Document:

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                                                                   EXHIBIT 10.25
                             LITTON INDUSTRIES, INC.
                           RESTRICTED STOCK AGREEMENT

        THIS AGREEMENT is entered into as of February 15, 1999, by and between
Litton Industries, Inc., (the "Company"), and D. Michael Steuert (the "Holder").

                                    Recitals:

        WHEREAS, the Board of Directors of the Company (the "Board") has agreed
to provide for the grant to the Holder of treasury shares of the Company's
common stock, par value $1.00 per share ("Stock");

        WHEREAS, such shares shall be subject to the terms and conditions set
forth below and shall be in the form of an award of restricted stock (the
"Restricted Stock Award") granted in connection with the acceptance of and
continued employment with the Company by the Holder; and

        WHEREAS, in consideration of the Restricted Stock Award and other
benefits, the Holder is willing to accept the Restricted Stock Award provided in
this Agreement and is willing to abide by the obligations imposed on him under
this Agreement and the other responsibilities of his position;

        NOW, THEREFORE, in consideration of the mutual benefits hereinafter
provided, and each intending to be legally bound, the Company and the Holder
hereby agree as follows:

1.      EFFECT OF THE AGREEMENT.

                The Restricted Stock Award shall be subject to the terms and
conditions set forth in this Agreement. The Holder shall abide by, and the
Restricted Stock Award shall be subject to, all of the provisions of this
Agreement.

2.      GRANT.

                The Company hereby grants to the Holder a total of 5,000 shares
of Stock (the "Restricted Stock"). This Restricted Stock Award is made as of
February 15, 1999 (the "Grant Date").

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3.      VESTING OF RESTRICTED STOCK.

        3.1    SERVICE REQUIREMENT.

               Except as otherwise provided in this Agreement, all of the
Restricted Stock granted hereby shall be forfeited by the Holder upon the
termination of his Service (as defined below) at any time before the first
anniversary of the Grant Date. The Holder shall have no rights with respect to
any of the Restricted Stock that has been forfeited, including, without
limitation, any right to vote or to receive dividends, if any. Any or all of the
Restricted Stock may become free of this risk of forfeiture by "vesting" in
accordance of this Agreement. Except in the case of death, disability or a
Change of Control of Company, One Thousand (1,000) shares of Restricted Stock
shall vest on the first anniversary of the Grant Date and on each of the next
four anniversaries of the Grant Date provided that the Holder is in Service of
the Company on each such date. "Service" means the Holder's employment with the
Company or a subsidiary of the Company, except that if the Service of the Holder
is terminated by the Company without cause (as defined below) the Restricted
Stock shall fully vest on the date of termination of Service.

               For purposes of this Agreement, the term "cause" shall mean one
or more of the following: (i) the continued failure of the Holder to perform
satisfactorily his duties (other than by reason of death or disability) after
written demand for performance is made specifically identifying the failure in
performance and after reasonable opportunity is given to cure such failure in
performance within the thirty (30) day period following such written demand;
(ii) conduct of the Holder that is injurious or detrimental to the Company;
(iii) the commission of a material act of dishonesty or fraud by the Holder
affecting the Company; (iv) the commission of an act by the Holder in the
performance of his duties constituting gross, willful or wanton negligence; or
(v) the conviction of the Holder of any felony or misdemeanor.

        3.2    RESTRICTED PERIOD.

               The period during which any particular portion of the Restricted
Stock is subject to forfeiture is the "Restricted Period." During the Restricted
Period and prior to the satisfaction of any other restrictions prescribed under
this Agreement, the Holder may not sell, transfer, assign, pledge or otherwise
encumber or dispose of such portion of the Restricted Stock.

        3.3    DELIVERY OF STOCK AND PAYMENT THEREFOR.

               With respect to the whole or any part of the Restricted Stock,
until the applicable Restricted Period expires, the Holder will be provided with
a copy of the actual Restricted Stock certificate which will contain a
restrictive legend referencing this Agreement. Upon the expiration of each
Restricted Period, the restrictions applicable to such Restricted Stock shall
lapse, and a stock certificate representing a number of shares of Stock equal to
the number of shares of Restricted Stock for which the restrictions have

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lapsed shall be delivered, free of all the restrictions, to the Holder or his
beneficiary or estate, as the case may be.

        3.4     DEATH OR DISABILITY.

                If the Holder dies before the end of the Restricted Period,
provided the Holder was in the Service of the Company at the time of his death,
the Restricted Stock shall fully vest on the date of death and shall be
deliverable pursuant to Section 3.3 above to the executors, administrators,
legatees or distributees of the Holder's estate. If the Holder's Service with
the Company is terminated by reason of the Holder's "permanent and total
disability" as determined under the Company's long-term disability plan, the
Restricted Stock shall fully vest on the date of the Holder's permanent and
total disability.

        3.5     VESTING IN THE EVENT OF A CHANGE IN CONTROL OF THE COMPANY.

                Notwithstanding any other provision of the Agreement to the
contrary, in the event of a Change in Control any Restricted Stock outstanding
as of the date such Change in Control is determined to have occurred shall
become fully vested.

                For purposes hereof, a "Change in Control" shall mean the
happening of any of the following events:

                (i) An acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d) of the Securities Exchange Act of 1934
as amended from time to time, and any successor thereto, [the "Exchange Act"])
(a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of either (1) the then
outstanding shares of common stock of Litton Industries, Inc. (the "Outstanding
Company Common Stock") or (2) the combined voting power of the then outstanding
voting securities of Litton Industries, Inc., entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); excluding,
however, the following acquisitions of Outstanding Company Common Stock and
Outstanding Company Voting Securities: (1) any acquisition directly from the
Corporation, (2) any acquisition by the Corporation, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation or (4) any
acquisition by any Person pursuant to a transaction which complies with clauses
(1), (2) and (3) of subsection (iii) hereof; or

                (ii) Individuals who, as of the date hereof constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individuals who becomes a member of
the Board subsequent to such effective date, whose election, or nomination for
election by the shareholders, was approved by a vote of at least a majority of
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; but, provided further, that any
such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used

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in Rule 14a-11 of Regulation 14A promulgated under the, Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of the
Incumbent Board; or

                (iii) Consummation by Litton Industries, Inc., of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of its assets ("Business Combination"); excluding, however,
such a Business Combination pursuant to which (1) all or substantially all of
the individuals and entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination own, directly or indirectly, more
than 60% of, respectively, the outstanding shares of common stock, and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns Litton Industries, Inc.,
or all or substantially all of its assets either directly or indirectly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (2) no person (other than any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or such corporation resulting from
such Business Combination) will beneficially own, directly or indirectly, 30% or
more of, respectively, the outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
outstanding voting securities of such corporation entitled to vote generally in
the election of directors except to the extent that such ownership existed with
respect to the Litton Industries, Inc., prior to the Business Combination and
(3) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or

                (iv) The approval of the shareholders thereof of a complete
liquidation or dissolution of Litton Industries, Inc.

4.      DIVIDEND AND VOTING RIGHTS.

                Subject to the following provisions, the Holder shall have the
right to vote the Restricted Stock and to receive any dividends declared or paid
thereon. Any distributions received by the Holder as a result of any stock
split, stock dividend, combination of shares or other similar transaction shall
be deemed to be a part of the Restricted Stock and subject to the same
conditions and restrictions applicable thereto. Any dividends paid on the
Restricted Stock shall, unless otherwise determined by the Board, be payable in
cash but shall be subject to the same conditions and restrictions as the
Restricted Stock.

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5.      REORGANIZATION.

                Restricted Stock will be subject to the same adjustment, if any,
accorded to all other outstanding shares of Stock in the event of (i) any change
in the total number of shares of Stock of the Company outstanding or the number
or kind of securities into which shares have been changed, (ii) any
reorganization or change in the Company's capital structure, or (iii) any other
transaction or event having an effect similar to the foregoing.

6.      REQUIREMENTS OF LAW.

                Notwithstanding any other provision of this Agreement, the
Company shall not be required to deliver any shares of Stock under this
Agreement if the delivery of the shares would constitute a violation by the
Holder or by the Company of any provision of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. Notwithstanding any other provisions of this
Agreement, if at any time the Company shall determine, in its sole discretion,
that the listing, registration or qualification of any shares of Stock subject
to this Agreement upon any securities exchange or under any state or federal
law, or the consent or approval of any government regulatory body, is necessary
or desirable as a condition of, or in connection with, the deliver of shares of
Stock hereunder, the Restricted Stock shall not vest in whole or in part unless
the listing, registration, qualification, consent or approval has been effected
or obtained free of any conditions not acceptable to the Company. Specifically
in connection with the Securities Act of 1933 (as now in effect or as hereafter
amended) (the "Act"), unless a registration statement under the Act is in effect
with respect to the shares of Stock covered by this Agreement, the Company shall
not be required to deliver the shares of Stock unless the Company has received
evidence satisfactory to it that the Holder may acquire the shares of Stock
pursuant to an exemption from registration under the Act. These determinations
by the Company shall be final, binding and conclusive. The Company may, but
shall not be obligated to, register any securities covered hereby pursuant to
the Act. Notwithstanding any other provision of this Agreement, as to any
jurisdiction that expressly imposes the requirement that the Restricted Stock
shall not vest unless and until registered or subject to an available exemption
from registration, the vesting of the Restricted Stock (under circumstances in
which the laws of the jurisdiction apply) shall be deemed conditional upon the
effectiveness of the registration or the availability of the exemption.

7.      TAXES; WITHHOLDING OF TAXES.

        7.1     TAX CONSEQUENCES.

                The Holder understands that the Holder (and not the Company)
shall be responsible for his own federal, state, local or foreign tax liability
that may arise as a result of the transactions contemplated by this Agreement.
The Holder is relying solely on the determination of his tax advisors and or his
own determinations, and not on any statements or representations of the Company
or any of its agents with regard to all such

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tax matters. The Holder understands that Section 83 of the Internal Revenue Code
of 1986, as amended (the "Code") taxes as ordinary income the difference between
the amount, if any, paid for the Restricted Stock and the fair market value of
the Restricted Stock as of the date any restrictions thereon lapse. The Holder
understands that he may elect to be taxed at the time the shares of Stock are
awarded rather than when the Restricted Period terminates or expires by filing
an election under Section 83(b) of the Code with the I.R.S. within 30 days from
the Grant Date.

                THE HOLDER ACKNOWLEDGES THAT IT IS THE HOLDER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b) OF THE CODE.

        7.2     WITHHOLDING.

                The Company shall have the right to deduct from payments of any
kind otherwise due to the Holder any federal, state, or local taxes of any kind
required by law to be withheld with respect to the vesting of or other, lapse of
restrictions applicable to Restricted Stock. At the time of the vesting or
lapse, the Holder shall pay to the Company any amount that the Company may
reasonably determine to be necessary to satisfy the legal withholding
obligation. Subject to prior approval of the Company, the Holder may elect to
satisfy these obligations, in whole or in part, (i) by causing the Company to
withhold shares of Stock otherwise deliverable or (ii) by delivering to the
Company, shares of Stock already owned by the Holder. The shares of Stock so
delivered or withheld shall have a fair market value equal to the withholding
obligations. The fair market value of the shares of Stock used to satisfy the
withholding obligation shall be determined by the Company as of the date that
the amount of tax to be withheld is to be determined based on the average
between the high and low trading price for the Stock on such date. If the Holder
makes an election pursuant to this Section 7.2, he may satisfy his withholding
obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.

8.      DISCLAIMER OF RIGHTS.

                No provision in this Agreement shall be construed (i) to confer
upon the Holder the right to remain in the Service of the Company or any
subsidiary or affiliate of the Company or (ii) to interfere in any way with the
right and authority of the Company, either to increase or decrease the
compensation of the Holder at any time or to terminate any employment, service
or other relationship with the Holder.

9.      INTERPRETATION OF THIS AGREEMENT.

                All determinations, decisions and interpretations made by the
Board with regard to any questions or matter arising under this Agreement or the
Plan shall be final, binding and conclusive on the Company and the Holder.

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10.     GOVERNING LAW.

                This Agreement is executed pursuant to and shall be governed by
the laws of Delaware (but not including the choice of any law rules thereof).

11.     SEVERABILITY.

                If any provision of this Agreement is determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions shall be severable and enforceable in accordance with their terms,
and all provisions shall remain enforceable in any other jurisdiction.

12.     NO WAIVER.

                The failure or delay of the Company (whether on one or more
occasions) to enforce any of the provisions of this Agreement or to exercise any
right or privilege hereunder (including, without limitation, any right arising
from a breach or default by the Holder) shall not be a waiver of the provision,
right or privilege, either as to the specific instance(s) of the failure or
delay of its enforcement or exercise or as to its future enforcement or
exercise.

13.     ENTIRE AGREEMENT.

                This Agreement and all determinations, decisions, actions and
interpretations of the Board pursuant hereto, constitutes the entire agreement
between the parties hereto with respect to the Restricted Stock Award, and it
supersedes all prior oral or written agreements, commitments or understandings.

                IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.

                                                    LITTON INDUSTRIES, INC.

                                                    By: Jeanette M. Thomas
                                                       -------------------------
                                                        Jeanette M. Thomas
                                                        Vice President and
                                                        Secretary

                                                    D. Michael Steuert
                                                    ----------------------------
                                                    D. Michael Steuert

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                ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY
                       IN GROSS INCOME IN YEAR OF TRANSFER
                    UNDER INTERNAL REVENUE CODE SECTION 83(b)

        The undersigned hereby elects pursuant to Section 83(b) of the Internal
Revenue Code with respect to the property described below and supplies the
following information in accordance with the regulations promulgated thereunder:

1.      THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE UNDERSIGNED
        ARE:

2.      DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING
        MADE:

        _____________ shares of Common Stock, par value $1 per share of Litton
Industries, Inc.

3.      THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS FEBRUARY ___, 1999.

        The taxable year to which this election relates is calendar year 1999.

4.      THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS:
If, on or before________, the employment of the taxpayer by Litton Industries,
Inc. terminates, other than for cause, or by reason of taxpayer's death or
disability, or a change in control of Litton Industries, Inc., the taxpayer
loses his entitlement to the property.

        The property is non-transferable in the taxpayer's hand, by virtue of
language to that effect in the applicable restricted stock agreement.

5.      FAIR MARKET VALUE:
        THE FAIR MARKET VALUE AT TIME OF TRANSFER (DETERMINED WITHOUT REGARD TO
        ANY RESTRICTIONS OTHER THAN RESTRICTIONS WHICH BY THEIR TERMS WILL NEVER
        LAPSE) OF THE PROPERTY WITH RESPECT TO WHICH THIS ELECTION IS BEING MADE
        IS $_______ PER SHARE.

6.      AMOUNT PAID FOR PROPERTY:
        The amount paid by taxpayer for the property is zero.

7.      FURNISHING STATEMENT TO EMPLOYER:
        A copy of this statement has been furnished to Litton Industries, Inc.

Dated:         , 1999
      ---------               ------------------------------------

                                      -8-<PAGE>   1
                                                                   EXHIBIT 10.27

                             LITTON INDUSTRIES, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                 (AS AMENDED AND RESTATED AS OF AUGUST 1, 2000)

<PAGE>   2
                               TABLE OF CONTENTS

                             LITTON INDUSTRIES, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                 (as amended and restated as of August 1, 2000)

<TABLE>
<CAPTION>

                                                                               Page
                                                                               ----
<S>         <C>                                                                <C>
ARTICLE I - INTRODUCTION AND PURPOSE                                            1

ARTICLE II - DEFINITIONS                                                        2
Section 2.1           Active Participant                                        2
Section 2.2           Actuarial Equivalent                                      3
Section 2.3           Annual Compensation                                       3
Section 2.4           Average Compensation                                      3
Section 2.5           Base Compensation Amount                                  4
Section 2.6           Beneficiary                                               4
Section 2.7           Board or Board of Directors                               4
Section 2.8           Change of Control                                         5
Section 2.9           Chief Executive Officer                                   7
Section 2.10          Committee                                                 7
Section 2.11          Company                                                   8
Section 2.12          Death Benefit                                             8
Section 2.13          Dependent Children                                        8
Section 2.14          Director                                                  8
Section 2.15          Disability                                                9
Section 2.16          Disability Benefit                                        9
Section 2.17          Mandatory Contributions                                   9
Section 2.18          Normal Form                                               9
Section 2.19          Offset Amount                                             10
Section 2.20          Participant                                               11
Section 2.21          Prior Retirement Benefit Formula                          11
Section 2.22          Retired Participant                                       11
Section 2.23          Retirement Benefit                                        12
Section 2.24          Supplemental Plan                                         12
Section 2.25          Trust                                                     12
Section 2.26          Trust Agreement                                           12
Section 2.27          Trustee                                                   12
Section 2.28          Years of Service                                          12
</TABLE>

<PAGE>   3

<TABLE>
<CAPTION>

<S>           <C>                                                       <C>
ARTICLE III - PARTICIPATION                                             13
Section 3.1           General                                           13
Section 3.2           Entry and Continuing Participation                13
Section 3.3           Change of Control                                 13

ARTICLE IV - BENEFIT ELIGIBILITY                                        13
Section 4.1           Eligibility for Retirement Benefit                13
Section 4.2           Eligibility for Death Benefit                     15
Section 4.3           Eligibility for Disability Benefit                15

ARTICLE V - CALCULATION OF BENEFITS AND VESTING                         16
Section 5.1           Retirement Benefit Formula                        16
Section 5.2           Death or Disability Benefit Formula               16
Section 5.3           Vesting                                           17

ARTICLE VI - FORMS OF BENEFIT AND COMMENCEMENT
             OF PAYMENTS                                                17
Section 6.1           Retirement Benefit Forms                          17
Section 6.2           Normal Form of Retirement Benefit                 18
Section 6.3           Alternative Forms of Benefit                      19
Section 6.4           Form of Benefit on Change of Control              20
Section 6.5           Amount of Death or Disability Benefit             20
Section 6.6           Commencement of Payments                          21
Section 6.7           Form of Benefit Irrevocable                       21
Section 6.8           Commutation of Benefits                           21

ARTICLE VII - BENEFIT ELECTIONS AND BENEFICIARY
              DESIGNATIONS                                              22
Section 7.1           General                                           22
Section 7.2           Form of Benefit Elections                         22
Section 7.3           Beneficiaries                                     22

ARTICLE VIII - ADMINISTRATION                                           23

ARTICLE IX - SOURCE OF PAYMENTS                                         23
Section 9.1           General Assets of Company                         23
Section 9.2           Payments to Trust                                 24
</TABLE>

<PAGE>   4

<TABLE>
<CAPTION>

<S>         <C>                                                         <C>
ARTICLE X - CLAIMS AND ENFORCEMENT                                      25
Section 10.1          Administrative Procedures                         25
Section 10.2          Enforcement                                       26

ARTICLE XI - AMENDMENT AND TERMINATION                                  27
Section 11.1          Amendment and Termination of the Plan             27
Section 11.2          Contractual Obligation                            28

ARTICLE XII - MISCELLANEOUS                                             28
Section 12.1          Employment Rights                                 28
Section 12.2          Rights of the Committee                           29
Section 12.3          Benefit Statements                                29
Section 12.4          Assignment                                 `      29
Section 12.5          Applicable Law                                    29
Section 12.6          Effective Date                                    29
Section 12.7          Entire Agreement                                  29
Section 12.8          Terms                                             30

APPENDIX              Assumptions to Calculate Present Value
                      Of Remaining Projected SERP Benefits
</TABLE>

<PAGE>   5

                      ARTICLE I -- INTRODUCTION AND PURPOSE

        Litton Industries, Inc. (the "Company"), established the Litton
Industries, Inc., Supplemental Executive Retirement Plan (the "Supplemental
Plan") as of August 1, 1995. The Company has decided to amend and restate this
Supplemental Plan as of August 1, 2000. This amended and restated Supplemental
Plan shall apply only to those employees of the Company who are employed on or
after August 1, 2000 who either are at such time Participants or who are
thereafter selected as Participants in this Supplemental Plan. Except for
Participants who are employees of the Company on or after August 1, 2000 for
whom a Retirement Benefit is greater under the Prior Retirement Benefit Formula,
in which case such Participant shall be entitled to receive a Retirement Benefit
computed under the Prior Retirement Benefit Formula, the provisions of this
Supplemental Plan at the time a Retired Participant either became or becomes a
Retired Participant shall solely determine the Retirement Benefit, if any, such
Retired Participant is entitled to receive under this Supplemental Plan.

        The purpose of this Supplemental Plan is to provide for supplemental
retirement benefits to certain key executive employees of the Company and
thereby encourage those employees to continue providing services to the Company
until their retirement. This Supplemental Plan is intended to provide benefits
solely for a select group of management or highly compensated employees within
the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Payments
under this Supplemental Plan shall be made either from the general assets of the
Company, or from the assets of the Litton Industries, Inc., Supplemental
Executive Retirement Plan Trust (the "Trust"), as provided under the

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<PAGE>   6

terms of this Supplemental Plan and the Trust. It is intended that this
Supplemental Plan remain at all times an unfunded plan for purposes of ERISA and
that the Trust shall constitute a grantor trust under Sections 671 through 679
of the Internal Revenue Code of 1986, as amended (the "Code").

                            ARTICLE II -- DEFINITIONS

        Section 2.1 "Active Participant" shall mean a key executive employee who
has been designated as a Participant in this Supplemental Plan pursuant to
Article III, and who continues to be employed by the Company. A Participant
shall not be treated as having terminated from employment during any period of
military service provided the Participant recommences employment by the Company
within 90 days after discharge from any such military service. A Participant
shall not be treated as having terminated from employment during any authorized
unpaid leave of absence not in excess of one year. A Participant shall be
treated as having terminated from employment during any other period of leave of
absence, unless the Committee, in its sole and absolute discretion, and subject
to such terms and conditions as the Committee may specify, approves the
Participant's absence. However, a Disabled or deceased Participant shall
continue to be treated as an Active Participant and, thus, continue to accrue
additional Years of Service until the earlier of the calendar month that the
Participant attains (or would have attained) age 65, or the date that the
Participant is no longer Disabled. A Participant who terminates employment with
the Company and is subsequently re-

                                      -2-
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employed with the Company shall not be treated as an Active Participant unless
the Committee re-designates the Participant as an Active Participant.

        Section 2.2 "Actuarial Equivalent" shall, except in the event of a
Change of Control in which case the assumptions provided for on the Appendix to
this Supplemental Plan shall apply, mean the definition of such term under the
Litton Industries, Inc. Retirement Plan "B", as amended from time to time.

        Section 2.3 "Annual Compensation" shall mean, for any calendar year, the
amount of base pay and, incentive compensation under the Litton Industries, Inc.
Performance Award Plan (or a similar plan), in either case paid, awarded, or
electively deferred, for such calendar year.

        Section 2.4 "Average Compensation" shall mean the sum, divided by three,
of the total amount of Annual Compensation received by an Active Participant
from the Company during the three calendar years out of the ten consecutive
calendar years which yield the Active Participant the most Compensation
including the calendar year in which an Active Participant terminates employment
with the Company. A Disabled Participant's Average Compensation shall be
calculated using the ten consecutive calendar years that include the calendar
years that his or her Disability commenced. In the case of an Active Participant
who dies prior to attaining age 65, the deceased Participant's Average
Compensation shall be calculated using the ten consecutive calendar years that
include the calendar year of the Participant's death (or Disability, in the case
of a Disabled Participant who dies). If a Participant is eligible to receive
payments under this Supplemental Plan but does not have three consecutive
calendar years of employment, then Average Compensation is the amount obtained
by dividing the

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<PAGE>   8

sum of the total amount of Annual Compensation of such Active Participant by the
actual number of calendar years of employment. However, the Committee may
determine Average Compensation for the purposes of this Section 2.4 by any other
methodology which it determines to be more appropriate under the facts and
circumstances.

        Section 2.5 "Base Compensation Amount" shall mean the applicable dollar
amount on the date that the Active Participant terminates from employment with
the Company, calculated as follows:

        (a) $125,000, for the first twelve months beginning on the original
effective date of this Supplemental Plan.

        (b) For each twelve-month period following the period described above in
Section 2.5(a), the dollar amount applicable for the immediately preceding
twelve-month period increased by a percentage, which shall be the sum of (1) the
percentage increase in the U.S. Department of Labor consumer price index for all
urban consumers for the immediately preceding twelve-month period and (2) one
percent.

        (c) In the case of a deceased or Disable Participant, the Base
Compensation Amount shall be the dollar amount in effect under Section 2.5(a) or
(b) for the earlier of the month in which the Participant died or became
Disabled.

        Section 2.6 "Beneficiary" shall mean one or more persons entitled to
receive payment of a benefit under this Supplemental Plan on account of a
Participant's death.

        Section 2.7 "Board" or "Board of Directors" shall mean the Board of
Directors of Litton Industries, Inc.

                                      -4-
<PAGE>   9

        Section 2.8 "Change of Control" shall mean -

               (a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty
percent (30%) or more of either (1) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (2) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of Directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this Section 2.7(a), the
following acquisitions of stock shall not constitute a Change of Control: (A)
any acquisition directly from the Company, (B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (1), (2) and (3) of Section 2.8(c); or

               (b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a Director
subsequent to the date hereof whose election, or nomination subsequent to the
date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs

                                      -5-
<PAGE>   10

as a result of an actual or threatened election contest with respect to the
election or removal of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board; or

               (c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless following such Business
Combination, (1) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly more than sixty
percent (60%) of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (2) no Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, thirty percent (30%) or more of
common stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business

                                      -6-
<PAGE>   11

Combination and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

               (d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

        Section 2.9 "Chief Executive Officer" shall mean the chief executive
officer of Litton Industries, Inc.

        Section 2.10  "Committee" shall mean --

               (a) The Compensation and Selection Committee of the Board of
Directors.

               (b) Notwithstanding Section 2.10(a), upon a Change of Control,
the Committee shall mean exclusively the "special administrators." The "special
administrators" shall be the individuals who constituted the Company's
Compensation and Selection Committee of the Board of Directors immediately prior
to the Change of Control. The "special administrators" shall constitute the
Committee until the last day of the eighteenth month following the month in
which the Change of Control occurred. The "special administrators" shall have
all rights and authority reserved to the Committee under this Supplemental Plan,
including, but not limited to, the rights specified in Section 12.2.

               (c) If a "special administrator" dies, becomes disabled, or
resigns as "special administrator" during the period that the "special
administrators" constitute the Committee, the remaining "special
administrator(s)" shall continue to serve as the

                                      -7-
<PAGE>   12

Committee without interruption. A successor "special administrator" shall be
required only if there are less than three remaining "special administrators."
If a successor "special administrator" is required, the successor shall be the
individual who, at that time, (1) is not already a "special administrator," and
(2) is not a Participant or currently an employee of the Company, and (3) was
the member of the Board immediately prior to the Change of Control with the
longest period of service on the Board, and (4) agrees to serve as a "special
administrator."

               (d) If a successor "special administrator" is required and there
are no individuals remaining who satisfy the criteria described in Section
2.10(c), then a successor "special administrator" shall either be appointed by
the Trustee or, in the Trustee's discretion, the Trustee shall submit the
selection of the "special administrator(s)" to an arbitrator, the costs of which
shall be borne fully by the Company, to be decided in accordance with the
American Arbitration Association Commercial Arbitration Rules then in effect. If
at any time, there are no remaining "special administrators," the Trustee shall
act as the "special administrator" until the successor(s) is selected.

        Section 2.11 "Company" shall mean Litton Industries, Inc., a Delaware
corporation, and its subsidiaries, except that any reference to stock or
securities of the Company shall mean only the stock or securities of Litton
Industries, Inc.

        Section 2.12 "Death Benefit" shall mean the benefit payable under
Section 4.2(a) to the Participant's Beneficiary, if any.

                                      -8-
<PAGE>   13

        Section 2.13 "Dependent Children" shall mean a son or daughter who
either (a) has not attained age 19, or (b) has not attained age 23 and is a
full-time student at an accredited educational institution.

        Section 2.14 "Director" shall mean a member of the Board of Directors of
Litton Industries, Inc.

        Section 2.15 "Disability" or "Disabled" shall mean a total disability,
as determined in the discretion of the Committee, that prevents an Active
Participant from providing the services that he or she would normally perform
for the Company.

        Section 2.16 "Disability Benefit" shall mean the benefit payable under
Section 4.3(a) to an Active Participant who becomes Disabled.

        Section 2.17 "Mandatory Contribution" shall mean, as of a Change of
Control, an amount equal to the excess of "A" over "B," where -

               (a) "A" is 120 percent of the present value of all vested
benefits under this Supplemental Plan determined under the factors set forth in
the Appendix to this Supplemental Plan; and

               (b) "B" is the current value of the Trust as determined by the
Trustee on the business day immediately preceding the day that a Mandatory
Contribution is paid to the Trustee.

        Section 2.18 "Normal Form" shall mean the form of Retirement Benefit
payable under Section 6.2 to a Retired Participant if the Participant has not
elected another form of payment or, if applicable, the form of payment of a
Retirement Benefit to the Beneficiary of a deceased Participant.

                                      -9-
<PAGE>   14

        Section 2.19 "Offset Amount" shall mean the annual "primary insurance
amount" and the annual "Company-provided pension."

               (a) The "primary insurance amount" shall mean the annual benefit
determined under the Social Security Act that is payable to the Participant as
of the calendar year that the Participant commences Retirement Benefits under
this Supplemental Plan. If no "primary insurance amount" is actually paid to a
Participant as of the calendar year in which the Retirement Benefit commences
under this Supplemental Plan, then the "primary insurance amount" shall be
deemed to be the "primary insurance amount" that would be payable at the
earliest date to the Participant (or would have been payable, in the case of a
deceased Participant). The "primary insurance amount" shall also include any
annual retirement benefit payable under any public retirement program of a
foreign country that the Committee determines is comparable in purpose to the
benefits payable under the Social Security Act.

               (b) Unless otherwise determined by the Committee, the
"Company-provided pension" shall mean the annual amount payable to a Participant
under any other defined benefit plan sponsored by the Company, which is either
intended to qualify under Section 401(a) of the Code or is intended to restore
benefits under such plan (excluding this Supplemental Plan). For any Participant
who never participated in any other defined benefit plan sponsored by the
Company, the amount of the "Company-provided pension" shall be determined as if
the Participant commenced participation in any such plan for which the
Participant was eligible at the earliest date on which the Participant was
eligible and participated in such plan to the fullest extent possible, and
withdrew his or her presumed contributions, if any, plus interest, thereon. The
amount of the "Company-

                                      -10-
<PAGE>   15

provided pension" described in the immediately preceding sentence shall be
calculated under the terms of any such defined benefit plan that were in effect
during the Participant's deemed participation, except that a subsequent,
retroactive amendment to such plan shall be taken into account only to the
extent that it actually would have increased the Participant's benefit under
that plan. For any Active Participant employed by the Company as of August 1,
2000, who is at least age 65, the "Company-provided pension" shall be computed
as if the Participant actually received the plan benefits as a single life
annuity calculated as of the date the Participant attained age 65.

        Section 2.20 "Participant" shall mean any key executive employee who has
been designated as an Active Participant in this Supplemental Plan by the
Committee, including a Retired Participant.

        Section 2.21 "Prior Retirement Benefit Formula" shall be calculated
under the formula [(A + B) x C] - D, where --

        (a) "A" is Average Compensation up to the Base Compensation Amount
multiplied by 1.6 percent;

        (b) "B" is Average Compensation in excess of the Base Compensation
Amount multiplied by 2.2 percent;

        (c) "C" is Years of Service limited to Years of Service for which the
Participant was both employed by the Company and was at least age 40 and limited
to Years of Service not in excess of 25; and

        (d) "D" is the Offset Amount.

        Section 2.22 "Retired Participant" shall mean a Participant who has
terminated from employment with the Company and who is vested in a Retirement
Benefit.

                                      -11-
<PAGE>   16

        Section 2.23 "Retirement Benefit" shall mean the benefits payable to a
Participant and, if applicable, the Beneficiary of a Participant, as provided
under Section 4.1.

        Section 2.24 "Supplemental Plan" shall mean the Litton Industries, Inc.,
Supplemental Executive Retirement Plan that is described in this document and
Appendices, as amended from time to time, and including any rules and
regulations promulgated by the Committee for purposes of administering this
Supplemental Plan.

        Section 2.25 "Trust" shall mean the Litton Industries, Inc.,
Supplemental Executive Retirement Plan Trust, as amended from time to time.

        Section 2.26 "Trust Agreement" shall mean the terms of the agreement
entered into between the Company and the Trustee that establish the Trust.

        Section 2.27 "Trustee" shall mean the trustee of the Trust.

        Section 2.28  "Years of Service" shall mean -

               (a) The definition of such term under the Litton Industries, Inc.
Retirement Plan "B", as amended from time to time.

               (b) In its discretion, the Committee may: (i) compute a
Participant's Years of Service by treating separate periods of employment as
continuous periods of employment with the Company; (ii) credit a Participant
with Years of Service in addition to the Years of Service accrued while actually
employed with the Company; and (iii) credit a Participant for Years of Service
solely for purposes of satisfying the vesting requirements of Section 5.3(a).

                                      -12-
<PAGE>   17

                          ARTICLE III -- PARTICIPATION

        Section 3.1 General. Participation in this Supplemental Plan is limited
solely to key executive employees of the Company, who are designated by the
Committee, after nomination by the Chief Executive Officer. A key executive
employee shall not be disqualified from becoming an Active Participant solely
because the key executive employee is also a Director.

        Section 3.2 Entry and Continuing Participation. A key executive employee
shall become an Active Participant as of the date specified by the Committee. A
key executive employee who is designated as an Active Participant shall continue
to be an Active Participant until he or she ceases to be actively reported on a
payroll system of the Company.

        Section 3.3 Change of Control. On or after a Change of Control, no
additional Participants shall be designated under this Supplemental Plan.

                        ARTICLE IV -- BENEFIT ELIGIBILITY

        Section 4.1   Eligibility for Retirement Benefit.

               (a) General. A Participant shall be eligible to begin receiving a
Retirement Benefit if the Participant has (i) filed an election to receive
payments under Article VII; (ii) satisfied the vesting requirement of Section
5.3(a); (iii) terminated employment with the Company; and (iv) either attained
age 65 or satisfied the conditions in Section 4.1(b) or (c) below.

                                      -13-
<PAGE>   18

               (b) Retirement Benefits Commencing Prior to Age 65 and After Age
54. A Participant who has attained age 55, but not yet attained age 65, shall be
eligible to begin receiving a Retirement Benefit only if the Committee
determines, in its discretion, that the Participant has entered into and
continues to satisfy an agreement not to engage in any activity or perform
services for any entity in competition with a business of the Company. Such
agreement not to compete with the Company's business shall terminate upon the
Participant's attainment of age 65. Retirement Benefits commencing after age 54
but prior to age 62 shall be equal to the Retirement Benefit calculated pursuant
to Section 5.1 reduced by one-half percent (1/2%) for each full month by which
the commencement of the payment of such Retirement Benefit precedes his or her
attaining age 62.

               (c) Retirement Benefits Prior to Age 55. A Participant shall not
be entitled to begin receiving a Retirement Benefit prior to attainment of age
55, except in the sole and absolute discretion of the Committee, and subject to
such terms and conditions, including the imposition of Retirement Benefit
reductions, that the Committee may specify.

               (d) Change of Control. Notwithstanding the foregoing provisions
of this Section 4.1, as of a Change of Control, an Active Participant shall
become fully vested as provided under Section 5.3(a) and there shall be a waiver
of any condition concerning eligibility for payment of a Retirement Benefit that
requires (i) the filing of any election, (ii) the attainment of a specified age,
(iii) an agreement not to engage in competitive activities with the Company,
(iv) satisfaction of any other terms or conditions or the application of any
benefit reductions described in Sections 4.1(b), and

                                      -14-
<PAGE>   19

(v) termination of employment with the Company in order to begin receiving
Retirement Benefits.

        Section 4.2   Eligibility for Death Benefit.

               (a) Death Prior to Age 65. The Beneficiary of an Active
Participant who dies prior to attaining age 65 shall be eligible to begin
receiving a Death Benefit if the beneficiary has filed a claim under Article
VII. A Death Benefit shall cease on the earlier of (i) the date on which there
are no individuals who are eligible to be Beneficiaries under Section 6.5(a);
(ii) the first day of the calendar month following the date on which the
Participant would have attained age 65 if the Participant were still living; or
(iii) the date that payment of a Retirement Benefit commences, but not including
a Retirement Benefit that commences pursuant to a Change of Control.

               (b) Death On or After Age 65. No Beneficiary of, an Active
Participant who dies on or after attaining age 65, shall be eligible for a Death
Benefit.

               (c) Death of a Retired Participant. No Beneficiary of a Retired
Participant shall be eligible for a Death Benefit.

        Section 4.3   Eligibility for Disability Benefit.

               (a) Disability Prior to Age 65. An Active Participant who becomes
Disabled prior to attaining age 65 shall be eligible to begin receiving a
Disability Benefit if the Disabled Participant has filed a claim under Article
VII. The Disability Benefit shall cease on the earlier of (i) the first day of
the calendar month following the Disabled Participant's attainment of age 62;
(ii) the date on which the Committee determines that the Participant is no
longer Disabled; (iii) the date of the Disabled Participant's death (in which
case a Death Benefit may be payable under Section 4.2); or (iv) the date that

                                      -15-
<PAGE>   20

payment of a Retirement Benefit commences, but not including a Retirement
Benefit that commences pursuant to a Change of Control.

               (b) Disability After Attaining Age 65. An Active Participant who
becomes Disabled on or after attaining age 65 shall not be eligible for a
Disability Benefit.

               (c) Retired Participant. A Retired Participant shall not be
eligible for a Disability Benefit.

                ARTICLE V -- CALCULATION OF BENEFITS AND VESTING

        Section 5.1 Retirement Benefit Formula. A Participant's Retirement
Benefit shall be calculated under the formula (A + B + C) - D, where -

               (a) "A" is Average Compensation multiplied by 3.5 percent for
each Year of Service not in excess of 10 Years of Service;

               (b) "B" is Average Compensation multiplied by 1.25 percent for
each Year of Service in excess of 10 Years of Service but not in excess of 20
Years of Service;

               (c) "C" is Average Compensation multiplied by .5 percent for each
Year of Service in excess of 20 Years of Service but not in excess of 25 Years
of Service; and

               (d) "D" is the Offset Amount.

        Section 5.2   Death or Disability Benefit Formula.

               (a) Death Benefit Formula. A Death Benefit shall be equal to
forty percent of the Participant's Average Compensation. If Dependent Children
are the

                                      -16-
<PAGE>   21

Beneficiaries of a Death Benefit, the amount of the Death Benefit payable may be
reduced, as provided in Section 6.5(a).

               (b) Disability Benefit Formula. A Disability Benefit shall be
equal to fifty percent of the Participant's Average Compensation.

        Section 5.3   Vesting.

               (a) Vesting in Retirement Benefit. A Participant shall have no
vested right to a Retirement Benefit prior to attaining both age 55 and five
Years of Service, except that an Active Participant who dies or becomes disabled
shall be fully vested as if he or she had attained age 55 with five Years of
Service, regardless of his or her actual age or Years of Service at the time of
his or her death or disability.

               (b) Change of Control. Upon a Change of Control and thereafter,
an Active Participant shall be fully vested in his or her Retirement Benefit
regardless of Years of Service or age.

               (c) Death or Disability Benefit Coverage. A Participant shall at
all times be entitled to Death Benefit or Disability Benefit coverage while he
or she is an Active Participant.

                 ARTICLE VI -- FORMS OF BENEFIT AND COMMENCEMENT

                                   OF PAYMENTS

        Section 6.1.  Retirement Benefit Forms.

               (a) General Rule. Unless a Participant has made an election to
receive payment of Retirement Benefits in an alternative form, a Participant
shall be deemed to have elected the Normal Form.

                                      -17-
<PAGE>   22

               (b) Actuarial Equivalent. All forms of payment of Retirement
Benefits shall be the Actuarial Equivalent of a single life annuity.

        Section 6.2 Normal Form of Retirement Benefit.

               (a) Single Life Annuity. The Normal Form of Retirement Benefit
shall be a single life annuity for a Participant who is unmarried at the time
that payment of the Retirement Benefit commences. Under a single life annuity, a
Retired Participant shall receive a monthly benefit for life equal to 1/12 of
his or her Retirement Benefit and all payments shall cease upon the Retired
Participant's death.

               (b) Joint and Survivor Annuity. If a Participant is married, the
Normal Form of Retirement Benefit shall be a joint and survivor annuity (which
shall be the Actuarial Equivalent of a single life annuity) for the benefit of
the Participant's spouse as of the date that payment of the Retirement Benefit
commences. Under the Normal Form, a Participant shall receive a monthly benefit
for life and, upon the Participant's death, the spouse, if living, shall receive
a monthly benefit for life equal to 100 percent of the monthly benefit that was
payable to the Participant.

               (c) Deceased Participants. If a Participant dies while employed
by the Company and is vested in a Retirement Benefit, the Normal Form of
Retirement Benefit shall be either the benefit under Section 6.2(a) or (b),
determined with regard to the Participant's marital status on the date of death.
If the Normal Form of Retirement Benefit for a deceased Participant is a joint
and survivor annuity (which shall be the Actuarial Equivalent of a single life
annuity), then the spouse's benefit shall be calculated as if the Participant
began receiving payment of the Retirement Benefit as a joint and 100-percent
survivor annuity on the day preceding the commencement of Retirement

                                      -18-
<PAGE>   23

Benefit payments to the spouse, and then died the following day. The Retirement
Benefit shall be calculated on the basis of the age that the Participant would
have attained as of the commencement date.

               (d) Spousal Death Within Two Years After Retirement. If the
spouse of a Participant who is married at the time payment of the Retirement
Benefit commences pursuant to Section 6.2(b) should predecease such Participant
not more than two (2) years after such Retirement Benefit commences, then
commencing with the first Retirement Benefit payment payable as of the first day
of the calendar month after the calendar month during which the death of the
spouse occurred, such Retirement Benefit shall be converted to an annual
Retirement Benefit computed pursuant to Section 6.2(a) in an amount equal to the
amount of the annual Retirement Benefit the Participant would have received at
the time of and based on his or her age at the date his or her Retirement
Benefit commenced.

        Section 6.3 Alternative Forms of Benefit.

               (a) Election of Forms of Benefit. Prior to the commencement of
payment of a Retirement Benefit, a Participant may file an election designating
a payment form other than the Normal Form of Retirement Benefit. If a
Participant elects an annuity form of payment of pension benefits under a plan
sponsored by the Company that is intended to be tax-qualified under section
401(a) of the Code, such form of payment shall, except as noted in the following
sentence, be available for the payment of Retirement Benefits under this
Supplemental Plan. A joint and survivor annuity or a contingent annuity shall
not be available under this Supplemental Plan with respect to

                                      -19-
<PAGE>   24

anyone other than the Participant's spouse as of the date that the Retirement
Benefit commences.

               (b) Additional Forms of Benefit. From time to time, the Committee
may make other forms of payment of Retirement Benefits available in its sole
discretion.

        Section 6.4 Form of Benefit on Change of Control.

               (a) Single Sums. Notwithstanding the provisions of Sections 6.1,
6.2, 6.3, 6.6, and 6.7, upon a Change of Control, all Retirement Benefits shall
be payable in a single sum payment that is the Actuarial Equivalent of a single
life annuity using the assumptions set forth on the Appendix to this
Supplemental Plan.

               (b) Committee Discretion. Section 6.4(a) shall not apply if the
Committee, within thirty days following the Change of Control, determines, in
its discretion, that single sum payments shall not be provided.

        Section 6.5   Amount of Death or Disability Benefit.

               (a) Form of Death Benefit. The class of individuals who are
eligible to be Beneficiaries of a Death Benefit is limited to the Participant's
spouse, as of the date of the Participant's death, and the Participant's
Dependent Children. If there is both a living spouse and Dependent Children, the
Beneficiary shall be the spouse. A spouse Beneficiary shall receive a monthly
benefit equal to 1/12th of the Death Benefit. If a spouse Beneficiary dies prior
to the cessation of the Death Benefit payments, then the remaining Death
Benefits shall be paid to any Dependent Children. The amount of any Death
Benefit payable to each of the Dependent Children on a monthly basis is the
amount equal to the Death Benefit that would be payable to a spouse Beneficiary
multiplied by a fraction, the numerator of which is one and the denominator of
which is

                                      -20-
<PAGE>   25

the number of Dependent Children. If there are no living Beneficiaries, no Death
Benefit shall be paid.

               (b) Form of Disability Benefit. A Disabled Participant shall
receive a monthly benefit equal to 1/12th of the Disability Benefit.

        Section 6.6 Commencement of Payments. Payment of benefits under this
Supplemental Plan shall begin as soon as administratively feasible after the
Participant (or Beneficiary, if applicable) has provided a claim for benefits in
writing to the Committee, including any supporting documentation required by the
Committee, and the Committee has determined that the Participant (or
Beneficiary, if applicable) satisfies the requirements for payment.

        Section 6.7 Form of Benefit Irrevocable. Once Retirement Benefits have
commenced under this Supplemental Plan, the form of the Retirement Benefit
payable is irrevocable.

        Section 6.8 Commutation of Benefits. If the amount of the annual
Retirement Benefit or Death Benefit payable under this Supplemental Plan to any
Participant or his or her spouse or Beneficiary is less than five thousand
dollars ($5,000), payment of the Actuarial Equivalent of such payments may be
made in a lump sum in full settlement of all sums payable under this
Supplemental Plan.

                                      -21-
<PAGE>   26

                      ARTICLE VII -- BENEFIT ELECTIONS AND

                            BENEFICIARY DESIGNATIONS

        Section 7.1 General. All elections to receive benefits under this
Supplemental Plan must be made in writing to the Committee in the form specified
by the Committee and include the information or documentation that the Committee
deems necessary. The Committee, in its discretion, may request additional
information or reasonable documentation from time to time in order to determine
whether a Participant receiving a Disability Benefit continues to be Disabled.

        Section 7.2 Form of Benefit Elections. An election to receive payment of
Retirement Benefits in a form other than the Normal Form must be submitted to
the Committee in writing at any time prior to the commencement of payments. An
election must be made in the form specified by the Committee and include the
information or documentation that the Committee deems necessary, including
written consent of the spouse in the case of a married Participant who elects a
Retirement Benefit in a form other than the Normal Form. The filing of an
election as to the form of Retirement Benefits shall revoke any pre-existing
election, except that a revocation of an election for a married Participant
shall be valid only if accompanied by the spouse's written consent to the
subsequent election (other than a subsequent election to receive payments in the
Normal Form).

        Section 7.3 Beneficiaries. If the Committee makes available alternative
benefit forms that provide for payments after a Participant's death, the
Participant shall

                                      -22-
<PAGE>   27

designate the Beneficiary under such payment form in accordance with the
procedures set forth by the Committee.

                         ARTICLE VIII -- ADMINISTRATION

        The Committee shall administer this Supplemental Plan in accordance with
its terms and purposes. The Committee shall have authority to interpret this
Supplemental Plan, to determine benefits under this Supplemental Plan, to
establish rules and procedures necessary to carry out the terms of this
Supplemental Plan, and, in its discretion, to waive or modify any requirements
or conditions on the receipt or calculation of benefits under this Supplemental
Plan where the Committee determines that such a waiver is appropriate. The
Committee may appoint one or more officers or employees of the Company to act on
the Committee's behalf with respect to administrative matters related to this
Supplemental Plan.

                        ARTICLE IX -- SOURCE OF PAYMENTS

        Section 9.1 General Assets of Company. Benefits payable under this
Supplemental Plan shall be paid directly to the Participant, or to the
Participant's Beneficiary, as applicable, from the general assets of the
Company, including the assets of the Trust to the extent that the Trust so
provides. If any person acquires a right to receive payments from the Company
under this Supplemental Plan, such right shall be no greater than the right of
any unsecured general creditor of the Company. In the event that

                                      -23-
<PAGE>   28

the Company establishes an advance accrual reserve on its books against its
future liability under this Supplemental Plan, such reserve shall not constitute
an asset of this Supplemental Plan but shall at all times remain part of the
general assets of the Company subject to the claims of the Company's creditors.

        Section 9.2  Payments to Trust.

               (a) Mandatory Contribution. Upon a Change of Control, the Company
shall make Mandatory Contributions to the Trustee by wire transfer in
immediately available funds of United States dollars. A Mandatory Contribution
shall be made as soon as possible upon the Change of Control, but in no event
more than ten days from the date of the Change of Control. In addition, a
Mandatory Contribution shall be made every six months thereafter, provided that
the calculation of the Mandatory Contribution on the sixth-month date yields a
positive dollar amount. Mandatory Contributions shall continue to be required
semi-annually until all Retirement Benefits, Disability Benefits, and Death
Benefits have been paid to all Participants and Beneficiaries. The Company shall
immediately notify the Committee in writing when payment of the Mandatory
Contribution is made to the Trustee.

               (b) Continuing Obligation of Company. Subsequent to the payment
of a Mandatory Contribution, Participants and Beneficiaries shall be paid
benefits under this Supplemental Plan from the Trust pursuant to the Trust
Agreement, but in no event shall the making of a Mandatory Contribution relieve
the Company of its obligation under this Supplemental Plan.

                                      -24-
<PAGE>   29

                       ARTICLE X -- CLAIMS AND ENFORCEMENT

        Section 10.1  Administrative Procedures.

               (a) Notice of Denial. If the Committee determines that any person
who has submitted a claim for payment of benefits under this Supplemental Plan
is not eligible for payment of benefits or, if applicable, is not eligible for
payment of benefits in the form requested, then the Committee shall, within a
reasonable period of time, but no later than 90 days after receipt of the
written claim, notify the claimant of the denial of the claim. Such notice of
denial: (i) shall be in writing; (ii) shall be written in a manner calculated to
be understood by the claimant; and (iii) shall contain (A) the specific reason
or reasons for denial of the claim; (B) a specific reference to the pertinent
Supplemental Plan provisions or administrative rules and regulations upon which
the denial is based; (C) a description of any additional material or information
necessary for the claimant to perfect the claim; and (D) an explanation of this
Supplemental Plan's appeal procedures.

               (b) Review Procedures. Within 90 days of the receipt by the
claimant of the written notice of denial of the claim, or if the claim has not
been granted or denied, within 120 days of the claimant's original claim, the
claimant may file a written request with the Board that it conduct a full and
fair review of the denial of the claimant's claim for benefits. The claimant's
written request must include a statement of the grounds on which the claimant
appeals the original claim denial. The Board shall deliver to the claimant a
written decision on the claim promptly, but not later than 60 days after the
receipt of the claimant's request for review, except that if there are special
circumstances that require an extension of time for processing, the 60-day
period shall be extended to

                                      -25-
<PAGE>   30

120 days, in which case written notice of the extension shall be furnished to
the claimant prior to the end of the 60-day period.

        Section 10.2  Enforcement.

               (a) Right to Enforce. The Company's obligations under this
Supplemental Plan may be enforced by the filing of an action by any Participant
or by any Participant's Beneficiary, spouse, Dependent Child, or personal
representative.

               (b) Attorneys Fees and Costs. If, on or after a Change of
Control, any claimant is denied a claim for benefits under this Supplemental
Plan and the claimant requests a review under the procedures described in
Section 10.1(b), or files a claim in a court of law or any other tribunal to
enforce any obligation of the Company under this Supplemental Agreement, which
is based on a failure to administer the Plan in accordance with its terms,
including the requirement that the Company make a Mandatory Contribution to the
Trust, the Company shall pay such claimant all attorneys fees and costs incurred
in connection with the claim, regardless of the outcome of the claim, provided
that the claim is not frivolous. All attorneys' fees and costs under this
Section 10.2(b) shall be paid by the Company as they are incurred by the
claimant, but no later than 30 days from the date that the claimant submits a
bill or other statement to the Company.

               (c) Interest. If any claimant prevails in a review procedure
described in Section 10.1(b), or if a claimant prevails in an action in a court
of law or any other tribunal to enforce the payment of benefits under this
Supplemental Plan, the Company shall pay interest to the claimant on any unpaid
benefits accruing from the date that benefit payments should have commenced and
continuing until the date that such owed

                                      -26-
<PAGE>   31

and unpaid benefits are paid to the claimant in full. For purposes of the
preceding sentence, interest shall accrue at an annual rate equal to one percent
plus the prime rate reported by the Wall Street Journal.

                     ARTICLE XI -- AMENDMENT AND TERMINATION

        Section 11.1  Amendment and Termination of this Supplemental Plan.

               (a) General. Although the Company intends to maintain this
Supplemental Plan, the Company reserves the right to amend or terminate this
Supplemental Plan at any time for whatever purposes it may deem appropriate,
except as specifically limited by this Article XI. The Company may amend,
terminate, or suspend this Supplemental Plan only by the action of the Board,
except that the Committee shall have the authority to make any amendments that
do not decrease the level of benefits payable and that it deems necessary for
the proper administration of this Supplemental Plan.

               (b) Automatic Termination. This Supplemental Plan may be
terminated or suspended only by action of the Board, except that this
Supplemental Plan shall terminate automatically if there are no Active
Participants remaining and all Retirement Benefits, Death Benefits, and
Disability Benefits have been paid.

               (c) Protection of Benefits. No amendment, termination, or
suspension of this Supplemental Plan shall be effective to the extent that it
reduces (i) the Retirement Benefit accrued or payable to any Retired
Participant; (ii) Retirement Benefits that have

                                      -27-
<PAGE>   32

commenced to be paid; or (iii) Death or Disability Benefits that have commenced
to be paid.

               (d) Protection of Active Participants. No amendment, termination,
or suspension of this Supplemental Plan shall be effective to the extent that it
reduces the Retirement Benefits that an Active Participant may accrue unless the
amendment, termination or suspension also provides that the Active Participant
is immediately vested in a Retirement Benefit calculated as if the Active
Participant terminated employment immediately prior to the later of the date
that the amendment, termination, or suspension is enacted or is effective.

               (e) Change of Control. On or after a Change of Control, any
amendment, termination, or suspension of the Plan shall be effective only upon
the written consent of at least eighty-five percent of all Participants. The
preceding sentence shall not apply to (i) a termination that occurs under
Section 11.1(b); (ii) any amendment, termination, or suspension that affects
future accruals of Retirement Benefits and that complies with the terms of
Section 11.1(c) and (d).

        Section 11.2 Contractual Obligation. The Company makes a contractual
obligation that any amendment, suspension, or termination of this Supplemental
Plan shall comply with the terms of Section 11.1.

                          ARTICLE XII -- MISCELLANEOUS

        Section 12.1 Employment Rights. Nothing contained in this Supplemental
Plan shall be construed as a contract of employment between the Company and the
Participant,

                                      -28-
<PAGE>   33

or as a right of any employee to be continued in the employment of the Company,
or as a limitation of the right of the Company to discharge any of its
employees, with or without cause.

        Section 12.2 Rights of the Committee. To the extent permitted by law,
the Company shall indemnify the Committee (including any officers and employees
of the Company appointed to act on behalf of the Committee) and hold such
individuals harmless from and against any damages, losses, costs and expenses
incurred (including without limitation expenses of investigation and the fees
and expenses of counsel) in the course of administering this Supplemental Plan.
The Company shall bear all expenses of the Committee incurred in the course of
administering this Supplemental Plan.

        Section 12.3 Benefit Statements. Upon the request of a Participant or a
Beneficiary, as the case may be, the Company shall provide a statement of
benefits under this Supplemental Plan to such Participant (or Beneficiary) that
includes the information necessary to calculate the accrued Retirement Benefit,
Disability Benefit, or Death Benefit, as applicable, with respect to such
Participant or Beneficiary.

        Section 12.4 Assignment. The benefits payable under this Supplemental
Plan may not be assigned or alienated.

        Section 12.5 Applicable Law. This Supplemental Plan shall be governed by
the laws of the State of Delaware.

        Section 12.6 Effective Date. This amended and restated Supplemental Plan
shall take effect as of August 1, 2000.

        Section 12.7 Entire Agreement. This writing is the final expression of
this Supplemental Plan and a complete and exclusive statement of its terms,
except that to the

                                      -29-
<PAGE>   34

extent that this Supplemental Plan refers to the Trust, the terms of the Trust
Agreement, as of the date immediately preceding a Change of Control, shall be
deemed to be incorporated herein.

        Section 12.8 Terms. Except as required otherwise by the context,
capitalized terms that are used in this Supplemental Plan shall have the meaning
assigned to them in Article II. Feminine or neuter pronouns shall be substituted
for those of the masculine form, and the plural shall be substituted for the
singular, in any place or places herein where the context may require such
substitution or substitutions.

IN WITNESS WHEREOF, Litton has caused this Supplemental Plan to be executed in
its name and on its behalf by its authorized officer as of the 1st day of
August, 2000.

                                            LITTON INDUSTRIES, INC.

                                            By:      /s/ D. Michael Steuert
                                               ---------------------------------
                                            Title: Senior Vice President and
                                                     Chief Financial Officer

                                            By:     /s/ Lynne M. O. Brickner
                                               ---------------------------------
                                            Title: Vice President and Secretary

                                      -30-

<PAGE>   35

                                 APPENDIX TO THE
         LITTON INDUSTRIES, INC. SUPPLEMENTAL, EXECUTIVE RETIREMENT PLAN
                 (AS AMENDED AND RESTATED AS OF AUGUST 1, 2000)
   ASSUMPTIONS TO CALCULATE PRESENT VALUE OF REMAINING PROJECTED SERP BENEFITS

NOTE:     Capitalized terms are as defined in the Plan document or as defined
          below.

SERP      Based on the Participant's appointment date, a gross annual SERP
FORMULAS: Retirement Benefit that is the GREATER of
          (a) [((1.6% x projected Average Compensation up to Base Compensation
              Amount) plus (2.2% x projected Average Compensation over Base
              Compensation Amount)) x Years of Service after later of age 40 or
              actual date of hire] OR

          (b) [(3.50% x projected Average Compensation for the first ten (l0)
              Years of Service)+ (1.25% x projected Average Compensation for
              the next ten (10) Years of Service) + (0.50% x projected Average
              Compensation for the next five (5) Years of Service

           Less Offset Amounts, representing the sum of the projected
           primary insurance amount and the projected Company-provided pension
           Multiplied by the "Present Value Factor"

OFFSET     The projected Company-provided pension represents the following:
AMOUNTS:   (a) The projected LRP benefit (limited to the projected Section 415
               limit):

               85%(1) x [projected defined benefit after-tax deposits + FSSP
               Retirement Account deposits (reflecting Section 401(k) Limit)]

               Minus 75% of the projected primary insurance amount

               Minus [(FSSP Retirement Account annuity equivalent factor for
               "Age at Retirement" x projected FSSP Retirement Account Deposits
               with Earnings)

               Plus (LRP annuity equivalent factor for "Age at Retirement" x
               projected defined benefit after-tax deposits with interest)]

           (b) The projected Restoration Plan pension benefit:

               85% x projected FSSP Retirement Account restricted amount (4% of
               eligible pay over the Section 401(x)(17) pay limit)

               Minus (FSSP Retirement Account annuity equivalent factor for "Age
               at Retirement" x projected FSSP Retirement Account restricted
               amount with 8% interest)

<TABLE>
<CAPTION>

        ITEM                              ASSUMPTION                        OTHER REQUIRED DATA
        ----                              ----------                        -------------------
 <S>                                      <C>            <C>
 Salary scale for Average Compensation       6,00%       Past base salary and incentive cash awards for last ten (10) calendar years
 LRP interest rate                           5.00%       Defined benefit after-tax deposits: the greater of 5% interest
                                                         or the rate per Section 411(c)(2) -- 120% of average federal
                                                         rate as of the beginning of the calendar year

 FSSP investment rate of return              8.00%       FSSP Retirement Account deposits: Earnings at the rates actually earned
                                                         under the plans
 Age at retirement                        Current age
 Social Security Wage Base Increases         5.00%       Date of Birth, Current year's Social Security Wage Base
 Social Security CPI                         4.00%       Sections 415 and 401(k) limited index & Base Compensation Amount Index
 Mortality table (Post-retirement Only)     83 GAM
 Present Value Factor & Interest Rate      See Note(2)   Deferred to "Age at Retirement" actuarial factor based on
                                                         the present value interest rate and the form of payment
                                                         specified
</TABLE>
(1) Applied to all actual and all hypothetical deposits made after 1982.
    Hypothetical deposits before 1983 are credited at 50%.
(2) Yield on 10-Year AAA California Municipal Bond as of the Calculation Date

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