Document:

Exhibit 10.1

Exhibit 10.1

Execution Copy

THIRD AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

This Third Amended and Restated Executive Employment Agreement (this “Agreement”), dated as of
April 27, 2010 and effective as of such date, is made by and between Constar International Inc., a
Delaware corporation, having its principal offices at One Crown Way, Philadelphia, Pennsylvania
19154, (together with their respective successors and assigns, the “Company”), and Mr. Michael
Hoffman (the “Executive”).

RECITALS

WHEREAS, the Executive is currently employed by the Company as its Chief Executive Officer,
pursuant to the terms of a Second Amended and Restated Executive Employment Agreement dated May 29,
2009 (the “Amended Agreement”);

WHEREAS, the Company and the Executive desire to replace in its entirety, as of April 27,
2010, the Amended Agreement with this Third Amended and Restated Executive Employment Agreement;
and

WHEREAS, the Company and the Executive desire to have this Third Amended and Restated
Executive Employment Agreement be the sole document governing the Executive’s employment or
termination thereof as Chief Executive Officer and as an officer or an employee of the Company or
any of its Affiliates and the Executive’s resignation as a director of the Company or any of its
Affiliates.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and
intending to be legally bound hereby, the Company and the Executive hereby agree as follows:

1. Definitions.

1.1. “Affiliate” means any person or entity controlling, controlled by or under common
control with the Company.

1.2. “Board” means the Board of Directors of the Company.

1.3. “Cause” means (i) willful conduct by the Executive constituting a material act of
gross misconduct in connection with the performance of the Executive’s duties, including,
without limitation, misappropriation of funds or property of the Company or any of its
subsidiaries or affiliates other than customary and de minimis use of Company property for
personal purposes; (ii) the conviction of the Executive of, or plea of guilty or nolo
contendere by the Executive to (A) any felony or (B) a misdemeanor (involving moral turpitude
or fraud) either of which result in incarceration; (iii) willful acts of moral turpitude by
the Executive that result in material financial loss to the Company or any of its
subsidiaries; (iv) the Executive’s willful and material failure to follow the lawful
reasonable instructions of the Company’s board (other than by reason of the Executive’s
physical or mental illness, incapacity or disability), provided that the Company will first
provide the Executive written notice specifying the alleged failure, and the Executive shall
have 30 days from the receipt of such notice to comply, in the event of which cure the
Executive’s employment may not be terminated for cause in respect of such alleged failure; (v)
a material and willful breach by the Executive of this Agreement (including, without
limitation, any breach of any of the provisions contained in Section 8 of this agreement other
than inadvertent disclosures of confidential information) or of any other written agreement
between the Executive (on the one hand) and the Company or any of its subsidiaries or
affiliates (on the other hand), provided that the Company will first provide the Executive
written notice specifying the nature of the breach, and the Executive shall have 30 days from
the receipt of such notice to cure the breach, in the event of which cure the Executive’s
employment may not be terminated for cause in respect of such cured breach; (vi) the
Executive’s willful and material violation of any of the Company’s written employment
policies, other than inadvertent disclosures of confidential information, provided that the
Company will first provide the Executive written notice specifying the nature of the
violation, and the

 

 

 

Executive shall have 30 days from the receipt of such notice to cure the
violation, in the event of
which cure the Executive’s employment may not be terminated for cause in respect of such
violation; (vii) the Executive’s failure to cooperate with a bona fide internal investigation
or an investigation by regulatory or law enforcement authorities, after being instructed by
the Company to cooperate (provided that if the Company believes that the Executive is not
cooperating, the Company must first provide the Executive written notice specifying the
cooperation that must be provided, and the Executive shall have 30 days from the receipt of
such notice to comply, in the event of which compliance the Executive’s employment may not be
terminated for cause in respect of the previously alleged failure to cooperate); or (viii)
after being advised of the commencement of any such investigation, the willful destruction or
willful failure to preserve documents or other materials known to be relevant to any such
investigation or the willful inducement of others to fail to cooperate or to produce documents
or other materials in connection with any such investigation.

1.4. “Change in Control” shall mean:

1.4.1. the acquisition after the Effective Date by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 30% of the combined voting power of the
voting securities of the Company entitled to vote generally in the election of directors
(the “Voting Securities”); provided, however, that the following acquisitions shall not
constitute a Change in Control: (a) any acquisition, directly or indirectly by or from
the Company or any subsidiary of the Company, or by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any subsidiary of the Company,
(b) any acquisition by any underwriter in connection with any firm commitment
underwriting of securities to be issued by the Company, or (c) any acquisition by any
corporation if, immediately following such acquisition, 70% or more of the then
outstanding shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation (entitled to vote generally
in the election of directors), are beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who, immediately prior to such
acquisition, were the beneficial owners of the then outstanding common stock of the
Company (“Common Stock”) and the Voting Securities in substantially the same
proportions, respectively, as their ownership, immediately prior to such acquisition, of
the Common Stock and Voting Securities; or

1.4.2. The occurrence after the Effective Date of a reorganization, merger or
consolidation, other than a reorganization, merger or consolidation with respect to
which all or substantially all of the individuals and entities who were the beneficial
owners, immediately prior to such reorganization, merger or consolidation, of the Common
Stock and Voting Securities beneficially own, directly or indirectly, immediately after
such reorganization, merger or consolidation 70% or more of the then outstanding common
stock and voting securities (entitled to vote generally in the election of directors) of
the corporation resulting from such reorganization, merger or consolidation in
substantially the same proportions as their respective ownership, immediately prior to
such reorganization, merger or consolidation, of the Common Stock and Voting Securities;
or

1.4.3. The occurrence after the Effective Date of (a) a complete liquidation or
substantial dissolution of the Company, or (b) the sale or other disposition of all or
substantially all of the assets of the Company, in each case other than to a subsidiary,
wholly-owned, directly or indirectly, by the Company or to a holding company of which
the Company is a direct or indirect wholly owned subsidiary prior to such transaction;
or

1.4.4. During any period of twenty-four (24) consecutive months commencing upon the
Effective Date, the individuals at the beginning of any such period who constitute the
Board and any new director (other than a director designated by a person or entity who
has entered into an agreement with the Company or other person or entity to effect a
transaction described in Sections 1.4.1, 1.4.2 or 1.4.3 above) whose election by the
Board or nomination for election by the Company’s stockholders was approved by a vote of
at least two-thirds (2/3) of the

 

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directors then still in office who either were
directors at the beginning of any such period or
whose election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board.

Notwithstanding the above, a “Change in Control” shall not include any event, circumstance or
transaction which results from the action of any entity or group which includes, is affiliated with
or is wholly or partially controlled by one or more executive officers of the Company and in which
the Executive participates.

1.5. [Intentionally omitted.]

1.6. “Effective Date” means April 27, 2010.

1.7. [Intentionally omitted.]

1.8. “Restricted Period” means the Executive’s period of service with the Company, plus the
twenty-four (24) month period immediately following any termination of the Executive’s employment
for any reason.

2. Term of Employment. This Agreement will govern the Executive’s continued
employment by the Company until that employment ceases pursuant to Section 5 (such period of the
Executive’s employment is herein referred to as the “Term of Employment”). In all events, the
Executive shall be an “at will” employee whose employment can be terminated with or without Cause
by the Company and with or without notice, subject to the provisions of Section 5 of this
Agreement.

3. Position. During the Term of Employment, the Executive shall be employed and serve
as the chief executive officer of the Company and shall report to the Board. During the Term of
Employment, the Executive shall devote substantially all of his business time, during normal
business hours, to the business and affairs of the Company and the Executive shall use his
reasonable best efforts to perform faithfully and efficiently the duties and responsibilities
contemplated by this Agreement; provided, however, that the Executive shall be allowed, to the
extent such activities do not substantially interfere with the performance by the Executive of his
duties and responsibilities hereunder, to (a) manage the Executive’s personal, financial and legal
affairs, and (b) serve on corporate, civic or charitable boards or committees.

4. Compensation and Other Benefits.

4.1. Base Salary. During the Term of Employment, the Executive shall receive a
base salary per annum payable in accordance with the Company’s normal payroll practices of US
$497,950 (“Base Salary”).

4.2. Annual Bonus. During the Term of Employment, the Executive shall participate
in the Annual Incentive Plan (“AIP”) as maintained by the Company from time to time for the
benefit of senior executives. In respect of each calendar year during the Term of Employment,
the Executive shall be eligible for an annual bonus (the “Bonus”) if the Executive and/or the
Company achieves performance goals established by the Board in good faith and consistent with
the AIP and the Executive is employed on the date such payment is made.

4.3. Retirement and Savings Plans. During the Term of Employment, the Executive
shall be eligible to participate in all pension, retirement, savings, 401(k) and other
employee pension benefit plans, policies and programs (the “Retirement Plans”) maintained by
the Company from time to time for the benefit of senior executives and/or other employees.
However, nothing in this Section 4.3 shall be construed to require the Company to establish or
maintain any such Retirement Plans.

4.4. SERP. The Executive acknowledges that he consented to the cessation,
termination and distributions of the Company’s Supplemental Executive Retirement Plan (the
“SERP”), and that the Company paid him in full the amount due and owing to him under the SERP.

4.5. Welfare Benefit Plans. During the Term of Employment, the Executive, the
Executive’s spouse, if any, and his eligible dependents, if any, shall be eligible to
participate in and be covered on the same basis as other senior executive officers of the
Company under all the welfare benefit plans, policies and/or programs maintained by the
Company from time to time including, without limitation, all medical, hospitalization, dental,
disability, life, accidental death and dismemberment and travel

 

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accident insurance plans,
policies and/or programs (the “Welfare Plans”). However, nothing in this
Section 4.5 shall be construed to require the Company to establish or maintain any such
Welfare Plans. The Welfare Plans and the Retirement Plans are sometimes referred to
collectively herein as the “Benefit Plans.”

4.6. Expense Reimbursement. During and in respect of the Term of Employment, the
Executive shall be entitled to receive prompt reimbursement for business expenses incurred by
the Executive during the Term of Employment in performing his duties and responsibilities
hereunder in accordance with the Company’s policy for senior executives of the Company.
Notwithstanding anything herein to the contrary or otherwise, except to the extent any
expense, reimbursement or in-kind benefit provided pursuant to Section 4.5 and this Section
4.6 does not constitute a “deferral of compensation” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended from time to time, and its implementing regulations
and guidance (“Section 409A”) (a) the amount of expenses eligible for reimbursement or in-kind
benefits provided to the Executive during any calendar year will not affect the amount of
expenses eligible for reimbursement or in-kind benefits provided to the Executive in any other
calendar year, (b) the reimbursements for expenses for which the Executive is entitled to be
reimbursed shall be made on or before the last day of the calendar year following the calendar
year in which the applicable expense is incurred and (c) the right to payment or reimbursement
or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.

4.7. Vacation and Fringe Benefits. During the Term of Employment, the Executive
shall be entitled to four weeks paid vacation per calendar year, pro-rated for any partial
year, plus paid time off due to illness or personal reasons in accordance, in all such cases,
with Company policy.

5. Termination. Upon the occurrence of any termination of the Executive’s employment,
the Executive shall and shall be deemed to immediately resign from any membership on the Board and
from any committees thereof (and the Executive shall promptly tender to the Board a written
resignation letter effecting the foregoing). For purposes of determining under Section 409A whether
there has been a “separation from service” with the meaning of Treasury Regulation Section
1.409A-1(h) (or any successor regulation), the Executive shall be deemed to have incurred a
separation from service if his employment has been terminated in accordance with Section 5.1 or
Section 5.2 hereof and he is performing less than 20% of the average level of bona fide services he
was performing for the Company in the immediately preceding 36-month period (“Separation From
Service”).

5.1. Termination For Any Reason Other Than By the Company For Cause. Upon any
termination of the Executive’s employment except by the Company for Cause (including without
limitation upon the Executive’s voluntary resignation), whether or not such termination is
before, after or in connection with a Change in Control, in full satisfaction of any payments,
benefits, entitlements or other obligations the Company or any of its Affiliates has or may
have to the Executive or any of his eligible dependents, the Company shall pay or provide the
Executive: (a) Base Salary earned but unpaid as of the date of the Executive’s termination,
payable on the next regularly scheduled payroll date following termination of employment; (b)
subject to Section 5.3, a lump-sum payment in the amount of $2,200,000, payable on the
60th day following the Executive’s “Separation from Service”; (c) continuation of
medical benefits in effect as of the date of termination for a period of two years following
the date of termination at the Company’s sole expense and, following the expiration of this
coverage period, COBRA continuation coverage under the Company’s medical plan for 18 months in
accordance with applicable law at the Executive’s sole expense provided that the Executive is
not enrolled in another group health plan; provided that to the extent that the foregoing
medical benefits are deemed to be a “deferral of compensation” within the meaning of Section
409A, the provision of such benefits will be subject to the second sentence of Section 4.6;
(d) subject to Section 5.3, payment of $81,067, payable on the 60th day following
the Executive’s “Separation from Service” (which shall extinguish all of the Executive’s
rights under the AIP and the Executive acknowledges that all other amounts under the AIP shall
be forfeited as of the date of termination); and (e) immediate payment for any unused accrued
vacation days through the date of termination in accordance with the Company’s vacation
accrual policy. The payments and entitlements due to the Executive pursuant to clauses (b)
and (c) and (d) of this Section 5.1 are

 

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contingent upon (i) the Executive’s execution and
delivery to the Company of the release in the form
attached as Exhibit A (the “Release”) and such Release becoming effective in
accordance with its terms no later than the 45th day following the Executive’s date
of termination; (ii) the Executive’s compliance with the Release and his obligations under
Section 8 of this Agreement; and (iii) the Executive’s provision of consulting services to the
Company as and when reasonably requested by the Board (including, without limitation, the
Executive being available in person to provide such services to the Company upon reasonable
notice and at a reasonable location) with respect to the transition to a new Chief Executive
Officer, corporate transactions, customer relations and other strategic and operational
matters, for a period of three months following the date of the Executive’s termination of
employment; both the Executive and the Company reasonably anticipate that any such consulting
services performed after the Executive’s termination of employment will not exceed 20% of the
Executive’s average level of service to the Company performed prior to his termination of
employment (as determined based on the Executive’s average level of service performed over the
36 month period preceding such termination, accordingly, the Executive’s “separation from
service” with the meaning of Treasury Regulation Section 1.409A-1(h) shall occur on the date
of his termination of employment. If (x) the Executive fails to execute and deliver to the
Company an effective Release within 45 days after his termination date or if the Executive
revokes his agreement to such Release in accordance therewith, (y) the Executive breeches the
Release and/or his obligations under Section 8 of this Agreement or (z) the Executive refuses
to provide the consulting services, as required under the preceding sentence, then, in any
such case, the Executive shall not be entitled to any payments or benefits from the Company or
any Affiliate other than the payments under clause (a) (regarding his earned Base Salary) and
any other payment required by applicable law.

5.2. Termination For Cause. Subject to the provisions of this Section 5.2, the
Company may terminate the Executive’s employment for Cause. In such event, the Executive shall
be entitled to: (a) any Base Salary earned but unpaid through the date of termination; (b)
immediate payment of any unpaid expense reimbursements and unused accrued vacation days
through the date of termination; and (c) any other payments and/or benefits to which the
Executive is entitled to receive under any of the Benefit Plans or the AIP in accordance with
the terms of such plan or arrangement. In any case described in this Section 5.2, the
Executive shall be given written notice authorized by a vote of at least a majority of the
members of the Board that the Company intends to terminate the Executive’s employment for
Cause. Such written notice shall specify the particular act or acts, or failure to act, which
is or are the basis for the decision to so terminate the Executive’s employment for Cause.
Executive shall be given 30 days after such notice to cure such act or failure to act to the
satisfaction of the Board. Upon failure of the Executive, within such 30 day period, to
correct such act or failure to act, the Executive shall be deemed terminated for Cause.

5.3. Section 409A. Notwithstanding anything to the contrary in this Agreement or
elsewhere, if the Executive is a “specified employee” as determined pursuant to Section 409A
as of the date of the Executive’s Separation From Service and if any payment or benefit
provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation”
within the meaning of Section 409A and (y) cannot be paid or provided in the manner otherwise
provided without subjecting the Executive to additional tax, interest or penalties under
Section 409A, then any such payment or benefit that is payable during the first six months
following the Executive’s Separation From Service shall be paid or provided to the Executive
in a cash lump-sum, without interest, on the first business day of the seventh calendar month
following the month in which the Executive’s Separation From Service occurs. In addition, any
payment or benefit due upon a termination of the Executive’s employment that represents a
“deferral of compensation” within the meaning of Section 409A shall only be paid or provided
to the Executive upon a Separation From Service (as defined above). Notwithstanding anything
to the contrary in Section 5 or elsewhere, any payment or benefit under this Section 5, or
otherwise, that is exempt from Section 409A pursuant to Final Treasury Regulation
1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Executive only to the extent that
the expenses are not incurred, or the benefits are not provided, beyond the last day of the
second taxable year of the Executive following the taxable year of the Executive in which the
Separation From Service occurs; and provided further that such expenses are reimbursed no
later than the last day of the third taxable year following the taxable year of the Executive
in which the Separation From Service

 

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occurs. Additionally, for the purposes of this Agreement,
amounts payable under Section 5 shall be
deemed not to be a “deferral of compensation” subject to Section 409A to the extent
provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term
deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph
(iii)) and other applicable provisions of Treasury Regulation Section 1.409A-1 through A-6.
Notwithstanding the foregoing, neither the Company nor any of its subsidiaries, divisions,
Affiliates, directors, officers, predecessors, successors, employees, agents or attorneys
shall be liable to the Executive if any amount payable or provided under this Agreement or
otherwise is subject to any taxes, penalties or interest as a result of the application of
Section 409A.

6. Full Discharge of Company Obligations. This Agreement exclusively governs the
Executive’s employment and termination of such employment with the Company and any Affiliates and
his service (or termination of such service) on the Board. Therefore, the payments and benefits
described in Section 5 supersede any other payments, awards or benefits that the Executive may be
eligible for under any other plan, policy, program or arrangement of the Company or any Affiliate,
including without limitation, any payment for which the Executive may be eligible under the
Company’s standard severance plan, any change-in-control plan or agreement or pursuant to the AIP.
Notwithstanding the foregoing, the Executive will remain eligible to receive the benefits accrued
under the Company’s 401(k) Retirement Savings Plan and the Company’s Pension Plan pursuant to the
applicable terms of such plans. The Executive acknowledges that the amounts payable to him under
this Agreement following termination of employment are fair and reasonable and his sole and
exclusive remedy, in lieu of all other remedies at law or in equity, with respect to his
termination of employment with the Company or any Affiliate or his removal or resignation from the
Board; provided the Executive shall not be deemed to be waiving, or to have waived, any rights to
indemnification pursuant to the Company’s corporate governance documents or to be covered under any
applicable directors’ and officers’ liability insurance policies in accordance with their terms.

7. Successors.

7.1. The Executive. This Agreement is personal to the Executive and, without the
prior express written consent of the Company, shall not be assignable by the Executive, except
that the Executive’s rights to receive any compensation or benefits under this Agreement may
be transferred or disposed of pursuant to testamentary disposition, intestate succession or
pursuant to a domestic relations order. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s heirs, beneficiaries and/or legal representatives.

7.2. The Company. This Agreement shall inure to the benefit of and be binding
upon the Company and its respective successors and assigns. The Company shall require any
successor to all or substantially all of its business and/or assets, whether direct or
indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise (the
“Company’s Successor”), by an agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform if no such succession had taken place.

8. Restrictive Covenants.

8.1. Non-Solicitation. During the Restricted Period, the Executive shall not
(except on the Company’s behalf), directly or indirectly, on his own behalf or on behalf of
any other person, firm, partnership, corporation or other entity, (a) solicit or service the
business of any of the Company’s or its Affiliates’ clients, any of the Company’s or its
Affiliates’ former clients which were clients within twelve months prior to the termination of
his employment as chief executive officer or any of the prospective clients which were being
actively solicited by the Company or its Affiliates at the time of the termination of his
employment, as chief executive officer or (b) attempt to cause or induce any employee of the
Company or its Affiliates to leave the Company or the Affiliate.

8.2. Non-Competition. During the Restricted Period, the Executive shall not,
directly or indirectly, within or with respect to the United States of America engage, without
the consent of the Company, in any business or activity, whether as an employee, consultant,
partner, principal, agent, representative, stockholder or in any other capacity, or render any
services or provide any advice to any business, activity, person or entity which competes with
any PET packaging business; provided,

 

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however, that the Executive’s ownership of not more than
5% of the stock of any publicly-traded
corporation shall not be a violation of this Section 8.2. By agreeing in the Amended
Agreement to a contractual modification of the Executive’s non-compete prospectively at the
time such Amended Agreement was effective, the parties intended to make this provision
enforceable under the law(s) of all applicable states so that the entire agreement not to
compete and/or this Agreement (which incorporates in full the modification to such non-compete
in the Amended Agreement) shall remain in full force and effect and shall not be rendered void
or illegal. The Executive acknowledges that his skills are such that he can be gainfully
employed in noncompetitive employment and that the agreement not to compete will in no way
prevent him from earning a living. The Executive understands and agrees that the rights and
obligations set forth in this Section 8.2 shall extend beyond the Term of Employment.

8.3. Confidentiality. The Executive shall not, during his period of service with
the Company or at any time thereafter, without the prior express written consent of the
Company, directly or indirectly, divulge, disclose or make available or accessible any
Confidential Information (as defined below) to any person, firm, partnership, corporation,
trust or any other entity or third party (other than when required to do so in good faith to
perform the Executive’s duties and responsibilities while employed by the Company or when (a)
required to do so by a lawful order of a court of competent jurisdiction, any governmental
authority or agency, or any recognized subpoena power, or (b) necessary in connection with any
court proceeding filed by the Executive to enforce his rights under any section of this
Agreement that applies following termination of employment or to defend himself in connection
with any court proceeding filed by the Company against him. In addition, the Executive shall
not create any derivative work or other product based on or resulting from any Confidential
Information (except in the good faith performance of his duties under this Agreement). The
Executive shall also proffer to the Board’s designee, no later than the effective date of any
termination of his employment as chief executive officer with the Company for any reason, and
without retaining any copies, notes or excerpts thereof, all memoranda, computer disks or
other media, computer programs, diaries, notes, records, data, customer or client lists,
marketing plans and strategies, and any other documents consisting of or containing
Confidential Information that are in the Executive’s actual or constructive possession or
which are subject to his control at such time. For purposes of this Agreement, “Confidential
Information” shall mean all information respecting the business and activities of the Company,
or any Affiliate of the Company, including, without limitation, the terms and provisions of
this Agreement, the clients, customers, suppliers, employees, consultants, computer or other
files, projects, products, computer disks or other media, computer hardware or computer
software programs, marketing plans, financial information, methodologies, know-how, processes,
practices, approaches, projections, forecasts, formats, systems, data gathering methods and/or
strategies of the Company or any Affiliate. Notwithstanding the immediately preceding
sentence, Confidential Information shall not include any information that is, or becomes,
generally available to the public (unless such availability occurs as a result of the
Executive’s breach of any portion of this Section 8.3).

8.4. Ownership of Inventions. Each Invention (as defined below) made, conceived
or first actually reduced to practice by the Executive, whether alone or jointly with others,
during the term of Executive’s employment with the Company and each Invention made, conceived
or first actually reduced to practice by the Executive, whether alone or jointly with others,
within one year after the termination of Executive’s employment with the Company which relates
in any way to work performed for the Company during the term of Executive’s employment, shall
be promptly disclosed in writing to the Board. Such report shall be sufficiently complete in
technical detail and appropriately illustrated by sketch or diagram to convey to one skilled
in the art of which the invention pertains, a clear understanding of the nature, purpose,
operations, and, to the extent known, the physical, chemical, biological or other
characteristics of the Invention. As used in this Agreement, “Invention” means any invention,
discovery or innovation with regard to any facet of the Company’s business whether or not
patentable, made, conceived, or first actually reduced to practice by Executive, alone or
jointly with others, in the course of, in connection with, or as a result of service as an
employee of the Company, including any art, method, process, machine, manufacture, design or
composition of matter, or any improvement thereof. Each Invention, as herein defined, shall be
the sole and exclusive property of the Company. The Executive agrees to execute an

 

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assignment
to the Company or its nominee of the Executive’s entire right, title and interest in and to
any Invention, without compensation beyond that provided in this Agreement. The Executive
further agrees, upon the request of the Company and at its expense, that the Executive will
execute any other instrument and document necessary or desirable in applying for and obtaining
patents in the United States and in any foreign country with respect to any Invention. The
Executive further agrees, whether or not the Executive is then an employee of the Company, to
cooperate to the extent and in the manner reasonably requested by the Company in the
prosecution or defense of any claim involving a patent covering any Invention or any
litigation or other claim or proceeding involving any Invention covered by this Agreement, but
all expenses thereof shall be paid by the Company.

8.5. Non-disparagement. Except as otherwise required by law, the Executive
agrees that he will not make any statement, whether oral or written, that is intended or could
reasonably be expected to disparage the Company, its Affiliates or any of their products,
services, directors, officers or employees.

8.6. Cooperation. Both during and after the Executive’s employment, the
Executive agrees to reasonably cooperate in connection with any litigation or other proceeding
arising out of or relating to matters in which the Executive was involved prior to his
termination of employment or of which he has knowledge. The Company agrees to pay the
Executive for his out-of-pocket travel expenses in connection with any such cooperation. In
addition, the Executive agrees that during the pendency of any litigation or other proceeding
involving the Company or any Affiliate, he will maintain the confidentiality (other than to
his attorneys and tax and/or financial advisors) regarding the facts or subject matter of any
pending or potential litigation, or regulatory or administrative proceeding involving the
Company or any of its Affiliates and in the event any other party attempts to obtain
information or documents from the Executive with respect to matters which are related to such
litigation or other proceeding, the Executive shall promptly so notify the Company’s counsel.

8.7. Injunctive Relief. The Executive acknowledges and agrees that the Company
will have no adequate remedy at law, and would be irreparably harmed, if the Executive
breaches or threatens to breach any of the provisions of this Section 8 of this Agreement. The
Executive agrees that the Company shall be entitled to equitable and/or injunctive relief to
prevent any breach or threatened breach of this Section 8, and to specific performance of each
of the terms of such Section in addition to any other legal or equitable remedies that the
Company may have. The Executive further agrees that he shall not, in any equity proceeding
relating to the enforcement of the terms of this Section 8, raise the defense that the Company
has an adequate remedy at law.

8.8. Special Severability. The terms and provisions of this Section 8 are
intended to be separate and divisible provisions and if, for any reason, any one or more of
them is held to be invalid or unenforceable, neither the validity nor the enforceability of
any other provision of this Agreement shall thereby be affected. It is the intention of the
parties to this Agreement that the potential restrictions on the Executive’s future employment
imposed by this Section 8 be reasonable in both duration and geographic scope and in all other
respects. If for any reason any court of competent jurisdiction shall find any provisions of
this Section 8 unreasonable in duration or geographic scope or otherwise, the Executive and
the Company agree that the restrictions and prohibitions contained herein shall be effective
to the fullest extent allowed under applicable law in such jurisdiction.

9. Miscellaneous.

9.1. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, applied without reference to
principles of conflict of laws. Both the Executive and the Company agree to appear before and
submit exclusively to the jurisdiction of the state and federal courts located within
Philadelphia, Pennsylvania with respect to any controversy, dispute, or claim arising out of
or relating to this Agreement. The Executive further agrees that the Company may serve him
with judicial process via registered or certified mail and that the Corporate Secretary of the
Company shall at all times be the Executive’s agent for service of judicial process, and the
Executive hereby appoints the Corporate Secretary of the Company as the Executive’s agent for
that and any other related purpose. No party shall be liable for special, punitive or
exemplary damages under any circumstances and each party shall be responsible for its or his
own legal costs and expenses, including attorneys’ fees.

 

8

 

9.2. No Mitigation. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement.

9.3. Amendments. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective successors and legal
representatives.

9.4. Mutual Intent. Both parties participated in the drafting of the Agreement,
and the language used in this Agreement is the language chosen by the Executive and the
Company to express their mutual intent. Both the Executive and the Company agree that in the
event that any language, section, clause, phrase or word used in the Agreement is determined
to be ambiguous, no presumption shall arise against or in favor of either party and that no
rule of strict construction shall be applied against either party with respect to such
ambiguity.

9.5. Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand-delivery to the other parties or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

	 	 	 	 	 
	 

	 	To the Company:	 	 
	 

	 	 	 	Chairman of the Compensation Committee
	 

	 	 	 	Constar International Inc.
	 

	 	 	 	One Crown Way
	 

	 	 	 	Philadelphia, PA 19154
	 
	 	 	 	 
	 

	 	and to	 	 
	 
	 	 	 	 
	 

	 	 	 	General Counsel
	 

	 	 	 	Constar International Inc.
	 

	 	 	 	One Crown Way
	 

	 	 	 	Philadelphia, PA 19154
	 
	 	 	 	 
	

	 	To the Executive:	 	 
	 

	 	 	 	Mr. Michael Hoffman
	 

	 	 	 	1212 Candlewick Ct
	 

	 	 	 	Yardley, PA 19067

or to such other address as any party shall have furnished to the others in writing in accordance
herewith. Notices and communications shall be effective when actually received by the addressee.

9.6. Withholding. The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes to the extent the same are required to be
withheld pursuant to any applicable law or regulation. The Executive remains solely liable
for any and all taxes due or imposed on his compensation and/or any payments or benefits under
this Agreement or otherwise.

9.7. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement.

9.8. Captions. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

9.9. Counterparts. This Agreement may be executed in one or more counterparts
each of which shall be deemed an original instrument, but all of which together shall
constitute but one and the same Agreement.

 

9

 

9.10. Beneficiaries/References. The Executive shall be entitled to select (and
change) a beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive’s death, and may change such election, in either case by
giving the Company written notice thereof. In the event of the Executive’s death, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary(ies), estate or other legal representative(s).

9.11. Entire Agreement. This Agreement contains the entire agreement between the
parties concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or oral, between
the parties with respect thereto.

9.12. Representations.

9.12.1. Company Representation. The Company represents and warrants to the
Executive that this Agreement will be authorized by all necessary action of the Company
and will be the binding agreement of the Company, enforceable against it in accordance
with the terms thereof, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting enforcement of creditors’
rights generally. The Company is not prevented from entering into or performing this
Agreement by any law, order, rule or regulation, its certificate of incorporation,
bylaws or any agreement to which it is a party.

9.12.2. Employee Representation. The Executive represents and warrants that
the performance by Executive of the Executive’s duties and obligations under this
Agreement will not violate any agreement between the Executive and any other person,
firm, partnership, corporation or other organization. The Executive also acknowledges
that he has not relied on any representation which is not expressly set forth in this
Agreement and that he was encouraged by the Company to seek independent legal advice
before entering into this Agreement.

9.13. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement or the Executive’s Term of
Employment hereunder for any reason to the extent necessary to the intended provision of such
rights and the intended performance of such obligations. Without limiting the generality of
the first sentence of this Section 9.13, the rights and obligations of Section 8 shall survive
the termination of this Agreement.

9.14. All Prior Agreements Terminated. Without limiting the generality of Section
9.11, this Agreement terminates and supersedes: (i) the Amended Agreement and any other
agreements between the Company and the Executive related to the Executive’s employment (or
termination thereof) by the Company (including, without limitation, any change-in-control
agreement or change-in-control severance agreement), and (ii) the Constar, Inc.
Confidentiality and Trade Secret Protection Agreement between Constar, Inc. and the Executive
dated May 12, 2008. The Executive also acknowledges that his Change-in-Control Agreement was
terminated and superseded by the Amended Agreement.

 

10

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the Company
has caused this Agreement to be executed in its name on its behalf, all as of the day and year
first above written.

	 	 	 	 	 
	 	Constar International Inc.

 	 
	 	By:  	/s/ David Waksman
 	 
	 	 	Name:  	David Waksman 	 
	 	 	Title:  	Senior Vice President, Human Resources, General Counsel and
Secretary 	 
	 
	 	 	 
	 	/s/ Michael Hoffman
 	 
	 	Michael Hoffman 	 
	 	 	 

 

11

 

	 	 	 	 	 

EXHIBIT A — RELEASE

IN CONSIDERATION OF the terms and conditions contained in the Third Amended and Restated
Executive Employment Agreement, dated as of April 27, 2010, (the “Employment Agreement”) by and
between Michael Hoffman (the “Executive”) and Constar International Inc. and its affiliates
(together with their respective successors and assign, the “Company”), including, without
limitation, the severance benefits provided in Section 5 of the Employment Agreement, the
Executive, on behalf of himself and his heirs, executors, administrators, and assigns, hereby
releases and forever discharges the Company and its past present and future subsidiaries,
divisions, affiliates and parents (including without limitation to the foregoing Crown Cork & Seal
Company, Inc.), and their respective current and former officers, directors, employees, agents,
contractors and/or owners, and their respective successors, and assigns and any other person or
entity claimed to be jointly or severally liable with the Company or any of the aforementioned
persons or entities, including without limitation, current and former trustees and administrators
of any employee pension benefit and welfare benefit plans (the “Released Parties”) from any and all
manner of actions and causes of action, suits, debts, dues, accounts, bonds, covenants, contracts,
agreements, judgments, charges, claims, and demands whatsoever, whether in law or in equity and
whether known or unknown (“Losses”) which the Executive and his heirs, executors, administrators,
and assigns have, had, or may hereafter have, whether known or unknown, against the Released
Parties or any of them from the beginning of time up through and including the date the Executive
executes this Release, including, without limitation, any claims the Executive may have arising out
of or relating to his employment or termination from employment with the Company, the Executive’s
service as a director of the Company, any claims for attorneys’ fees or indemnification for taxes
or other liabilities and any and all Losses arising under any federal, state, or local statute,
rule, or regulation, or principle of contract law or common law, including without limitation, the
Family and Medical Leave Act of 1993, as amended, 29 U.S.C. §§ 2601 et seq., Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. §§ 2000 et seq., the Age Discrimination in Employment Act
of 1967, as amended, 29 U.S.C. §§ 621 et seq., the Americans with Disabilities Act of 1990, as
amended, 42 U.S.C. §§ 12101 et seq., the Worker Adjustment and Retraining Notification Act of 1988,
as amended, 29 U.S.C. §§ 2101 et seq., the Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. §§ 1001 et seq., the Fair Labor Standards Act, as amended, 29 U.S.C. §§ 201 et.
seq., the Pennsylvania Human Relations Act, as amended, 43 P.S. §§ 955 et. seq., and any other
equivalent or similar federal, state, or local laws against discrimination or any other federal,
state, or local statue, or common law relating to employment, wages, hours or any other terms and
conditions of employment. This Release includes a release by the Executive of any and all claims
or rights arising under contract, covenant, public policy, tort or otherwise; provided, however,
that the Executive does not release or discharge the Released Parties from any of the Company’s
obligations to him (i) under Section 5.1 of the Employment Agreement, (ii) for indemnification
under the Company’s By-Laws and/or certificate of incorporation, (iii) under the Company’s 401(k)
Retirement Savings Plan and the Company’s Pension Plan, pursuant to the applicable terms of such
plans, or (iv) under any applicable directors’ and officers’ insurance policies. It is understood
that nothing in this Release is to be construed as an admission on behalf of the Released Parties
of any wrongdoing with respect to the Executive, any such wrongdoing being expressly denied.

The Executive acknowledges that the Executive is waiving and releasing any rights that the
Executive may have under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §§
621 et seq. (“ADEA”) and the Older Workers Benefit Protection Act, as amended, 29 U.S.C. §§ 621 et
seq. (“OWBPA”) and that this Release is knowing and voluntary. The Executive and the Company agree
that this Release does not apply to any rights or claims that may arise under ADEA or OWBPA after
the effective date of this Release. The Executive acknowledges that the consideration given for
this Release is in addition to anything of value to which Executive is already entitled. The
Executive further acknowledges that the Executive has been advised by this writing that: (i) the
Executive should consult with an attorney prior to executing this Release, (ii) the Executive has
at least twenty-one (21) days within which to consider this Release, although the Executive may, at
his discretion, sign and return this Release to the Company at an earlier time, (iii) for a period
of 7 days following the execution and delivery of this Release to the Company, the Executive may
revoke his consent to this Release by providing written notice of such revocation to the Company’s
General Counsel, Constar International Inc., One Crown Way, Philadelphia, PA 19154 prior to the
expiration of this 7-day revocation period, (iv) if seven (7) days pass without receipt of such
notice of revocation, this Release shall become binding and effective on the eighth

 

12

 

(8th) day after the execution hereof (the “Effective Date”) and (v) nothing in this Release
prevents or precludes the Executive from challenging or seeking a determination in good faith of
the validity of this Release under ADEA or OWBPA, nor does it impose any condition precedent,
penalties or costs for doing so, unless specifically authorized by federal law.

The Executive acknowledges and agrees that he has no right to future employment with the
Company or its affiliates and the Company and its affiliates shall have the right to refuse to
re-employ Executive without liability. The Executive acknowledges and agrees that even though
claims and facts in addition to those now known or believed by the Executive to exist may
subsequently be discovered, it is Executive’s intention to fully settle and release all claims the
Executive may have against the Company and the persons and entities described above, whether known,
unknown or suspected.

The Executive acknowledges and agrees that the provisions of Section 8 of the Employment
Agreement shall continue in full force and effect in accordance with their terms and, along with
this Release, are a material inducement for the Company to provide the payments and benefits in
Section 5 of the Employment Agreement.

The Executive further represents and warrants that he has not filed, and will not initiate, or
cause to be initiated on his behalf any complaint, charge, claim, or proceeding against any of the
Released Parties before any federal, state, or local agency, court, or other body relating to any
claims barred or released in this Release thereof, and will not voluntarily participate in such a
proceeding. However, nothing in this Release shall preclude or prevent the Executive from filing a
claim in good faith which challenges the validity of this Release solely with respect to the
Executive’s waiver of any Losses arising under the ADEA or OWBPA or from filing a charge or
participating, where applicable, in any investigative proceeding of any federal, state or local
governmental agency relating to discrimination. To the extent permitted by applicable law, the
Executive agrees not to seek or accept any monetary damages or any other relief obtained on his
behalf by any government agency, private party, class, or otherwise with respect to any claims
covered by this Release.

Except as otherwise permitted herein or pursuant to applicable law, the Executive agrees that
if he ever challenges the validity of the Employment Agreement or this Release, the Executive will
return to the Company all money paid to the Executive pursuant to Section 5.1 of the Employment
Agreement if requested by the Company or required by a court to do so. In addition, except as
otherwise permitted herein or pursuant to applicable law, upon a breach of any of the release of
claims or covenant not to sue provisions set forth in this Release by the Executive, and due to the
difficulties in calculating the damages that might be sustained (directly or indirectly) as a
result of such breach, the Executive shall forfeit his right to any and all benefits or payments to
be provided pursuant to Section 5.1 of the Employment Agreement, or in the event the Executive has
already been paid such benefits or payments, the Executive shall return such benefits or payments
to the Company. The Company may withhold any payments otherwise due under the Employment Agreement
pending final adjudication of any such claim of breach.

 

13

 

This Release will inure to the benefit of the Company and its Affiliates (and any successor
thereto). Section 9.1 of the Employment Agreement shall govern this Release (including any
disputes in connection herewith).

INTENDING TO BE LEGALLY BOUND, the Executive hereby sets his hand below:

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Michael Hoffman 

	 
	 	Dated: 	 

 

14exv10w2

Exhibit 10.2

 NORTHROP GRUMMAN CORPORATION

TERMS AND CONDITIONS APPLICABLE TO

2010 RESTRICTED PERFORMANCE STOCK RIGHTS

GRANTED UNDER THE 2001 LONG-TERM INCENTIVE STOCK PLAN

               These Terms and Conditions (“Terms”) apply to certain “Restricted Performance Stock
Rights” (“RPSRs”) granted by Northrop Grumman Corporation (the “Company”) in 2010. If you were
granted an RPSR award by the Company in 2010, the date of grant of your RPSR award and the target
number of RPSRs applicable to your award are set forth in the letter from the Company announcing
your RPSR award grant (your “Grant Letter”) and are also reflected in the electronic stock plan
award recordkeeping system (“Stock Plan System”) maintained by the Company or its designee. These
Terms apply only with respect to your 2010 RPSR award. If you were granted an RPSR award, you are
referred to as the “Grantee” with respect to your award. Capitalized terms are generally defined
in Section 10 below if not otherwise defined herein.

               Each RPSR represents a right to receive one share of the Company’s Common Stock, or cash of
equivalent value as provided herein, subject to vesting as provided herein. The performance
period applicable to your award is January 1, 2010 to December 31, 2012 (the “Performance
Period”). The target number of RPSRs subject to your award is subject to adjustment as
provided herein. The RPSR award is subject to all of the terms and conditions set forth in
these Terms, and is further subject to all of the terms and conditions of the Plan, as it may
be amended from time to time, and any rules adopted by the Committee, as such rules are in
effect from time to time.

	1.	 	Vesting; Payment of RPSRs.

          The RPSRs are subject to the vesting and payment provisions established (or to be established,
as the case may be) by the Committee with respect to the Performance Period. RPSRs that vest based
on such provisions will be paid as provided below. No fractional shares will be issued.

          1.1   Performance-Based Vesting of RPSRs. At the conclusion of the Performance Period, the
Committee shall determine whether and the extent to which the applicable performance criteria have
been achieved for purposes of determining earnouts and RPSR payments. Based on its determination,
the Committee shall determine the percentage of target RPSRs subject to the award (if any) that
have vested for the Performance Period in accordance with the earnout schedule established (or to
be established, as the case may be) by the Committee with respect to the Performance Period (the
“Earnout Percentage”). Any RPSRs subject to the award that are not vested as of the conclusion of
the Performance Period after giving effect to the Committee’s determinations under this Section 1.1
shall terminate and become null and void immediately following such determinations.

          1.2   Payment of RPSRs. The number of RPSRs payable at the conclusion of the Performance
Period (“Earned RPSRs”) shall be determined by multiplying the Earnout Percentage by the target
number of RPSRs subject to the award. The Earned RPSRs may be paid out in either an equivalent
number of shares of Common Stock, or, in the discretion of the Committee, in cash or in a
combination of shares of Common Stock and cash. In the event of a cash payment, the amount of the

payment for each Earned RPSR to be paid in cash will equal the Fair Market Value of a share of
Common Stock as of the date the Committee determines the extent to which the applicable RPSR
performance criteria have been achieved. RPSRs will be paid in the calendar year following the
calendar year containing the last day of the Performance Period (and generally will be paid in the
first 75 days of such year).

	2.	 	Early Termination of Award; Termination of Employment.

          2.1   General. The RPSRs subject to the award shall terminate and become null and void prior
to the conclusion of the Performance Period if and when (a) the award terminates in connection with
a Change in Control pursuant to Section 5 below, or (b) except as provided below in this Section 2
and in Section 5, the Grantee ceases for any reason to be an employee of the Company or one of its
subsidiaries.

          2.2   Termination of Employment Due to Retirement, Death or Disability. The number of RPSRs
subject to the award shall vest on a prorated basis as provided herein if the Grantee’s employment
by the Company and its subsidiaries terminates due to the Grantee’s Retirement, death, or
Disability and, in each case, only if the Grantee has completed at least six (6)
consecutive calendar months of employment with the Company or a subsidiary during the three-year
Performance Period. Such prorating of RPSRs shall be based on the number of full months the
Grantee was actually employed by the Company or one of its subsidiaries out of the thirty-six month
Performance Period. Partial months of employment during the Performance Period, even if
substantial, shall not be

1

 

counted for purposes of prorated vesting. Any RPSRs subject to the award that do not vest in
accordance with this Section 2.2 upon a termination of the Grantee’s employment due to Retirement,
death or Disability shall terminate immediately upon such termination of employment.

          Death or Disability. In the case of death or Disability (a) the Performance Period used to
calculate the Grantee’s Earned RPSRs will be deemed to have ended as of the most recent date that
performance has been measured by the Company with respect to the RPSRs (but in no event shall such
date be more than one year before the Grantee’s termination of employment), (b) the Earnout
Percentage of the Grantee’s RPSRs will be determined based on actual performance for that short
Performance Period, and (c) payment of Earned RPSRs will be made in the calendar year containing
the 75th day following the date of the Grantee’s death or Disability (and generally will
be paid on or about such 75th day).

          Retirement in General. Subject to the following provisions of this Section 2.2, in the case
of Retirement, (a) the entire Performance Period will be used to calculate the Grantee’s Earned
RPSRs, (b) the Earnout Percentage of the Grantee’s RPSRs will be determined based on actual
performance for the Performance Period, and (c) payment of Earned RPSRs will be made in the
calendar year following the calendar year containing the last day of the Performance Period (and
generally will be paid in the first 75 days of such year).

          In determining the Grantee’s eligibility for Retirement, service is measured by dividing (a)
the number of days the Grantee was employed by the Company or a subsidiary in the period commencing
with his or her last date of hire by the Company or a subsidiary through and including the date on
which the Grantee is last employed by the Company or a subsidiary, by (b) 365. If the Grantee
ceased to be employed by the Company or a subsidiary and was later rehired by the Company or a
subsidiary, the Grantee’s service prior to the break in service shall be disregarded in determining
service for such purposes; provided that, if the Grantee’s employment with the Company or a
subsidiary had terminated due to the Grantee’s Retirement, or by the Company as part of a reduction
in force (in each case, other than a termination by the Company or a subsidiary for cause) and,
within the two-year period following such termination of employment (the “break in service”) the
Grantee was subsequently rehired by the Company or a subsidiary, then the Grantee’s period of
service with the Company or a subsidiary prior to and ending with the break in service will be
included in determining service for such purposes. In the event the Grantee is employed by a
business that is acquired by the Company or a subsidiary, the Company shall have discretion to
determine whether

the Grantee’s service prior to the acquisition will be included in determining
service for such purposes.

          Retirement Due to Government Service. In the case of Retirement where the Grantee accepts a
position in the federal government or a state or local government and an accelerated distribution
under the award is permitted under Code Section 409A based on such government employment and
related ethics rules (a) the Performance Period used to calculate the Grantee’s Earned RPSRs will
be deemed to have ended as of the most recent date that performance has been measured by the
Company with respect to the RPSRs prior to the Grantee’s Retirement (but in no event shall such
date be more than one year before the Grantee’s Retirement), (b) the Earnout Percentage of the
Grantee’s RPSRs will be determined based on actual performance for that short Performance Period,
and (c) payment of Earned RPSRs will be made within 10 days after Retirement.

          2.3   Other Terminations of Employment. Subject to Section 5.2, all RPSRs subject to the
award terminate immediately upon a termination of the Grantee’s employment: (a) for any reason
other than due to the Grantee’s Retirement, death or Disability; or (b) for Retirement, death or
Disability, if the six-month employment requirement under Section 2.2 above is not satisfied.

          2.4   Leave of Absence. Unless the Committee otherwise provides (at the time of the leave or
otherwise), if the Grantee is granted a leave of absence by the Company, the Grantee (a) shall not
be deemed to have incurred a termination of employment at the time such leave commences for
purposes of the award, and (b) shall be deemed to be employed by the Company for the duration of
such approved leave of absence for purposes of the award. A termination of employment shall be
deemed to have occurred if the Grantee does not timely return to active employment upon the
expiration of such approved leave or if the Grantee commences a leave that is not approved by the
Company.

          2.5   Salary Continuation. Subject to Section 2.4 above, the term “employment” as used herein
means active employment by the Company and salary continuation without active employment (other
than a leave of absence approved by the Company that is covered by Section 2.4) will not, in and of
itself, constitute “employment” for purposes hereof (in the case of salary continuation without
active employment, the Grantee’s cessation of active employee status shall, subject to Section 2.4,
be deemed to be a termination of “employment” for purposes hereof). Furthermore, salary
continuation will not, in and of itself, constitute a leave of absence approved by the Company for
purposes of the award.

2

 

          2.6   Sale or Spinoff of Subsidiary or Business Unit. For purposes of the RPSRs subject to
the award, a termination of employment of the Grantee shall be deemed to have occurred if the
Grantee is employed by a subsidiary or business unit and that subsidiary or business unit is sold,
spun off, or otherwise divested and the Grantee does not Retire upon or immediately before such
event and the Grantee does not otherwise continue to be employed by the Company or one of its
subsidiaries after such event.

          2.7   Continuance of Employment Required. Except as expressly provided in Sections 2.2 and
2.4 above and in Section 5 below, the vesting of the RPSRs subject to the award requires continued
employment through the last day of the Performance Period as a condition of the payment of such
RPSRs. Employment for only a portion of the Performance Period, even if a substantial portion,
will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment. Nothing contained in these
Terms, the Grant Letter, the Stock Plan System, or the Plan constitutes an employment commitment by
the Company or any subsidiary, affects the Grantee’s status (if the Grantee is otherwise an
at-will employee) as an employee at will who is subject to termination without cause,
confers upon the Grantee any right to continue in the employ of the Company or any subsidiary, or
interferes in any way with the right of the Company or of any subsidiary to terminate such
employment at any time.

          2.8   Death. In the event of the Grantee’s death subsequent to the vesting of RPSRs but prior
to the delivery of shares or other payment with respect to such RPSRs, the Grantee’s Successor
shall be entitled to any payments to which the Grantee would have been entitled under this
Agreement with respect to such RPSRs.

	3.	 	Non-Transferability and Other Restrictions.

          3.1   Non-Transferability. The award, as well as the RPSRs subject to the award, are
non-transferable and shall not be subject in any manner to sale, transfer, anticipation,
alienation, assignment, pledge, encumbrance or charge. The foregoing transfer restrictions shall
not apply to transfers to the Company. Notwithstanding the foregoing, the Company may honor any
transfer required pursuant to the terms of a court order in a divorce or similar domestic relations
matter to the extent that such transfer does not adversely affect the Company’s ability to register
the offer and sale of the underlying shares on a Form S-8 Registration Statement and such transfer
is otherwise in compliance with all applicable legal, regulatory and listing requirements.

          3.2   Recoupment of Awards. Any payments or issuances of shares with respect to the award are
subject

to recoupment pursuant to the Company’s Policy Regarding the Recoupment of Certain
Performance-Based Compensation Payments as in effect from time to time, and the Grantee shall
promptly make any reimbursement requested by the Board or Committee pursuant to such policy with
respect to the award. Further, the Grantee agrees, by accepting the award, that the Company and
its affiliates may deduct from any amounts it may owe the Grantee from time to time (such as wages
or other compensation) to the extent of any amounts the Grantee is required to reimburse the
Company pursuant to such policy with respect to the award.

	4.	 	Compliance with Laws; No Stockholder Rights Prior to Issuance.

          The Company’s obligation to make any payments or issue any shares with respect to the award is
subject to full compliance with all then applicable requirements of law, the Securities and
Exchange Commission, the Commissioner of Corporations of the State of California, or other
regulatory agencies having jurisdiction over the Company and its shares, and of any exchange upon
which stock of the Company may be listed. The Grantee shall not have the rights and privileges of
a stockholder, including without limitation the right to vote or receive dividends, with respect to
any shares which may be issued in respect of the RPSRs until the date appearing on the
certificate(s) for such shares (or, in the case of shares entered in book entry form, the date that
the shares are actually recorded in such form for the benefit of the Grantee), if such shares
become deliverable.

	5.	 	Adjustments; Change in Control.

          5.1   Adjustments. The RPSRs and the shares subject to the award are subject to adjustment
upon the occurrence of events such as stock splits, stock dividends and other changes in
capitalization in accordance with Section 6(a) of the Plan. In addition, for RPSRs that do not use
a relative total shareholder return metric as the applicable performance criterion, the Committee
shall adjust the applicable performance criteria to eliminate the effects of the gain, loss, income
or expense or other extraordinary items resulting from (i) changes in accounting principles that
become effective during the Performance Period, (ii) the purchase or disposition of a business
during the Performance Period, and (iii) extraordinary charges not foreseen at the date of grant of
the RPSRs, provided that the Committee shall have the discretion not to make any such adjustment if
not making such adjustment would result in a reduction in the number of Earned RPSRs. In the event
of any adjustment, the Company will give the Grantee written notice thereof which will set forth
the nature of the adjustment.

3

 

          5.2   Possible Acceleration on Change in Control. Notwithstanding the provisions of Section 2
hereof, and further subject to the Company’s ability to terminate the award as provided in Section
5.3 below, the Grantee shall be entitled to proportionate vesting of the award as provided below if
the Grantee is not otherwise entitled to a pro-rata payment pursuant to Section 2 and in the event
of the Grantee’s termination of employment in the following circumstances:

	 	(a)	 	if the Grantee is covered by a Change in Control Severance Arrangement at the time of the
termination, and the termination of employment constitutes a “Qualifying Termination” (as
such term, or any similar successor term, is defined in such Change in Control Severance
Arrangement) that triggers the Grantee’s right to severance benefits under such Change in
Control Severance Arrangement.
	 
	 	(b)	 	if the Grantee is not covered by a Change in Control Severance Arrangement at the time of
the termination, the termination occurs either within the Protected Period corresponding to
a Change in Control of the Company or within twenty-four (24) calendar months following the
date of a Change in Control of the Company, and the Grantee’s employment by the Company and
its subsidiaries is involuntarily terminated by the Company and its subsidiaries for reasons
other than Cause or by the Grantee for Good Reason.

          Notwithstanding anything else contained herein to the contrary, the termination of the
Grantee’s employment (or other events giving rise to Good Reason) shall not entitle the Grantee to
any accelerated vesting pursuant to clause (b) above if there is objective evidence that, as of the
commencement of the Protected Period, the Grantee had specifically been identified by the Company
as an employee whose employment would be terminated as part of a corporate restructuring or
downsizing program that commenced prior to the Protected Period and such termination of employment
was expected at that time to occur within six (6) months. The applicable Change in Control
Severance Arrangement shall govern the matters addressed in this paragraph as to clause (a) above.

In the event the Grantee is entitled to a prorated payment in accordance with the foregoing
provisions of this Section 5.2, then the Grantee will be eligible for a prorated portion of the
RPSRs determined in accordance with the following formula: (a) the Earnout Percentage determined
in accordance with Section 1 but calculated based on performance for the portion of the three-year
Performance Period ending on the last day of the month coinciding with or immediately preceding the
date of the termination of the Grantee’s employment, multiplied by

(b) the target number of RPSRs
subject to the award, multiplied by (c) a fraction the numerator of which is the total number of
full months that the Grantee was an employee of the Company or a subsidiary on and after the
beginning of the Performance Period and through the date of the termination of the Grantee’s
employment (but not in excess of 36 months) and the denominator of which is 36. Payment of any
amount due under this Section 5.2 will be made in the calendar year following the calendar year
containing the last day of the Performance Period (and generally will be paid in the first 75 days
of such year).

          5.3   Automatic Acceleration; Early Termination. If the Company undergoes a Change in Control
triggered by clause (iii) or (iv) of the definition thereof and the Company is not the surviving
entity and the successor to the Company (if any) (or a Parent thereof) does not agree in writing
prior to the occurrence of the Change in Control to continue and assume the award following the
Change in Control, or if for any other reason the award would not continue after the Change in
Control, then upon the Change in Control the Grantee shall be entitled to a prorated payment of the
RPSRs as provided below and the award shall terminate. Unless the Committee expressly provides
otherwise in the circumstances, no acceleration of vesting of the award shall occur pursuant to
this Section 5.3 in connection with a Change in Control if either (a) the Company is the surviving
entity, or (b) the successor to the Company (if any) (or a Parent thereof) agrees in writing prior
to the Change in Control to assume the award. The Committee may make adjustments pursuant to
Section 6(a) of the Plan and/or deem an acceleration of vesting of the award pursuant to this
Section 5.3 to occur sufficiently prior to an event if necessary or deemed appropriate to permit
the Grantee to realize the benefits intended to be conveyed with respect to the shares underlying
the award; provided, however, that, the Committee may reinstate the original terms of the award if
the related event does not actually occur.

          In the event the Grantee is entitled to a prorated payment in accordance with the foregoing
provisions of this Section 5.3, then the Grantee will be eligible for a prorated portion of the
RPSRs determined in accordance with the following formula: (a) the Earnout Percentage determined
in accordance with Section 1 but calculated based on performance for the portion of the three-year
Performance Period ending on the date of the Change in Control of the Company, multiplied by (b)
the target number of RPSRs subject to the award, multiplied by (c) a fraction the numerator of
which is the total number of full months that the Grantee was an employee of the Company or a
subsidiary on and after the beginning of the Performance Period and before the occurrence of the
Change in Control (but not in excess of 36 months) and the denominator of which is 36. Payment of
any amount due under this Section 5.3 will be made in the calendar

4

 

year following the calendar year containing the last day of the Performance Period (and
generally will be paid in the first 75 days of such year).

	6.	 	Tax Matters.

          6.1   Tax Withholding. The Company or the subsidiary which employs the Grantee shall be
entitled to require, as a condition of making any payments or issuing any shares upon vesting of
the RPSRs, that the Grantee or other person entitled to such shares or other payment pay any sums
required to be withheld by federal, state, local or other applicable tax law with respect to such
vesting or payment. Alternatively, the Company or such subsidiary, in its discretion, may make
such provisions for the withholding of taxes as it deems appropriate (including, without
limitation, withholding the taxes due from compensation otherwise payable to the Grantee or
reducing the number of shares otherwise deliverable with respect to the award (valued at their then
Fair Market Value) by the amount necessary to satisfy such withholding obligations).

          6.2   Transfer Taxes. The Company will pay all federal and state transfer taxes, if any, and
other fees and expenses in connection with the issuance of shares in connection with the vesting of
the RPSRs.

          6.3   Compliance with Code. The Committee shall administer and construe the award, and may
amend the Terms of the award, in a manner designed to comply with the Code and to avoid adverse tax
consequences under Code Section 409A or otherwise.

          6.4   Unfunded Arrangement. The right of the Grantee to receive payment under the award shall
be an unsecured contractual claim against the Company. As such, neither the Grantee nor any
Successor shall have any rights in or against any specific assets of the Company based on the
award. Awards shall at all times be considered entirely unfunded for tax purposes.

	7.	 	Committee Authority.

          The Committee has the discretionary authority to determine any questions as to the date when
the Grantee’s employment terminated and the cause of such termination and to interpret any
provision of these Terms, the Grant Letter, the Stock Plan System, the Plan, and any other
applicable rules. Any action taken by, or inaction of, the Committee relating to or pursuant to
these Terms, the Grant Letter, the Stock Plan System, the Plan, or any other applicable rules shall
be within the absolute discretion of the Committee and shall be conclusive and binding on all
persons.

	8.	 	Plan; Amendment.

          The RPSRs subject to the award are governed by, and the Grantee’s rights are subject to, all
of the terms

and conditions of the Plan and any other rules adopted by the Committee, as the
foregoing may be amended from time to time. The Grantee shall have no rights with respect to any
amendment of these Terms or the Plan unless such amendment is in writing and signed by a duly
authorized officer of the Company. In the event of a conflict between the provisions of the Grant
Letter and/or the Stock Plan System and the provisions of these Terms and/or the Plan, the
provisions of these Terms and/or the Plan, as applicable, shall control.

	9.	 	Required Holding Period.

          The holding requirements of this Section 9 shall apply to any Grantee who is an elected or
appointed officer of the Company on the date Earned RPSRs are paid (or, if earlier, on the date the
Grantee’s employment by the Company and its subsidiaries terminates for any reason). Any Grantee
subject to this Section 9 shall not be permitted to sell, transfer, anticipate, alienate, assign,
pledge, encumber or charge 50% of the total number (if any) of shares of Common Stock the Grantee
receives as payment for Earned RPSRs until the earlier of (A) the third anniversary of the date
such shares of Common Stock are paid to the Grantee, or (B) the date the Grantee’s employment by
the Company and its subsidiaries terminates due to the Grantee’s death or Disability. Should the
Grantee’s employment by the Company and its subsidiaries terminate (regardless of the reason for
such termination, but other than due to the Grantee’s death or Disability), such holding period
requirement shall not apply as to any shares acquired upon payment of Earned RPSRs to the extent
such payment is made more than one year after such termination of employment. (For purposes of
clarity, in such circumstances the holding period requirement will apply as to any shares acquired
upon payment of Earned RPSRs within one year after such a termination of employment.) For purposes
of this Section 9, the total number of shares of Common Stock the Grantee receives as payment for
Earned RPSRs shall be determined on a net basis after taking into account any shares otherwise
deliverable with respect to the award that the Company withholds to satisfy tax obligations
pursuant to Section 6.1. Any shares of Common Stock received in respect of shares that are
covered by the holding period requirements of this Section 9 (such as shares received in respect of
a stock split or stock dividend) shall be subject to the same holding period requirements as the
shares to which they relate.

	10.	 	Definitions.

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

5

 

          “Board” means the Board of Directors of the Company.

          “Cause” means the occurrence of either or both of the following:

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

          “Change in Control” is used as defined in the Plan.

          “Change in Control Severance Arrangement” means a “Special Agreement” entered into by and
between the Grantee and the Company that provides severance protections in the event of certain
changes in control of the Company or the Company’s Change-in-Control Severance Plan, as each may be
in effect from time to time, or any similar successor agreement or plan that provides severance
protections in the event of a change in control of the Company.

          “Code” means the United States Internal Revenue Code of 1986, as amended.

          “Committee” means the Company’s Compensation Committee or any successor committee appointed by
the Board to administer the Plan.

          “Common Stock” means the Company’s common stock.

          “Disability” means, with respect to a Grantee, that the Grantee: (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than twelve months; or (ii) is, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering employees of the
Grantee’s employer; all construed and interpreted consistent with the definition of “Disability”
set forth in Code Section 409A(a)(2)(C).

          “Fair Market Value” is used as defined in the Plan; provided, however, the Committee in
determining such Fair Market Value for purposes of the award may utilize such other exchange,
market, or listing as it deems appropriate.

          “Good Reason” means, without the Grantee’s express written consent, the occurrence of any one
or more of the following:

	 	(i)	 	A material and substantial reduction in the nature or status of the Grantee’s authorities
or responsibilities (when such authorities and/or responsibilities are viewed in the
aggregate) from their level in effect on the day immediately prior to the start of the
Protected Period, other than (A) an inadvertent act that is remedied by the Company promptly
after receipt of notice thereof given by the Grantee, and/or (B) changes in the nature or
status of the Grantee’s authorities or responsibilities that, in the aggregate, would
generally be viewed by a nationally-recognized executive placement firm as resulting in the
Grantee having not materially and substantially fewer authorities and responsibilities
(taking into consideration the Company’s industry) when compared to the authorities and
responsibilities applicable to the position held by the Grantee immediately prior to the
start of the Protected Period. The Company may retain a nationally-recognized executive
placement firm for purposes of making the determination required by the preceding sentence
and the written opinion of the firm thus selected shall be conclusive as to this issue.
	 
	 	 	 	In addition, if the Grantee is a vice president, the Grantee’s loss of vice-president status
will constitute “Good Reason”; provided that the loss of the title of “vice president” will
not, in and of itself, constitute Good Reason if the Grantee’s lack of a vice president title
is generally consistent with the manner in which the title of vice president is used within
the Grantee’s business unit or if the loss of the title is the result of a promotion to a
higher level office. For the purposes of the preceding sentence, the Grantee’s lack of a
vice-president title will only be considered generally consistent with the manner in which
such title is used if most persons in the business unit with authorities, duties, and
responsibilities comparable to those of the Grantee immediately prior to the commencement of
the Protected Period do not have the title of vice-president.
	 
	 	(ii)	 	A reduction by the Company in the Grantee’s annualized rate of base salary as in effect
on the first to occur of the start of the Performance

6

 

	 	 	 	Period or the start of the Protected Period, or as the same shall be increased from time to
time.
	 
	 	(iii)	 	A material reduction in the aggregate value of the Grantee’s level of participation in
any of the Company’s short and/or long-term incentive compensation plans (excluding
stock-based incentive compensation plans), employee benefit or retirement plans, or
policies, practices, or arrangements in which the Grantee participates immediately prior to
the start of the Protected Period provided; however, that a reduction in the aggregate value
shall not be deemed to be “Good Reason” if the reduced value remains substantially
consistent with the average level of other employees who have positions commensurate with
the position held by the Grantee immediately prior to the start of the Protected Period.
	 
	 	(iv)	 	A material reduction in the Grantee’s aggregate level of participation in the Company’s
stock-based incentive compensation plans from the level in effect immediately prior to the
start of the Protected Period; provided, however, that a reduction in the aggregate level of
participation shall not be deemed to be “Good Reason” if the reduced level of participation
remains substantially consistent with the average level of participation of other employees
who have positions commensurate with the position held by the Grantee immediately prior to
the start of the Protected Period.
	 
	 	(v)	 	The Grantee is informed by the Company that his or her principal place of employment for
the Company will be relocated to a location that is greater than fifty (50) miles away from
the Grantee’s principal place of employment for the Company at the start of the
corresponding Protected Period; provided that, if the Company communicates an intended
effective date for such relocation, in no event shall Good Reason exist pursuant to this
clause (v) more than ninety (90) days before such intended effective date.

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

          “Parent” is used as defined in the Plan.

          “Plan” means the Northrop Grumman 2001 Long-Term Incentive Stock Plan, as it may be amended
form time to time.

          The “Protected Period” corresponding to a Change in Control of the Company shall be a period
of time determined in accordance with the following:

	 	(i)	 	If the Change in Control is triggered by a tender offer for shares of the Company’s stock
or by the offeror’s acquisition of shares pursuant to such a tender offer, the Protected
Period shall commence on the date of the initial tender offer and shall continue through and
including the date of the Change in Control; provided that in no case will the Protected
Period commence earlier than the date that is six (6) months prior to the Change in Control.

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

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

          “Retirement” or “Retire” means that the Grantee terminates employment after attaining age 55
with at least 10 years of service (other than in connection with a termination by the Company or a
subsidiary for cause). In the case of a Grantee who is an officer of the Company subject
to the Company’s mandatory retirement at age 65 policy, “Retirement” or “Retire” shall also include
as to that Grantee (without limiting the Grantee’s ability to Retire pursuant to the preceding
sentence) a termination of the Grantee’s employment pursuant to such mandatory retirement policy
(regardless of the Grantee’s years of service and other than in connection with a termination by
the Company or a subsidiary for cause).

          “Successor” means the person acquiring a Grantee’s rights to a grant under the Plan by will or
by the laws of descent or distribution.

7

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