been paid to Participants. Any
subsequent Change in Control (“Subsequent Change in Control”) that occurs during the original or
any extended term shall also continue the term of this Plan until the later of: (i) twenty-four
(24) months beyond the month in which such Subsequent Change in Control occurred; or (ii) until all
obligations of the Company hereunder have been fulfilled, and until all benefits required hereunder
have been paid to Participants; provided, however, that if a Subsequent Change in Control occurs,
it shall only be considered a Change in Control under this Plan if it occurs no later than
twenty-four (24) months after the immediately preceding Change in Control or Subsequent Change in
Control.



     1.3. Purpose of the Plan. The purpose of this Plan is to provide for continuity in the
management of the Company by offering certain key employees of the Company employment protection
and financial security in the event of a Change in Control of the Company.



     1.4. ERISA. This Plan is intended as (i) a pension plan within the meaning of Section 3(2) of
ERISA, and (ii) an unfunded pension plan maintained by the Company for a select group of management
or highly compensated employees within the meaning of Department of Labor Regulation 2520.104-23
promulgated under ERISA, and Sections 201, 301, and 401 of ERISA.



1









 





Article 2. Definitions




     Whenever used in this Plan, the following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word is capitalized:




	 	(a)	 	“Base Salary” means the salary of record paid to a Participant by the Company
as annual salary (whether or not deferred), but excludes amounts received under
incentive or other bonus plans.
	 
	 	(b)	 	“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
	 
	 	(c)	 	“Beneficiary” in the event of a Participant’s death means the Participant’s
devisee, legatee, or other designee, or if there is no such designee, the Participant’s
estate.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	“Cause” means the occurrence of either or both of the following:






	 	(i)	 	The Participant’s conviction for committing an act of fraud,
embezzlement, theft, or other act constituting a felony (other than traffic
related offenses or as a result of vicarious liability); or
	 
	 	(ii)	 	The willful engaging by the Participant in misconduct that is
significantly injurious to the Company. However, no act, or failure to act, on
the Participant’s part shall be considered “willful” unless done, or omitted to
be done, by the Participant not in good faith and without reasonable belief that
his or her action or omission was in the best interest of the Company.






	 	(f)	 	“Change in Control” of the Company shall be deemed to have occurred as of the
first day that any one or more of the following conditions shall have been satisfied:






	 	(i)	 	Any Person (other than those Persons in control of the Company as
of the Effective Date, or other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any affiliate of the
Company or a successor) becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing twenty-five percent (25%) or more of
either (1) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (2) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this clause (i): (A) “Person” or “group”
shall not include underwriters acquiring newly issued voting securities (or
securities convertible into voting securities) directly from the Company with a
view towards distribution, (B) creditors of the Company who become stockholders
of the Company in connection with any bankruptcy of the Company under the laws
of the United States shall not, by virtue of such bankruptcy, be deemed a
“group” or a single Person for the purposes of this clause (i) (provided that
any one of such creditors may trigger a Change in Control pursuant to this
clause (i) if such




2









 












	 	 	 	creditor’s ownership of Company securities equals or exceeds the foregoing
threshold), and (C) an acquisition shall not constitute a Change in Control if
made by an entity pursuant to a transaction that is covered by and does not
otherwise constitute a Change in Control under clause (iii) below;
	 
	 	(ii)	 	On any day after the Effective Date (the “Measurement Date”),
Continuing Directors cease for any reason to constitute either: (1) if the
Company does not have a Parent, a majority of the Board; or (2) if the Company
has a Parent, a majority of the Board of Directors of the Controlling Parent. A
director is a “Continuing Director” if he or she either:






	 	(1)	 	was a member of the Board on the applicable Initial
Date (an “Initial Director”); or
	 
	 	(2)	 	was elected to the Board (or the Board of Directors
of the Controlling Parent, as applicable), or was nominated for election
by the Company’s or the Controlling Parent’s stockholders, by a vote of
at least two-thirds (2/3) of the Initial Directors then in office.






	 	 	 	A member of the Board (or Board of Directors of the Controlling Parent, as
applicable) who was not a director on the applicable Initial Date shall be
deemed to be an Initial Director for purposes of clause (2) above if his or
her election, or nomination for election by the Company’s or the Controlling
Parent’s stockholders, was approved by a vote of at least two-thirds (2/3) of
the Initial Directors (including directors elected after the applicable
Initial Date who are deemed to be Initial Directors by application of this
provision) then in office.
	 
	 	 	 	“Initial Date” means the later of (1) the Effective Date or (2) the date that
is two (2) years before the Measurement Date.
	 
	 	(iii)	 	Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the Company
or any of its subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or stock of
another entity by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case unless, following such Business Combination, (1) all
or substantially all of the individuals and entities that were the Beneficial
Owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination Beneficially
Own, directly or indirectly, more than sixty percent (60%) of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such
transaction, is a Parent of the Company or the successor of the Company) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (2) no Person (excluding any
entity resulting from such Business Combination or a Parent of the Company or
any successor of the





3









 











	 	 	 	Company or any employee benefit plan (or related trust) of the Company or such
entity resulting from such Business Combination or a Parent of the Company or
the successor entity) Beneficially Owns, directly or indirectly, twenty-five
percent (25%) or more of, respectively, the then-outstanding shares of common
stock of the entity resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such entity, except
to the extent that the ownership in excess of twenty-five percent (25%)
existed prior to the Business Combination, and (3) a Change in Control is not
triggered pursuant to clause (ii) above with respect to the Company (including
any successor entity) or any Parent of the Company (or the successor entity).
	 
	 	(iv)	 	A complete liquidation or dissolution of the Company other than
in the context of a transaction that does not constitute a Change in Control of
the Company under clause (iii) above.






	 	 	 	Notwithstanding the foregoing, in no event shall a transaction or other event that
occurred prior to the Effective Date constitute a Change in Control. Notwithstanding
anything in clause (iii) above to the contrary, a change in ownership of the Company
resulting from creditors of the Company becoming stockholders of the Company in
connection with any bankruptcy of the Company under the laws of the United States
shall not trigger a Change in Control pursuant to clause (iii) above.
	 
	 	(g)	 	“Code” means the United States Internal Revenue Code of 1986, as amended.
	 
	 	(h)	 	“Committee” means the Compensation Committee of the Board, or any other
committee appointed by the Board to perform the functions of the Compensation
Committee.
	 
	 	(i)	 	“Company” means Northrop Grumman Corporation, a Delaware corporation
(including, for purposes of determining whether a Participant is employed by the
Company, any and all subsidiaries specified by the Committee), or any successor thereto
as provided in Article 10. Notwithstanding any other provision of this Plan to the
contrary, the term “Company” shall mean, for the following purposes, the Company and
any entity with respect to which the Company, directly or indirectly, has majority
voting control (the “NGC Group”): (i) with respect to determining a Participant’s total
Base Salary, bonus and other compensation; (ii) the Participant shall not have a
termination of employment, including a Qualifying Termination, unless he or she is no
longer employed by any member of the NGC Group (any transfer of a Participant from one
member of the NGC Group to another member of the NGC Group shall not cause the
Participant to cease being covered by this Plan); and (iii) with respect to any
reference to a benefit or compensation plan or program maintained by the Company.
	 
	 	(j)	 	“Controlling Parent” means the Company’s Parent so long as a majority of the
voting stock or voting power of that Parent is not Beneficially Owned, directly or
indirectly through one or more subsidiaries, by any other Person. In the event that
the Company has more than one “Parent,” then “Controlling Parent” shall mean the Parent
of the Company the majority of the voting stock or voting power of which is not
Beneficially Owned, directly or indirectly through one or more subsidiaries, by any
other Person.




4









 












	 	(k)	 	“Disability” with respect to a particular Participant means disability as
defined in the Company’s long-term disability plan in which the Participant
participates at the relevant time or, if the Participant does not participate in a
Company long-term disability plan at the relevant time, as such term is defined in the
Company’s principal long-term disability plan that generally covers the Company’s
senior-level executives at that time.
	 
	 	(l)	 	“Effective Date” means January 1, 2009.
	 
	 	(m)	 	“Effective Date of Termination” means the date on which a Qualifying
Termination occurs.
	 
	 	(n)	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
	 
	 	(o)	 	“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.
	 
	 	(p)	 	“Good Reason” means, without the Participant’s express written consent, the
occurrence of any one or more of the following:






	 	(i)	 	A material and substantial reduction in the nature or status of
the Participant’s authorities or responsibilities (when such authorities and/or
responsibilities are viewed in the aggregate) from their level in effect on the
day immediately prior to the start of the Protected Period, other than (A) an
inadvertent act that is remedied by the Company promptly after receipt of notice
thereof given by the Participant, and/or (B) changes in the nature or status of
the Participant’s authorities or responsibilities that, in the aggregate, would
generally be viewed by a nationally-recognized executive placement firm as
resulting in the participant having not materially and substantially fewer
authorities and responsibilities (taking into consideration the Company’s
industry) when compared to the authorities and responsibilities applicable to
the position held by the Participant immediately prior to the start of the
Protected Period. For the purpose of the preceding test, the Participant and
the Company shall mutually agree on a nationally-recognized consulting firm;
provided that, if agreement cannot timely be reached, the Company and the
Participant shall each timely choose a nationally recognized firm and
representatives of these two firms shall promptly choose a third firm, which
third firm will make the determination referred to in the preceding sentence.
The written opinion of the firm thus selected may be admitted in any arbitration
pursuant to Section 9.4 and shall be conclusive as to this issue.
	 
	 	 	 	In addition, if the Participant is a vice president, the Participant’s loss of
vice-president status will constitute “Good Reason”; provided that the loss of
the title of “vice president” will not, in and of itself, constitute Good
Reason if the Participant’s lack of a vice president title is generally
consistent with the manner in which the title of vice president is used within
the Participant’s business unit or if the loss of the title is the result of a
promotion to a higher level office. For the purposes of the preceding
sentence, the Participant’s lack of a vice-president title will only be
considered generally consistent with the manner in which such title is used if
most persons in the business unit with authorities, duties, and
responsibilities comparable to those of the Participant immediately prior to
the commencement of the Protected Period do not have the title of
vice-president.





5









 






	 	(ii)	 	A reduction by the Company in the Participant’s Base Salary as in
effect on the Effective Date or as the same shall be increased from time to
time.
	 
	 	(iii)	 	A material reduction in the aggregate value of the Participant’s
level of participation in any of the Company’s short and/or long-term incentive
compensation plans (excluding stock-based incentive compensation plans),
employee benefit or retirement plans, or policies, practices, or arrangements in
which the Participant participates immediately prior to the start of the
Protected Period provided; however, that a reduction in the aggregate value
shall not be deemed to be “Good Reason” if the reduced value remains
substantially consistent with the average level of other employees who have
positions commensurate with the position held by the Participant immediately
prior to the start of the Protected Period.
	 
	 	(iv)	 	A material reduction in the Participant’s aggregate level of
participation in the Company’s stock-based incentive compensation plans from the
level in effect immediately prior to the start of the Protected Period;
provided, however, that a reduction in the aggregate level of participation
shall not be deemed to be “Good Reason” if the reduced level of participation
remains substantially consistent with the average level of participation of
other employees who have positions commensurate with the position held by the
Participant immediately prior to the start of the Protected Period.
	 
	 	(v)	 	The failure of the Company to obtain a satisfactory agreement
from any successor to the Company to assume and agree to perform this Plan, as
required in Article 10.
	 
	 	(vi)	 	Any purported termination by the Company of the Participant’s
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 4.8 and for purposes of this Plan, no such purported
termination shall be effective.
	 
	 	(vii)	 	The Participant is informed by the Company that his or her
principal place of employment for the Company will be relocated to a location
that is greater than fifty (50) miles away from the Participant’s principal
place of employment for the Company at the start of the corresponding Protected
Period; provided that, if the Company communicates an intended effective date
for such relocation, in no event shall Good Reason exist pursuant to this clause
(vii) more than ninety (90) days before such intended effective date.
	 
	 	(viii)	 	The Company or any successor company repudiates or breaches any of the
provisions of this Plan.






	 	 	 	The Participant’s right to terminate employment for Good Reason shall not be affected
by the Participant’s incapacity due to physical or mental illness. The Participant’s
continued employment shall not constitute a consent to, or a waiver of rights with
respect to, any circumstances constituting Good Reason herein.





6









 






	 	(q)	 	“Key Employee” means an employee treated as a “specified employee” as of his or
her Separation from Service under Code section 409A(a)(2)(B)(i) of the Company or its
affiliate (i.e., a key employee (as defined in Code section 416(i) without regard to
paragraph (5) thereof)) if the 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 individuals 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.
	 
	 	(r)	 	“Parent” means an entity that Beneficially Owns a majority of the voting stock
or voting power of the Company, or all or substantially all of the Company’s assets,
directly or indirectly through one or more subsidiaries.
	 
	 	(s)	 	“Participant” means an employee of the Company who fulfills the eligibility and
participation requirements, as provided in Article 3.
	 
	 	(t)	 	“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) thereof.
	 
	 	(u)	 	“Plan” means this Northrop Grumman Corporation January 2009 Change In Control
Severance Plan.
	 
	 	(v)	 	“Qualifying Termination” has the meaning given to such term in Section 4.3(a).
	 
	 	(w)	 	“Separation from Service” or “Separate from Service” means a “separation from
service” within the meaning of Section 409A of the Code.
	 
	 	(x)	 	“Severance Benefits” means the payments and/or benefits provided in Section
4.4.





Article 3. Participation




     3.1. Eligible Employees. Individuals eligible to participate in this Plan shall include such
employees of the Company as may be determined by the Committee in its sole discretion.



     3.2. Participation. Subject to the terms of this Plan, the Committee or its delegate may,
from time to time select from all eligible employees those who shall participate in this Plan. The
Committee or its delegate also may, from time to time and by written notice to the affected
Participant(s), remove any previously selected Participant(s) from continued participation in this
Plan; provided that any removal of a Participant shall not be effective if it occurs after the
commencement of the Protected Period (as such term is defined in Section 4.3(b)).



Article 4. Severance Benefits




     4.1. Right to Severance Benefits. A Participant shall be entitled to receive from the Company
Severance Benefits, as described in Section 4.4, if the Participant has incurred a Qualifying
Termination.



7









 





     A Participant shall not be entitled to receive Severance Benefits if his or her employment
terminates (regardless of the reason) before the Protected Period (as such term is defined in
Section 4.3(b)) corresponding to a Change in Control of the Company or more than twenty-four (24)
months after the date of a Change in Control of the Company.



     4.2. Services During Certain Events. In the event a Person begins a tender or exchange offer,
circulates a proxy to stockholders of the Company, or takes other steps seeking to effect a Change
in Control, the Participant shall not voluntarily leave the employ of the Company and shall
continue to render services until the later of (i) the date such Person has abandoned or terminated
his or her or its efforts to effect a Change in Control, and (ii) the date that is six (6) months
after a Change in Control has occurred. Notwithstanding the foregoing, the Company may terminate
the Participant’s employment for Cause at any time, and the Participant may terminate his or her
employment at any time after the Change in Control for Good Reason.



     4.3. Qualifying Termination.




	 	(a)	 	Subject to Sections 4.3(c), 4.3(d), 4.5, 4.6 and 4.7, the occurrence of any one
or more of the following events within the Protected Period corresponding to a Change
in Control of the Company, or within twenty-four (24) calendar months following the
date of a Change in Control of the Company shall constitute a “Qualifying Termination”:






	 	(i)	 	An involuntary termination of the Participant’s employment by the
Company for reasons other than Cause; or
	 
	 	(ii)	 	A voluntary termination of employment by the Participant for Good
Reason.






	 	 	 	If more than one of the events set forth in this Section 4.3(a) occurs, such events
shall constitute but a single Qualifying Termination and the Participant shall be
entitled to but a single payment of the Severance Benefits.
	 
	 	(b)	 	The “Protected Period” corresponding to a Change in Control of the Company
shall be a period of time determined in accordance with the following:






	 	(i)	 	If the Change in Control is triggered by a tender offer for
shares of the Company’s stock or by the offeror’s acquisition of shares pursuant
to such a tender offer, the Protected Period shall commence on the date of the
initial tender offer and shall continue through and including the date of the
Change in Control; provided that in no case will the Protected Period commence
earlier than the date that is six (6) months prior to the Change in Control.
	 
	 	(ii)	 	If the Change in Control is triggered by a merger, consolidation,
or reorganization of the Company with or involving any other corporation, the
Protected Period shall commence on the date that serious and substantial
discussions first take place to effect the merger, consolidation, or
reorganization and shall continue through and including the date of the Change
in Control; provided that in no case will the Protected Period commence earlier
than the date that is six (6) months prior to the Change in Control.





8









 






	 	(iii)	 	In the case of any Change in Control not described in clause (i)
or (ii) above, the Protected Period shall commence on the date that is six (6)
months prior to the Change in Control and shall continue through and including
the date of the Change in Control.






	 	(c)	 	Notwithstanding anything else contained herein to the contrary, a Participant’s
termination of employment on account of reaching mandatory retirement age, as such age
may be defined from time to time in policies adopted by the Company prior to the
commencement of the Protected Period, and consistent with applicable law, shall not be
a Qualifying Termination.
	 
	 	(d)	 	Notwithstanding anything else contained herein to the contrary, the termination
of a Participant’s employment (or other events giving rise to Good Reason) shall not
constitute a Qualifying Termination if there is objective evidence that, as of the
commencement of the Protected Period, the Participant had specifically been identified
by the Company as an employee whose employment would be terminated as part of a
corporate restructuring or downsizing program that commenced prior to the Protected
Period and such termination of employment was expected at that time to occur within six
(6) months.
	 
	 	(e)	 	Notwithstanding anything else contained herein to the contrary (other than
those provisions that contain an express exception to this Section 4.3(e)), a
Participant’s Severance Benefits under this Plan shall be reduced by the severance
benefits (including, without limitation, any other change in control severance benefits
and any other severance benefits generally) that the Participant may be entitled to
under any other plan, program, agreement or other arrangement with the Company
(including, without limitation, any such benefits provided for by an employment
agreement, a current or any prior Northrop Grumman Corporation Special Agreement, or
under any predecessor Northrop Grumman Corporation Change-In-Control Severance Plan);
provided that if the Participant is otherwise entitled to receive Severance Benefits
under this Plan and under a Northrop Grumman Corporation Special Agreement (version
January 2009 or later), benefits shall be paid under the Northrop Grumman Corporation
Special Agreement rather than under this Plan. For purposes of the foregoing, any cash
severance benefits payable to the Participant under any other plan, program, agreement
or other arrangement with the Company shall offset the cash severance benefits
otherwise payable to the Participant under this Plan on a dollar-for-dollar basis. For
purposes of the foregoing, non-cash severance benefits to be provided to the
Participant under any other plan, program, agreement or other arrangement with the
Company shall offset any corresponding benefits otherwise to be provided to the
Participant under this Plan or, if there are no corresponding benefits otherwise to be
provided to the Participant under this Plan, the value of such benefits shall offset
the cash severance benefits otherwise payable to the Participant under this Plan on a
dollar-for-dollar basis. If the amount of other benefits to be offset against the cash
severance benefits otherwise payable to the Participant under this Plan in accordance
with the preceding two sentences exceeds the amount of cash severance benefits
otherwise payable to the Participant under this Plan, then the excess may be used to
offset other non-cash severance benefits otherwise to be provided to the Participant
under this Plan on a dollar-for-dollar basis. For purposes of this Section 4.3(e), the
Company shall reasonably determine the value of any non-cash
benefits.





9









 





     4.4. Description of Severance Benefits. In the event that a Participant becomes entitled to
receive Severance Benefits, as provided in Sections 4.1 and 4.3, the Company shall pay to the
Participant and provide him or her with the following:




	 	(a)	 	An amount equal to two (2) times the highest rate of the Participant’s
annualized Base Salary in effect at any time in the two (2) year period ending on the
Effective Date of Termination.
	 
	 	(b)	 	An amount equal to two (2) times the Participant’s target annual bonus
established under the Company’s Annual Incentive Plan or Incentive Compensation Plan
bonus program (or any successor bonus program) for the fiscal year in which the Change
in Control of the Company occurs (the “Bonus Amount”). Special bonuses or bonus
enhancements that would otherwise be included for purposes of the calculation pursuant
to the first sentence of this Section 4.4(b), but that are related to a merger,
acquisition, consolidation, reorganization, spin-off or similar event and that are not
part of the Company’s customary on-going program of Annual Incentive Plan or Incentive
Compensation Plan (or any successor bonus program) bonuses shall be excluded for
purposes of such calculation.
	 
	 	(c)	 	An amount in settlement of the Participant’s bonus opportunity under the
Company’s Annual Incentive Plan or Incentive Compensation Plan (or a successor bonus
program) for the fiscal year in which the Effective Date of Termination occurs, such
amount determined as follows:






	 	(i)	 	Subject to clause (iii) below, if the Effective Date of
Termination occurs in the fiscal year in which the Change in Control of the
Company occurs, then such amount shall equal the sum of:






	 	(A)	 	the greater of (X) or (Y) multiplied by a fraction,
the numerator of which is the number of days completed in the fiscal year
through the date of the Change in Control of the Company and the
denominator of which is three hundred sixty-five (365), where (X) is the
Participant’s target annual bonus established under the Company’s Annual
Incentive Plan or Incentive Compensation Plan (or any successor bonus
program) for that fiscal year and (Y) is the amount of bonus that the
Participant would be entitled to under the Company’s Annual Incentive
Plan or Incentive Compensation Plan (or any successor bonus program) for
that fiscal year assuming that the Participant’s employment had not
terminated and based on performance through the date of the Change in
Control of the Company relative to the pre-approved performance goals for
that year; plus
	 
	 	(B)	 	the Participant’s Bonus Amount multiplied by a
fraction, the numerator of which is the number of days completed in the
fiscal year following the date of the Change in Control of the Company
through the Effective Date of Termination and the denominator of which is
three hundred sixty-five (365).





10









 






	 	(ii)	 	Subject to clause (iii) below, if the Effective Date of
Termination occurs in a fiscal year following the fiscal year in which the
Change in Control of the Company occurs, then such amount shall equal the
Participant’s Bonus Amount multiplied by a fraction, the numerator of which is
the number of days completed in the fiscal year in which the Effective Date of
Termination occurs through the Effective Date of Termination and the denominator
of which is three hundred sixty-five (365).
	 
	 	(iii)	 	If the Participant’s bonus opportunity for the fiscal year in
which the Effective Date of Termination occurs is covered by the Company’s
Incentive Compensation Plan (or similar successor bonus program designed to
comply with the performance-based compensation exception under Section 162(m) of
the Code), then the Participant’s amount determined pursuant to clause (i) or
(ii) above, as applicable, shall not exceed the maximum bonus the Participant
would have been entitled to receive under the Company’s Incentive Compensation
Plan for that fiscal year, assuming the Participant had been employed through
the date bonuses are paid under such plan for that year, and otherwise
calculated under the terms of such plan based on actual performance for that
fiscal year (but without giving effect to any discretion of the plan
administrator to reduce the bonus amount from the maximum otherwise determined
in accordance with such plan).






	 	(d)	 	A continuation of the Participant’s medical coverage, dental coverage, and
group term life insurance (the “Welfare Benefits”) for the Participant, his or her
spouse, and his or her eligible dependents for the two (2) years following the
Participant’s Effective Date of Termination; provided that such continuation of
coverage shall run concurrently with COBRA continuation or similar state law
continuation periods; and provided further that the continuation of such coverage shall
be discontinued prior to the end of the two (2) year period in the event the
Participant has available substantially similar benefits from a subsequent employer, as
reasonably determined by the Committee. Except as provided in the next sentence, such
benefits shall be provided to the Participant at the same premium cost, and at the same
coverage level, as in effect as of the Participant’s Effective Date of Termination.
However, in the event the premium cost and/or level of coverage shall change for all
employees of the Company, the cost and/or coverage level, likewise, shall change for
each Participant in a corresponding manner. The continuation of coverage for the
period contemplated by this Section 4.4(d) shall be coordinated with and paid secondary
to any benefits that the Participant, his or her spouse, or his or her dependent
receives from another employer or from Medicare (following the Participant’s, his or
her spouse’s, and/or his or her dependent’s entitlement to Medicare benefits) to the
maximum extent permissible under relevant law. Notwithstanding the foregoing
provisions of this Section 4.4(d), if the Participant is eligible to commence benefits
under the Company’s Special Officer Retiree Medical Plan (“SORMP”) as of the Effective
Date of Termination, then the Participant shall receive medical and dental continuation
coverage pursuant to the SORMP instead of the continuation coverage contemplated by the
foregoing provisions of this Section 4.4(d). Any other continuation of medical,
dental, or group term life insurance that the Participant may otherwise be entitled to
upon or following his or her Effective Date of Termination in accordance with the
express terms of a Company welfare benefit plan shall not give rise to an offset
pursuant to Section 4.3(e) and shall not be deemed to duplicate the benefits of the
continuation coverage
contemplated by this Section 4.4(d).




11









 












	 	 	 	The Welfare Benefits provided pursuant to this Section 4.4(d) shall be provided in
such a manner that results in such Welfare Benefits (and any costs and premiums
thereof) being excluded from the Participant’s income for federal and state income
tax purposes.
	 
	 	(e)	 	A lump-sum cash amount equal to (i) minus (ii), with (i) and (ii) determined as
follows:






	 	(i)	 	equals the actuarial present value equivalent of the aggregate
benefits accrued by the Participant as of his or her Effective Date of
Termination under the qualified defined benefit pension plan or plans in which
the Participant participates (the “qualified plan”), and under any and all
supplemental defined benefit retirement plans in which the Participant
participates, calculated as if the Participant’s employment continued for two
(2) full years following the Participant’s Effective Date of Termination (i.e.,
the Participant receives two (2) additional years of vesting and benefit
accruals, including, in the case of a Participant in a cash balance plan, two
years of projected post-termination interest credits based on the interest rate
in effect at termination, and his or her age is also increased two (2) years
from his or her age as of his or her Effective Date of Termination); provided,
however, that for purposes of determining “Final Average Pay” under such plans,
the Participant’s actual pay history as of the Effective Date of Termination
shall be used; and
	 
	 	(ii)	 	equals the actuarial present value equivalent of the aggregate
benefits payable to the Participant as of his or her Effective Date of
Termination under the qualified plan and under any and all supplemental defined
benefit retirement plans in which the Participant participates, calculated
assuming that the Participant retired and went into pay status under the terms
of such plans on or as soon as possible after his or her Effective Date of
Termination.






	 	 	 	The intent of this Section 4.4(e) is that the qualified plan and any supplemental
defined benefit retirement plan benefits will be paid in the normal course under the
terms of those plans, with the additional benefits payable as a result of the
imputation of age and service under this provision being paid from this Plan. The
Participant shall also be entitled to an additional two (2) years of age and service
to count towards eligibility under one or more of the Company retiree medical
programs for which the Participant would have been eligible absent any such
termination.
	 
	 	(f)	 	Reimbursement by the Company for the costs of all reasonable outplacement
services obtained by the Participant within the one (1) year period after the Effective
Date of Termination; provided, however, that the total reimbursement shall be limited
to an amount equal to fifteen percent (15%) of the Participant’s Base Salary as of the
Effective Date of Termination. All such expenses shall be reimbursed as soon as
practicable, but in no event later than the end of the year following the year the
Participant Separates from Service.





     4.5. Termination for Total and Permanent Disability. Termination of a Participant’s
employment due to Disability is not a Qualifying Termination. However, if immediately prior to the
condition or event leading to, or the commencement of, the Disability of the Participant, the
Participant



12









 







would have experienced a Qualifying Termination if he or she had terminated at that time, then
upon termination of his or her employment for Disability he or she shall be entitled to the
benefits provided by this Plan for a Qualifying Termination.



     4.6. Termination for Retirement or Death. Termination of a Participant’s employment due to
retirement or death is not a Qualifying Termination. However, if immediately prior to the
Participant’s retirement (but not death), the Participant would have experienced a Qualifying
Termination if he or she had terminated at that time, then upon his or her retirement he or she
shall (subject to Section 4.3(c)) be entitled to the benefits provided by this Plan for a
Qualifying Termination.



     4.7. Termination for Cause or by a Participant Other Than for Good Reason Termination of a
Participant’s employment by the Company for Cause or by the Participant other than for Good Reason
does not constitute a Qualifying Termination.



     4.8. Notice of Termination. Any termination by the Company for Cause or by a Participant for
Good Reason shall be communicated by a Notice of Termination. For purposes of this Plan, a “Notice
of Termination” shall mean a written notice which shall indicate the specific termination provision
in this Plan relied upon, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Participant’s employment under the provision so
indicated.



Article 5. Form and Timing of Severance Benefits; Tax Withholding; Funding of Rabbi Trust




     5.1. Form and Timing of Severance Benefits. The Severance Benefits described in Section
4.4(a), 4.4(b), and 4.4(e) shall be paid in cash to the Participant in a single lump sum as soon as
practicable following the Participant’s Separation from Service, but in no event beyond thirty (30)
days from such date. Notwithstanding the foregoing, if the Participant is a Key Employee, the lump
sum payment shall be made on or within thirty (30) days after the first day of the seventh month
following the Participant’s Separation from Service (or, if earlier, the first day of the month
after the Participant’s death). The Severance Benefit described in Section 4.4(c) shall be paid in
a single lump sum in the year following the year in which the Participant’s Separation from Service
occurs; provided that if the Participant is a Key Employee, such payment shall be made no earlier
than six months after the Participant’s Separation from Service (or, if earlier, the date of the
Participant’s death).



     5.2. Withholding of Taxes. The Company shall be entitled to withhold from any amounts payable
under or pursuant to this Plan all taxes as legally shall be required (including, without
limitation, any United States Federal taxes, and any other state, city, or local taxes).



     5.3. Funding of Rabbi Trust. To the extent the Company is obligated to make a contribution to
any rabbi trust, pursuant to the express terms of such trust, upon or with respect to a Protected
Period or the occurrence of a Change in Control, the Company shall make such required contribution
in accordance with the terms of such trust.



Article 6. Excise Tax Limitation; Possible Gross-Up




     6.1. Determination of Termination Payment Limit.




	 	(a)	 	Notwithstanding anything contained in this Plan to the contrary, to the extent
that any payment, benefit or other distribution of any type to or for a Participant by
the Company,





13









 






	 	 	 	any affiliate of the Company, any person who acquires ownership or effective control
of the Company or ownership of a substantial portion of the Company’s assets (within
the meaning of Section 280G of the Code and regulations thereunder), or any affiliate
of such person, whether paid or payable or distributed or distributable pursuant to
the terms of this Plan or otherwise (the “Total Payments”) is or will be subject to
the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then the
Total Payments shall be reduced (but not below zero) so that the maximum amount of
the Total Payments (after reduction) shall be one dollar ($1) less than the amount
which would cause the Total Payments to be subject to the Excise Tax; provided that
the amount of the Total Payments after giving effect to such reduction is not less
than ninety percent (90%) of the amount of the Total Payments before giving effect to
such reduction. If the amount of the Total Payments after giving effect to the
reduction contemplated by the preceding sentence would be less than ninety percent
(90%) of the amount of the Total Payments before giving effect to such reduction,
then such a reduction shall not apply and the Company shall pay to the Participant or
for the Participant’s benefit as provided below in cash an additional amount or
amounts (the “Gross-Up Payment(s)”) such that the net amount of the Total Payments
retained by the Participant after the deduction of any Excise Tax on such payments,
benefits and/or amounts so received and any Federal, state and local income tax and
Excise Tax upon the Gross-Up Payment(s) provided for by this Section 6.1 shall be
equal to ninety percent (90%) of the net amount of the Total Payments that the
Participant would have retained (after the deduction of any Federal, state and local
income tax on such payments) had the Total Payments not been subject to the Excise
Tax. Such Gross-Up Payment(s) shall be made by the Company to the Participant or
applicable taxing authority on behalf of the Participant as soon as practicable
following the receipt or deemed receipt of any such payments, benefits and/or amounts
so received, and may be satisfied by the Company making a payment or payments on the
Participant’s account in lieu of withholding for tax purposes but in all events shall
be made within thirty (30) days of the receipt or deemed receipt by the Participant
of any such payment, benefit and/or amount.
	 
	 	(b)	 	If a reduction in the Total Payments is required pursuant to Section 6.1(a),
then the Company shall reduce or eliminate the Total Payments by first reducing or
eliminating the portion of the Total Payments which are not payable in cash and then by
reducing or eliminating cash payments, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the Determination
(as hereinafter defined).





     6.2. Calculation of Gross-Up Payment. The determination of whether a reduction in Total
Payments or a Gross-Up Payment is required pursuant to this Article 6 and the amount of any such
reduction or Gross-Up Payment shall be determined in writing (the “Determination”) by a
nationally-recognized certified public accounting firm selected by the Company (the “Accounting
Firm”). The Accounting Firm shall provide its Determination in writing, together with detailed
supporting calculations and documentation and any assumptions used in making such computation, to
the Company and the Participant within twenty (20) days of the Effective Date of Termination.
Within twenty (20) days following delivery of the Accounting Firm’s Determination, the Participant
shall have the right, at the Company’s expense, to obtain the opinion of an “outside counsel,”
which opinion need not be unqualified, which sets forth: (i) the amount of the Participant’s
“annualized includible compensation for the base period” (as defined in Code Section 280G(d) (1));
(ii) the present value of the Total Payments;



14









 




(iii) the amount and present value of any “excess parachute payment;” and (iv) detailed
supporting calculations and documentation and any assumptions used in making such computations.
The opinion of such outside counsel shall be supported by the opinion of a nationally-recognized
certified public accounting firm and, if necessary or required by the Company, a firm of
nationally-recognized executive compensation consultants. The outside counsel’s opinion shall be
binding upon the Company and the Participant and shall constitute the “Determination” for purposes
of this Article 6 instead of the initial determination by the Accounting Firm. The Company shall
pay (or, to the extent paid by the Participant, reimburse the Participant for) the certified public
accounting firm’s and, if applicable, the executive compensation consultant’s reasonable and
customary fees for rendering such opinion. For purposes of this Section 6.2, “outside counsel”
means a licensed attorney selected by the Participant who is recognized in the field of executive
compensation and has experience with respect to the calculation of the Excise Tax; provided that
the Company must approve the Participant’s selection, which approval shall not be unreasonably
withheld.




     6.3. Computation Assumptions. For purposes of determining whether any payments, benefits
and/or amounts, including amounts paid as Severance Benefits, will be subject to Excise Tax, and
the amount of any such Excise Tax and any Gross-Up Payment:




	 	(a)	 	Any other payments, benefits and/or amounts received or to be received by the
Participant in connection with or contingent upon a Change in Control of the Company or
the Participant’s termination of employment (whether pursuant to the terms of this Plan
or any other plan, arrangement or agreement with the Company, or with any Person whose
actions result in a Change in Control of the Company or any Person affiliated with the
Company or such Persons) shall be combined to determine whether the Participant has
received any “parachute payment” within the meaning of Section 280G(b)(2) of the Code,
and if so, the amount of any “excess parachute payments” within the meaning of Section
280G(b)(1) that shall be treated as subject to the Excise Tax, unless in the opinion of
the person or firm rendering the Determination, such other payments, benefits and/or
amounts (in whole or in part) do not constitute parachute payments, or such excess
parachute payments represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to
the Excise Tax;
	 
	 	(b)	 	The value of any non-cash benefits or any deferred payment or benefit shall be
determined by the person or firm rendering the Determination in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code;
	 
	 	(c)	 	The compensation and benefits provided for in Section 4.4, and any other
compensation earned prior to the Effective Date of Termination by the Participant
pursuant to the Company’s compensation programs (if such payments would have been made
in the future in any event, even though the timing of such payment is triggered by the
Change in Control), shall for purposes of the calculation pursuant to this Section 6.3
be deemed to be reasonable; and
	 
	 	(d)	 	The Participant shall be deemed to pay Federal income taxes at the highest
marginal rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made. Furthermore, the computation of the Gross-Up Payment shall
assume (and adjust for the fact) that (i) there is a loss of miscellaneous itemized
deductions under Section 67





15









 






	 	 	 	of the Code (or analogous federal or state provisions) on account of the Gross-Up
Payment and (ii) a loss of itemized deductions under Section 68 of the Code (or
analogous federal or state provisions) on account of the Gross-Up Payment. The
computation of the Gross-Up Payment shall take into account any reduction in the
Gross-Up Payment due to the Participant’s share of the hospital insurance portion of
FICA and any state withholding taxes (other than any state withholding tax for income
tax liability). The computation of the state and local income taxes applicable to
the Gross-Up Payment shall be based on the highest marginal rate of taxation in the
state and locality of the Participant’s residence on the Effective Date of
Termination, and shall take into account the maximum reduction in Federal income
taxes that could be obtained from the deduction of such state and local taxes.





     6.4. Participant’s Obligation to Notify Company. The Participant shall promptly notify the
Company in writing of any claim by the Internal Revenue Service (or any successor thereof) or any
state or local taxing authority (individually or collectively, the “Taxing Authority”) that, if
successful, would require the payment by the Company of a Gross-Up Payment in excess of any
Gross-Up Payment as originally set forth in the Determination. If the Company notifies Participant
in writing that it desires to contest such claim, the Participant shall: (a) give the Company any
information reasonably requested by the Company relating to such claim; (b) take such action in
connection with contesting such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation with respect to such claim
by an attorney selected by the Company that is reasonably acceptable to Participant; (c) cooperate
with the Company in good faith in order to effectively contest such claim; and (d) permit the
Company to participate in any proceedings relating to such claim; provided that the Company shall
bear and pay directly all attorneys fees, costs and expenses (including additional interest,
penalties and additions to tax) incurred in connection with such contest and shall indemnify and
hold the Participant harmless, on an after-tax basis, for all taxes (including, without limitation,
income and excise taxes), interest, penalties and additions to tax imposed in relation to such
claim and in relation to the payment of such costs and expenses or indemnification. Without
limitation on the foregoing provisions of this Section 6.4, and to the extent its actions do not
unreasonably interfere with or prejudice the Participant’s disputes with the Taxing Authority as to
other issues, the Company shall control all proceedings taken in connection with such contest and,
in its reasonable discretion, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the Taxing Authority in respect of such claim and may, at its sole
option, either direct the Participant to pay the tax, interest or penalties claimed and sue for a
refund or contest the claim in any permissible manner, and the Participant agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Participant to pay such claim and sue for a refund, the Company shall advance
an amount equal to such payment to the Participant, on an interest-free basis, and shall indemnify
and hold the Participant harmless, on an after-tax basis, from all taxes (including, without
limitation, income and excise taxes), interest, penalties and additions to tax imposed with respect
to such advance or with respect to any imputed income with respect to such advance, as any such
amounts are incurred; and, further, provided, that any extension of the statute of limitations
relating to payment of taxes, interest, penalties or additions to tax for the taxable year of the
Participant with respect to which such contested amount is claimed to be due is limited solely to
such contested amount; and, provided, further, that any settlement of any claim shall be reasonably
acceptable to the Participant and the Company’s control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder, and the Participant shall be
entitled to settle or contest, as the case may be, any other issue.



16









 





     6.5. Subsequent Recalculation. In the event of a binding or uncontested determination by the
Taxing Authority that adjusts the computation set forth in the Determination so that the
Participant did not receive the greatest net benefit required pursuant to Section 6.1, the Company
shall reimburse the Participant as provided herein for the full amount required to place the
Participant in after-tax position required pursuant to Section 6.1. In the event of a binding or
uncontested determination by the Taxing Authority that adjusts the computation set forth in the
Determination so that the Participant received a payment or benefit in excess of the amount
required pursuant to Section 6.1 (including, without limitation, in the event that a reduction in
Total Payments is required pursuant to Section 6.1 and the amount of such required reduction
increases as a result of the determination by the Taxing Authority), then the Participant shall
promptly pay to the Company the amount of such excess (or the amount of the additional required
reduction, as the case may be) together with interest on such amount (at the same rate as is
applied to determine the present value of payments under Section 280G of the Code or any successor
thereto) from the date the reimbursable payment or benefit was received by the Participant to the
date the same is repaid to the Company.



     6.6. Compliance with Code Section 409A. Any payment made to or on behalf of a Participant
under this Article 6 shall be made in compliance with Section 409A of the Code and by the end of
the year following the year that the related taxes are remitted to the applicable taxing authority.
This Plan is intended to comply with, and avoid the imputation of any tax penalty or interest
under, Section 409A of the Code and shall be construed and interpreted accordingly.



Article 7. The Company’s Payment Obligation




     7.1. Payment of Obligations Absolute. Except as provided in Sections 4.3(e) and 5.2 and in
Article 6, the Company’s obligation to make the payments and the arrangements provided for herein
shall be absolute and unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other right which the Company
may have against the Participant or anyone else. All amounts payable by the Company hereunder
shall be paid without notice or demand. Each and every payment made hereunder by the Company shall
be final, and the Company shall not seek to recover all or any part of such payment from the
Participant or from whomsoever may be entitled thereto, for any reasons whatsoever, except as
otherwise provided in Article 6 or Article 9; provided that this Section does not preclude the
Company from pursuing causes of action that it otherwise might have against the Participant.



     Participants shall not be obligated to seek other employment in mitigation of the amounts
payable or arrangements made under any provision of this Plan, and the obtaining of any such other
employment shall in no event effect any reduction of the Company’s obligations to make the payments
and arrangements required to be made under this Plan, except to the extent provided in Section
4.4(d).



     7.2. Contractual Right to Benefits. This Plan establishes and vests in each Participant a
contractual right to the benefits to which he or she is entitled hereunder. The Company expressly
waives any ability, if possible, to deny liability for any breach of its contractual commitment
hereunder upon the grounds of lack of consideration, accord and satisfaction or any other defense.
In any dispute arising after a Change in Control as to whether the Participant is entitled to
benefits under this Plan, there shall be a presumption that the Participant is entitled to such
benefits and the burden of proving otherwise shall be on the Company. However, nothing herein
contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company
to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to
provide for any payments to be made or required hereunder.



17









 





     7.3. Pension Plans; Duplicate Benefits. All payments, benefits and amounts provided under
this Plan shall be in addition to and not in substitution for any pension rights under the
Company’s tax-qualified pension plan, supplemental retirement plans, nonqualified deferred
compensation plans, and any disability, workers’ compensation or other Company benefit plan
distribution that a Participant is entitled to at his or her Effective Date of Termination.
Notwithstanding the foregoing, this Plan shall not create an inference that any duplicate payments
shall be required. No payments made pursuant to this Plan shall be considered compensation for
purposes of any such benefit plan; provided that any amount paid pursuant to Section 4.4(c) shall
not be subject to such limitation. Payment of a Participant’s accrued and unpaid Base Salary and
accrued vacation pay through the Participant’s Effective Date of Termination shall be deemed to not
duplicate any benefit contemplated by this Plan and shall not result in an offset pursuant to
Section 4.3(e). Any acceleration of vesting, lapse of restrictions and/or payout occasioned by a
Change in Control pursuant to the provisions of any long-term incentive plan and/or individual
award agreement under such a long-term incentive plan shall be deemed to not duplicate any benefit
contemplated by this Plan and shall not result in an offset pursuant to Section 4.3(e).



Article 8. Trade Secrets; Non-Solicitation and Non-Disparagement




     By accepting participation in this Plan and again by receiving any benefits provided for by
this Plan, each Participant shall be deemed to, and does, agree as follows:




	 	(a)	 	In the course of performing his or her duties for the Company,
the Participant will receive, and acknowledges that he or she has received,
confidential information, including without limitation, information not
available to competitors relating to the Company’s existing and contemplated
financial plans, products, business plans, operating plans, research and
development information, and customer information, all of which is hereinafter
referred to as “Trade Secrets.” The Participant agrees that he or she will not,
either during his or her employment or subsequent to the termination of his or
her employment with the Company, directly or indirectly disclose, publish or
otherwise divulge any Trade Secret of the Company or any of its affiliates to
anyone outside the Company, or use such information in any manner which would
adversely affect the business or business prospects of the Company, without
prior written authorization from the Company to do so. The Participant further
agrees that if, at the time of the termination of his or her employment with the
Company, he or she is in possession of any documents or other written or
electronic materials constituting, containing or reflecting Trade Secrets, the
Participant will return and surrender all such documents and materials to the
Company upon leaving its employ. The restrictions and protection provided for
in this Section 8(a) shall be in addition to any protection afforded to Trade
Secrets by law or equity and in addition to any protection afforded to Trade
Secrets by any other agreement between the Participant and the Company.
	 
	 	(b)	 	For a period of one year following the termination of the
Participant’s employment with the Company, the Participant shall not, directly
or indirectly through, aid, assistance or counsel, on the Participant’s own
behalf or on behalf of another person or entity (i) contact, solicit or offer to
hire any person who was, within a period of six months prior to the termination
of the Participant’s employment with the Company, employed by the Company or one
of its





18









 






	 	 	 	subsidiaries, or (ii) by any means issue or communicate any private or public
statement that may be critical or disparaging of the Company or any of its
affiliates, or any of their respective products, services, officers, directors
or employees.





Article 9. Claims Procedures




     9.1. Committee Review. Any Participant or Beneficiary of a deceased Participant (such
Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a
written claim for a determination with respect to the amounts distributable to such Claimant from
this Plan. Such claim shall be delivered to the Committee in care of the Company in accordance
with the notice provisions of Section 11.5. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within sixty (60) days after such notice was
received by the Claimant. All other claims must be made within two hundred and seventy (270) days
of the date on which the event that caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.



     9.2. Notification of Decision. The Committee shall consider a Claimant’s claim pursuant to
Section 9.1 within a reasonable time, but no later than ninety (90) days after receiving the claim.
If the Committee determines that special circumstances require an extension of time for processing
the claim, written notice of the extension shall be furnished to the Claimant prior to the
termination of the initial ninety (90) day period. In no event shall such extension exceed a
period of ninety (90) days from the end of the initial period. The extension notice shall indicate
the special circumstances requiring an extension of time and the date by which the Committee
expects to render the benefit determination. The Committee shall notify the Claimant in writing:




	 	(a)	 	that the Claimant’s requested determination has been made, and
that the claim has been allowed in full; or
	 
	 	(b)	 	that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant’s requested determination, and such notice must set
forth in a manner calculated to be understood by the Claimant:






	 	(i)	 	the specific reason(s) for the denial of the claim,
or any part of it;
	 
	 	(ii)	 	specific reference(s) to pertinent provisions of
this Plan upon which such denial was based;
	 
	 	(iii)	 	a description of any additional material or
information necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
	 
	 	(iv)	 	a statement that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to and copies
of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the Claimant’s claim for benefits; and
	 
	 	(v)	 	a statement of the Claimant’s right to seek
arbitration pursuant to Section 9.4.










19









 











     9.3. Pre and Post-Change in Control Procedures. With respect to claims made prior to the
occurrence of a Change in Control, a Claimant’s compliance with the foregoing provisions of this
Article 9 is a mandatory prerequisite to a Claimant’s right to commence arbitration pursuant to
Section 9.4 with respect to any claim for benefits under this Plan. With respect to claims made
upon and after the occurrence of a Change in Control, the Claimant may proceed directly to
arbitration in accordance with Section 9.4 and need not first satisfy the foregoing provisions of
this Article 9.



     9.4. Arbitration of Claims. All claims or controversies arising out of or in connection with
this Plan, that the Company may have against any Claimant, or that any Claimant may have against
the Company or against its officers, directors, employees or agents acting in their capacity as
such, shall, subject to the initial review provided for in the foregoing provisions of this Article
9 that are effective with respect to claims brought prior to the occurrence of a Change in Control,
be resolved through arbitration as provided in this Section 9.4. The decision of an arbitrator on
any issue, dispute, claim or controversy submitted for arbitration, shall be final and binding upon
the Company and the Claimant and that judgment may be entered on the award of the arbitrator in any
court having proper jurisdiction. The arbitrator shall review de novo any claim previously
considered by the Committee pursuant to Section 9.1.



     All expenses of such arbitration, including the fees and expenses of the counsel for the
Participant, shall be advanced and borne by the Company; provided, however, that if it is finally
determined that the Claimant did not commence the arbitration in good faith and had no reasonable
basis therefore, the Claimant shall repay all advanced fees and expenses and shall reimburse the
Company for its reasonable legal fees and expenses in connection therewith.



     Except as otherwise provided in this procedure or by mutual agreement of the parties, any
arbitration shall be administered: (1) in accordance with the then-current Model Employment
Arbitration Procedures of the American Arbitration Association (“AAA”) before an arbitrator who is
licensed to practice law in the state in which the arbitration is convened; or (2) if locally
available, the Judicial Arbitration & Mediation Services, Inc. (“JAMS”), in accordance with the
JAMS procedures then in effect. The party who did not initiate the claim can designate between
JAMS or AAA (the “Tribunal”). The arbitration shall be held in the city in which the Claimant is
or was last employed by the Company in the nearest Tribunal office or at a mutually agreeable
location. Pre-hearing and post-hearing procedures may be held by telephone or in person as the
arbitrator deems necessary.



     The arbitrator shall be selected as follows: if the parties cannot agree on an arbitrator, the
Tribunal (JAMS or AAA) shall then provide the names of nine (9) available arbitrators experienced
in business employment matters along with their resumes and fee schedules. Each party may strike
all names on the list it deems unacceptable. If more than one common name remains on the list of
all parties, the parties shall strike names alternately until only one remains. The party who did
not initiate the claim shall strike first. If no common name remains on the lists of the parties,
the Tribunal shall furnish an additional list or lists until an arbitrator is selected.



     The arbitrator shall interpret this Plan, any applicable Company policy or rules and
regulations, any applicable substantive law (and the law of remedies, if applicable) of the state
in which the claim arose, or applicable federal law. In reaching his or her decision, the
arbitrator shall have no authority to change or modify any lawful Company policy, rule or
regulation, or this Plan. The arbitrator, and not any federal, state or local court or agency,
shall have exclusive and broad authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Plan, including but not limited to, any claim
that all or any part of this Plan is voidable.



20









 





     The arbitrator shall have authority to entertain a motion to dismiss and/or motion for summary
judgment by any party and shall apply the standards governing such motions under the Federal Rules
of Civil Procedure.



     Each party shall have the right to take the deposition of one individual and any expert
witness(es) designated by another party. Each party shall also have the opportunity to obtain
documents from another party through one request for production of documents. Additional discovery
may be had only when the arbitrator so orders upon a showing of substantial need. Any disputes
regarding depositions, requests for production of documents or other discovery shall be submitted
to the arbitrator for determination.



     Each party shall have the right to subpoena witnesses and documents for the arbitration
hearing by requesting a subpoena from the arbitrator. Any such request shall be served on all
other parties, who shall advise the arbitrator in writing of any objections that the party may have
to issuance of the subpoena within ten (10) calendar days of receipt of the request.



     At least thirty (30) calendar days before the arbitration, the parties must exchange lists of
witnesses, including any expert(s), and copies of all exhibits intended to be used at the
arbitration.



Article 10. Successors and Assignment




     10.1. Successors to the Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the
business and/or assets of the Company or of any division or subsidiary thereof (the business and/or
assets of which constitute at least fifty percent (50%) of the total business and/or assets of the
Company) to expressly assume and agree to perform the Company’s obligations under this Plan in the
same manner and to the same extent that the Company would be required to perform them if such
succession had not taken place.



     10.2. Assignment by the Participant. This Plan shall inure to the benefit of and be
enforceable by each Participant’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If a Participant dies while any amount
would still be payable to him or her hereunder had he or she continued to live, all such amounts,
unless otherwise provided herein, shall be paid to the Participant’s Beneficiary in accordance with
the terms of this Plan.



Article 11. Miscellaneous




     11.1. Employment Status. Except as may be provided under any other written agreement between
a Participant and the Company, the employment of the Participant by the Company is “at will,” and,
prior to the effective date of a Change in Control, may be terminated by either the Participant or
the Company at any time, subject to applicable law.



     11.2. Gender and Number. Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine, the plural shall include the singular, and the
singular shall include the plural.



     11.3. Severability. In the event that any provision of this Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this
Plan, and this Plan



21









 







shall be construed and enforced as if the illegal or invalid provision had not been included.
Further, the captions of this Plan are not part of the provisions hereof and shall have no force
and effect.



     11.4. Modification. No provision of this Plan may be modified, waived, or discharged unless
as to a Participant such modification, waiver, or discharge is agreed to in writing and signed by
each affected Participant and by an authorized member of the Committee or its designee, or by the
respective parties’ legal representatives and successors.



     11.5. Notice. For purposes of this Plan, notices, including a Notice of Termination, and all
other communications provided for in this Plan shall be in writing and shall be deemed to have been
duly given when delivered or on the date stamped as received by the U.S. Postal Service for
delivery by certified or registered mail, postage prepaid and addressed: (i) if to the Participant,
to his or her latest address as reflected on the records of the Company, and (ii) if to the
Company: Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, California 90067, Attn:
Chief Human Resources Officer, or to such other address as the Company may furnish to the
Participant in writing with specific reference to this Plan and the importance of the notice,
except that notice of change of address shall be effective only upon receipt.



     11.6. Applicable Law. To the extent not preempted by the laws of the United States, the laws
of the State of California shall be the controlling law in all matters relating to this Plan. Any
statutory reference in this Plan shall also be deemed to refer to all applicable final rules and
final regulations promulgated under or with respect to the referenced statutory provision.




22