Document:

exv10wxjyxivy

 

Exhibit 10(j)(iv)

APPENDIX G

TO THE NORTHROP GRUMMAN SUPPLEMENTAL PLAN 2

Officers Supplemental Executive Retirement Program

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

Appendix G to the Northrop Grumman Supplemental Plan 2 (the “Appendix”) is hereby amended and
restated effective as of January 1, 2005. This restatement amends the October 1, 2004 restatement
of the Appendix to address Code section 409A.

	G.01	 	 Purpose. The purpose of this Program is to give enhanced retirement
benefits to eligible officers of the Company. This Program is
intended to supplement benefits that are otherwise available under
the Qualified Plans.
	 
	G.02 	 	Definitions and Construction.

	 	(a)	 	Capitalized terms used in this Appendix that are not defined in this Appendix
or Article I of the Plan are taken from the Qualified Plans, and are intended to have
the same meaning.
	 
	 	(b)	 	Eligible Pay. Subject to paragraphs (1) through (3) below, Eligible Pay will
generally be determined under the rules of the Participant’s supplemental benefit plan
(for section 401(a)(17) purposes).

	 	(1)	 	For periods during which a Participant did not participate in a
supplemental benefit plan, Eligible Pay will be determined by reference to the
applicable qualified defined benefit retirement plan under which the
Participant benefits.

	 	(A)	 	Eligible Pay will be calculated without regard
to any otherwise applicable limitations under the Code, including
section 401(a)(17).
	 
	 	(B)	 	Eligible Pay will include compensation deferred
under a Deferred Compensation Plan and in connection with the Northrop
Grumman Electronic Systems Executive Pension Plan.
	 
	 	(C)	 	For purposes of (B), any compensation deferred
will only be treated as compensation for Plan benefit calculation
purposes in the year(s) payment would otherwise have been made and not
in the year(s) of actual payment.

	 	(2)	 	Special Rules for Certain Participants.

 

 

	 	(A)	 	Former Northrop Grumman Electronic Systems
Executive Pension Plan Participants. For years prior to 2002, Eligible
Pay is determined by reference to the Participant’s total base salary
under the Northrop Grumman Electronic Systems Pension Plan plus any
bonuses that were received or would have been received had the
Participant not elected to have the amounts deferred under a deferred
compensation arrangement. No compensation of any kind paid or
otherwise earned while employed by an entity prior to that entity
becoming an Affiliated Company will be included in the Participant’s
Eligible Pay.
	 
	 	(B)	 	Employees of Newport News Shipbuilding, Inc.
For the period beginning on January 1, 1994 and ending December 31,
2003, Eligible Pay is determined by reference to the Participant’s
total base salary plus any bonuses that were received or would have
been received had the Participant not elected to have the amounts
deferred under a deferred compensation arrangement.

	 	(3)	 	If a Participant experiences a Termination of Employment before
December 31 of any year, Eligible Pay for the year in which the Participant’s
Termination of Employment occurs is determined in accordance with the Standard
Annualization Procedure in Article 2 of the Standard Definitions and Procedures
for Certain Northrop Grumman Corporation Retirement Plans.

	 	(c)	 	Final Average Salary for any Plan Year is the Participant’s average Eligible
Pay for the highest three of the last ten consecutive Plan Years in which the
Participant was an employee of an Affiliated Company and a participant in a qualified
defined benefit retirement plan. For this purpose, years will be deemed to be
consecutive even though a break in service year(s) intervenes.
	 
	 	(d)	 	Months of Benefit Service.

	 	(1)	 	Months of Benefit Service will be determined under the rules of
the Qualified Plans for determining Credited Service.
	 
	 	(2)	 	Months of Benefit Service will continue to be counted for a
Participant until the earlier of (A) or (B):

	 	(A)	 	The date the Participant ceases to earn benefit
accrual service under either the Qualified Plans or some other defined
benefit plan of the Affiliated Companies that is qualified under
section 401(a) of the Code (“Successor Qualified Plan”).
	 
	 	(B)	 	Cessation of the Participant’s status as an
elected or appointed officer of the Company.

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	 	(3)	 	If a Participant is transferred to a position with an
Affiliated Company not covered by a Qualified Plan, Months of Benefit Service
will be determined as the Credited Service in the Participant’s last Qualified
Plan.

	 	(A)	 	If such a transfer occurs, the Participant will
continue to earn deemed service credits as if he or she were still
participating under the Qualified Plan.
	 
	 	(B)	 	Those deemed service credits will not be
considered as earned under the Qualified Plan for purposes of
determining:

	 	(i)	 	benefits under the Qualified Plan
or supplements to the Qualified Plan other than this Program, or
	 
	 	(ii)	 	the offset under Section G.05
below, including the early retirement factors associated with
the plans included in the offset.

	 	(e)	 	The benefits under this Program are designed to supplement benefits under the
Qualified Plans and are to be construed using the same principles and benefit
calculation methodologies applicable under the Qualified Plans except where expressly
modified in this Program.
	 
	 	(f)	 	Benefits are calculated without regard to the limits in sections 401(a)(17) and
415 of the Code.

	G.03	 	Eligibility. Except as otherwise provided in (1) through (5) below, eligibility for
benefits under this Program is limited to elected or appointed officers of the Company, other
than Charles H. Noski.

	 	(1)	 	Employees of Newport News Shipbuilding Inc. will be eligible to participate
under this Program effective January 1, 2004.
	 
	 	(2)	 	No employees of Northrop Grumman Space & Mission Systems Corp. (formerly TRW
Inc.), Component Technologies, or Premier America Credit Union are eligible for
benefits under this Program.
	 
	 	(3)	 	No Participant is entitled to any benefits under this Appendix G until he or
she becomes Vested under the Qualified Plans, except to the extent provided in Section
G.08.
	 
	 	(4)	 	No individual who is, was, or will be eligible to participate in and receive
benefits under Appendix F of the Plan (the “CPC SERP”) is eligible to participate under
this Program.

Effective January 1, 2005, Section G.03 is restated in its entirety to provide as follows:

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	G.03	 	 Eligibility. Except as otherwise provided in (1) through (5) below,
eligibility for benefits under this Program is limited to elected or appointed officers
of the Company, other than Charles H. Noski.

	 	(1)	 	Employees of Newport New Shipbuilding, Inc. will be eligible to
participate under this Program effective January 1, 2004.
	 
	 	(2)	 	No employees of Vinnell Corporation, Component Technologies, or
Premier America Credit Union are eligible for benefits under this Program.
	 
	 	(3)	 	No Participant is entitled to any benefits under this Appendix
G until he or she becomes Vested under the Qualified Plans, except to the
extent provided in Section G.08.
	 
	 	(4)	 	No individual who is, was, or will be eligible to participate
in and received benefits under Appendix F of the Plan (the “CPC SERP””) is
eligible to participate under this Program.
	 
	 	(5)	 	Notwithstanding any other provisions of this Program to the
contrary, elected and appointed officers of the Company’s Mission Systems and
Space Technology Sectors will be eligible to participate under this Program
effective as of January 1, 2005.

	G.04	 	 Benefit Amount.

	 	(a)	 	A Participant’s annual Normal Retirement Benefit under this Program equals the
sum of (1) through (3) below, subject to the limit described in Section G.05:

	 	(1)	 	2.0% x Final Average Salary x Months of Benefit Service up to
120 months ÷ 12
	 
	 	(2)	 	1.5% x Final Average Salary x Months of Benefit Service in
excess of 120 months up to 240 months ÷ 12
	 
	 	(3)	 	1.0% x Final Average Salary x Months of Benefit Service in
excess of 240 months up to 540 months ÷ 12

	 	 	 	However, if an employee performs service during his or her career in covered
positions under both this Appendix G and the CPC SERP: the employee’s entire benefit
will be calculated under Section F.04 of the CPC SERP and payable under the terms of
that program; all benefits accrued under this Program will be eliminated; and no
amounts will be payable under this Appendix G.

	 	(b)	 	The total benefit payable is a single, straight life annuity commencing at age
65, assuming an annual benefit equal to the gross benefit under (a). The form of
benefit and timing of commencement will be determined under Section G.06.

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	 	(c)	 	If a Participant’s benefit is paid under this Program before age 65, the
benefit will be adjusted as follows. The Early Retirement Benefit is a monthly benefit
equal to the Normal Retirement Benefit reduced by the lesser of:

	 	(1)	 	1/12th of 2.5% for each calendar month the payment of benefits
begins before age 65; or
	 
	 	(2)	 	2.5% for each Benefit Point less than 85 where the
Participant’s Benefit Points (truncated to reach a whole number) equal the sum
of:

	 	(A)	 	his or her age (computed to the nearest 1/12th
of a year) at the annuity starting date and
	 
	 	(B)	 	1/12th of his or her months of Credited Service
under the applicable Qualified Plan (also computed to the nearest
1/12th of a year) as of the date his or her employment terminated.

	 	 	 	A Participant’s Vesting Service and months of Credited Service earned under the
Qualified Plans (or deemed earned in the event of a transfer) are used to determine
whether the Early Retirement Benefit provisions apply and to calculate the early
retirement reduction.

	 	(d)	 	Except as provided under Sections G.06(c) and G.07, no benefit will be paid
under this Program if a Participant:

	 	(1)	 	experiences a Termination of Employment before attaining age 55
and completing 120 Months of Benefit Service; or
	 
	 	(2)	 	is not an active Participant in the Plan at the time of his or
her Termination of Employment.

	 	 	 	Notwithstanding any other provision of the Program to the contrary, a Participant
who otherwise satisfies the requirements of this subsection (d) is not required to
retire and commence benefits under this Program upon his or her Termination of
Employment.

	G.05	 	 Benefit Limit. Accruals under Section G.04 will be limited as provided in this
Section.

	 	(a)	 	A Participant’s total accrued benefits under all plans, programs, and
arrangements in which he or she participates, including the benefit accrued under
Section G.04 and all plans included in Section G.05(b), may not exceed 60% of his or
her Final Average Salary. If this limit is exceeded, the Participant’s benefit accrued
under this Program will be reduced to the extent necessary to satisfy the limit.

	 	(1)	 	The Participant’s Final Average Salary will be reduced for
early retirement applying the factors in Section G.04(c).
	 
	 	(2)	 	The limit in this subsection may not be exceeded even after the
benefits under this Program have been enhanced under any Special Agreements.

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	 	(b)	 	The gross benefit calculated under Section G.04 above (multiplied by any
applicable early retirement factor) is reduced by the retirement benefits the
participant is entitled to receive (including all early retirement subsidies,
supplements, and other such benefits) under all defined benefit retirement plans,
programs, and arrangements maintained by the Affiliated Companies, whether qualified or
nonqualified (but not contributory or defined contribution plans, programs, or
arrangements).
	 
	 	(c)	 	For purposes of the offset in subsection (b):

	 	(1)	 	Offsets will be made:

	 	(A)	 	with respect to:

	 	(i)	 	benefits accrued under any plan
while a Participant is employed by the Affiliated Companies; and
	 
	 	(ii)	 	benefits accrued under any plan
while a Participant was employed by a company before it became
an Affiliated Company;

	 	(B)	 	with respect to any benefit enhancements under
change-in-control Special Agreements (including enhancements for age
and service) that Participants have entered into with the Company
(“Special Agreements”); and
	 
	 	(C)	 	without regard to:

	 	(i)	 	benefits accrued under the
Supplemental Retirement Income Program for Senior Executives
described in Appendix A;
	 
	 	(ii)	 	Part II benefits under the Litton
Restoration Plan and Litton Restoration Plan II; or
	 
	 	(iii)	 	benefits accrued under the
Company’s Pilot’s Transition Plan.

	 	(2)	 	If a Participant’s benefit under this Program commences upon
reaching age 65, the Participant’s benefits under all the plans and programs
described in (b) above will be compared on the basis of a single, straight life
annuity commencing at age 65 using the assumptions stated in Section G.09.
	 
	 	(3)	 	If a Participant’s benefit under this Program commences before
age 65, benefits under this Program will be offset for the plans described in
(b) above by converting the benefits paid or payable from those plans to an

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	 	 	 	actuarially equivalent single life annuity benefit commencing upon retirement.
For this purpose, the benefit will be converted to an early retirement benefit
under each applicable plan’s terms and further adjusted, if necessary, for
different normal forms of benefits or different commencement dates using the
actuarial assumptions of Section G.09.
	 
	 	(4)	 	If a Participant previously received a distribution under one
of the plans described in (b) above for a period of service that counts as
Months of Benefit Service, that previously received benefit applies toward the
limit under this Section.

	 	(e)	 	Example: A Participant elects to receive an early retirement benefit at age 55
after completing 240 Months of Benefit Service with Final Average Salary equal to
$250,000. The Participant has accrued monthly benefits under the Northrop Grumman
Electronic Systems Pension Plan (the “ES Plan”) equal to $2,550 payable at age 55, the
Northrop Grumman ERISA Supplemental Program 2 (“ERISA 2”) equal to $600 payable at age
55, and the Northrop Grumman Electronic Systems Executive Pension Plan (the “ES EPP”)
equal to $600 payable at age 65.
	 
	 	 	 	The Participant’s pre-offset benefit under this Program, calculated in accordance
with Section G.04, equals 35% of the Participant’s Final Average Salary ($250,000) x
75% to account for the early retirement reduction under Section G.04(c). This
results in a monthly gross benefit under this Program, before the benefit limit is
applied, equal to $5,468.75. The Participant’s total net benefit is calculated,
taking into account the offset under (b) above, by reducing the gross benefit by the
following:

	 	(1)	 	the $2,550 monthly benefit under the ES Plan payable at age 55,
subject to that plan’s conversion factors; and
	 
	 	(2)	 	the $600 ERISA 2 early retirement single life annuity payable
at age 55.
	 
	 	(3)	 	No offset results from the ES EPP, however, because the
Participant is not eligible to receive a benefit at age 55 under that plan.

	 	 	 	This results in a monthly gross benefit under this Program equal to $2,318.75.

	G.06	 	 Payment of Benefits.

	 	(a)	 	Benefits will generally be paid in accordance with Section 2.03 of the Plan.
	 
	 	 	 	In addition to all other benefit forms otherwise available under this Program,
effective as of January 1, 2004, a Participant may elect to have his or her benefits
paid in the form of a 75% Joint and Survivor Option. Under this option, the
Participant is paid a reduced monthly benefit for life and then, if the
Participant’s spouse is still alive, a benefit equal to 75% of the Participant’s
monthly benefit is paid to the spouse for the remainder of his or her life. If the
spouse is not still

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	 	 	 	alive when the Participant dies, no further payments are made.
The determination of the benefit payable under this option will be made utilizing
the factors for a 75% Joint and Survivor Option under the provisions of the Northrop
Grumman Retirement Plan.
	 
	 	(b)	 	Except as provided in (c), benefits will commence as of the first day of the
month following the Participant’s Termination of Employment or, if later, as of the
date the Participant’s early retirement benefit commences under the Qualified Plans.
	 
	 	(c)	 	If a Participant has a Termination of Employment because of disability before
the Participant is eligible for an early retirement benefit from a Qualified Plan,
benefits may commence immediately, subject to adjustment for early commencement using
the applicable factors and methodologies under Sections G.04(c) and G.05(c)(3).
	 
	 	(d)	 	If a Participant dies after commencement of benefits, any survivor benefits
will be paid in accordance with the form of benefit selected by the Company. If a
Participant dies prior to commencement of benefits, payment will be made under Section
G.07.

     The distribution rules under this Section only apply to Grandfathered Amounts. See Appendix 1
and Appendix 2 for distribution rules that apply to other Plan benefits.

	G.07 	 	Preretirement Death Benefits. If a Participant dies before benefits commence,
preretirement surviving spouse benefits are payable under this Program on behalf of the
Participant if his or her surviving spouse is eligible for a qualified preretirement survivor
annuity (as required under section 401(a)(11) of the Code) from a Qualified Plan.

	 	(a)	 	Amount and Form of Preretirement Death Benefit. A preretirement death benefit
paid to a surviving spouse is the survivor benefit paid to a surviving spouse is the
survivor benefit portion of a 100% joint and survivor annuity calculated using the
survivor annuity factors under the Northrop Grumman Pension Plan in an amount
determined as follows:

	 	(1)	 	First, the Participant’s gross benefit under Section G.04(a)
will be calculated and reduced, as necessary, for early retirement using the
factors in Section G.04(c);
	 
	 	(2)	 	Second, the target preretirement death benefit under this
Program will be calculated by applying the appropriate 100% joint-and-survivor
annuity factor (as provided in the Northrop Grumman Pension Plan) to the amount
determined in (1); and
	 
	 	(3)	 	Third, the target preretirement death benefit determined in (2)
will be reduced by the preretirement death benefits, if any, payable under all
defined benefit retirement plans, programs, and arrangements maintained by the
Affiliated Companies, whether qualified or nonqualified, that are otherwise
included in the offsets described under Section G.05(b) such

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	 	 	 	that the sum of the preretirement death benefit payments made to the surviving spouse under all
plans, including this Program, will equal, at all times, the level of payments
determined to be the target preretirement death benefit (subject to the benefit
limit described in Section G.05(a)).

	 	(b)	 	Timing of Preretirement Death Benefit.

	 	(1)	 	Benefits commence as of the first day of the month following
the death of the Participant, subject to adjustment for early commencement
using the applicable factors under G.04(c).
	 
	 	(2)	 	If there is a dispute as to whom payment is due, the Company
may delay payment until the dispute is settled.

	 	(c)	 	No benefit is payable under this Program with respect to a spouse after the
spouse dies.

     The distribution rules under this Section only apply to Grandfathered Amounts. See Appendix 1
and Appendix 2 for distribution rules that apply to other Plan benefits.

	G.08  	 	Individual Arrangements. This Section applies to a Participant who has an
individually-negotiated arrangement with the Company for supplemental retirement pension
benefits. Notwithstanding any other provision to the contrary, this Section does not apply to
any individually-negotiated arrangements between a Participant and the Company concerning
severance payments.

	 	(a)	 	This Section is intended to coordinate the benefits under this Program with
those of any individually-negotiated arrangement. Participants with such arrangements
will be paid the better of the benefits under the arrangement or under Sections G.04 or
G.07 (as limited by G.05).
	 
	 	(b)	 	In no case will duplicate benefits be paid under this Program and such an
individual arrangement. Any payments under this Program will be counted toward the
Company’s obligations under an individual arrangement, and vice-versa.
	 
	 	(c)	 	If the benefit under an individually-negotiated arrangement exceeds the one
payable under this Program, then the individual benefit will be substituted as the
benefit payable under this Program (even if it exceeds the limit under G.05).
	 
	 	(d)	 	To determine which benefit is greater, all benefits will be compared, subject
to adjustment for early retirement using the applicable factors and methodologies under
Sections G.04(c) and G.05(c)(3).
	 
	 	(e)	 	For purposes of (d), the individually-negotiated benefit will be determined in
accordance with all of its terms and conditions. Nothing in this Section is meant to
alter any of those terms and conditions.
	 
	 	(f)	 	This Section does not apply to the Special Agreements.

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	G.09	 	 Actuarial Assumptions. The following defined terms and actuarial assumptions will be
used to the extent necessary under Sections G.05 and G.08 to convert benefits to straight life
annuity form commencing upon the Participant reaching age 65:
	 
	 	 	Interest: Five percent (5%)

Mortality: The applicable mortality table which would be used to calculate a lump
sum value for the benefit under the Qualified Plans.

	 	 	Increase in Code Section 415 Limit: 2.8% per year.

Variable Unit Values: Variable Unit Values are presumed not to increase for future
periods after commencement of benefit.

* * *

               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 	 
	 

-10-exv10wxky

 

Exhibit 10(k)

NORTHROP GRUMMAN

ERISA SUPPLEMENTAL PLAN

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

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	INTRODUCTION
	 	 	1	 
	 
	 	 	 	 
	Article I Definitions
	 	 	2	 
	1.01 Affiliated Companies
	 	 	2	 
	1.02 CIC Plans
	 	 	2	 
	1.03 Code
	 	 	2	 
	1.04 Company
	 	 	2	 
	1.05 Grandfathered Amounts
	 	 	2	 
	1.06 Key Employee
	 	 	2	 
	1.07 Participant
	 	 	2	 
	1.08 Payment Date
	 	 	2	 
	1.09 Plan
	 	 	2	 
	1.10 Pension Plan Benefits
	 	 	2	 
	1.11 Pension Plan
	 	 	2	 
	1.12 Separation from Service
	 	 	3	 
	1.13 Termination of Employment
	 	 	3	 
	 
	 	 	 	 
	Article II Eligibility for and Amount of Benefits
	 	 	4	 
	2.01 Purpose
	 	 	4	 
	2.02 Eligibility
	 	 	4	 
	2.03 Amount of Benefit
	 	 	4	 
	2.04 Preretirement Surviving Spouse Benefit
	 	 	4	 
	2.05 Forms and Times of Benefit Payments
	 	 	5	 
	2.06 Beneficiaries and Spouses
	 	 	5	 
	2.07 Plan Termination
	 	 	6	 
	2.08 Pension Plan Benefits
	 	 	6	 
	2.09 Mandatory Cashout
	 	 	6	 
	2.10 Optional Payment Forms
	 	 	7	 
	 
	 	 	 	 
	Article III Lump Sum Election
	 	 	8	 
	3.01 In General
	 	 	8	 
	3.02 Retirees Election
	 	 	8	 
	3.03 Retirees Lump Sum
	 	 	9	 
	3.04 Actives Election
	 	 	9	 
	3.05 Actives Lump Sum – Retirement Eligible
	 	 	10	 
	3.06 Actives Lump Sum – Not Retirement Eligible
	 	 	12	 
	3.07 Lump Sums with CIC Severance Plan Election
	 	 	12	 
	3.08 Calculation of Lump Sum
	 	 	12	 
	3.09 Spousal Consent
	 	 	13	 
	 
	 	 	 	 
	Article IV Miscellaneous
	 	 	14	 
	4.01 Amendment and Plan Termination
	 	 	14	 

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	4.02 Not an Employment Agreement
	 	 	14	 
	4.03 Assignment of Benefits
	 	 	14	 
	4.04 Nonduplication of Benefits
	 	 	14	 
	4.05 Funding
	 	 	15	 
	4.06 Construction
	 	 	15	 
	4.07 Governing Law
	 	 	15	 
	4.08 Actions By Company
	 	 	15	 
	4.09 Plan Representatives
	 	 	15	 
	4.10 Number
	 	 	15	 
	4.11 2001 Reorganization
	 	 	15	 
	 
	 	 	 	 
	APPENDIX A – 2005-2007 TRANSITION RELIEF
	 	 	17	 
	A.01 Election
	 	 	17	 
	A.02 2005 Commencements
	 	 	17	 
	A.03 2006 and 2007 Commencements
	 	 	18	 
	 
	 	 	 	 
	APPENDIX B – POST 2007 DISTRIBUTION OF 409A AMOUNTS
	 	 	19	 
	B.01 Time of Distribution
	 	 	19	 
	B.02 Special Rule for Key Employees
	 	 	19	 
	B.03 Forms of Distribution
	 	 	19	 
	B.04 Death
	 	 	19	 
	B.05 Actuarial Assumptions
	 	 	20	 
	B.06 Accelerated Lump Sum Payouts
	 	 	20	 
	B.07 Effect of Early Taxation
	 	 	21	 
	B.08 Permitted Delays
	 	 	21	 
	B.09 Special Tax Distribution
	 	 	21	 

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INTRODUCTION

     The Northrop Grumman ERISA Supplemental Plan (the “Plan”), formerly known as the Northrop
Corporation ERISA Supplemental Plan 1, is hereby amended and restated effective as of January 1,
2005. This restatement amends the October 1, 2004 restatement of the Plan to address the
requirements of Code section 409A and certain other changes.

     The Plan is intended to comply with Code section 409A and official guidance issued thereunder
(except for Grandfathered Amounts). Notwithstanding any other provision of this Plan, this Plan
shall be interpreted, operated and administered in a manner consistent with this intention.

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ARTICLE I 

Definitions

For purposes of the Plan, the following terms, when capitalized, will have the following meanings:

	1.01	 	Affiliated Companies. The Company and any other entity
related to the Company under the rules of section 414 of the Code. The Affiliated Companies
include Northrop Grumman Corporation and its 80%-owned subsidiaries and may include other
entities as well.
	 
	1.02	 	CIC Plans. Northrop Grumman Corporation Change-In-Control Severance Plan (effective
August 1, 1996, as amended) or the Northrop Grumman Corporation March 2000 Change-In-Control
Severance Plan.
	 
	1.03	 	Code. The Internal Revenue Code of 1986, as amended.
	 
	1.04	 	Company. The Company as designated in the Pension Plans.
	 
	1.05	 	Grandfathered Amounts. Plan benefits that were earned and vested as of December 31,
2004 within the meaning of Code section 409A and official guidance thereunder.
	 
	1.06	 	Key Employee. An employee treated as a “specified employee” under Code section
409A(a)(2)(B)(i) of the Company or the Affiliated Companies (i.e., a key employee (as defined
in Code section 416(i) without regard to paragraph (5) thereof)) if the Company’s or an
Affiliated Company’s stock is publicly traded on an established securities market or
otherwise. The Company shall determine in accordance with a uniform Company policy which
Participants are Key Employees as of each December 31 in accordance with IRS regulations or
other guidance under Code section 409A, provided that in determining the compensation of
individuals for this purpose, the definition of compensation in Treas. Reg. § 1.415(c)-2(d)(3)
shall be used. Such determination shall be effective for the twelve (12) month period
commencing on April 1 of the following year.
	 
	1.07	 	Participant. Any employee who (a) is eligible for benefits under one or both Pension
Plans, (b) meets the eligibility requirements of Section 2.02 of this Plan and (c) and has not
received full payment under the Plan.
	 
	1.08	 	Payment Date. The 1st of the month coincident with or following the later of (a) the
date the Participant attains age 55, or (b) the date the Participant Separates from Service.
	 
	1.09	 	Plan. The Northrop Grumman ERISA Supplemental Plan, formerly known as the Northrop
Corporation ERISA Supplemental Plan 1.
	 
	1.10	 	Pension Plan Benefits. This term is defined in Section 2.08 of this Plan.
	 
	1.11	 	Pension Plan and Pension Plans. Any of the following:

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

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

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

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

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ARTICLE II

Eligibility for and Amount of Benefits

	2.01	 	Purpose. The purpose of this Plan is simply to restore to employees of the Company
the benefits they lose under the Pension Plans as a result of the benefit limits in Code
section 415, as amended, or any successor section (“section 415”), as the benefit limits are
described in the applicable Pension Plan.
	 
	2.02	 	Eligibility. Each Participant is eligible to receive a benefit under this Plan if:

	 	(a)	 	he or she has vested in benefits under one or both Pension Plans;
	 
	 	(b)	 	he or she has vested benefits reduced because of the application of section
415;
	 
	 	(c)	 	he or she is not eligible to receive a benefit under the Northrop Corporation
Supplemental Retirement Income Program for Senior Executives or any other plan or
program which bars an employee from participation in this Plan; and
	 
	 	(d)	 	he or she is not a “Participant” in the Charles H. Noski Executive Retirement
Plan as that term is defined under that plan.

	2.03	 	Amount of Benefit. The benefit payable from the Company under this Plan to a
Participant will equal the retirement benefit, if any, which would have been payable to the
Participant under the terms of a Pension Plan but for the restrictions of section 415 (as
described in the applicable Pension Plan).
	 
	 	 	The benefit payable under this Plan will be reduced by the amount of Pension Plan Benefits
attributable to the applicable Pension Plan.
	 
	 	 	Benefits under this Plan will only be paid to supplement benefit payments actually made from
a Pension Plan. If benefits are not payable under a Pension Plan because the Participant
has failed to vest or for any other reason, no payments will be made under this Plan with
respect to such Pension Plan.
	 
	 	 	In no event, however, (1) will this Plan pay any amount of a Participant’s retirement
benefit, if any, attributable to the “2000 Ad Hoc Increase for Retirees” Appendix added to
certain of the Company’s tax-qualified plans pursuant to the Board of Directors resolution
adopted May 17, 2000, or (2) will a Participant be entitled to a benefit (or an increased
benefit) from or as a result of participation in this Plan under the Board of Directors
resolution adopted May 17, 2000.
	 
	2.04	 	Preretirement Surviving Spouse Benefit. This Section only applies to Grandfathered
Amounts.

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	 	 	Preretirement surviving spouse benefits will be payable under this Plan on behalf of a
Participant if such Participant’s surviving spouse is eligible for preretirement surviving
spouse benefits payable from a Pension Plan. The benefit payable will be the amount which
would have been payable under the Pension Plan but for the restrictions of section 415 (as
described in the applicable Pension Plan).
	 
	 	 	The benefit payable under this Plan will be reduced by the amount of Pension Plan Benefits
attributable to the applicable Pension Plan.
	 
	 	 	No benefit will be payable under this Plan with respect to a spouse after the death of that
spouse.
	 
	 	 	See Appendix A and Appendix B for the rules that apply to other benefits earned under the
Plan.
	 
	2.05	 	Forms and Times of Benefit Payments. This Section only applies to Grandfathered
Amounts.
	 
	 	 	The Company will determine the form and timing of benefit payments in its sole discretion.
However, for payments made to supplement those of a particular Pension Plan, the Company
will only select among the options available under that Pension Plan, and using the same
actuarial adjustments used in that Pension Plan except in cases of lump sums.
	 
	 	 	Whenever the present value of the amount payable under the Plan does not exceed $10,000, it
will be paid in the form of a single lump sum as of the first of the month following
Termination of Employment. The lump sum will be calculated using the factors and
methodology described in Section 3.08 below. (See Section 2.09 for the rule that applies as
of January 1, 2008).
	 
	 	 	No payments will commence under this Plan until a Participant has a Termination of
Employment, even in cases where benefits have commenced under a Pension Plan for
Participants over age 70-1/2.
	 
	 	 	See Appendix A and Appendix B for the rules that apply to other benefits earned under the
Plan.
	 
	2.06	 	Beneficiaries and Spouses. This Section only applies to Grandfathered Amounts.
	 
	 	 	If the Company selects a form of payment which includes a survivor benefit, the Participant
may make a beneficiary designation, which may be changed at any time prior to commencement
of benefits. A beneficiary designation must be in writing and will be effective only when
received by the Company.
	 
	 	 	If a Participant is married on the date his or her benefits are scheduled to commence, his
or her beneficiary will be his or her spouse unless some other beneficiary is named with
spousal consent. Spousal consent, to be effective, must be submitted in writing before
benefits commence and must be witnessed by a Plan representative or notary public. No

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	 	 	spousal consent is necessary if the Company determines that there is no spouse or that the
spouse cannot be found.
	 
	 	 	The Participant’s spouse will be the spouse as determined under the underlying Pension Plan.
	 
	 	 	See Appendix A and Appendix B for the rules that apply to other benefits earned under the
Plan.
	 
	2.07	 	Plan Termination. No further benefits may be earned under this Plan with respect to
a particular Pension Plan after the termination of such Pension Plan.
	 
	2.08	 	Pension Plan Benefits. The term “Pension Plan Benefits” generally means the benefits
actually payable to a Participant, spouse, beneficiary or contingent annuitant under a Pension
Plan. However, this Plan is only intended to remedy pension reductions caused by the
operation of section 415 and not reductions caused for any other reason. In those instances
where pension benefits are reduced for some other reason, the term “Pension Plan Benefits”
shall be deemed to mean the benefits that would have been actually payable but for such other
reason.
	 
	 	 	Examples of such other reasons include, but are not limited to, the following:

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

	2.09	 	Mandatory Cashout. Notwithstanding any other provisions in the Plan, Participants
with Grandfathered Amounts who have not commenced payment of such benefits prior to January 1,
2008 will be subject to the following rules:

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

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	 	 	 	of their underlying qualified pension plan benefits (without interest), if such
present value is below the Code section 402(g) limit in effect at the time such
payments commence.

For purposes of calculating present values under this Section, the actual assumptions and
calculation procedures for lump sum distributions under the Northrop Grumman Pension Plan
shall be used.

	2.10	 	Optional Payment Forms. Participants with Grandfathered Amounts shall be permitted
to elect (a) or (b) below:

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

	 	 	 	 	 
	 

	 	Interest Rate: 6%
	 	
	 
	 	 	 	 
	 

	 	Mortality Table: RP-2000 Mortality Table projected 15 years for future standardized
cash balance factors

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ARTICLE III

Lump Sum Election

     This Article only applies with respect to Grandfathered Amounts. See Appendix A and Appendix
B for the distribution rules that apply to other benefits earned under the Plan.

	3.01	 	In General. This Article sets forth the rules under which Participants may elect to
receive their benefits in a lump sum. Except as provided in Section 3.08, this Article does
not apply to active employees (as defined in Section 3.04) in cases where benefits are
automatically payable in lump sum form under Article II.
	 
	3.02	 	Retirees Election. Participants and Participants’ beneficiaries already receiving
monthly benefits under the Plan at its inception will be given a one-time opportunity to elect
a lump sum payout of future benefit payments.

	 	(a)	 	The election must be made within a 60-day period determined by the Company.
Within its discretion, the Company may delay the commencement of the 60-day period in
instances where the Company is unable to timely communicate with a particular payee.
	 
	 	(b)	 	The determination as to whether a payee is already receiving monthly benefits
will be made at the beginning of the 60-day period.
	 
	 	(c)	 	An election to take a lump sum must be accompanied by a waiver of the existing
retiree medical benefits by those Participants (and their covered spouses or surviving
spouses) entitled either to have such benefits entirely paid for by the Company or to
receive such benefits as a result of their classification as an employee under
Executive Class Code II.
	 
	 	 	 	Following the waiver, waiving Participants (and covered spouses or surviving
spouses) will be entitled to the coverage offered to employees who are eligible for
Senior Executive Retirement Insurance Benefits in effect as of July 1, 1993.
	 
	 	(d)	 	If the person receiving payments as of the beginning of the 60-day period dies
prior to making a lump sum election, his or her beneficiary, if any, may not make the
lump sum election.
	 
	 	(e)	 	Elections to receive a lump sum (and waivers under (c)) must be made in writing
and must include spousal consent if the payee (whether the Participant or beneficiary)
is married. Elections and spousal consent must be witnessed by a Plan representative
or a notary public.
	 
	 	(f)	 	An election (with spousal consent, where required) to receive the lump sum made
at any time during the 60-day period will be irrevocable. If no proper election has
been made by the end of the 60-day period, payments will continue unchanged in the
monthly form that had previously been applicable.

- 8 -

 

	3.03	 	Retirees Lump Sum. If a retired Participant or beneficiary makes a valid election
under Section 3.02 within the 60-day period, monthly payments will continue in the previously
applicable form for 12 months (assuming the payees live that long).

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

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

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

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

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

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

- 9 -

 

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

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

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

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

Before the election becomes effective, it may be revoked.

If a Participant does not have a Termination of Employment within 60 days after
making an election, the election will never take effect.

	 	(d)	 	An election may only be made once. If it fails to become effective after 60
days or is revoked before becoming effective, it cannot be made again at a later time.
	 
	 	(e)	 	After a Participant has a Termination of Employment, no election can be made.
	 
	 	(f)	 	If a Participant dies before making a lump sum election, his or her spouse may
not make a lump sum election with respect to any benefits which may be due the spouse.
	 
	 	(g)	 	Elections to receive a lump sum must be made in writing and must include
spousal consent if the Participant is married. Elections and spousal consent must be
witnessed by a Plan representative or a notary public.

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

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

- 10 -

 

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

	 	(A)	 	with the survivor benefit equal to 50% of the
Participant’s benefit;
	 
	 	(B)	 	with the Participant’s spouse as the survivor
annuitant;
	 
	 	(C)	 	determined by using the contingent annuitant
option factors used to convert straight life annuities to 50% joint and
survivor annuities under the Northrop Retirement Plan; and
	 
	 	(D)	 	with all payments ceasing upon the death of
both the Participant and his or her spouse should they die before the
12 months elapse.

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

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

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

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

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	3.06	 	Actives Lump Sum – Not Retirement Eligible. If a Participant with a valid lump sum
election in effect under Section 3.04, has a Termination of Employment before he or she is
entitled to commence benefits under the Pension Plans, payments will be made in accordance
with this Section.

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

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

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

	3.07	 	Lump Sums with CIC Severance Plan Election. A Participant who elects lump sum
payments of all his or her nonqualified benefits under the CIC Plans is entitled to have his
or her benefits paid as a lump sum calculated under the terms of the applicable CIC Plan.
Otherwise, benefit payments are governed by the general provisions of this Article, which
provide different rules for calculating the amount of lump sum payments.
	 
	3.08	 	Calculation of Lump Sum. The factors to be used in calculating the lump sum are as
follows:

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

	 	(1)	 	the discount rate used by the Company for purposes of Statement
of Financial Accounting Standards No. 87 of the Financial Accounting Standards
Board as disclosed in the Company’s annual report to shareholders for the year
end immediately preceding the date of distribution, or
	 
	 	(2)	 	the applicable interest rate that would be used to calculate a
lump sum value for the benefit under the Pension Plans.

- 12 -

 

Mortality: the applicable mortality table that would be used to calculate a
lump sum value for the benefit under the Northrop Grumman Retirement Plan.

Increase in Section 415 Limit: 4% per year.

Age: Age rounded to the nearest month on the date the lump sum is payable.

Variable Unit Values: Variable Unit Values are presumed not to increase for
future periods after the date the lump sum is payable.

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

For example, assume a Participant is receiving benefit payments in the form of a 50%
joint and survivor annuity.

If the Participant and the survivor annuitant are both still alive at the time the
lump sum payment is due, the present value calculation will be based on the
remaining benefits that would be paid to both the Participant and the survivor in
the annuity form.

If only the survivor is alive, the calculation will be based solely on the remaining
50% survivor benefits that would be paid to the survivor.

If only the Participant is alive, the calculation will be based solely on the
remaining benefits that would be paid to the Participant.

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

In the case of a lump-sum under Section 3.07 (related to lump sums with a CIC Severance Plan
election), the lump-sum amount will be calculated as described in that section and the rules
of this Section 3.08 are not used.

	3.09	 	Spousal Consent. Spousal consent, as required for elections as described above, need
not be obtained if the Company determines that there is no spouse or the spouse cannot be
located.

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ARTICLE IV

Miscellaneous

	4.01	 	Amendment and Plan Termination. The Company may, in its sole discretion, terminate,
suspend or amend this Plan at any time or from time to time, in whole or in part for any
reason. This includes the right to amend or eliminate any of the provisions of the Plan with
respect to lump sum distributions, including any lump sum calculation factors, whether or not
a Participant has already made a lump sum election. Notwithstanding the foregoing, no
amendment or termination of the Plan shall reduce the amount of a Participant’s accrued
benefit under the Plan as of the date of such amendment or termination.
	 
	 	 	No amendment of the Plan shall apply to the Grandfathered Amounts, unless the amendment
specifically provides that it applies to such amounts. The purpose of this restriction is
to prevent a Plan amendment from resulting in an inadvertent “material modification” to the
Grandfathered Amounts.
	 
	 	 	The Company may, in its sole discretion, seek reimbursement from the Pension Plans to the
extent this Plan pays Pension Plan Benefits to which Participants were entitled to or became
entitled to under the Pension Plans.
	 
	4.02	 	Not an Employment Agreement. Nothing contained in this Plan gives any Participant
the right to be retained in the service of the Company, nor does it interfere with the right
of the Company to discharge or otherwise deal with Participants without regard to the
existence of this Plan.
	 
	4.03	 	Assignment of Benefits. A Participant, surviving spouse or beneficiary may not,
either voluntarily or involuntarily, assign, anticipate, alienate, commute, sell, transfer,
pledge or encumber any benefits to which he or she is or may become entitled under the Plan,
nor may Plan benefits be subject to attachment or garnishment by any of their creditors or to
legal process.
	 
	4.04	 	Nonduplication of Benefits. This Section applies if, despite Section 4.03, with
respect to any Participant (or his or her beneficiaries), the Company is required to make
payments under this Plan to a person or entity other than the payees described in the Plan.
In such a case, any amounts due the Participant (or his or her beneficiaries) under this Plan
will be reduced by the actuarial value of the payments required to be made to such other
person or entity.

Actuarial value will be determined using the factors and methodology described in
Section 3.08 above (in the case of lump sums) and using the actuarial assumptions in
the underlying Pension Plan in all other cases.

In dividing a Participant’s benefit between the Participant and another person or
entity, consistent actuarial assumptions and methodologies will be used so that
there is no increased actuarial cost to the Company.

- 14 -

 

	4.05	 	Funding. Participants have the status of general unsecured creditors of the Company
and the Plan constitutes a mere promise by the Company to make benefit payments in the future.
The Company may, but need not, fund benefits under the Plan through a trust. If it does so,
any trust created by the Company and any assets held by the trust to assist it in meeting its
obligations under the Plan will conform to the terms of the model trust, as described in
Internal Revenue Service Revenue Procedure 92-64, but only to the extent required by Internal
Revenue Service Revenue Procedure 92-65. It is the intention of the Company and Participants
that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA.
	 
	 	 	Any funding of benefits under this Plan will be in the Company’s sole discretion. The
Company may set and amend the terms under which it will fund and may cease to fund at any
time.
	 
	4.06	 	Construction. The Company shall have full discretionary authority to determine
eligibility and to construe and interpret the terms of the Plan, including the power to remedy
possible ambiguities, inconsistencies or omissions.
	 
	4.07	 	Governing Law. This Plan shall be governed by the law of the State of California,
except to the extent superseded by federal law.
	 
	4.08	 	Actions By Company. Any powers exercisable by the Company under the Plan shall be
utilized by written resolution adopted by the Board of Directors or its delegate. The Board
may by written resolution delegate any of the Company’s powers under the Plan and any such
delegations may provide for subdelegations, also by written resolution.
	 
	4.09	 	Plan Representatives. Those authorized to act as Plan representatives will be
designated in writing by the Board of Directors or its delegate.
	 
	4.10	 	Number. The singular, where appearing in this Plan, will be deemed to include the
plural, unless the context clearly indicates the contrary.
	 
	4.11	 	2001 Reorganization. Effective as of the 2001 Reorganization Date in (d), the
corporate structure of Northrop Grumman Corporation and its affiliates was modified. Effective
as of the Litton Acquisition Date in (e), Litton Industries, Inc. was acquired and became a
subsidiary of the Northrop Grumman Corporation (the “Litton Acquisition”).

	 	(a)	 	The former Northrop Grumman Corporation was renamed Northrop Grumman Systems
Corporation. It became a wholly-owned subsidiary of the new parent of the reorganized
controlled group.
	 
	 	(b)	 	The new parent corporation resulting from the restructuring is called Northrop
Grumman Corporation. All references in this Plan to the former Northrop Grumman
Corporation and its Board of Directors now refer to the new parent corporation bearing
the same name and its Board of Directors.

- 15 -

 

	 	(c)	 	As of the 2001 Reorganization Date, the new Northrop Grumman Corporation became
the sponsor of this Plan, and its Board of Directors assumed authority over this Plan.
	 
	 	(d)	 	2001 Reorganization Date. The date as of which the corporate
restructuring described in (a) and (b) occurred.
	 
	 	(e)	 	Litton Acquisition Date. The date as of which the conditions for the
completion of the Litton Acquisition were satisfied in accordance with the “Amended and
Restated Agreement and Plan of Merger Among Northrop Grumman Corporation, Litton
Industries, Inc., NNG, Inc., and LII Acquisition Corp.

* * *

     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	 	 

- 16 -

 

APPENDIX A – 2005-2007 TRANSITION RULES

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

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

	 	(a)	 	Key Employees. A Key Employee Separating from Service on or after July
1, 2005, with Plan distributions subject to Code section 409A scheduled to be paid in
2006 and within six months of his date of Separation from Service, shall have such
distributions delayed for six months from the Key Employee’s date of Separation from
Service. The delayed distributions shall be paid as a single sum with interest at the
end of the six month period and Plan distributions will resume as scheduled at such
time. Interest shall be computed using the retroactive annuity starting date rate in
effect under the Northrop Grumman Pension Plan on a month-by-month basis during such
period (i.e., the rate may change in the event the period spans two calendar years).
Alternatively, the Key Employee may elect under IRS Notice 2005-1, Q&A-20 to have such
distributions accelerated and paid in 2005 without the interest adjustment, provided,
such election is made in 2005.
	 
	 	(b)	 	Lump Sum Option. During 2005, a temporary immediate lump sum feature
shall be available as follows:

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

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

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APPENDIX B – POST 2007

DISTRIBUTION OF 409A AMOUNTS

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

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

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

If a Participant is married on his Payment Date and elects a joint and survivor annuity, his
survivor annuitant will be his spouse unless some other survivor annuitant is named with
spousal consent. Spousal consent, to be effective, must be submitted in writing before the
Payment Date and must be witnessed by a Plan representative or notary public. No spousal
consent is necessary if the Company determines that there is no spouse or that the spouse
cannot be found.

	B.04 	 	Death. If a married Participant dies before the Payment Date, a death benefit will
be payable to the Participant’s spouse commencing 90 days after the Participant’s death. The
death benefit will be a single life annuity in an amount equal to the survivor portion of a
Participant’s vested retirement benefit based on a 100% joint and survivor annuity determined
on the Participant’s date of death. This benefit is also payable to a

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	 	 	Participant’s domestic partner who is properly
registered with the Company in accordance with
procedures established by the Company.

	B.05	 	 Actuarial Assumptions.
Except as provided in
Section B.06, all forms of
payment under this Appendix
B shall be actuarially
equivalent life annuity
forms of payment, and all
conversions from one such
form to another shall be
based on the following
actuarial assumptions:

	 	 	 	 	 
	 

	 	Interest Rate: 6%
	 	
	 
	 	 	 	 
	 

	 	Mortality Table: RP-2000 Mortality Table projected 15 years for future standardized cash
balance factors

	B.06	 	 Accelerated Lump Sum Payouts.

	 	(a)	 	Post-2007 Separations. Notwithstanding the provisions of this Appendix
B, for Participants who Separate from Service on or after January 1, 2008, if the
present value of (a) the vested portion of a Participant’s retirement benefit and (b)
other vested amounts under nonaccount balance plans that are aggregated with the
retirement benefit under Code section 409A, determined on the first of the month
coincident with or following the date of his Separation from Service, is less than or
equal to $25,000, such benefit amount shall be distributed to the Participant (or his
spouse or domestic partner, if applicable) in a lump sum payment. Subject to the
special timing rule for Key Employees under Section B.02, the lump sum payment shall be
made within 90 days after the first of the month coincident with or following the date
of the Participant’s Separation from Service.
	 
	 	(b)	 	Pre-2008 Separations. Notwithstanding the provisions of this Appendix
B, for Participants who Separate from Service before January 1, 2008, if the present
value of (a) the vested portion of a Participant’s retirement benefit and (b) other
vested amounts under nonaccount balance plans that are aggregated with the retirement
benefit under Code section 409A, determined on the first of the month coincident with
or following the date the Participant attains age 55, is less than or equal to $25,000,
such benefit amount shall be distributed to the Participant (or his spouse or domestic
partner, if applicable) in a lump sum payment within 90 days after the first of the
month coincident with or following the date the Participant attains age 55, but no
earlier that January 1, 2008.
	 
	 	(c)	 	Conflicts of Interest. The present value of a Participant’s vested
retirement benefit shall also be payable in an immediate lump sum to the extent
required under conflict of interest rules for government service and permissible under
Code section 409A.
	 
	 	(d)	 	Present Value Calculation. The conversion of a Participant’s
retirement benefit into a lump sum payment and the present value calculations under
this Section B.06 shall be based on the GATT assumptions in effect under the Northrop
Grumman Pension Plan, and will be based on the Participant’s immediate benefit

- 20 -

 

	 	 	 	if the Participant is 55 or older at Separation from Service. Otherwise, the
calculation will be based on the benefit amount the Participant will be eligible to
receive at age 55.

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

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

provided, that any payment delayed pursuant to this Section B.08 shall be paid in accordance
with Code section 409A.

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

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