Document:

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Exhibit 10(t)

NORTHROP GRUMMAN

DEFERRED COMPENSATION PLAN

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

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	2	 
	1.1
	 	Definitions	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II PARTICIPATION	 	 	6	 
	2.1
	 	In General	 	 	6	 
	2.2
	 	Disputes as to Employment Status	 	 	6	 
	2.3
	 	Cessation of Eligibility	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE III DEFERRAL ELECTIONS	 	 	7	 
	3.1
	 	Elections to Defer Compensation	 	 	7	 
	3.3
	 	Investment Elections	 	 	7	 
	3.4
	 	Investment Return Not Guaranteed	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE IV ACCOUNTS AND TRUST FUNDING	 	 	9	 
	4.1
	 	Accounts	 	 	9	 
	4.2
	 	Use of a Trust	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE V VESTING	 	 	10	 
	5.1
	 	In General	 	 	10	 
	5.2
	 	Exceptions	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE VI DISTRIBUTIONS	 	 	11	 
	6.1
	 	Distribution of Deferred Compensation Contributions	 	 	11	 
	6.2
	 	Pre-2005 Deferrals	 	 	12	 
	6.3
	 	Withdrawals for Unforeseeable Emergency	 	 	13	 
	6.4
	 	Payments Not Received At Death	 	 	13	 
	6.5
	 	Inability to Locate Participant	 	 	13	 
	6.6
	 	Committee Rules	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE VII ADMINISTRATION	 	 	14	 
	7.1
	 	Committees	 	 	14	 
	7.2
	 	Committee Action	 	 	14	 
	7.3
	 	Powers and Duties of the Administrative Committee	 	 	14	 
	7.4
	 	Powers and Duties of the Investment Committee	 	 	15	 
	7.5
	 	Construction and Interpretation	 	 	15	 
	7.6
	 	Information	 	 	16	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	7.7
	 	Committee Compensation, Expenses and Indemnity	 	 	16	 
	7.8
	 	Disputes	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS	 	 	18	 
	8.1
	 	Unsecured General Creditor	 	 	18	 
	8.2
	 	Restriction Against Assignment	 	 	18	 
	8.3
	 	Restriction Against Double Payment	 	 	19	 
	8.4
	 	Withholding	 	 	19	 
	8.5
	 	Amendment, Modification, Suspension or Termination	 	 	19	 
	8.6
	 	Governing Law	 	 	20	 
	8.7
	 	Receipt or Release	 	 	20	 
	8.8
	 	Payments on Behalf of Persons Under Incapacity	 	 	20	 
	8.9
	 	Limitation of Rights and Employment Relationship	 	 	20	 
	8.10
	 	Headings	 	 	20	 
	8.11
	 	2001 Reorganization	 	 	20	 
	 
	 	 	 	 	 	 
	APPENDIX A 2005 TRANSITION RELIEF	 	 	A1	 
	A.1
	 	Cash Out	 	 	A1	 
	A.2
	 	Elections	 	 	A1	 
	A.3
	 	Key Employees	 	 	A1	 
	 
	 	 	 	 	 	 
	APPENDIX B DISTRIBUTION RULES FOR PRE-2005 AMOUNTS	 	 	B1	 
	B.1
	 	Distribution of Contributions	 	 	B1	 
	B.2
	 	Early Non-Scheduled Distributions	 	 	B2	 
	B.3
	 	Hardship Distribution	 	 	B3	 
	B.4
	 	Plan Termination	 	 	B3	 
	 
	 	 	 	 	 	 
	APPENDIX C TRANSFER OF LIABILITIES — NORTHROP GRUMMAN
EXECUTIVE DEFERRED COMPENSATIONPLAN	 	 	C1	 
	C.1
	 	Background	 	 	C1	 
	C.2
	 	Treatment of Transferred Liabilities	 	 	C1	 
	C.3
	 	Investments	 	 	C1	 
	C.4
	 	Distributions	 	 	C1	 
	C.5
	 	Other Provisions	 	 	C1	 

 

 

NORTHROP GRUMMAN

DEFERRED COMPENSATION PLAN

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

The Northrop Grumman Deferred Compensation Plan (the “Plan”) is hereby amended and restated
effective as of January 1, 2005.

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

The Northrop Grumman Corporation (the “Company”) established this unfunded Plan for a select group
of management and highly compensated employees effective as of December 1, 2000. Since then the
Plan has been amended as follows:

	 	(a)	 	to provide for the acceptance of a transfer of certain liabilities from the
Northrop Grumman Executive Deferred Compensation Plan, effective March 1, 2001;
	 
	 	(b)	 	to account for the acquisition of Litton Industries, Inc. and the associated
corporate reorganization, effective December 1, 2000;
	 
	 	(c)	 	to provide for the acceptance of a transfer of certain liabilities from certain
nonqualified deferred compensation plans of Aerojet-General Corporation, effective
December 1, 2000;
	 
	 	(d)	 	to provide the Plan’s administrative committee with additional discretion in
determining whether and when employees may participate in the Plan, effective January
1, 2002; and
	 
	 	(e)	 	to provide for the acceptance of a transfer of certain liabilities from the
TASC, Inc. Supplemental Retirement Plan, generally effective March 28, 2003.

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ARTICLE I

DEFINITIONS

     1.1 Definitions

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

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

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

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

          (d) “Base Salary” shall mean a Participant’s annual base salary, excluding bonuses,
commissions, incentive and all other remuneration for services rendered to the Affiliated Companies
and prior to reduction for any salary contributions to a plan established pursuant to section 125
of the Code or qualified pursuant to section 401(k) of the Code.

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

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

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

               (3) No designation of a Beneficiary other than the Participant’s spouse shall be valid unless
consented to in writing by such spouse. If there is no such designation or if there is no surviving
designated Beneficiary, then the Participant’s surviving spouse shall be the Beneficiary. If there
is no surviving spouse to receive any benefits payable in accordance with the preceding sentence,
the duly appointed and currently acting personal representative of the Participant’s estate (which
shall include either the Participant’s probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant’s estate duly appointed
and acting in that capacity within 90 days after the Participant’s death (or such extended period
as the Administrative Committee determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed 180 days after the Participant’s death), then
Beneficiary shall mean the person or persons who

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can verify by affidavit or court order to the satisfaction of the Administrative Committee that they are legally entitled to receive the benefits specified hereunder. Effective January 1,
2007, a Participant will automatically revoke a designation of a spouse as primary beneficiary upon
the dissolution of their marriage.

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

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

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

          (g) “Bonuses” shall mean the bonuses earned under the Company’s formal incentive plans as
defined by the Administrative Committee.

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

          (i) “Committees” shall mean the Committees appointed by the Board to administer the Plan and
investments in accordance with Article VII.

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

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

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

          (m) “Early Distribution” shall mean an election by a Participant in accordance with Appendix
Section B.2 to receive a withdrawal of amounts from his or her Account prior to the time at which
such Participant would otherwise be entitled to such amounts.

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

               (1) he or she is initially treated by the Affiliated Companies as an Employee and not as an
independent contractor; and

               (2) he or she meets the eligibility criteria established by the Administrative Committee.

          The eligibility criteria established by the Administrative Committee will include, but not be
limited to, classifications of Employees who are eligible to participate and the date as of which
various groups of Employees will be eligible to participate. This includes, for example,
Administrative Committee authority to delay eligibility for employees of newly acquired companies
who become Employees.

          (o) “Employee” shall mean any common law employee of the Affiliated Companies.

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

          (q) “Hardship Distribution” shall mean a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant or of his or her
dependent (as defined in Section 152(a) of the Code), loss of a Participant’s property due to
casualty, or other similar or extraordinary and unforseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that would constitute an
unforseeable emergency will depend upon the facts of each case, but, in any case, a Hardship
Distribution may not be made to the extent that such hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant’s
assets, to the extent the liquidation of assets would not itself cause severe financial hardship,
or (iii) by cessation of deferrals under this Plan.

          (r) “Initial Election Period” shall mean:

               (1) in the case of a newly hired Employee who is entitled to participate under Article II, the
30-day period following the date on which the Employee first becomes an Eligible Employee; and

               (2) in the case of any other Employee who becomes an Eligible Employee and is entitled to
participate under Article II, the next Open Enrollment Period.

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

          (t) “Key Employee” means an employee treated as a “specified employee” under Code section
409A(a)(2)(B)(i) of the Company or the Affiliated Companies (i.e., a key employee (as defined in
Code section 416(i) without regard to paragraph (5) thereof)) if the

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Company’s or an Affiliated Company’s stock is publicly traded on an established securities market or otherwise. The Company shall determine in accordance with a uniform Company policy
which Participants are Key Employees as of each December 31 in accordance with IRS regulations or
other guidance under Code section 409A, provided that in determining the compensation of
individuals for this purpose, the definition of compensation in Treas. Reg. § 1.415(c)-2(d)(3)
shall be used. Such determination shall be effective for the twelve (12) month period commencing
on April 1 of the following year.

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

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

          (w) “Payment Date” shall mean:

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

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

               (3) for distributions with a scheduled withdrawal date under Section B.1(c), a date after the
December 31 prior to the elected payment year,

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

          (x) “Plan” shall be the Northrop Grumman Deferred Compensation Plan.

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

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

          (aa) “Scheduled Withdrawal Date” shall mean the distribution date elected by the Participant
for an in-service withdrawal of amounts deferred in a given Plan Year, and earnings and losses
attributable thereto, as set forth on the election form for such Plan Year.

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

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ARTICLE II

PARTICIPATION

     2.1 In General

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

          (b) Anyone who becomes an Eligible Employee will be entitled to become a Participant during
his or her Initial Election Period or any subsequent Open Enrollment Period.

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

     2.2 Disputes as to Employment Status

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

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

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

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

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

     2.3 Cessation of Eligibility

          If the Administrative Committee determines or reasonably believes that a Participant has
ceased to be a management or highly compensated employee within the meaning of ERISA Title I, the
Participant will no longer be able to make elections to defer compensation under the Plan.

          If an Eligible Employee receives a distribution under Appendix Section B.2, the Employee will
not be permitted to defer amounts under the Plan for the two Plan Years following the year of
distribution.

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ARTICLE III

DEFERRAL ELECTIONS

     3.1 Elections to Defer Compensation

          (a) Initial Elections. Each Participant may elect to defer an amount of Compensation
by filing an election with the Administrative Committee no later than the last day of his or her
Initial Election Period. If the election is made pursuant to Section 1.1(r)(1), it will apply for
the remainder of the Plan Year. Otherwise, the election will apply for the following Plan Year.

          (b) Subsequent Elections. A Participant may elect to defer Compensation earned in
subsequent Plan Years by filing a new election in the Open Enrollment Period for each subsequent
Plan Year. An election to participate for a Plan Year is irrevocable.

          (c) General Rules for all Elections. The Administrative Committee may establish
procedures for elections and set limits and other requirements on the amount of Compensation that
may be deferred. The Administrative Committee may change these rules from time to time. An Eligible
Employee’s minimum contribution for any Plan Year will be $5,000, provided the minimum contribution
can be satisfied from any element of Compensation. If a Participant defers less than this amount
during a Plan Year, the deferred amount will be refunded to the Participant in the first quarter of
the following Plan Year.

          (d) Committee Rules. All elections must be made in accordance with rules, procedures
and forms provided by the Administrative Committee. The Administrative Committee may change the
rules, procedures and forms from time to time and without prior notice to Participants.

          (e) Cancellation of Election. If a Participant becomes disabled (as defined under Code
Section 409A) or obtains a distribution on account of an Unforeseeable Emergency under Section 6.3
during a Plan Year, his deferral election for such Plan Year shall be cancelled.

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

     3.3 Investment Elections

          (a) The Investment Committee will establish a number of different types of investments for the
Plan. The Investment Committee may change the investments from time to time, without prior notice
to Participants.

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          (b) Participants may elect how their future contributions and existing Account balances will
be deemed invested in the various types of investment and may change their elections from time to
time.

          (c) Although the Participants may designate the deemed investment of their Accounts, the
Investment Committee is not bound to invest any actual amounts in any particular investment. The
Investment Committee will select from time to time, in its sole and absolute discretion,
commercially available investments of each of the types offered. Any investments actually made
remain the property of the Affiliated Companies (or the rabbi trust under Section 4.2) and are not
Plan assets.

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

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

               (2) The Administrative Committee may prescribe rules for valuing Accounts for purposes of
transfers. Such rules may, in the Administrative Committee’s discretion, use averaging methods to
determine values and accrue estimated expenses.

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

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

     3.4 Investment Return Not Guaranteed

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

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ARTICLE IV

ACCOUNTS AND TRUST FUNDING

     4.1 Accounts

          The Administrative Committee shall establish and maintain an Account for each Participant
under the Plan. Each Participant’s Account shall be further divided into separate subaccounts
(“investment subaccounts”), each of which corresponds to an investment type elected by the
Participant pursuant to Section 3.3. A Participant’s Account shall be credited as follows:

          (a) The Administrative Committee shall credit the investment subaccounts of the Participant’s
Account with an amount equal to Compensation deferred by the Participant in accordance with the
Participant’s election under Section 3.3; that is, the portion of the Participant’s deferred
Compensation that the Participant has elected to be deemed invested in a certain type of investment
shall be credited to the investment subaccount corresponding to that investment type.

          (b) The investment subaccounts of Participants’ Accounts will be credited with earnings or
losses based on the earnings or losses of the corresponding investments selected by the Participant
and valued in accordance with the rules and procedures of the Administrative Committee.

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

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

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

     4.2 Use of a Trust

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

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ARTICLE V

VESTING

     5.1 In General

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

     5.2 Exceptions

          The following exceptions apply to the vesting rule:

          (a) Forfeitures on account of a lost payee. See Section 6.5.

          (b) Forfeitures under an escheat law.

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

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

          (e) Investment losses.

          (f) Forfeitures resulting from early withdrawals. See Section B.2.

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ARTICLE VI

DISTRIBUTIONS

     6.1 Distribution of Deferred Compensation Contributions

          (a) Separate Distribution Election. A Participant must make a separate distribution
election for each year beginning with the 2005 deferral election. A Participant generally makes a
distribution election at the same time the Participant makes the deferral election, i.e., during
the Open Enrollment Period. The Participant will specify in the distribution election whether the
amounts deferred for the year (and earnings thereon) will be paid upon a Separation from Service or
upon a specified date, and the method of distribution for such amounts. Even if a Participant
elects to have a year’s deferrals payable upon a specified date, he shall also specify a method of
distribution for payments upon a Separation from Service.

          (b) Distribution Upon Separation from Service. A Participant may elect on a deferral
form to have the portion of his Account related to amounts deferred under the deferral form (and
earnings thereon) distributed in a lump sum or in quarterly installments over a period of 5, 10, or
15 years. If a Participant does not elect a method for distribution for a deferred amount, the
amount will be distributed in quarterly installments over 10 years. Notwithstanding the foregoing,
if a Participant’s Account balance is $50,000 or less at the time the Participant Separates from
Service or if the Separation from Service occurs before age 55 for reasons other than death or
disability (as defined under Code section 409A), the deferred amount will be distributed in a lump
sum payment.

               A lump sum payment shall be made in the second month following the month of Separation from
Service. Installment payments shall commence as of the January, April, July, or October that next
follows the month of Separation from Service and that is not the month immediately following the
month of Separation from Service. For example, if a Separation from Service occurs in January,
payments begin in April. If a Separation from Service occurs in March, payments begin in July.

               Notwithstanding the foregoing, distributions may not be made to a Key Employee upon a
Separation from Service before the date which is six months after the date of the Key Employee’s
Separation from Service (or, if earlier, the date of death of the Key Employee). Any lump sum
payment that would otherwise be made during this period of delay shall be paid on the first day of
the seventh month following the Participant’s Separation from Service (or, if earlier, the first
day of the month after the Participant’s death). Any series of installment payments impacted by
this delay shall begin as of the January, April, July, or October coincident with or next following
the Participant’s Separation from Service. The initial payment of such an installment series shall
include any installment payments that would have otherwise been made during the period of delay.

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          (c) Distribution as of Specified Date. A Participant may elect on a deferral form to
have the portion of his Account related to amounts deferred under the deferral form (and earnings thereon) paid to the Participant as of a January that is at least two years after the
year of deferral. The Participant may elect to receive such amount as a lump sum or in quarterly
installments over 2 to 5 years. If the amount is $25,000 or less at the specified date for
distribution, the Participant will receive a lump sum distribution of the amount regardless of his
elected distribution form. If the Participant Separates from Service before the specified date or
while receiving a distribution of an amount under this Section 6.1(c), such portion of the Account
will be distributed in accordance with the Participant’s distribution election for a Separation
from Service made at the time of the Participant’s deferral election.

          (d) Changes in Time or Form of Distribution. A Participant may make up to two
subsequent elections to change the time or form of a distribution for any year’s deferral. Such an
election, however, shall be effective only if the following conditions are satisfied:

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

               (2) In the case of an election to change the time or form of the distribution under Sections
6.1(b) or (c), a distribution may not be made earlier than at least five (5) years from the date
the distribution would have otherwise been made; and

               (3) In the case of an election to change the time or form of a distribution under Section
6.1(c), the election must be made at least twelve (12) months before the date the distribution is
scheduled to be paid.

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

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

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

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

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

     6.2 Pre-2005 Deferrals. Notwithstanding the foregoing, Appendix B governs the
distribution of amounts that were earned and vested (within the meaning of Code section 409A and
regulations thereunder) under the Plan prior to 2005 (and earnings thereon) and are exempt

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from the requirements of Code section 409A. Thus, Section 6.1 does not apply to pre-2005 deferrals.

     6.3 Withdrawals for Unforeseeable Emergency. A Participant may withdraw all or any
portion of his Account balance for an Unforeseeable Emergency. The amounts distributed with
respect to an Unforeseeable Emergency may not exceed the amounts necessary to satisfy such
Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of
the distribution, after taking into account the extent to which such hardship is or may be relieved
through reimbursement or compensation by insurance or otherwise or by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship) or by cessation of deferrals under the Plan. “Unforeseeable Emergency” means
for this purpose a severe financial hardship to a Participant resulting from an illness or accident
of the Participant, the Participant’s spouse, or a dependent (as defined in Code section 152(a)) of
the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond the control of the
Participant.

     6.4 Payments Not Received At Death. In the event of the death of a Participant before
receiving a payment, payment will be made to his or her estate if death occurs on or after the date
of a check which has been issued by the Plan. Otherwise, payment of the amount will be made to the
Participant’s Beneficiary.

     6.5 Inability to Locate Participant

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

     6.6 Committee Rules

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

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ARTICLE VII

ADMINISTRATION

     7.1 Committees

          (a) An Administrative Committee of one or more persons, shall be appointed by, and serve at
the pleasure of, the Chairman and Chief Executive Officer. The number of members comprising the
Administrative Committee shall be determined by the Chairman, President, and Chief Executive
Officer, who may from time to time vary the number of members. A member of the Administrative
Committee may resign by delivering a written notice of resignation to the Chairman, President, and
Chief Executive Officer. The Chairman, President, and Chief Executive Officer may remove any member
by delivering a certified copy of its resolution of removal to such member. Vacancies in the
membership of the Administrative Committee shall be filled promptly by the Chairman, President, and
Chief Executive Officer.

          (b) An Investment Committee of one or more persons, shall be appointed by, and serve at the
pleasure of, the Board. The number of members comprising the Investment Committee shall be
determined by the Board, who may from time to time vary the number of members. A member of the
Investment Committee may resign by delivering a written notice of resignation to the Board. The
Board may remove any member by delivering a certified copy of its resolution of removal to such
member. Vacancies in the membership of the Investment Committee shall be filled promptly by the
Board.

     7.2 Committee Action

          Each Committee shall act at meetings by affirmative vote of a majority of the members of that
Committee. Any action permitted to be taken at a meeting may be taken without a meeting if, prior
to such action, a written consent to the action is signed by all members of the Committee and such
written consent is filed with the minutes of the proceedings of the Committee. A member of a
Committee shall not vote or act upon any matter which relates solely to himself or herself as a
Participant. The chairman of a Committee, or any other member or members of each Committee
designated by the chairman of the Committee, may execute any certificate or other written direction
on behalf of the Committee of which he or she is a member.

     7.3 Powers and Duties of the Administrative Committee

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

          (a) To construe and interpret the terms and provisions of this Plan;

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

-14-

 

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

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

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

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

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

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

     7.4 Powers and Duties of the Investment Committee

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

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

          (b) To oversee any rabbi trust; and

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

     7.5 Construction and Interpretation

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

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     7.6 Information

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

     7.7 Committee Compensation, Expenses and Indemnity

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

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

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

     7.8 Disputes

          (a) Claims

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

          (b) Claim Decision

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

          If the claim is denied in whole or in part, the Administrative Committee shall inform the
Claimant in writing, using language calculated to be understood by the Claimant, setting forth:
(1) the specific reason or reasons for such denial; (2) specific references to pertinent provisions
of this Plan on which such denial is based; (3) a description of any additional material or
information necessary for the Claimant to perfect his or her claim and an explanation of why such
material or such information is necessary; (4) an explanation of the

-16-

 

procedure for review of the
denied or partially denied claim set forth below, including the Claimant’s right to bring a civil
action under ERISA section 502(a) following an adverse benefit determination on review.

          (c) Request For Review

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

          (d) Review of Decision

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

          (e) Limitation on Claims

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

               (1) Two years after the claim arose, or

               (2) One year after the decision on appeal under this Section (or one year after the expiration
of the time to take an appeal if no appeal is taken).

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ARTICLE VIII

MISCELLANEOUS

     8.1 Unsecured General Creditor

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

     8.2 Restriction Against Assignment

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

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

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

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

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

-18-

 

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

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

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

     8.3 Restriction Against Double Payment

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

     8.4 Withholding

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

     8.5 Amendment, Modification, Suspension or Termination

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

          Notwithstanding the foregoing, no amendment of the Plan shall apply to amounts that were
earned and vested (within the meaning of Code section 409A and regulations thereunder) under the
Plan prior to 2005, unless the amendment specifically provides that it applies to such amounts. The
purpose of this restriction is to prevent a Plan amendment from resulting in an inadvertent
“material modification” to amounts that are “grandfathered” and exempt from the requirements of
Code section 409A.

-19-

 

     8.6 Governing Law

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

     8.7 Receipt or Release

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

     8.8 Payments on Behalf of Persons Under Incapacity

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

     8.9 Limitation of Rights and Employment Relationship

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

     8.10 Headings

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

     8.11 2001 Reorganization

          Effective as of the 2001 Reorganization Date in (d), the corporate structure of Northrop
Grumman Corporation and its affiliates was modified. Effective as of the Litton Acquisition Date in
(e), Litton Industries, Inc. was acquired and became a subsidiary of the Northrop Grumman
Corporation (the “Litton Acquisition”).

          (a) The former Northrop Grumman Corporation was renamed Northrop Grumman Systems Corporation.
It became a wholly-owned subsidiary of the new parent of the reorganized controlled group.

-20-

 

          (b) The new parent corporation resulting from the restructuring is called Northrop Grumman
Corporation. All references in this Plan to the former Northrop Grumman Corporation and its Board
of Directors now refer to the new parent corporation bearing the same name and its Board of
Directors.

          (c) As of the 2001 Reorganization Date, the new Northrop Grumman Corporation became the
sponsor of this Plan, and its Board of Directors assumed authority over this Plan.

          (d) 2001 Reorganization Date. The date as of which the corporate restructuring
described in (a) and (b) occurred.

          (e) Litton Acquisition Date. The date as of which the conditions for the completion of
the Litton Acquisition were satisfied in accordance with the “Amended and Restated Agreement and
Plan of Merger Among Northrop Grumman Corporation, Litton Industries, Inc., NNG, Inc., and LII
Acquisition Corp.

* * *

          IN WITNESS WHEREOF, this Amendment and Restatement is hereby executed by a duly authorized
officer on this 21st day of December, 2007.

	 	 	 	 	 
	 	NORTHROP GRUMMAN CORPORATION

 	 
	 	By:  	/s/
Debora L. Catsavas 	 
	 	 	Debora L. Catsavas 	 
	 	 	Vice President, Compensation, Benefits and HRIS 	 
	 

-21-

 

APPENDIX A

2005 TRANSITION RELIEF

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

	A.1	 	 Cash-Out

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

	A.2	 	 Elections

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

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

	A.3	 	 Key Employees

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

	 	I.	 	Delay the distributions described above for six months from the
date of Separation from Service. The delayed payments will be paid as a single
sum with interest at the end of the six month period, with the remaining
payments resuming as scheduled.
	 
	 	II.	 	Accelerate the distributions described above into a payment in
2005 without interest adjustments.
	 
	 	III.	 	Key Employees must elect I or II during 2005.

-A 1-

 

APPENDIX B

DISTRIBUTION RULES FOR PRE-2005 AMOUNTS

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

	 	B.1	 	 Distribution of Contributions

          (a) Distributions Upon Early Termination

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

               (2) Involuntary Termination. If a Participant involuntarily terminates employment with
the Affiliated Companies before age 55, distribution of his or her Account will generally be made
in quarterly installments over a 5, 10 or 15-year period, commencing on the Participant’s Payment
Date, in accordance with the Participant’s original election on his or her deferral election form.
Payment will be made in a lump sum if the Participant had originally elected a lump sum, if the
Account balance is $50,000 or less, or if the Administrative Committee so requires.

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

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

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

                    (B) Quarterly installments over 5 years beginning on the Participant’s
Payment Date.

                    (C) Quarterly installments over 10 years beginning on the Participant’s
Payment Date.

                    (D) Quarterly installments over 15 years beginning on the Participant’s
Payment Date.

-B 1-

 

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

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

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

          (c) Distribution With Scheduled Withdrawal Date. A Participant who has elected a
Scheduled Withdrawal Date for a distribution while still in the employ of the Affiliated Companies,
will receive the designated portion of his or her Account as follows:

               (1) A Participant’s Scheduled Withdrawal Date can be no earlier than two years from the last
day of the Plan Year for which the deferrals of Compensation are made.

               (2) A Participant may extend the Scheduled Withdrawal Date for any Plan Year, provided such
extension occurs at least one year before the Scheduled Withdrawal Date and is for a period of not
less than two years from the Scheduled Withdrawal Date. The Participant shall have the right to
twice modify any Scheduled Withdrawal Date.

               (3) Payments under this subsection may be in the form of a lump sum, or 2, 3, 4 or 5-year
quarterly installments. The default form will be a lump sum. If the Account balance to be
distributed is $25,000 or less, payment will automatically be made in a lump sum. Payments will
commence on the Scheduled Withdrawal Date.

               (4) In the event a Participant terminates employment with the Affiliated Companies prior to
the commencement or completion of a distribution under this subsection, the portion of the
Participant’s Account associated with a Scheduled Withdrawal Date which has not been distributed
prior to such termination shall be distributed in accordance with Section B.1(a) and (b) along with
the remainder of the Account.

	 	B.2	 	 Early Non-Scheduled Distributions

          A Participant shall be permitted to elect an Early Distribution from his or her Account prior
to a Payment Date under Section B.1, subject to the following restrictions:

-B 2-

 

          (a) The election to take an Early Distribution shall be made by filing a form provided by and
filed with the Administrative Committee prior to the end of any calendar month.

          (b) The amount of the Early Distribution shall equal up to 90% of his or her Account balance.

          (c) The amount described in subsection (b) above shall be paid in a lump sum as of a date
after the receipt by the Administrative Committee of the request for a withdrawal under this
Section. The exact date will be determined by the Administrative Committee to allow time for
administrative processing.

          (d) A Participant shall forfeit 10% of the amount of the requested distribution. The
Affiliated Companies shall have no obligation to the Participant or his or her Beneficiary with
respect to such forfeited amount.

               (1) Example 1: A Participant requests a distribution of 100% of the Account. The
Participant receives 90%. The amount forfeited is 10% of the Account.

               (2) Example 2: A Participant requests a distribution of 50% of the Account. The
Participant receives 45%. The amount forfeited is 5% of the Account.

          (e) All distributions shall be made on a pro rata basis from among a Participant’s investment
subaccounts.

	 	B.3	 	 Hardship Distribution

          A Participant shall be permitted to elect a Hardship Distribution from his or her Account
prior to a Payment Date under Section B.1, subject to the following restrictions:

          (a) The election to take a Hardship Distribution shall be made by filing a form provided by
and filed with the Administrative Committee prior to the end of any calendar month.

          (b) The Administrative Committee shall have made a determination that the requested
distribution constitutes a Hardship Distribution.

          (c) The amount determined by the Administrative Committee as a Hardship Distribution shall be
paid in a lump sum as of a date after the approval by the Administrative Committee of the request
for a withdrawal under this Section. The exact date will be determined by the Administrative
Committee to allow time for administrative processing.

	 	B.4	 	 Plan Termination

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

-B 3-

 

APPENDIX C

TRANSFER OF LIABILITIES — 

NORTHROP GRUMMAN EXECUTIVE DEFERRED COMPENSATION PLAN

	 	C.1	 	 Background

          Effective March 1, 2001, all liabilities under the Northrop Grumman Executive Deferred
Compensation Plan other than the Estate Enhancement Program Account, were transferred to this Plan.
This Appendix describes the treatment of those liabilities (plus earnings) (“Transferred
Liabilities”) and the Participant to whom those liabilities are owed (“Transferred Participant”).

	 	C.2	 	 Treatment of Transferred Liabilities

          The Transferred Liabilities will generally be treated under the Plan like Compensation
deferred in accordance with Article III.

	 	C.3	 	 Investments

          The Transferred Participant may make investment elections for the Transferred Liabilities in
accordance with Section 3.3. Section 3.4 will also apply.

	 	C.4	 	 Distributions

          Distributions of amounts corresponding to the Transferred Liabilities will generally be made
in accordance with the provisions of Appendix B. The following exceptions and special rules apply:

          (a) Section B.1

               (1) For purposes of Sections B.1(a)(2) and B.1(b)(1), the Transferred Participant will be
deemed to have made an election of 5 or 10-year installments corresponding to his elections of 5 or
10-year installments under Section 6.9(b)(2) of the Northrop Grumman Executive Deferred
Compensation Plan.

               (2) The Transferred Participant may utilize Section B.1(b)(2) to vary the form of his
distribution.

               (3) Distributions under Section B.1(c) are not available.

          (b) Section B.2. The Early Non-Scheduled Distribution election is available. The
Transferred Liabilities will be aggregated with any other amounts in the Transferred Participant’s
Account for purposes of distributions under Section B.2.

          (c) Sections 6.3-6.6. These Sections are fully applicable.

-C 1-

 

	 	C.5	 	 Other Provisions

          The Transferred Liabilities and the Transferred Participant will be fully
subject to the provisions of Articles IV, V, VII and VIII.

-C 2-

 

APPENDIX D

TRANSFER OF LIABILITIES — 

AEROJET-GENERAL LIABILITIES

	 	D.1	 	 Background

          (a) Effective as of the Closing Date specified in the April 19, 2001 Asset Purchase Agreement
by and Between Aerojet-General Corporation and Northrop Grumman Systems Corporation (the “APA”),
certain liabilities (“Transferred Liabilities”) under the Benefits Restoration Plan for Salaried
Employees of GenCorp Inc. and Certain Subsidiary Companies and the GenCorp Inc. and Participating
Subsidiaries Deferred Bonus Plan were transferred to this Plan.

          (b) The transfer took place pursuant to section 10.6 of the APA, under which Northrop Grumman
acquired the Azusa and Colorado Operations units from Aerojet-General Corporation. That section
reads:

* * * * *

          10.6 Unfunded Deferred Compensation

               (a) Subject to legal requirements for employee acquiescence, as
of the effective time of the Closing, the Purchaser shall assume any
and all obligations of the Seller to pay any and all unfunded
deferred compensation as set forth on Schedule 10.6 for all
Transferring Employees, provided such benefits are adequately
reflected on the Balance Sheet.

               (b) The Seller shall retain any and all legal obligation to pay
any and all unfunded deferred compensation for all Aerojet Employees
that are not Transferring Employees.

* * * * *

          (c) This Appendix is intended to effectuate the assumption of certain of the liabilities
contemplated by section 10.6 of the APA. It describes the treatment of those liabilities (plus
earnings) and the Participants to whom those liabilities are owed (“Transferred Participants”).

          (d) The only liabilities assumed by this Plan are:

               (1) those from the GenCorp Inc. and Participating Subsidiaries Deferred Bonus Plan, and

-D 1-

 

               (2) those liabilities under the Benefits Restoration Plan for Salaried Employees of GenCorp
Inc. and Certain Subsidiary Companies which represent supplements with respect to an Aerojet
defined contribution plan.

No liabilities are assumed which represent supplements with respect to an Aerojet defined benefit
plan.

          (e) The assumed liabilities will be represented by starting Account balances for the
Transferred Participants, determined in the discretion of the Administrative Committee.

	 	D.2	 	 Treatment of Transferred Liabilities

          The Transferred Liabilities will generally be treated under the Plan like Compensation
deferred in accordance with Article III.

	 	D.3	 	 Investments

          The Transferred Participants may make investment elections for the Transferred Liabilities in
accordance with Section 3.3. Section 3.4 will also apply.

	 	D.4	 	 Distributions

          Distributions of amounts corresponding to the Transferred Liabilities will generally be made
in accordance with the provisions of Appendix B. The following exceptions and special rules apply:

          (a) Section B.1

               (1) For purposes of Sections B.1(a)(2) and B.1(b)(1), the Transferred Participants will be
deemed to have made an election of 10-year installments.

               (2) The Transferred Participants may utilize Section B.1(b)(2) to vary the form of their
distributions.

               (3) Distributions under Section B.1(c) are not available.

          (b) Section B.2. The Early Non-Scheduled Distribution election is available. The
Transferred Liabilities will be aggregated with any other amounts in the Transferred Participants’
Accounts for purposes of distributions under Section B.2.

          (c) Sections 6.3-6.6. These Sections are fully applicable.

	 	D.5	 	 Other Provisions

          The Transferred Liabilities and the Transferred Participants will be fully subject to the
provisions of Articles IV, V, VII and VIII.

-D 2-

 

APPENDIX E

TRANSFER OF LIABILITIES — TASC, INC. SUPPLEMENTAL

RETIREMENT PLAN

	 	E.1	 	 Background

          (a) Effective as of the TASC Merger Date, all liabilities under the TASC, Inc. Supplemental
Retirement Plan were transferred to this Plan. This Appendix describes the treatment of those
liabilities (plus earnings) (“Transferred Liabilities”) and the Participant to whom those
liabilities are owed (“Transferred Participant”).

          (b) The “TASC Merger Date” is March 28, 2003 or such other date that the Northrop Grumman
Director of Benefits Administration and Services determines is feasible. If the Northrop Grumman
Director of Benefits Administration and Services determines that March 28, 2003 is not feasible, he
shall identify in writing, before March 28, 2003, a date that is feasible.

	 	E.2	 	 Treatment of Transferred Liabilities

     The Transferred Liabilities will generally be treated under the Plan like Compensation
deferred in accordance with Article III.

	 	E.3	 	 Investments

     The Transferred Participant may make investment elections for the Transferred Liabilities in
accordance with Section 3.3. Section 3.4 will also apply.

	 	E.4	 	 Distributions

     Distributions of amounts corresponding to the Transferred Liabilities will generally be made
in accordance with the provisions of Appendix B.

	 	E.5	 	 Other Provisions

          The Transferred Liabilities and the Transferred Participant will be fully subject to the
provisions of Articles IV, V, VII and VIII.

-E 1-exv10wxuy

 

Exhibit 10(u)

THE 2002 INCENTIVE COMPENSATION PLAN

OF

NORTHROP GRUMMAN CORPORATION

As amended and restated effective January 1, 2008

SECTION I

PURPOSE

     The purpose of this Plan is to promote the success of the Company and render its operations
profitable to the maximum extent by providing for the Senior Executives of the Company incentives
that continue to be dependent upon the overall successful performance of the Company. The Senior
Executives, for this purpose, are only those elected corporate officers who participate in making
the basic and strategic decisions which affect the corporate-wide performance of the Company,
together with those Senior Executives who are in charge of significant operating subsidiaries. The
Plan is designed to comply with the performance-based compensation exception under Section 162(m)
of the Internal Revenue Code of 1986, as amended.

SECTION II

DEFINITIONS

     1. COMPANY — Northrop Grumman Corporation and such of its subsidiaries as are consolidated
in its consolidated financial statements.

     2. CODE — The Internal Revenue Code of 1986, as amended from time to time.

     3. COMMITTEE — The Compensation and Management Development Committee of the Board of
Directors of the Company. It shall be composed of not less than three members of the Board of
Directors, no one of whom shall be an officer or employee of the Company and it shall be
constituted so as to permit this Plan to comply with the “outside director” requirement of Code
section 162(m).

     4. INCENTIVE COMPENSATION — Awards payable under this Plan.

     5. PERFORMANCE CRITERIA — Economic Earnings, and for purposes of this Plan, “Economic
Earnings” shall mean income from continuing operations before federal and foreign income taxes and
the cumulative effect of accounting changes and extraordinary items, less pension income (or plus
pension expense) plus amortization and impairment of goodwill and other purchased intangibles, plus
restructuring or similar charges to the extent they are separately disclosed in the annual report.

     6. PERFORMANCE YEAR — The Year with respect to which an award of Incentive Compensation is
calculated and paid.

     7. PLAN — This 2002 Incentive Compensation Plan of Northrop Grumman Corporation, as
amended and restated effective January 1, 2008.

     8. SECTION 162(m) OFFICER — A Participant who is a “covered employee” as defined in
Section 162(m) of the Code with respect to an award of Incentive Compensation under the Plan for a
Performance Year.

 

 

     9. YEAR — The fiscal year of Northrop Grumman Corporation.

SECTION III

PARTICIPATION

     1. The persons eligible to receive Incentive Compensation awards under this Plan are
elected corporate officers of the rank of Vice President and above and the Presidents of those
consolidated subsidiaries that the Committee determines to be significant in the overall corporate
operations who are Section 162(m) Officers.

     2. A “Participant” is a person granted or eligible to receive an Incentive Compensation
award under this Plan.

     3. Directors, as such, shall not participate in this Plan, but the fact that an elected
corporate officer or subsidiary President is also a Director shall not prevent his participation.

     4. The death of a Participant shall not disqualify him for an Incentive Compensation award
for the Performance Year in which he dies or the preceding Performance Year. In the case of a
deceased Participant, the Incentive Compensation, if any, determined for him for the Performance
Year by the Committee shall be paid to his spouse, children, or legal representatives as directed
by the Committee.

SECTION IV

INCENTIVE COMPENSATION APPROPRIATIONS AND AWARDS

     1. The amount to be appropriated to the Plan with respect to a Performance Year shall equal
two and one-half percent (2.5%) of the Performance Criteria for such Performance Year. The amount
appropriated to the Plan for a Performance Year based on the Performance Criteria set forth in this
Paragraph 1, SECTION IV shall be referred to as the “Tentative Appropriated Incentive Compensation”
for such Performance Year.

     2. The amount of the Tentative Appropriated Incentive Compensation for a Performance Year
may be reduced (but not increased) by the Committee, in its sole discretion, after taking into
account an appraisal of individual and overall Company performance in the attainment of such
predetermined financial and non-financial objectives as are selected by the Committee and set forth
in writing within the first 90 days of a Performance Year, at a time when it is substantially
uncertain whether a Participant will earn any amount of Incentive Compensation. The amount
appropriated to the Plan for a Performance Year by the Committee under this Paragraph 2, SECTION IV
shall be referred to herein as the “Appropriated Incentive Compensation” for such Performance Year.
In no event shall Incentive Compensation payable to Participants for a Performance Year exceed the
Appropriated Incentive Compensation under the Plan for such Performance Year. Any Tentative
Appropriated Incentive Compensation for a Performance Year, which is not actually appropriated to
the Plan for such Year, shall be forfeited.

     3. Incentive Compensation Awards to Section 162(m) Officer:

     (a) Notwithstanding any other provisions of this Plan, any Incentive Compensation award for a
Performance Year under this Plan payable to a Section 162(m) Officer must satisfy the requirements
of this Paragraph 3, SECTION IV. The purpose of this Paragraph 3 is to ensure compliance by the
Plan with the requirements of Section 162(m) of the Code relating to performance-based

 

 

compensation. Incentive Compensation awards to Section 162(m) Officers under this Plan are
subject to:

     (i) Approval of this Plan and the criteria stated in Paragraph 3(b) of this SECTION IV by the
shareholders of the Company;

     (ii) The maximum amount that may be awarded to any Section 162(m) Officer under the Plan for
any Performance Year as stated in Paragraph 3(b) of this SECTION IV; and

     (iii) Approval by the Committee.

     (b) The maximum potential amount of Appropriated Incentive Compensation (as defined in
Paragraph 2 of this SECTION IV) payable to any Participant as an Incentive Compensation award for
any single Performance Year shall be limited to no more than thirty percent (30%) for the CEO and
seventeen and one-half percent (17.5%) for each of the other four (4) Participants for such
Performance Year.

     (c) The Performance Criteria established in Paragraph 5 of SECTION II on which Incentive
Compensation awards under the Plan are based shall first apply in the Performance Year 2002, but
such Performance Criteria and any Incentive Compensation awards based thereon shall be conditional
upon a vote of the shareholders of the Company approving the Plan and the Performance Criteria and
performance goals stated herein.

     (d) Prior to the payment of any Incentive Compensation awards for a Performance Year, the
Committee shall make a determination and certification in writing as to whether the Section 162(m)
Officers have met the Performance Criteria, performance goals, and any other material terms of the
Plan for each Performance Year. The Committee may, in its sole discretion, exercise negative
discretion by reducing amounts of Incentive Compensation awards to all or any of the Section 162(m)
Officers from the maximum potential awards payable by application of Paragraph 3(b) of this SECTION
IV. No such reduction shall increase the amount of the maximum award payable to any other Section
162(m) Officer. The Committee shall determine the amount of any reduction in a Section 162(m)
Officer’s Incentive Compensation award on the basis of such factors as it deems relevant, and it
shall not be required to establish any allocation or weighting component with respect to the
factors it considers. The Committee shall have no discretion to increase any Incentive Compensation
award for a Performance Year above the amount determined by application of Paragraph 3(b) of this
SECTION IV.

     4. After the end of a Performance Year, in determining each Participant’s Incentive
Compensation award for such Year, the Committee may make a downward adjustment after considering
such factors as it deems relevant, which shall include but not be limited to the following factors:

     (a) The evaluation of the Participant’s performance during that Performance Year in relation
to the Participant’s predetermined objectives and the Participant’s contribution during such Year
to the success or profit of the Company.

     (b) The classification of the Participant’s position, relative to the position of all
Participants.

     The Committee shall make the final determination of each Participant’s Incentive Compensation
award for a Performance Year.

 

 

SECTION V

ADMINISTRATION OF THE PLAN

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

     1. Interpret the Plan, make any rules and regulations relating to the Plan, determine which
consolidated subsidiaries are significant for the purpose of the first paragraph of SECTION III,
and determine factual questions arising in connection with the Plan, after such investigation or
hearing as the Committee may deem appropriate.

     2. As soon as practicable after the close of each Performance Year and prior to the payment
of any Incentive Compensation for such Performance Year, review the performance of each Participant
and determine the amount of each Participant’s individual Incentive Compensation award, if any,
with respect to that Performance Year.

     3. Have sole discretion in determining Incentive Compensation awards under the Plan, except
that in making awards the Committee may, in its discretion, request and consider the
recommendations of the Chief Executive Officer of the Company and others whom it may designate.

     Any decisions made by the Committee under the provisions of this SECTION V shall be conclusive
and binding on all parties concerned. Except as otherwise specifically provided in this Plan, the
provisions of this Plan shall be interpreted and administered by the Committee in a manner
consistent with the requirements for exemption of Incentive Compensation awards granted to
Participants who are Section 162(m) Officers as “performance-based compensation” under Code Section
162(m) and regulations and other interpretations issued by the Internal Revenue Service thereunder.

SECTION VI

METHOD OF PAYMENT OF INCENTIVE COMPENSATION TO INDIVIDUALS

     1. The amount of Incentive Compensation award determined for each Participant with respect
to a given Performance Year shall be paid in cash or in Common Stock of the Company (“Northrop
Grumman Common Stock”) or partly in cash and partly in Northrop Grumman Common Stock, as the
Committee may determine. Payment of an Incentive Compensation award, in cash or in Northrop Grumman
Common Stock, with respect to a given Performance Year shall be made in a lump sum between February
15 and March 15 of the year following such Performance Year.

     2. The Committee may impose such conditions, including forfeitures and restrictions, as the
Committee believes will best serve the interests of the Company and the purposes of the Plan.

     3. In making awards of Northrop Grumman Common Stock, the Committee shall first determine
all Incentive Compensation awards in terms of dollars. The total dollar amount of all Incentive
Compensation awards for a particular Performance Year shall not exceed the Appropriated Incentive
Compensation for that Performance Year under this Plan. In the case of Section 162(m) Officers, the
total dollar amount of an Incentive Compensation award for a particular Performance Year shall be
no greater than the maximum potential awards payable by application of Paragraph 3(b) of SECTION
IV. After fixing the total amount of each Participant’s Incentive Compensation award in terms of
dollars, then if some or all of the award is to be paid in Northrop Grumman Common Stock, the
dollar amount of the Incentive Compensation award so to be paid shall be converted into shares of
Northrop Grumman Common Stock by using the fair market value of such stock on the date of the
award. “Fair market value” shall be the closing price of such stock on the New York Stock Exchange
on the date of the award, or, if no sales of such stock occurred on that date, then on the last
preceding date on which such sales occurred. No fractional share shall be issued.

 

 

     4. If an Incentive Compensation award is paid in Northrop Grumman Common Stock, the number
of shares shall be appropriately adjusted for any stock splits, stock dividends, recapitalizations
or other relevant changes in capitalization effective after the date of award and prior to the date
as of which the Participant becomes the record owner of the shares received in payment of the
award. All such adjustments thereafter shall accrue to the Participant as the record owner of the
shares.

     5. Northrop Grumman Common Stock issued in payment of Incentive Compensation awards may, at
the option of the Board of Directors, be either originally issued shares or treasury shares.

     6. Distribution of awards shall be governed by the terms and conditions applicable to such
awards, as determined by the Committee or its delegate. An award, the payment of which is to be
deferred pursuant to the terms of an employment agreement, shall be paid as provided by the terms
of such agreement. Awards or portions thereof deferred pursuant to the Northrop Grumman Deferred
Compensation Plan, the Northrop Grumman Savings Excess Plan, or any other deferred compensation
plan or deferral arrangement shall be paid as provided in such plan or arrangement.

     7. The Company shall have the right to deduct from all payments under this Plan any
federal, state, or local taxes required by law to be withheld with respect to such payments.

     8. No Participant or any other party claiming an interest in amounts earned under the Plan
shall have any interest whatsoever in any specific asset of the Company. To the extent that any
party acquires a right to receive payments under the Plan, such right shall be equivalent to that
of an unsecured general creditor of the Company.

     9. The Committee shall have the exclusive right to interpret the provisions of this SECTION
VI, to determine all questions arising under it or in connection with its administration, and to
issue regulations and take actions implementing its provisions.

SECTION VII

AMENDMENT OR TERMINATION OF PLAN

     The Board of Directors of the Company shall have the right to terminate or amend this Plan at
any time and to discontinue further appropriations thereto, except that no amendment to the Plan
shall be made without the approval of the Shareholders, which would (i) increase the amount
authorized for appropriation pursuant to Section IV of this Plan, (ii) permit a member of the
Committee to participate in the Plan, or (iii) modify the right of the Committee to make the
appropriations or allocations set forth in this Plan.

SECTION VIII

EFFECTIVE DATE

     This Plan was first effective for Performance Years commencing in 2002, and was amended and
restated effective for Performance Years commencing with and following 2008. No appropriations will
be made, and no Incentive Compensation shall be paid, under the Plan for Performance Years after
2001 if the Plan is not approved by the Shareholders.

SECTION IX

MISCELLANEOUS

     1. Participation in the Plan shall not constitute an agreement (1) of the Participant to
remain in the employ of and to render his/her services to the Company, or (2) of the Company to
continue to employ

 

 

such Participant, and the Company may terminate the employment of a Participant at any time
with or without cause.

     2. In the event any provision of the Plan shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been included.

     3. All costs of implementing and administering the Plan shall be borne by the Company.

     4. All obligations of the Company under the Plan shall be binding upon and inure to the
benefit of any successor to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

     5. The Plan, and any agreements hereunder, shall be governed by and construed in accordance with
the laws of the state of Delaware.

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