Document:

exv10wxvy

 

Exhibt 10(v)

NORTHROP GRUMMAN 2006 ANNUAL INCENTIVE PLAN

AND

INCENTIVE COMPENSATION PLAN (for NON-SECTION 162(m) OFFICERS)

As amended and restated effective January 1, 2008

SECTION I

PURPOSE

Northrop Grumman has an annual incentive program to promote the success of the Company and render
its operations profitable to the maximum extent by providing incentives to key employees.
Participating employees have varying degrees of impact on the overall success and performance of
the Company. To facilitate the appropriate incentive level for each Participant, Northrop Grumman
utilizes two incentive plans that use common financial and business performance criteria:

	 	•	 	The Incentive Compensation Plan (ICP)
	 
	 	•	 	The Annual Incentive Plan (AIP)

SECTION II

DEFINITIONS

	1.	 	Company—Northrop Grumman Corporation and such of its subsidiaries as
are consolidated in its consolidated financial statements.
	 
	2.	 	Code—The Internal Revenue Code of 1986, as amended from time to time.
	 
	3.	 	Committee—The Compensation and Management Development Committee of
the Board of Directors of the Company.
	 
	4.	 	Incentive Compensation—Awards payable under these plans.
	 
	5.	 	Participant—An employee of the Company granted or eligible to receive
Incentive Compensation award under one of these Plans.

	 
	6.	 	 Performance Criteria—The performance criteria is a weighted
combination of various financial and non-financial factors approved by
the Committee for the Performance Year.
	 
	7.	 	Performance Year—The year with respect to which an award of Incentive
Compensation is calculated and paid.
	 
	8.	 	Plans—Collectively, the Incentive Compensation Plan (ICP); and/or the
Annual Incentive Plan (AIP).
	 
	9.	 	Plan Year—The fiscal year of Northrop Grumman Corporation.
	 
	10.	 	Section 162(m) Officer—An employee who is a “covered employee” as
defined in Section 162(m) of the Code with respect to an award of
Incentive Compensation under the 2002 Incentive Compensation Plan for
any Performance Year.

SECTION III

PARTICIPATION

Employees may be eligible for incentive compensation under one of the Northrop Grumman incentive
plans as described below.

	1.	 	Incentive Compensation Plan (ICP):

	 	a.	 	Employees eligible to receive incentive compensation under the ICP are
elected corporate officers of the rank of vice president and above and
the presidents of those consolidated subsidiaries that the committee
determines to be significant in the overall corporate operations that
are not section 162(m) officers for the performance year. If an
executive receives or is eligible to receive an 

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	 	 	 	incentive compensation
award under the 2002 Incentive Compensation Plan for 162(m) officers,
then the executive will not be eligible and shall not receive an
incentive compensation award under the ICP.

	 	b.	 	Directors, as such, shall not participate in the ICP, but the fact
that an elected corporate officer or subsidiary president is also a
director of the Company shall not prevent participation.

	2.	 	Annual Incentive Plan (AIP):

	 	a.	 	Employees eligible to receive incentive compensation awards under the
AIP are appointed vice presidents, senior management, middle
management and individual key contributors (employees normally in a
position that customarily perform quasi-management or team leadership
duties). In addition, employees may be eligible to participate in the
AIP if they have specific individual goals that directly contribute to
the attainment of their respective business unit’s operating goals or
if employees are considered “high performing” and are in a position to
make measurable and significant contributions to the success of the
Company.
	 
	 	b.	 	At the beginning of, or prior to, a performance year, the Company’s
CEO approves the number of participants eligible for participation in
the AIP. Participants are then selected by their management based on
an assessment of their position relative to other candidates, their
performance, and their potential impact on achievement of business
unit and the Company goals.
	 
	 	c.	 	Participation in the AIP during any performance year does not imply
nor guarantee participation in the AIP in future years.

	3.	 	Non-Duplication of Awards

	 	a.	 	A participant may not receive an incentive compensation award under
more than one of the above plans for the performance year. The only
exception to this is in the event that an individual is a participant
in a particular plan for a portion of the performance year and then is
selected to participate in one of the other plans for the remainder of
that performance year. In this event, an individual may receive
pro-rated awards based on the time that he/she participated in each
plan.
	 
	 	b.	 	A participant will not be eligible to receive any incentive
compensation award from either of these plans if the employee is a
participant in the Company’s 2002 Incentive Compensation Plan for
162(m) Officers.

	4.	 	Death, Disability, or Retirement
	 
	 	 	A participant may be eligible to receive a pro-rated incentive compensation award in the event
of the employee’s death, disability, or retirement. In the case of a deceased participant,
such incentive compensation award will be paid to the participant’s estate.

	5.	 	Employment Status
	 
	 	 	Except as provided in Section III 4 (see above), in order to be eligible to receive a payment
from these plans, a participant must be an active employee of the Company as of December 31 of
the plan year, unless an exception is approved in writing by the Company’s chief human
resources and administrative officer.

SECTION IV

GOAL SETTING AND PERFORMANCE CRITERIA

Goal setting and performance planning are essential elements of plan administration. This requires
establishing performance criteria, such as annual goals, goal weights, and performance measures.
The Committee approves the annual business and financial goals for the Company, as described below,
in writing within the first 90 days of a Performance Year, at a time when it is substantially
uncertain whether the Participant will earn any amount of Incentive Compensation.

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	1.	 	Corporation Goals
	 
	 	 	For each performance year, until otherwise determined by the Committee, financial and
non-financial objectives will be established by the Committee in its sole discretion.

	2.	 	Financial Measures

	 	a.	 	The CEO’s recommended goals are reviewed and amended as appropriate,
and established by the Committee at its sole discretion. Measures may
include, but are not limited to: cash management, cash flow, return on
investment, debt reduction, revenue growth, net earnings, and return
on equity.
	 
	 	b.	 	The Committee approves a performance threshold, a target level and a
maximum performance level for each of the financial measures for the
performance year.

	3.	 	Supplemental Goals
	 
	 	 	Supplemental goals may be either qualitative or quantitative such as, but not limited to:
customer satisfaction, contract acquisition, delivery schedule, cycle-time improvement,
productivity, quality, workforce diversity, and environmental management. The CEO recommends
the supplemental goals based on sector goals contained in Annual Operating Plans and corporate
office goals established prior to the beginning of each year. Supplemental goals have stated
milestones and weights. The CEO’s recommended supplemental goals are reviewed and amended as
appropriate, and established by the Committee at its sole discretion.

	4.	 	Individual Goals
	 
	 	 	Each year participants develop individual goals that support achievement of the Company’s
business plan and the specific goals established by the Committee in the three aforementioned
corporation goals. Individual goals are prepared, approved and documented. The employee’s
manager reviews these goals with each participant to ensure they are aggressive, coordinated
and focused on attainment of Company business objectives.

SECTION V

PERFORMANCE DETERMINATION

At the end of the performance year the CEO evaluates the performance of each of the operating units
and that of the overall Company against the financial and business goals established at the
beginning of the performance year and submits his assessment to the Committee.

The CEO’s final evaluation of performance (the “unit performance factor” or “UPF”) is stated
numerically and is a performance multiplier for individual incentive targets. The UPF will vary
from 0.0 to a maximum as approved by the Committee.

The Committee, in its sole discretion, after taking into account its appraisal of the overall
performance of the Company in the attainment of such predetermined financial and non-financial
objectives, may either increase or decrease the company UPF for these plans.

SECTION VI

INCENTIVE COMPENSATION APPROPRIATIONS

	1.	 	The amount appropriated for the plans for a performance year is based
on the CEO’s determination of the UPF (as approved or modified by the
Committee) and applied to the individual incentive targets of
participants. These performance-adjusted targets are aggregated into
the “Appropriated Incentive Compensation” for the performance year.
	 
	2.	 	In no event shall incentive compensation payable to participants for a
performance year exceed the appropriated incentive compensation for
the plans as approved by the Committee.

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	3.	 	Any appropriated incentive compensation for a performance year, which
is not actually distributed to the participants as awards for such
year, cannot be transferred to the following performance year.

SECTION VII

INCENTIVE COMPENSATION AWARDS

	1.	 	Individual Award Factors

	 	a.	 	Target award percentage—is established annually and is a percentage
of annual aggregate salary that reflects the varying impact of
participant’s positions on business results. Generally vice presidents
will have higher target award percentages than senior middle managers
and so forth.
	 
	 	b.	 	Individual performance—prior to the submission of recommended
incentive compensation awards, each participant will be evaluated by
his management in relation to the participant’s achievement of
predetermined individual goals and his/her relative contribution
during the performance year compared to other participants to the
success or profit of the Company. This assessment of performance (the
“individual performance factor” or “IPF”) is stated numerically and is
a performance multiplier for individual incentive targets. The IPF may
range from 0 to 1.5.
	 
	 	c.	 	Both the IPF and the UPF are multipliers for the individual
participant’s target award percentage to determine that participant’s
incentive compensation award.

	2.	 	ICP Awards:

	 	a.	 	The Committee shall review the CEO’s recommendations and make the
final determination of each individual ICP participant’s incentive
compensation award for the performance year.

	3.	 	AIP Awards:

	 	a.	 	Prior to the payment of any incentive compensation awards for a
performance year, the CEO, or his delegate, may in his sole
discretion, adjust or reduce to zero recommended amounts of incentive
compensation awards to all or any of the participants.
	 
	 	b.	 	The CEO or his delegate shall determine the amount of any adjustment
in a participant’s incentive compensation award on the basis of such
factors as he deems relevant, and shall not be required to establish
any allocation or weighting component with respect to the factors he
considers.

SECTION VIII

ADMINISTRATION OF THE PLANS

	1.	 	ICP: The Committee shall be responsible for the administration of the Plan. The Committee shall:

	 	a.	 	Interpret the ICP, make any rules and regulations relating to that
plan, determine which consolidated subsidiaries are significant for
the purpose of the first paragraph of SECTION III, and determine
factual questions arising in connection with the ICP, after such
investigation or hearing as the Committee may deem appropriate.
	 
	 	b.	 	As soon as feasible after the close of each performance year and prior
to the payment of any incentive compensation for such performance
year, review the performance of each participant and determine the
amount of each participant’s individual incentive compensation award,
if any, with respect to that performance year.
	 
	 	c.	 	Have sole discretion in determining incentive compensation awards
under the ICP, except that in making awards the Committee may, in its
discretion, request and consider the recommendations of the CEO and
others whom it may designate.
	 
	 	d.	 	Any decisions made by the Committee under the provisions of this
SECTION VIII, as well as any interpretations of the ICP by the
Committee, shall be conclusive and binding on all parties concerned.

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	2.	 	AIP: The CEO shall be responsible for the administration of this plan. The CEO shall:

	 	a.	 	Interpret the AIP, make any rules and regulations relating to the
plan, and determine factual questions arising in connection with the
AIP.
	 
	 	b.	 	As soon as feasible after the close of each performance year and prior
to the payment of any incentive compensation for such performance
year, review the recommended awards of selected participants, as
determined by the CEO, to determine if the award is appropriate with
respect to that performance year, making any adjustments as he deems
necessary and approving each such award.
	 
	 	c.	 	Review and approve the total incentive compensation award expenditure
of each sector and the Company overall.
	 
	 	d.	 	Any decisions made by the CEO under the provisions of this Section
VIII, as well as any interpretation of the AIP by the CEO, shall be
conclusive and binding on all parties concerned.

SECTION IX

METHOD OF PAYMENT OF INCENTIVE

COMPENSATION TO INDIVIDUALS

	1.	 	ICP Payments

	 	a.	 	The amount of incentive compensation award determined for each
participant with respect to a given performance year shall be paid in
cash or in common stock of the Company (“Northrop Grumman common
stock”) or partly in cash and partly in Northrop Grumman common stock,
as the Committee may determine. Subject to any applicable deferred
compensation election to the contrary, payment of the Incentive
Compensation award with respect to a given Performance Year shall be
made in a lump sum payment between February 15 and March 15 of the
year following such Performance Year.
	 
	 	b.	 	The Committee may impose such conditions, including forfeitures and
restrictions, as the Committee believes will best serve the interests
of the Company and the purposes of the ICP.
	 
	 	c.	 	In making awards of Northrop Grumman common stock, the Committee shall
first determine all incentive compensation awards in terms of dollars.
The total dollar amount of all incentive compensation awards for a
particular year shall not exceed the appropriated incentive
compensation for that performance year under the ICP. After fixing the
total amount of each Participant’s incentive compensation award in
terms of dollars, then if some or all of the award is to be paid in
Northrop Grumman common stock, the dollar amount of the incentive
compensation award so to be paid shall be converted into shares of
Northrop Grumman common stock by using the fair market value of such
stock on the date of the award. “Fair market value” shall be the
closing price of such stock on the New York Stock Exchange on the date
of the award, or, if no sales of such stock occurred on that date,
then on the last preceding date on which such sales occurred. No
fractional share shall be issued.
	 
	 	d.	 	If an incentive compensation award is paid in Northrop Grumman common
stock, the number of shares shall be appropriately adjusted for any
stock splits, stock dividends, re-capitalization or other relevant
changes in capitalization effective after the date of award and prior
to the date as of which the participant becomes the record owner of
the shares received in payment of the award. All such adjustments
thereafter shall accrue to the participant as the record owner of the
shares.
	 
	 	e.	 	Northrop Grumman common stock issued in payment of incentive
compensation awards may, at the option of the Board of Directors, be
either originally issued shares or treasury shares.
	 
	 	f.	 	Distribution of awards shall be governed by the terms and conditions
applicable to such awards, as determined by the Committee or its
delegate. An award, the payment of which is to be deferred pursuant to
the terms of an employment agreement, shall be paid as provided by the
terms of such agreement. Awards or portions thereof deferred pursuant
to the Northrop Grumman Deferred

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	 	 	 	Compensation Plan, the Northrop
Grumman Savings Excess Plan, or any other deferred compensation plan
or deferral arrangement shall be paid as provided in such plan or
arrangement.
	 
	 	g.	 	The Company shall have the right to deduct from all payments under the
ICP any federal, state, or local taxes required by law to be withheld
with respect to such payments.
	 
	 	h.	 	No participant or any other party claiming an interest in amounts
earned under the ICP shall have any interests whatsoever in any
specific asset of the Company. To the extent that any party acquires a
right to receive payments under the ICP, such right shall be
equivalent to that of an unsecured general creditor of the Company.
Awards payable under the plan shall be payable in shares or from the
general assets of Northrop Grumman, and no special or separate
reserve, fund or deposit shall be made to assure payment of such
awards.

	2.	 	AIP Payments

	 	a.	 	The amount of incentive compensation award determined for each
participant with respect to a given performance year shall be paid in
cash between February 15 and March 15 of the year following that
performance year.
	 
	 	b.	 	The Company shall have the right to deduct from all payments under
this plan any federal, state, or local taxes required by law to be
withheld with respect to such payments.
	 
	 	c.	 	No participant or any other party claiming an interest in amounts
earned under the AIP shall have any interest whatsoever in any
specific asset of the Company. To the extent that any party acquires a
right to receive payments under the plan, such right shall be
equivalent to that of an unsecured general creditor of the Company.
Awards payable under the AIP shall be payable in shares or from the
general assets of Northrop Grumman, and no special or separate
reserve, fund or deposit shall be made to assure payment of such
awards.

SECTION X

AMENDMENT OR TERMINATION OF PLANS

The Committee shall have the right to terminate or amend these plans at any time and to discontinue
further appropriations to the plans.

Without limiting the generality of the preceding paragraph, the Committee reserves the right to
adjust performance measures, the applicable performance goals and performance results with respect
to either or both of the plans to the extent the Committee determines such adjustment is reasonably
necessary or advisable to preserve the intended incentives and benefits under the plans to reflect
(1) any change in capitalization, any corporate transaction (such as a reorganization, combination,
separation, merger, acquisition, or any combination of the foregoing), or any complete or partial
liquidation, (2) any change in accounting policies or practices, or (3) the effects of any special
charges to earnings, or (4) any other similar special circumstances.

SECTION XI

EFFECTIVE DATE

These plans were first effective for performance years commencing with 2006, and were amended and
restated effective for performance years commencing with and following 2008 and shall stay in
effect until amended, modified or terminated by the Committee. The provisions of these plans,
together with those of the 2002 Incentive Compensation Plan for Section 162(m) Officers, shall
supersede and replace those of prior plan documents.

SECTION XII

MISCELLANEOUS

	1.	 	Participation in any plan shall not constitute an agreement of the
participant to remain in the employ of

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	 	 	and to render his/her services
to the Company, or of the Company to continue to employ such
participant, and the Company may terminate the employment of a
participant at any time with or without cause.

	2.	 	In the event any provision of the plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the plans, and the plans shall be construed and
enforced as if the illegal or invalid provision had not been included.
	 
	3.	 	All costs of implementing and administering the plans shall be borne by the Company.
	 
	4.	 	All obligations of the Company under the plans shall be binding upon
and inure to the benefit of any successor to the Company, whether the
existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
	 
	5.	 	The plans and any agreements hereunder, shall be governed by and
construed in accordance with the laws of the state of Delaware.
	 
	6.	 	The rights of a participant or any other person to any payment or
other benefits under either of the plans may not be assigned,
transferred, pledged, or encumbered except by will or the laws of
decent or distribution.

Neither of the plans constitutes a contract. Neither of the plans confers upon any person any right
to receive a bonus or any other payment or benefit. There is no commitment or obligation on the
part of Northrop Grumman (or any affiliate) to continue any bonus plan (similar to the plans or
otherwise) in any particular year.

7exv10wxwy

 

Exhibit 10(w)

NORTHROP GRUMMAN

SAVINGS EXCESS PLAN

(Amended and Restated Effective as of January 1, 2005)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	INTRODUCTION
	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	2	 
	1.1
	 	Definitions	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II PARTICIPATION
	 	 	6	 
	2.1
	 	In General	 	 	6	 
	2.2
	 	Disputes as to Employment Status	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE III DEFERRAL ELECTIONS
	 	 	7	 
	3.1
	 	Elections to Defer Compensation	 	 	7	 
	3.2
	 	Contribution Amounts	 	 	7	 
	3.3
	 	Crediting of Deferrals	 	 	8	 
	3.4
	 	Investment Elections	 	 	8	 
	3.5
	 	Investment Return Not Guaranteed	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE IV ACCOUNTS
	 	 	10	 
	4.1
	 	Accounts	 	 	10	 
	4.2
	 	Valuation of Accounts	 	 	10	 
	4.3
	 	Use of a Trust	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE V VESTING AND FORFEITURES
	 	 	11	 
	5.1
	 	In General	 	 	11	 
	5.2
	 	Exceptions	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE VI DISTRIBUTIONS
	 	 	12	 
	6.1
	 	Distribution Rules	 	 	12	 
	6.2
	 	Pre-2005 Deferrals	 	 	13	 
	6.3
	 	Payments Not Received At Death	 	 	13	 
	6.4
	 	Inability to Locate Participant	 	 	13	 
	6.5
	 	Committee Rules	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE VII ADMINISTRATION
	 	 	14	 
	7.1
	 	Committees	 	 	14	 
	7.2
	 	Committee Action	 	 	14	 
	7.3
	 	Powers and Duties of the Administrative Committee	 	 	15	 
	7.4
	 	Powers and Duties of the Investment Committee	 	 	15	 
	7.5
	 	Construction and Interpretation	 	 	16	 
	7.6
	 	Information	 	 	16	 
	7.7
	 	Committee Compensation, Expenses and Indemnity	 	 	16	 
	7.8
	 	Disputes	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS
	 	 	19	 
	8.1
	 	Unsecured General Creditor	 	 	19	 
	8.2
	 	Restriction Against Assignment	 	 	19	 
	8.3
	 	Restriction Against Double Payment	 	 	20	 
	8.4
	 	Withholding	 	 	20	 
	8.5
	 	Amendment, Modification, Suspension or Termination	 	 	20	 

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	8.6
	 	Governing Law	 	 	21	 
	8.7
	 	Receipt and Release	 	 	21	 
	8.8
	 	Payments on Behalf of Persons Under Incapacity	 	 	21	 
	8.9
	 	Limitation of Rights and Employment Relationship	 	 	21	 
	8.10
	 	Headings	 	 	21	 
	 
	 	 	 	 	 	 
	APPENDIX A – 2005 TRANSITION RELIEF
	 	 	1	 
	A.1
	 	Cash-Out	 	 	1	 
	A.2
	 	Elections	 	 	1	 
	A.3
	 	Key Employees	 	 	1	 
	 
	 	 	 	 	 	 
	APPENDIX B – DISTRIBUTION RULES FOR PRE-2005 AMOUNTS
	 	 	1	 
	B.1
	 	Distribution of Contributions	 	 	1	 
	 
	 	 	 	 	 	 
	APPENDIX C – MERGED PLANS
	 	 	1	 
	C.1
	 	Plan Mergers	 	 	1	 
	C.2
	 	Merged Plans – General Rule	 	 	1	 

ii

 

 

 

INTRODUCTION

          The Northrop Grumman Savings Excess Plan (the “Plan”) is hereby amended and restated effective
as of January 1, 2005, except as otherwise provided.

          Northrop Grumman Corporation (the “Company”) established this Plan for participants in the
Northrop Grumman Savings Plan who exceed the limits under sections 401(a)(17) or 415(c) of the
Internal Revenue Code. This Plan is intended (1) to comply with section 409A of the Internal
Revenue Code, as amended (the “Code”) and official guidance issued thereunder (except with respect
to amounts covered by Appendix B), and (2) to be “a plan which is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974. Notwithstanding any other
provision of this Plan, this Plan shall be interpreted, operated and administered in a manner
consistent with these intentions.

          The Plan was originally effective January 1, 2004. It was amended effective as of December
10, 2004 to merge two similar plans, the Northrop Grumman Benefits Equalization Plan and the
Northrop Grumman Space & Mission Systems Corp. Deferred Compensation Plan, into the Plan. It also
was amended effective April 29, 2005 to merge the BDM International, Inc. 1997 Executive Deferred
Compensation Plan into the Plan. An amendment effective April 27, 2006 established identical
membership for the Plan’s Administrative Committee and the Administrative Committee for the
Northrop Grumman Deferred Compensation Plan.

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ARTICLE I

DEFINITIONS

     1.1 Definitions

          Whenever the following words and phrases are used in this Plan, with the first letter
capitalized, they shall have the meanings specified below.

          (a) “Account” shall mean the recordkeeping account set up for each Participant to keep track
of amounts to his or her credit.

          (b) “Administrative Committee” means the committee in charge of Plan administration, as
described in Article VII.

          (c) “Affiliated Companies” shall mean the Company and any entity affiliated with the Company
under Code sections 414(b) or (c).

          (d) “Basic Contributions” shall have the same meaning as that term is defined in the NGSP.

          (e) “Beneficiary” or “Beneficiaries” shall mean the person or persons, including a trustee,
personal representative or other fiduciary, last designated in writing by a Participant in
accordance with procedures established by the Administrative Committee to receive the benefits
specified hereunder in the event of the Participant’s death.

               (1) No Beneficiary designation shall become effective until it is filed with the
Administrative Committee.

               (2) Any designation shall be revocable at any time through a written instrument filed by the
Participant with the Administrative Committee with or without the consent of the previous
Beneficiary.

                    No designation of a Beneficiary other than the Participant’s spouse shall be valid unless
consented to in writing by such spouse. If there is no such designation or if there is no surviving
designated Beneficiary, then the Participant’s surviving spouse shall be the Beneficiary. If there
is no surviving spouse to receive any benefits payable in accordance with the preceding sentence,
the duly appointed and currently acting personal representative of the Participant’s estate (which
shall include either the Participant’s probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant’s estate duly appointed
and acting in that capacity within 90 days after the Participant’s death (or such extended period
as the Administrative Committee determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed 180 days after the Participant’s death), then
Beneficiary shall mean the person or persons who can verify by affidavit or court order to the
satisfaction of the Administrative Committee that they are legally entitled to receive the benefits
specified hereunder. Any payment made pursuant to such determination shall constitute a full
release and discharge of the Plan, the Administrative

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Committee and the Company. Effective January 1, 2007, a Participant will automatically revoke
a designation of a spouse as primary beneficiary upon the dissolution of their marriage.

               (3) In the event any amount is payable under the Plan to a minor, payment shall not be made to
the minor, but instead be paid (a) to that person’s living parent(s) to act as custodian, (b) if
that person’s parents are then divorced, and one parent is the sole custodial parent, to such
custodial parent, or (c) if no parent of that person is then living, to a custodian selected by the
Administrative Committee to hold the funds for the minor under the Uniform Transfers or Gifts to
Minors Act in effect in the jurisdiction in which the minor resides. If no parent is living and the
Administrative Committee decides not to select another custodian to hold the funds for the minor,
then payment shall be made to the duly appointed and currently acting guardian of the estate for
the minor or, if no guardian of the estate for the minor is duly appointed and currently acting
within 60 days after the date the amount becomes payable, payment shall be deposited with the court
having jurisdiction over the estate of the minor. Any payment made pursuant to such determination
shall constitute a full release and discharge of the Plan, the Administrative Committee and the
Company.

               (4) Payment by the Affiliated Companies pursuant to any unrevoked Beneficiary designation, or
to the Participant’s estate if no such designation exists, of all benefits owed hereunder shall
terminate any and all liability of the Affiliated Companies.

          (f) “Board” shall mean the Board of Directors of the Company.

          (g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (h) “Committees” shall mean the Committees appointed as provided in Article VII.

          (i) “Company” shall mean Northrop Grumman Corporation and any successor.

          (j) “Company Contributions” shall mean contributions by the Company to a Participant’s
Account.

          (k) “Compensation” shall be Compensation as defined by Section 5.01 of the NGSP. However, any
payment authorized by the Compensation and Management Development Committee that is (1) calculated
pursuant to the method for determining a bonus amount under the Annual Incentive Plan (AIP) for a
given year and (2) paid in lieu of such bonus in the year prior to the year the bonus would
otherwise be paid under the AIP, shall not be treated as Compensation.

          (l) “Disability” or “Disabled” shall mean the Participant’s inability to perform each and
every duty of his or her occupation or position of employment due to illness or injury as
determined in the sole and absolute discretion of the Administrative Committee.

          (m) “Eligible Employee” shall mean any Employee who meets the following conditions:

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               (1) he or she is eligible to participate in the NGSP;

               (2) he or she is classified by the Affiliated Companies as an Employee and not as an
independent contractor; and

               (3) he or she meets any additional eligibility criteria set by the Administrative Committee.

Additional eligibility criteria established by the Administrative Committee
may include specifying classifications of Employees who are eligible to
participate and the date as of which various groups of Employees will be
eligible to participate. This includes, for example, Administrative
Committee authority to delay eligibility for employees of newly acquired
companies who become Employees.

          (n) “Employee” shall mean any common law employee of the Affiliated Companies who is
classified as an employee by the Affiliated Companies.

          (o) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be
amended from time to time.

          (p) “Investment Committee” means the committee in charge of investment aspects of the Plan, as
described in Article VII.

          (q) “Key Employee” means 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.

          (r) “NGSP” means the Northrop Grumman Savings Plan.

          (s) “Open Enrollment Period” means the period designated by the Administrative Committee for
electing deferrals for the following Plan Year.

          (t) “Participant” shall mean any Eligible Employee who participates in this Plan in accordance
with Article II.

          (u) “Payment Date” shall mean:

               (1) for distributions upon early termination under Section B.1(a), a date after the end of the
month in which termination of employment occurs; and

4

 

               (2) for distributions after Retirement, Disability or death under Section B.1(b), a date after
the end of the month in which occurs Retirement, the determination of Disability by the
Administrative Committee, or the notification of the Administrative Committee of the Participant’s
death (or later qualification of the Beneficiary or Beneficiaries), as applicable.

The exact date in each case will be determined by the Administrative Committee to allow time for
administrative processing.

          (v) “Plan” shall be the Northrop Grumman Savings Excess Plan.

          (w) “Plan Year” shall be the calendar year.

          (x) “Retirement” shall mean termination of employment with the Affiliated Companies after
reaching age 55.

          (y) “Separation from Service” or “Separates from Service” or “Separating from Service” means a
“separation from service” within the meaning of Code section 409A.

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ARTICLE II

PARTICIPATION

     2.1 In General

          (a) An Eligible Employee may become a Participant by complying with the procedures established
by the Administrative Committee for enrolling in the Plan.

          (b) Anyone who becomes an Eligible Employee will be entitled to become a Participant during an
Open Enrollment Period.

          (c) An individual will cease to be a Participant when he or she no longer has a positive
balance to his or her Account under the Plan.

     2.2 Disputes as to Employment Status

          (a) Because there may be disputes about an individual’s proper status as an Employee or
non-Employee, this Section describes how such disputes are to be handled with respect to Plan
participation.

          (b) The Affiliated Companies will make the initial determination of an individual’s employment
status.

                    (1) If an individual is not treated by the Affiliated Companies as a common law employee, then
the Plan will not consider the individual to be an “Eligible Employee” and he or she will not be
entitled to participate in the Plan.

                    (2) This will be so even if the individual is told he or she is entitled to participate in the
Plan and given a summary of the plan and enrollment forms or other actions are taken indicating
that he or she may participate.

          (c) Disputes may arise as to an individual’s employment status. As part of the resolution of
the dispute, an individual’s status may be changed by the Affiliated Companies from non-Employee to
Employee. Such Employees are not Eligible Employees.

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ARTICLE III

DEFERRAL ELECTIONS

     3.1 Elections to Defer Compensation

          (a) Timing. A Participant may elect to defer Compensation earned in a Plan Year by
filing an election in the Open Enrollment Period for the Plan Year. An election to participate for
a Plan Year is irrevocable.

          (b) Election Rules. A Participant’s election may be made in writing, electronically,
or as otherwise specified by the Administrative Committee. Such election shall specify the
Participant’s rate of deferral for contributions to the Plan. The maximum deferral rate for any
year is the maximum percentage of Compensation that the Participant may defer under the NGSP,
without regard to the limits of Code section 401(a)(17). All elections must be made in accordance
with the rules, procedures and forms provided by the Administrative Committee. The Administrative
Committee may change the rules, procedures and forms from time to time and without prior notice to
Participants.

          (c) Cancellation of Election. If a Participant becomes disabled (as defined under
Code Section 409A) during a Plan Year, his deferral election for such Plan Year shall be cancelled.

     3.2 Contribution Amounts

          (a) Participant Contributions. A Participant may contribute under the Plan the product
of his or her elected rate of deferral under this Plan and the amount by which his or her
Compensation exceeds the Code section 401(a)(17) limit.

          (b) Company Contributions. The Company will make Company Contributions to a
Participant’s Account as provided in (1). In addition, the Company will make a Company Contribution
under (2) below if the conditions in that paragraph apply.

               (1) In General. The Company will make a Company Contribution equal to the matching
contribution rate for which the Participant is eligible under the NGSP for the Plan Year multiplied
by the amount of the Participant’s contributions under subsection (a).

               (2) Make-Up Contributions for Contribution Limitation. If a Participant’s Basic
Contributions under the NGSP for a Plan Year are limited by the Code section 415(c) contribution
limit before the Participant’s Basic Contributions under the NGSP are limited by the Code section
401(a)(17) compensation limit, the Company will make a Company Contribution equal to the amount of
matching contributions for which the Participant would have been eligible under the NGSP were Code
section 415(c) not applied, reduced by the actual amount of matching contributions made for the
Plan Year under the NGSP. This paragraph applies only if the Participant reaches the Code section
401(a)(17) compensation limit and only to the extent that contributions are based upon Participant
compensation up to that limit.

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Paragraph (1) above applies to contributions based on compensation exceeding the section
401(a)(17) limit.

     3.3 Crediting of Deferrals.

          Amounts deferred by a Participant under the Plan shall be credited to the Participant’s
Account as soon as practicable after the amounts would have otherwise been paid to the Participant.

     3.4 Investment Elections

          (a) The Investment Committee will establish a number of different investment funds or other
investment options for the Plan. The Investment Committee may change the funds or other investment
options from time to time, without prior notice to Participants.

          (b) Participants may elect how their future contributions and existing Account balances will
be deemed invested in the various investment funds and may change their elections from time to
time. If a Participant does not elect how future contributions will be deemed invested,
contributions will be deemed invested according to the Participant’s investment election for
contributions under the NGSP. If a Participant elected one or more investment options under the
NGSP that are not available under this Plan, the portion of the Participant’s contribution that
would have been deemed invested in those options will be deemed invested on a pro-rata basis in the
investment funds that the Participant elected that are available under this Plan.

          (c) Selections of investments, changes and transfers must be made according to the rules and
procedures of the Administrative Committee.

               (1) The Administrative Committee may prescribe rules that may include, among other matters,
limitations on the amounts that may be transferred and procedures for electing transfers.

               (2) The Administrative Committee may prescribe valuation rules for purposes of investment
elections and transfers. Such rules may, in the Administrative Committee’s discretion, use
averaging methods to determine values and accrue estimated expenses. The Administrative Committee
may change the methods it uses for valuation from time to time.

               (3) The Administrative Committee may prescribe the periods and frequency with which
Participants may change deemed investment elections and make transfers.

               (4) The Administrative Committee may change its rules and procedures from time to time and
without prior notice to Participants.

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     3.5 Investment Return Not Guaranteed

          Investment performance under the Plan is not guaranteed at any level. Participants may lose
all or a portion of their contributions due to poor investment performance.

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ARTICLE IV

ACCOUNTS

     4.1 Accounts

          The Administrative Committee shall establish and maintain a recordkeeping Account for each
Participant under the Plan.

     4.2 Valuation of Accounts

          The valuation of Participants’ recordkeeping Accounts will reflect earnings, losses, expenses
and distributions, and will be made in accordance with the rules and procedures of the
Administrative Committee.

          (a) The Administrative Committee may set regular valuation dates and times and also use
special valuation dates and times and procedures from time to time under unusual circumstances and
to protect the financial integrity of the Plan.

          (b) The Administrative Committee may use averaging methods to determine values and accrue
estimated expenses.

          (c) The Administrative Committee may change its valuation rules and procedures from time to
time and without prior notice to Participants.

     4.3 Use of a Trust

          The Company may set up a trust to hold any assets or insurance policies that it may use in
meeting its obligations under the Plan. Any trust set up will be a rabbi trust and any assets
placed in the trust shall continue for all purposes to be part of the general assets of the Company
and shall be available to its general creditors in the event of the Company’s bankruptcy or
insolvency.

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ARTICLE V

VESTING AND FORFEITURES

     5.1 In General

          A Participant’s interest in his or her Account will be nonforfeitable.

     5.2 Exceptions

          The following exceptions apply to the vesting rule:

          (a) Forfeitures on account of a lost payee. See Section 6.4.

          (b) Forfeitures under an escheat law.

          (c) Recapture of amounts improperly credited to a Participant’s Account or improperly paid to
or with respect to a Participant.

          (d) Expenses charged to a Participant’s Account.

          (e) Investment losses.

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ARTICLE VI

DISTRIBUTIONS

     6.1 Distribution Rules

          (a) Separate Distribution Election. A Participant must make a separate distribution
election for each year’s contributions beginning with the 2005 deferral election. A Participant
generally makes a distribution election at the same time the Participant makes the deferral
election, i.e., during the Open Enrollment Period.

          (b) Distribution Upon Separation. A Participant may elect on a deferral form to have
the portion of his Account related to amounts deferred under the deferral form and Company
contributions for the same year (and earnings thereon) distributed in a lump sum or in quarterly or
annual installments over a period of up to 15 years. Lump sum payments under the Plan will be made
in the month following the Participant’s Separation from Service. Installment payments shall
commence in the March, June, September or December next following the month of Separation from
Service. If a Participant does not make a distribution election and his Account balance exceeds
$50,000 and the Participant is age 55 or older, the Participant will receive quarterly installments
over a 10-year period. Otherwise, a Participant not making an election will receive a lump sum
payment. Notwithstanding the foregoing, if the Participant’s Account balance is $50,000 or less at
the time the Participant Separates from Service, the full Account balance shall be distributed in a
lump sum payment in the month following the Participant’s Separation from Service.

               Notwithstanding the timing rules in the foregoing paragraph, distributions may not be made to
a Key Employee upon a Separation from Service before the date which is six months after the date of
the Key Employee’s Separation from Service (or, if earlier, the date of death of the Key Employee).
Any payments that would otherwise be made during this period of delay shall be accumulated and
paid six months after the date payments would have commenced absent the six month delay.

          (c) Changes in Form of Distribution. A Participant may make up to two subsequent
elections to change the form of a distribution for a deferred amount for any year’s sub-account.
Such an election, however, shall be effective only if the following conditions are satisfied:

               (1) The election may not take effect until at least twelve (12) months after the date on which
the election is made; and

               (2) The distribution will be made exactly five (5) years from the date the distribution would
have otherwise been made.

          (d) Effect of Taxation. If Plan benefits are includible in the income of a
Participant under Code section 409A prior to actual receipt of the benefits, the Administrative
Committee shall immediately distribute the benefits found to be so includible to the Participant.

12

 

          (e) Permitted Delays. Notwithstanding the foregoing, any payment to a Participant
under the Plan shall be delayed upon the Committee’s reasonable anticipation of one or more of the
following events:

               (1) The Company’s deduction with respect to such payment would be eliminated by application of
Code section 162(m); or

               (2) The making of the payment would violate Federal securities laws or other applicable law;

               (3) provided, that any payment delayed pursuant to this Section 6.1(e) shall be paid in
accordance with Code section 409A.

     6.2 Pre-2005 Deferrals.

          Notwithstanding the foregoing, Appendix B governs the distribution of amounts that were earned
and vested (within the meaning of Code section 409A and regulations thereunder) under the Plan
prior to 2005 (and earnings thereon) and are exempt from the requirements of Code section 409A.
Thus, Section 6.1 does not apply to pre-2005 deferrals.

     6.3 Payments Not Received At Death

          In the event of the death of a Participant before receiving a payment, payment will be made to
his or her estate if death occurs on or after the date of a check that has been issued by the Plan.
Otherwise, payment of the amount will be made to the Participant’s Beneficiary.

     6.4 Inability to Locate Participant

          In the event that the Administrative Committee is unable to locate a Participant or
Beneficiary within two years following the required payment date, the amount allocated to the
Participant’s Account shall be forfeited. If, after such forfeiture and prior to termination of the
Plan, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated
without interest or earnings for the forfeiture period.

     6.5 Committee Rules

          All distributions are subject to the rules and procedures of the Administrative Committee. The
Administrative Committee may also require the use of particular forms. The Administrative Committee
may change its rules, procedures and forms from time to time and without prior notice to
Participants.

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ARTICLE VII

ADMINISTRATION

     7.1 Committees

          (a) Effective April 27, 2006, the Administrative Committee shall be comprised of the
individuals (in their corporate capacity) who are members of the Administrative Committee for
Northrop Grumman Deferred Compensation Plan. If no such Administrative Committee exists, the
members of the Administrative Committee for the Plan shall be individuals holding the following
positions within the Company (as such titles may be modified from time to time), or their
successors in office: the Corporate Vice President and Chief Human Resources and Administration
Officer; the Corporate Vice President, Controller and Chief Accounting Officer; the Vice President,
Taxation; the Vice President, Trust Administration and Investments; the Vice President,
Compensation, Benefits and HRIS; and the Corporate Director, Benefits Administration and Services.
A member of the Administrative Committee may resign by delivering a written notice of resignation
to the Corporate Vice President and Chief Human Resources and Administration Officer.

          (b) Prior to April 27, 2006, the Administrative Committee shall be comprised of the
individuals appointed by the Compensation and Management Development Committee of the Board (the
“Compensation Committee”).

          (c) An Investment Committee (referred to together with the Administrative Committee as, the
“Committees”), comprised of one or more persons, shall be appointed by and serve at the pleasure of
the Board (or its delegate). The number of members comprising the Investment Committee shall be
determined by the Board, which may from time to time vary the number of members. A member of the
Investment Committee may resign by delivering a written notice of resignation to the Board. The
Board may remove any member by delivering a certified copy of its resolution of removal to such
member. Vacancies in the membership of the Investment Committee shall be filled promptly by the
Board.

     7.2 Committee Action

          Each Committee shall act at meetings by affirmative vote of a majority of the members of that
Committee. Any determination of action of a Committee may be made or taken by a majority of a
quorum present at any meeting thereof, or without a meeting, by resolution or written memorandum
signed by a majority of the members of the Committee then in office. A member of a Committee shall
not vote or act upon any matter which relates solely to himself or herself as a Participant. The
Chairman or any other member or members of each Committee designated by the Chairman may execute
any certificate or other written direction on behalf of the Committee of which he or she is a
member.

          The Compensation Committee shall appoint a Chairman from among the members of the
Administrative Committee and a Secretary who may or may not be a member of the Administrative
Committee. The Administrative Committee shall conduct its business

14

 

according to the provisions of this Article and the rules contained in the current edition of
Robert’s Rules of Order or such other rules of order the Administrative Committee may deem
appropriate. The Administrative Committee shall hold meetings from time to time in any convenient
location.

     7.3 Powers and Duties of the Administrative Committee

          The Administrative Committee shall enforce the Plan in accordance with its terms, shall be
charged with the general administration of the Plan, and shall have all powers necessary to
accomplish its purposes, including, but not by way of limitation, the following:

          (a) To construe and interpret the terms and provisions of this Plan and make all factual
determinations;

          (b) To compute and certify to the amount and kind of benefits payable to Participants and
their Beneficiaries;

          (c) To maintain all records that may be necessary for the administration of the Plan;

          (d) To provide for the disclosure of all information and the filing or provision of all
reports and statements to Participants, Beneficiaries or governmental agencies as shall be required
by law;

          (e) To make and publish such rules for the regulation of the Plan and procedures for the
administration of the Plan as are not inconsistent with the terms hereof;

          (f) To appoint a Plan administrator or any other agent, and to delegate to them such powers
and duties in connection with the administration of the Plan as the Administrative Committee may
from time to time prescribe (including the power to subdelegate);

          (g) To exercise powers granted the Administrative Committee under other Sections of the Plan;
and

          (h) To take all actions necessary for the administration of the Plan, including determining
whether to hold or discontinue insurance policies purchased in connection with the Plan.

     7.4 Powers and Duties of the Investment Committee

          The Investment Committee shall have all powers necessary to accomplish its purposes,
including, but not by way of limitation, the following:

          (a) To select types of investment and the actual investments against which earnings and losses
will be measured;

          (b) To oversee any rabbi trust; and

15

 

          (c) To appoint agents, and to delegate to them such powers and duties in connection with its
duties as the Investment Committee may from time to time prescribe (including the power to
subdelegate).

     7.5 Construction and Interpretation

          The Administrative Committee shall have full discretion to construe and interpret the terms
and provisions of this Plan, to make factual determinations and to remedy possible inconsistencies
and omissions. The Administrative Committee’s interpretations, constructions and remedies shall be
final and binding on all parties, including but not limited to the Affiliated Companies and any
Participant or Beneficiary. The Administrative Committee shall administer such terms and provisions
in a uniform and nondiscriminatory manner and in full accordance with any and all laws applicable
to the Plan.

     7.6 Information

          To enable the Committees to perform their functions, the Affiliated Companies adopting the
Plan shall supply full and timely information to the Committees on all matters relating to the
Compensation of all Participants, their death or other events that cause termination of their
participation in this Plan, and such other pertinent facts as the Committees may require.

     7.7 Committee Compensation, Expenses and Indemnity

          (a) The members of the Committees shall serve without compensation for their services
hereunder.

          (b) The Committees are authorized to employ such accounting, consultants or legal counsel as
they may deem advisable to assist in the performance of their duties hereunder.

          (c) To the extent permitted by ERISA and applicable state law, the Company shall indemnify and
hold harmless the Committees and each member thereof, the Board and any delegate of the Committees
who is an employee of the Affiliated Companies against any and all expenses, liabilities and
claims, including legal fees to defend against such liabilities and claims arising out of their
discharge in good faith of responsibilities under or incident to the Plan, other than expenses and
liabilities arising out of willful misconduct. This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by the Company or provided by the Company
under any bylaw, agreement or otherwise, as such indemnities are permitted under ERISA and state
law.

     7.8 Disputes

          (a) Claims

          A person who believes that he or she is being denied a benefit to which he or she is entitled
under this Plan (hereinafter referred to as “Claimant”) must file a written request for such
benefit with the Administrative Committee, setting forth his or her claim.

16

 

     (b) Claim Decision

          Upon receipt of a claim, the Administrative Committee shall advise the Claimant that a reply
will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such
period. The Administrative Committee may, however, extend the reply period for an additional ninety
(90) days for special circumstances.

          If the claim is denied in whole or in part, the Administrative Committee shall inform the
Claimant in writing, using language calculated to be understood by the Claimant, setting forth:
(1) the specific reason or reasons for such denial; (2) specific references to pertinent provisions
of this Plan on which such denial is based; (3) a description of any additional material or
information necessary for the Claimant to perfect his or her claim and an explanation of why such
material or such information is necessary; and (4) an explanation of the procedure for review of
the denied or partially denied claim set forth below, including the Claimant’s right to bring a
civil action under ERISA section 502(a) following an adverse benefit determination on review.

     (c) Request For Review

          Within sixty (60) days after the receipt by the Claimant of the written opinion described
above, the Claimant may request in writing that the Administrative Committee review the initial
claim determination. The Claimant or his or her duly authorized representative may, but need not,
review the pertinent documents and submit issues and comments in writing for consideration by the
Administrative Committee. If the Claimant does not request a review within such sixty (60) day
period, he or she shall be barred and estopped from challenging the initial determination.

     (d) Review of Decision

          Within sixty (60) days after the Administrative Committee’s receipt of a request for review,
after considering all materials presented by the Claimant, the Administrative Committee will inform
the Participant in writing of its decision, in a manner calculated to be understood by the
Claimant. If special circumstances require that the sixty (60) day time period be extended, the
Administrative Committee will so notify the Claimant and will render the decision as soon as
possible, but no later than one hundred twenty (120) days after receipt of the request for review.
If the claim is denied on review, the decision shall set forth: (1) the specific reason or reasons
for the adverse determination; (2) specific reference to pertinent Plan provisions on which the
adverse determination is based; (3) 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 to the claimant’s claim for benefits; and (4) a statement describing any
voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information
about such procedures, as well as a statement of the claimant’s right to bring an action under
ERISA section 502(a)

     (e) Limitation on Claims

          No action may be brought in court on a claim for benefits under this Plan after the later of:

17

 

               (1) Six months after the claim arose, or

               (2) Six months after the decision on appeal under this Section (or six months after the
expiration of the time to take an appeal if no appeal is taken).

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ARTICLE VIII

MISCELLANEOUS

     8.1 Unsecured General Creditor

          Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, claims, or interest in any specific property or assets of the Affiliated
Companies. No assets of the Affiliated Companies shall be held in any way as collateral security
for the fulfilling of the obligations of the Affiliated Companies under this Plan. Any and all of
the Affiliated Companies’ assets shall be, and remain, the general unpledged, unrestricted assets
of the Affiliated Companies. The obligation under the Plan of the Affiliated Companies adopting the
Plan shall be merely that of an unfunded and unsecured promise of those Affiliated Companies to pay
money in the future, and the rights of the Participants and Beneficiaries shall be no greater than
those of unsecured general creditors. It is the intention of the Affiliated Companies that this
Plan be unfunded for purposes of the Code and for purposes of Title I of ERISA.

     8.2 Restriction Against Assignment

          (a) The Company shall pay all amounts payable hereunder only to the person or persons
designated by the Plan and not to any other person or corporation. No part of a Participant’s
Accounts shall be liable for the debts, contracts, or engagements of any Participant, his or her
Beneficiary, or successors in interest, nor shall a Participant’s Accounts be subject to execution
by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any
such person have any right to alienate, anticipate, sell, transfer, commute, pledge, encumber, or
assign any benefits or payments hereunder in any manner whatsoever. If any Participant, Beneficiary
or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell,
transfer, commute, assign, pledge, encumber or charge any distribution or payment from the Plan,
voluntarily or involuntarily, the Administrative Committee, in its discretion, may cancel such
distribution or payment (or any part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the Administrative Committee shall direct.

          (b) The actions considered exceptions to the vesting rule under Section 5.2 will not be
treated as violations of this Section.

          (c) Notwithstanding the foregoing, all or a portion of a Participant’s Account balance may be
paid to another person as specified in a domestic relations order that the Administrative Committee
determines is qualified (a “Qualified Domestic Relations Order”). For this purpose, a Qualified
Domestic Relations Order means a judgment, decree, or order (including the approval of a settlement
agreement) which is:

               (1) issued pursuant to a State’s domestic relations law;

               (2) relates to the provision of child support, alimony payments or marital property rights to
a spouse, former spouse, child or other dependent of the Participant;

19

 

               (3) creates or recognizes the right of a spouse, former spouse, child or other dependent of
the Participant to receive all or a portion of the Participant’s benefits under the Plan; and

               (4) meets such other requirements established by the Administrative Committee.

               The Administrative Committee shall determine whether any document received by it is a
Qualified Domestic Relations Order. In making this determination, the Administrative Committee may
consider the rules applicable to “domestic relations orders” under Code section 414(p) and ERISA
section 206(d), and such other rules and procedures as it deems relevant.

     8.3 Restriction Against Double Payment

          If a court orders an assignment of benefits despite Section 8.2, the affected Participant’s
benefits will be reduced accordingly. The Administrative Committee may use any reasonable actuarial
assumptions to accomplish the offset under this Section.

     8.4 Withholding

          There shall be deducted from each payment made under the Plan or any other Compensation
payable to the Participant (or Beneficiary) all taxes, which are required to be withheld by the
Affiliated Companies in respect to such payment or this Plan. The Affiliated Companies shall have
the right to reduce any payment (or compensation) by the amount of cash sufficient to provide the
amount of said taxes.

     8.5 Amendment, Modification, Suspension or Termination

          The Administrative Committee may amend, modify, suspend or terminate the Plan in whole or in
part, except that no amendment, modification, suspension or termination may reduce a Participant’s
Account balance below its dollar value immediately prior to the amendment. The preceding sentence
is not intended to protect Participants against investment losses. Upon termination of the Plan,
distribution of balances in Accounts shall be made to Participants and Beneficiaries in the manner
and at the time described in Article VI, unless the Company determines in its sole discretion that
all such amounts shall be distributed upon termination in accordance with the requirements under
Code section 409A.

          Notwithstanding the foregoing, no amendment of the Plan shall apply to amounts that were
earned and vested (within the meaning of Code section 409A and regulations thereunder) under the
Plan prior to 2005, 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 amounts that are “grandfathered” and exempt from the requirements of
Code section 409A.

20

 

     8.6 Governing Law

          To the extent not preempted by ERISA, this Plan shall be construed, governed and administered
in accordance with the laws of Delaware.

     8.7 Receipt and Release

          Any payment to a payee in accordance with the provisions of the Plan shall, to the extent
thereof, be in full satisfaction of all claims against the Plan, the Committees and the Affiliated
Companies. The Administrative Committee may require such payee, as a condition precedent to such
payment, to execute a receipt and release to such effect.

     8.8 Payments on Behalf of Persons Under Incapacity

          In the event that any amount becomes payable under the Plan to a person who, in the sole
judgment of the Administrative Committee, is considered by reason of physical or mental condition
to be unable to give a valid receipt therefore, the Administrative Committee may direct that such
payment be made to any person found by the Committee, in its sole judgment, to have assumed the
care of such person. Any payment made pursuant to such determination shall constitute a full
release and discharge of the Administrative Committee and the Company.

     8.9 Limitation of Rights and Employment Relationship

          Neither the establishment of the Plan, any trust nor any modification thereof, nor the
creating of any fund or account, nor the payment of any benefits shall be construed as giving to
any Participant, or Beneficiary or other person any legal or equitable right against the Affiliated
Companies or any trustee except as provided in the Plan and any trust agreement; and in no event
shall the terms of employment of any Employee or Participant be modified or in any way be affected
by the provisions of the Plan and any trust agreement.

     8.10 Headings

          Headings and subheadings in this Plan are inserted for convenience of reference only and are
not to be considered in the construction of the provisions hereof.

* * *

21

 

          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 	 
	 

22

 

APPENDIX A – 2005 TRANSITION RELIEF

     The following provisions apply only during 2005, pursuant to transition relief granted in IRS
Notice 2005-1:

     A.1 Cash-Out

          Participants Separating from Service during 2005 for any reason before age 55 will receive an
immediate lump sum distribution of their Account balances. Other Participants Separating from
Service in 2005 will receive payments in accordance with their prior elections.

     A.2 Elections

          During the Plan’s open enrollment period in June 2005 Participants may fully or partially
cancel 2005 deferral elections and receive in 2005 a refund of amounts previously deferred in 2005.

          In addition, individuals working in Company facilities impacted by Hurricane Katrina may stop
or reduce 2005 elective contributions to the Plan at any time during 2005. All payments under this
Section A.2 will be made before the end of calendar year 2005.

     A.3 Key Employees

          Key Employees Separating from Service on or after July 1, 2005, with distributions subject to
Code section 409A and scheduled for payment in 2006 within six months of Separation from Service,
may choose I or II below, subject to III:

	 	I.	 	Delay the distributions described above for six months from the
date of Separation from Service. The delayed payments will be paid as a single
sum with interest at the end of the six month period, with the remaining
payments resuming as scheduled.

	 	II.	 	Accelerate the distributions described above into a payment in
2005 without interest adjustments.

	 	III.	 	Key Employees must elect I or II during 2005.

A1

 

APPENDIX B – DISTRIBUTION RULES FOR PRE-2005 AMOUNTS

     Distribution of amounts earned and vested (within the meaning of Code section 409A and
regulations thereunder) under the Plan prior to 2005 (and earnings thereon) are exempt from the
requirements of Code section 409A and shall be made in accordance with the Plan terms as in effect
on December 31, 2004 and as summarized in the following provisions.

     B.1 Distribution of Contributions

          (a) Distributions Upon Early Termination.

               (1) Voluntary Termination. If a Participant voluntarily terminates employment with the
Affiliated Companies before age 55 or Disability, distribution of his or her Account will be made
in a lump sum on the Participant’s Payment Date.

               (2) Involuntary Termination. If a Participant involuntarily terminates employment with
the Affiliated Companies before age 55, distribution of his or her Account will generally be made
in quarterly or annual installments over a fixed number of whole years not to exceed 15 years,
commencing on the Participant’s Payment Date, in accordance with the Participant’s original
election on his or her deferral election form. Payment will be made in a lump sum if the
Participant had originally elected a lump sum, if the Account balance is $50,000 or less, or if the
Administrative Committee so specifies.

          (b) Distribution After Retirement, Disability or Death. In the case of a Participant
who separates from service with the Affiliated Companies on account of Retirement, Disability or
death and has an Account balance of more than $50,000, the Account shall be paid to the Participant
(and after his or her death to his or her Beneficiary) in substantially equal quarterly
installments over 10 years commencing on the Participant’s Payment Date unless an optional form of
benefit has been specified pursuant to Section B.1(b)(1).

               (1) An optional form of benefit may be elected by the Participant, on the form provided by
Administrative Committee, during his or her initial election period from among those listed below:

     (A) A lump sum distribution on the Participant’s Payment Date.

     (B) Quarterly installments over a period of at least 1 and no more than
15 years beginning on the Participant’s Payment Date.

     (C) Annual installments over a period of at least 2 and no more than 15
years beginning on the Participant’s Payment Date.

          (2) A Participant from time to time may modify the form of benefit that he or she has
previously elected. Upon his or her separation from service, the most recently elected form of
distribution submitted at least 12 months prior to separation will govern. If no such election
exists, distributions will be paid under the 10-year installment method.

B1

 

          (3) In the case of a Participant who terminates employment with the Affiliated Companies on
account of Retirement, Disability or death with an Account balance of $50,000 or less, the Account
shall be paid to the Participant in a lump sum distribution on the Participant’s Payment Date.

          (4) In general, upon the Participant’s death, payment of any remaining Account balance will be
made to the Beneficiary in a lump sum on the Payment Date. But the Beneficiary will receive any
remaining installments (starting on the Payment Date) if the Participant was receiving
installments, or if the Participant died on or after age 55 with an Account balance over $50,000
and with an effective installment payout election in place. In such cases, the Beneficiary may
still elect a lump sum payment of the remaining Account balance, but only with the Administrative
Committee’s consent.

          (5) In the event that this Plan is terminated, the amounts allocated to a Participant’s
Account shall be distributed to the Participant or, in the event of his or her death, to his or her
Beneficiary in a lump sum.

B2

 

APPENDIX C – MERGED PLANS

     C.1 Plan Mergers

          (a) Merged Plans. As of their respective effective dates, the plans listed in (c)(the
“Merged Plans”) are merged into this Plan. All amounts from those plans that were merged into this
Plan are held in their corresponding Accounts.

          (b) Accounts. Effective as of the dates below, Accounts are established for
individuals who, before the merger, had account balances under the merged plans. These individuals
will not accrue benefits under this Plan unless they become Participants by virtue of being hired
into a covered position with an Affiliated Company, but they will be considered Participants for
purposes of the merged accounts. The balance credited to the Participant’s merged plan account
will, effective as of the date provided in the table below, be invested in accordance with the
terms of this Plan. Except as provided in section C.2 below, amounts merged into this Plan from
the merged plans are governed by the terms of this Plan.

          (c) Table.

	 	 	 	 	 
	 	 	Merger Effective	 	Merged Account
	Name of Merged Plans	 	Dates	 	Names
	Northrop Grumman Benefits 

Equalization Plan

	 	December 10, 2004
	 	NG BEP Account
	 
	 	 	 	 
	Northrop Grumman Space &
Mission Systems Corp.
Deferred Compensation Plan

	 	December 10, 2004
	 	S & MS Deferred

Compensation

Account
	 
	 	 	 	 
	BDM International, Inc. 1997
Executive Deferred
Compensation Plan (“BDM
Plan”)

	 	April 29, 2005
	 	BDM Account

     C.2 Merged Plans – General Rule

          (a) NG BEP Account and S & MS Deferred Compensation Account. Distributions from
Participants’ NG BEP and S & MS Deferred Compensation Accounts are made under the provisions of
Appendix B, except as provided in this Section.

               (1) Amounts in the Participant’s NG BEP Account and the S & MS Deferred Compensation Account
shall be paid out in accordance with elections made under the Merged Plans.

C1

 

               (2) The Participant’s “Payment Date” for amounts in the NG BEP Account and the S & MS Deferred
Compensation Account shall be deemed to be the end of January following the Participant’s
termination of employment.

               (3) The reference to $50,000 in the provisions of Appendix B shall be deemed to be $5,000 with
respect to amounts in the NG BEP Account and the S & MS Deferred Compensation Account.

               (4) The Administrative Committee shall assume the rights and responsibilities of the
Directors/Committee with respect to determining whether a Participant’s NG BEP Account may be paid
out in the event of hardship or in a form other than the automatic form of payment.

               (5) The Administrative Committee shall assume the rights and responsibilities of the Committee
or Special Committee with respect to determining whether a Participant’s S & MS Deferred
Compensation Account may be paid out in the event of hardship or in a form other than the automatic
form of payment.

               (6) For purposes of determining the time of payment of a Participant’s NG BEP Account, a
Participant’s employment will not be deemed to have terminated following the Participant’s layoff
until the earlier of the end of the twelve-month period following layoff (without a return to
employment with the Affiliated Companies) or the date on which the Participant retires under any
pension plan maintained by the Affiliated Companies.

               (7) A Participant’s S & MS Deferred Compensation Account shall be paid to the Participant no
later than the January 5 next preceding the Participant’s 80th birthday.

               (8) In no event will payments of amounts in the Participant’s NG BEP Account and the S & MS
Deferred Compensation Account be accelerated or deferred beyond the payment schedule provided under
the Merged Plans.

          (b) BDM Account. Distributions of a Participant’s vested BDM Account balance shall be
made in accordance with this Section C.2(b), and Article VI shall not apply to such distributions.
A Participant shall be vested in his BDM Account balance in accordance with the vesting provisions
of the BDM Plan.

               (1) Timing of Payment: A Participant’s vested BDM Account balance shall be
distributed in accordance with elections made under the BDM Plan. For those Participants who have
not commenced distributions as of April 29, 2005, payments from the BDM Account will commence at
the time designated on his or her BDM enrollment and election form, unless extended prior to such
date. However, if such a Participant did not elect a fixed date (or elect the earlier of a fixed
date or termination of employment), his or her vested BDM Account balance will be paid as soon as
administratively practicable following termination of employment in the form designated under
Section C.2(b)(2) below.

               (2) Form of Payment: A Participant’s vested BDM Account balance shall be paid in cash
or in-kind, as elected by the Participant, as permitted by the Administrative Committee. The
vested BDM Account balance will be paid in (i) a lump sum, (ii) five (5) or ten

C2

 

(10) substantially equal annual installments (adjusted for gains and losses), or (iii) a
combination thereof, as selected by the Participant (or Beneficiary) prior to the date on which
amounts are first payable to the Participant (or Beneficiary) under Section C.2(b)(1) above. If
the Participant fails to designate properly the manner of payment, such payment will be made in a
lump sum.

               (3) Death Benefits: If a Participant dies before commencement of payment of his BDM
Account balance, the entire Account balance will be paid at the times provided in Section C.2(b)(2)
above to his or her Beneficiary. If a Participant dies after commencement but before he or she has
received all payments from his vested BDM Account balance, the remaining installments shall be paid
annually to the Beneficiary. For purposes of this Section C.2(b), a Participant’s Beneficiary,
unless subsequently changed, will be the designated beneficiary(ies) under the BDM Plan or if none,
the Participant’s spouse, if then living, but otherwise the Participant’s then living descendants,
if any, per stirpes, but, if none, the Participant’s estate.

               (4) Hardship Withdrawal: A Participant may apply for a distribution of all or
any part of his or her vested BDM Account balance, to the extent necessary to alleviate the
Participant’s financial hardship (which financial hardship may be considered to include any taxes
due because of the distribution). A “financial hardship” shall be determined by the Administrative
Committee and shall mean (i) a severe financial hardship to the Participant resulting from a sudden
and unexpected illness or accident of the Participant or of a dependent (as defined in Code section
152(a)) of the Participant, (ii) loss of the Participant’s property due to casualty, or (iii) other
similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant.

               (5) Lost Participant: In the event that the Administrative Committee is unable to
locate a Participant or Beneficiary within three years following the payment date under Section
C.2(b)(1) above, the amount allocated to the Participant’s BDM Account shall be forfeited. If,
after such forfeiture and prior to termination of the Plan, the Participant or Beneficiary later
claims such benefit, such benefit shall be reinstated without interest or earnings for the
forfeiture period. In lieu of such a forfeiture, the Administrative Committee has the discretion
to direct distribution of the vested BDM Account balance to any one or more or all of the
Participant’s next of kin, and in the proportions as the Administrative Committee determines.

               (6) Committee Rules: All distributions are subject to the rules and procedures of the
Administrative Committee. The Administrative Committee may also require the use of particular
forms. The Administrative Committee may change its rules, procedures and forms from time to time
and without prior notice to Participants.

               (7) Payment Schedule: In no event will payments of amounts in the Participant’s BDM
Account be accelerated or deferred beyond the payment schedule provided under the BDM Plan.

               (8) Application to Trustee: BDM International, Inc. set aside amounts in a grantor
trust to assist it in meeting its obligations under the BDM Plan. Notwithstanding Section
C.2(b)(6) above and the claims procedures provided in Section 7.8, a Participant may

C3

 

make application for payment of benefits under this Section C.2(b) directly to the trustee of
such trust.

C4

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