Document:

exv10w2

Exhibit 10.2

	 	 	 
	
	 	Northrop Grumman Corporation

1840 Century Park East

Los Angeles, California 90067-2199

December 17, 2008

Dr. Ronald D. Sugar

Chairman and Chief Executive Officer

Northrop Grumman Corporation

1840 Century Park East

Los Angeles, CA 90067

Re: Employment Agreement

Dear Ron:

Reference is made to the Employment Agreement between you and Northrop Grumman Corporation
(“Northrop”), dated February 19, 2003 (the “Employment Agreement”).

This letter agreement confirms your and Northrop’s mutual agreement to terminate the Employment
Agreement effective December 31, 2008. For purposes of clarity and notwithstanding Section 28 of
the Employment Agreement to the contrary, after December 31, 2008, neither you nor Northrop will
have any rights or obligations under or pursuant to the Employment Agreement.

If Northrop terminates your employment without Cause (as such term is defined in your equity grant
certificates) before you have ten years of service with Northrop for purposes of your Northrop
equity awards, you will be deemed to have retired for purposes of your then-outstanding Northrop
equity awards to the extent that the terms of such awards provide you with more favorable terms
upon a retirement (including early retirement) than the termination of employment rules that would
otherwise apply.

This letter sets forth our entire agreement regarding these matters, and supersedes all of our
prior agreements regarding these matters.

 

 

Dr. Ronald D. Sugar

Page Two

December 17, 2008

If this letter accurately sets forth your agreement with Northrop with respect to the foregoing
matters, please sign and date this letter below and return it to me.

	 	 	 	 	 
	 	/s/ Lewis W. Coleman	 
	 	Lewis W. Coleman

Chairman, Compensation Committee 	 
	 

Accepted and Agreed:

	 	 
	/s/ Dr. Ronald D. Sugar
	 
	Dr. Ronald D. Sugar

	Date:
12/17/08exv10w3

Exhibit 10.3

Amendment To

Letter Agreement

     WHEREAS, Northrop Grumman Corporation (the “Company”) entered into a letter agreement with
James F. Palmer regarding certain terms of his employment with the Company dated February 1, 2007
(the “Agreement”);

     WHEREAS, the parties desire to amend the Agreement to address the impact of section 409A of
the Internal Revenue Code (“Code”);

     NOW, THEREFORE, effective January 1, 2008, the parties hereby agree as follows:

	1.	 	Section 5 is amended by adding the following sentence to the end of the section:
	 
	 	 	Notwithstanding the foregoing, the provision of these benefits will be in accordance
with the terms of the Northrop Grumman Corporation Supplemental Retirement
Replacement Plan, as amended effective January 1, 2008.
	 
	2.	 	Section 9 is amended by adding the following sentence to the end of the section:
	 
	 	 	Benefits provided under this Section shall be administered consistent with the following
requirements as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv): (1) your eligibility for
benefits in one year will not affect your eligibility for benefits in any other year; (2)
any reimbursement of eligible expenses will be made on or before the last day of the year
following the year in which the expense was incurred; and (3) your right to benefits is not
subject to liquidation or exchange for another benefit.
	 
	3.	 	Section 10 is amended by adding the following sentence to the end of the section:
	 
	 	 	Any benefits you become entitled to under this Section will be paid in accordance
with terms of the VP Severance Plan.

	4.	 	Section 11 is amended:

	 	(a)	 	by adding the following sentence to the end of the section: All
benefits provided under this Section will be paid to you by March 15, 2008.
	 
	 	(b)	 	by reaffirming and restating Section 11 respecting reasonable professional fees
incurred in connection with this Amendment and related plans and agreements, which
benefits shall not exceed $10,000 and shall be provided not later than March 15, 2009.

 

 

	5.	 	Section 13 is amended in its entirety to read as follows:
	 
	 	 	Signing Bonus
	 
	 	 	Effective with your Date of Hire, the Company agreed to provide you with a cash
signing bonus in the total amount of $700,000, to be paid in three equal
installments. The first installment was paid prior to the effective date hereof;
the second installment is payable on the first anniversary of your Date of Hire; and
the third installment on the second anniversary of your Date of Hire. Except as
provided for in the next sentence, your entitlement to each installment of the
signing bonus is contingent on your continued employment with the Company through
the installment payment date. However, in the event of your death, your Disability
or Qualifying Termination (as these two terms are defined in the VP Severance Plan)
prior to payment of the full signing bonus, the remaining installments will be paid
in cash to you in a single lump sum within 30 days following such separation from
service (within the meaning of Section 409A(a)(2)(A)(i) of the Code and Treasury
Regulation 1.409A-1(h)); provided, if you are a “Key Employee” as defined in the
Northrop Grumman Corporation Supplemental Retirement Replacement Plan on the date of
your separation from service, the lump sum payment shall be made the first day of
the seventh month following your separation from service (or, if earlier, the first
day of the month after your death after such separation from service).
	 
	6.	 	Section 14 is amended by adding the following sentence to the end of the section:
	 
	 	 	Notwithstanding the foregoing, the provision of these benefits will be in accordance
with the terms of the Northrop Grumman Corporation Supplemental Retirement
Replacement Plan, as amended effective January 1, 2008.

          IN WITNESS WHEREOF, the parties have caused these presents to be duly executed as of the dates
indicated below.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	JAMES F. PALMER	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:
	 	December 17, 2008	 	 	 	/s/ James F. Palmer	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	NORTHROP GRUMMAN CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	December 17, 2008	 	 	 	By:	 	/s/ Ian V. Ziskin	 	 
	 

	 	 

	 	 	 	 	 	 

Ian V. Ziskin
	 	 
	 

	 	 	 	 	 	 	 	Corporate Vice President, Chief Human
Resources and Administrative Officer	 	 

-2-exv10w4

Exhibit 10.4

NORTHROP GRUMMAN CORPORATION

SUPPLEMENTAL RETIREMENT REPLACEMENT PLAN

(Effective March 12, 2007; Restated effective January 1, 2008)

     The Northrop Grumman Corporation Supplemental Retirement Replacement Plan (“Plan”) is hereby
adopted effective March 12, 2007 by Northrop Grumman Corporation to provide supplemental retirement
benefits to James F. Palmer pursuant to the terms and provisions set forth below. The Plan is
hereby amended and completely restated effective January 1, 2008.

     The Plan is intended (1) to comply with Code section 409A and official guidance issued
thereunder, and (2) to be a plan which is unfunded and is maintained by an employer primarily for
the purpose of providing deferred compensation for a select group of management or highly
compensated employees within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

ARTICLE I

DEFINITIONS

     Wherever used herein the following terms shall have the meanings hereinafter set forth:

     “Affiliate” means any corporation or other entity that is treated as a single employer
with the Company under section 414 of the Code.

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

     “Committee” means the Company’s Board of Directors or such other committee as may be
appointed by the Board of Directors from time to time.

     “Company” means Northrop Grumman Corporation or any successor corporation or other
entity.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Key Employee” means an employee treated as a “specified employee” under Code section
409A(a)(2)(B)(i) of the Company or the Affiliates (i.e., a key employee (as defined in Code section
416(i) without regard to paragraph (5) thereof)) if the Company’s or an Affiliate’s stock is
publicly traded on an established securities market or otherwise. The Company shall determine in
accordance with a uniform Company policy which employees are Key Employees as of each December 31
in accordance with IRS regulations or other guidance under Code section 409A, provided that in
determining the compensation of individuals for this purpose, the definition of compensation in
Treas. Reg. § 1.415(c)-2(d)(3) shall be used. Such determination shall be effective for the twelve
(12) month period commencing on April 1 of the following year.

     “Participant” means James F. Palmer.

 

 

     “Plan” means the Northrop Grumman Corporation Supplemental Retirement Replacement
Plan, as set forth herein and as amended from time to time.

     “Separation from Service” or “Separates from Service” means a “separation from
service,” within the meaning of Code section 409A, with the Company and all Affiliates.

ARTICLE II

PARTICIPATION

     Participation in the Plan shall be limited to the Participant.

ARTICLE III

PLAN BENEFITS AND DISTRIBUTIONS

     3.1 Visteon Replacement Benefit. The amount of the benefit, if any, payable under
this section 3.1 to the Participant shall be equal to the amount by which the Visteon Present Value
exceeds the Northrop Grumman Present Value.

     For purposes of this Section:

“Visteon Present Value” means the lesser of (1) the estimated present value of the
Participant’s non-vested Visteon Corporation supplemental and qualified pension benefits at
March 12, 2007, and (2) $588,500.

“Northrop Grumman Present Value” means the present value as of the Participant’s
Separation from Service of all vested qualified and nonqualified defined benefit pension
benefits payable to Participant by the Company, excluding the Boeing Replacement Benefits
described in section 3.3 below.

The actuarial assumptions used to calculate present values under this Section shall be the
assumptions specified in Section F.09 of the Northrop Grumman CPC Supplemental Executive Retirement
Program, or any successor thereto.

     3.2 Distribution of Visteon Replacement Benefit. Any benefit under Section 3.1 shall
be paid in accordance with the terms of Appendix A hereto.

     3.3 Boeing Replacement Benefit.

          (a) In-Service Benefit. Beginning April 1, 2007, Participant will receive $8,632.01
monthly in the form of a joint and 100% survivor annuity, with the Participant’s spouse on March
12, 2007 (the “Spouse”) as the survivor annuitant. If the Spouse predeceases the
Participant, the monthly benefit to the Participant will increase to $10,219.57 and will be payable
only for the life of the Participant.

          (b) Post-Termination Benefit. The monthly benefit provided for under Section 3.3(a)
shall continue to be paid under the same terms as set forth in Section 3.3(a) after the Participant
ceases to be employed by the Company and its Affiliates.

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          (c) Forfeiture. The amount payable under Section 3.3(a) or (b) for a month will be
reduced by the amount, if any, actually paid to the Participant or the Spouse in the same month
from the Supplemental Executive Retirement Plan for Employees of the Boeing Company (“Boeing
SERP”).

     3.4 Acceleration of Boeing Replacement Benefit. If a change in ownership or effective
control event (as described in Treasury regulations or other guidance under Code section
409A(a)(2)(A)(v)) occurs that also qualifies as a change in control as defined in the Participant’s
March 2004 Special Agreement (as it may be amended or replaced), the Participant will receive a
lump sum payment equal to the present value of all remaining benefits under Section 3.3. The lump
sum amount will be paid 60 days after the change in control event and will be calculated based on
the actuarial assumptions used to calculate lump sums under the Northrop Grumman CPC Supplemental
Executive Retirement Program at the time of the change in control event.

     3.5 Vesting. All benefits under this Plan shall be 100% vested at all times.

     3.6 Effect of Early Taxation. If the Participant’s benefits under the Plan are
includible in income pursuant to Code section 409A, such benefits shall be distributed immediately
to the Participant.

     3.7 Permitted Delays. Notwithstanding the foregoing, any payment to the Participant
under the Plan shall be delayed if the making of the payment at such time would be prohibited by
Federal securities laws or other applicable law; provided, that any payment delayed pursuant to
this Section 3.7 shall be paid in accordance with Code section 409A.

ARTICLE IV

ADMINISTRATION

     4.1. General Administration. The Committee shall be responsible for the operation and
administration of the Plan and for carrying out the provisions hereof, subject to Participant’s
reservation of all rights, in the event of a dispute, under applicable legal process. The
Committee may, from time to time, employ agents and delegate to such agents, including employees of
the Company, such administrative duties as it sees fit.

     4.2. Indemnification. To the extent not covered by insurance, the Company shall
indemnify the Committee, each employee, officer, director, and agent of the Company, and all
persons formerly serving in such capacities, against any and all liabilities or expenses, including
all legal fees relating thereto, arising in connection with the exercise of their duties and
responsibilities with respect to the Plan, provided however that the Company shall not indemnify
any person for liabilities or expenses due to that person’s own gross negligence or willful
misconduct.

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ARTICLE V

AMENDMENT AND TERMINATION

     5.1 Amendment or Termination. The Company reserves the right to amend or terminate
the Plan with the prior written consent of Participant.

     5.2 Effect of Amendment or Termination. Upon termination of the Plan, distribution of
Plan benefits shall be made to Participant, his Spouse and any other beneficiary(s) in the manner
and at the time described in Article III, unless the Company determines in its sole discretion that
all such amounts shall be distributed at a sooner date upon termination in accordance with the
requirements under Code section 409A. Upon termination of the Plan, no further benefit accruals
shall occur.

ARTICLE VI

GENERAL PROVISIONS

     6.1 Rights Unsecured. The right of the Participant or his beneficiary to receive a
distribution hereunder shall be an unsecured (but legally enforceable) claim against the general
assets of the Company, and neither the Participant, his Spouse nor any other beneficiary shall have
any rights in or against any specific assets of the Company. Thus, the Plan at all times shall be
considered entirely unfunded for ERISA and tax purposes. Any funds set aside by the Company for
the purpose of meeting its obligations under the Plan, including any amounts held by a trustee,
shall continue for all purposes to be part of the general assets of the Company and shall be
available to its general creditors in the event of the Company’s bankruptcy or insolvency. The
Company’s obligation under this Plan shall be that of an unfunded and unsecured promise to pay
money in the future.

     6.2 Benefits Not Treated as Compensation. Benefits payable under the Plan shall not
be considered compensation for any purposes under any benefit plan sponsored by the Company or its
Affiliates, including qualified and nonqualified retirement plans.

     6.3 No Guarantee of Benefits. Nothing contained in the Plan shall constitute a
guarantee by the Company or any other person or entity that the assets of the Company will be
sufficient to pay any benefits hereunder.

     6.4 No Enlargement of Rights. The Participant, his Spouse and any other
beneficiary(s) shall not have any right to receive a distribution under the Plan except in
accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give
any Participant the right to continue to be employed by or provide services to the Company.

     6.5 Spendthrift Provision. No interest of any person in, or right to receive a
distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or
right to receive a distribution be taken, either voluntarily or involuntarily for the satisfaction
of the debts of, or other obligations or claims against, such person.

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

	 	(1)	 	issued pursuant to a State’s domestic relations law;
	 
	 	(2)	 	relates to the provision of child support, alimony payments or marital property
rights to a spouse, former spouse, child or other dependent of the Participant;
	 
	 	(3)	 	creates or recognizes the right of a spouse, former spouse, child or other
dependent of the Participant to receive all or a portion of the Participant’s benefits
under the Plan; and
	 
	 	(4)	 	meets such other requirements established by the Committee.

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

     6.6 Applicable Law. To the extent not preempted by federal law, the Plan shall be
governed by the laws of the State of California.

     6.7 Incapacity of Recipient. If any person entitled to a distribution under the Plan
is deemed by the Committee to be incapable of personally receiving and giving a valid receipt for
such payment, then, unless and until a claim for such payment shall have been made by a duly
appointed guardian or other legal representative of such person, the Committee may provide for such
payment or any part thereof to be made to any other person or institution then contributing toward
or providing for the care and maintenance of such person. Any such payment shall be a payment for
the account of such person and a complete discharge of any liability of the Company and the Plan
with respect to the payment.

     6.8 Taxes. The Company or other payor may withhold from a benefit payment under the
Plan or the Participant’s wages in order to meet any federal, state, or local tax withholding
obligations with respect to Plan benefits. The Company may also accelerate and pay a portion of
the Participant’s benefits in a lump sum equal to any Federal Insurance Contributions Act (“FICA”),
state or local tax imposed and the income tax withholding related to such FICA amounts. The
Company or other payor shall report Plan payments and other Plan-related information to the
appropriate governmental agencies as required under applicable laws.

     6.9 Corporate Successors. The Plan and the obligations of the Company under the Plan
shall become the responsibility of any successor to the Company by reason of a transfer or sale of
substantially all of the assets of the Company or by the merger or consolidation of the Company
into or with any other corporation or other entity.

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     6.10 Unclaimed Benefits. The Participant shall keep the Committee informed of his
current address and the current address of his spouse and any other beneficiary(s). The Committee
shall not be obligated to search for the whereabouts of any person if the location of a person is
not made known to the Committee.

     6.11 Severability. In the event any provision of the Plan shall be held invalid or
illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the
Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never
been inserted.

     6.12 Words and Headings. Words in the masculine gender shall include the feminine and
the singular shall include the plural, and vice versa, unless qualified by the context. Any
headings used herein are included for ease of reference only, and are not to be construed so as to
alter the terms hereof.

* * *

     IN
WITNESS WHEREOF, this Plan is hereby executed by a duly authorized
officer on this
17th day
of December, 2008.

	 	 	 	 	 	 	 
	 	 	NORTHROP GRUMMAN CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Ian Ziskin	 	 
	 

	 	 	 	 

Ian Ziskin
	 	 
	 

	 	 	 	Corporate Vice President, Chief Human Resources and
Administrative Officer	 	 

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APPENDIX A

DISTRIBUTION OF VISTEON AMOUNTS

     The provisions of this Appendix A shall apply only to the portion of benefits under the Plan
that are payable under Section 3.1.

     A.01 Time of Distribution. Subject to the special rules provided in this Appendix A,
distributions to the Participant of his vested retirement benefit shall commence as of the Payment
Date. For purposes of this Appendix A, “Payment Date” means the 1st of the month coincident with
or following the later of (a) the date the Participant attains age 55, or (b) the date the
Participant Separates from Service.

     A.02 Special Rule for Key Employees. If the Participant is a Key Employee and age 55
or older at his Separation from Service, distributions to the Participant shall commence on the
first day of the seventh month following the date of his Separation from Service (or, if earlier,
the date of the Participant’s death). Amounts otherwise payable to the Participant during such
period of delay shall be accumulated and paid on the first day of the seventh month following the
Participant’s Separation from Service, along with interest on the delayed payments. Interest shall
be computed using the retroactive annuity starting date rate in effect under the Northrop Grumman
Pension Plan on a month-by-month basis during such delay (i.e., the rate may change in the event
the delay spans two calendar years).

     A.03 Forms of Distribution. Subject to the special rules provided in this Appendix A,
the Participant’s vested retirement benefit shall be distributed in the form of a single life
annuity. However, the Participant may elect an optional form of benefit up until the Payment Date.
The optional forms of payment are:

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

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

     A.04 Death. If the Participant is married and dies before the Payment Date (or his
Separation from Service occurs due to his death), a death benefit will be payable to the
Participant’s spouse commencing 90 days after the Participant’s death. The death benefit will be a
single life annuity in an amount equal to the survivor portion of the Participant’s vested
retirement benefit based on a 100% joint and survivor annuity determined on the Participant’s date
of death. This benefit is also payable to any domestic partner of the Participant who is

 

 

properly registered with the Company in accordance with procedures established by the Company.

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

	 	 	 	 	 
	 

	 	Interest Rate: 6%	 	 
	 
	 	 	 	 
	 

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

     A.06 Accelerated Lump Sum Payouts.

          (a) At Separation. If the present value of (a) the vested portion of the
Participant’s retirement benefit and (b) other vested amounts under nonaccount balance plans that
are aggregated with the retirement benefit under Code section 409A, determined on the first of the
month coincident with or following the date of his Separation from Service, is less than or equal
to $25,000, such benefit amount shall be distributed to the Participant (or his spouse or domestic
partner, if applicable) in a lump sum payment. Subject to the special timing rule for Key
Employees under Section A.02, the lump sum payment shall be made within 90 days after the first of
the month coincident with or following the date of the Participant’s Separation from Service.

          Notwithstanding the foregoing, the Participant’s benefit under Section 3.3 shall not be
considered a plan to be aggregated under Code section 409A for purposes of this Section A.06(a) or
any similar provision in the other plans that are aggregated with this Plan under Code section
409A.

          (b) Conflicts of Interest. The present value of the Participant’s vested retirement
benefit shall also be payable in an immediate lump sum to the extent required under conflict of
interest rules for government service and permissible under Code section 409A.

          (c) Present Value Calculation. The conversion of the Participant’s retirement benefit
into a lump sum payment and the present value calculations under this Section A.06 shall be based
on the GATT assumptions in effect under the Northrop Grumman Pension Plan, and will be based on the
Participant’s immediate benefit if the Participant is 55 or older at Separation from Service.
Otherwise, the calculation will be based on the benefit amount the Participant will be eligible to
receive at age 55.

- 2 -

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