Document:

EX-10.7

 

Exhibit 10.7

FREEDOM TRAIL CORP.

WARRANT SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT (this “Agreement”) is made as of the 14th day of March,
2008, by and between Freedom Trail Corp., a Delaware corporation (the “Company”), and
Liberty Lane Funding LLC, a Delaware limited liability company (“Purchaser”).

     WHEREAS, it is the intention of the parties that, upon consummation of the Company’s initial
public offering (the “IPO”), Purchaser will own that number of Insider Warrants (as defined
herein) equal to 10% of the number of shares of common stock of the Company, par value $0.001 per
share (the “Common Stock”), sold in the IPO, including any shares sold pursuant to the
exercise of the Option (as defined herein).

     WHEREAS, the Company desires to commit to issue and sell, and Purchaser desires to commit to
purchase and acquire, Insider Warrants on the terms and conditions hereinafter set forth;

     NOW, THEREFORE, for and in consideration of the promises and mutual covenants set forth
herein, it is agreed between the parties as follows:

     1. Commitment to Purchase Insider Warrants.

     (a) Subject to and immediately prior to the consummation of the IPO, Purchaser hereby
agrees to subscribe for and purchase from the Company, and the Company hereby agrees to
issue and sell to Purchaser, 3,500,000 warrants (each an “Initial Insider Warrant”
and, together with the Subsequent Insider Warrants (as defined below), the “Insider
Warrants”) at a purchase price of $1.00 per Initial Insider Warrant for an aggregate
purchase price of $3,500,000. The closing of the purchase and sale of the Initial Insider
Warrants hereunder, including payment for and delivery of the Initial Insider Warrants,
shall occur at the offices of the Company immediately prior to, and subject to consummation
of, the IPO.

     (b) If the underwriter (the “Underwriter”) in the IPO exercises, in whole or in
part from time to time, its option (the “Option”) to purchase additional units to be
granted by the Company to the Underwriter pursuant to an underwriting agreement to be
executed by and between the Underwriter and the Company, then, subject to and immediately
prior to the closing of each such exercise of the Option (which may occur simultaneously
with the consummation of the IPO or thereafter), Purchaser hereby agrees to subscribe for
and purchase from the Company, and the Company hereby agrees to issue and sell to Purchaser,
a number of warrants (the “Subsequent Insider Warrants”) equal to 525,000 multiplied
by a fraction, the numerator of which is the number of shares of Common Stock with respect
to which the Option is being exercised and the denominator of which is 5,250,000, at a
purchase price of $1.00 per Subsequent Insider Warrant. The closing of the purchase and sale
of the Subsequent Insider Warrants hereunder, including payment for and delivery of the Subsequent Insider Warrants, shall occur at the offices
of the Company immediately prior to, and subject to consummation of, the applicable closing
of the exercise of the Option.

     (c) Each Insider Warrant shall entitle the holder thereof to purchase one share of
Common Stock at an exercise price of $7.50, in accordance with the terms of the Insider
Warrant substantially as set forth in the Form of Warrant Agreement attached hereto as
Exhibit A (the

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“Warrant Agreement”) to be entered into by and between the Company
and American Stock Transfer & Trust Company, as warrant agent, and shall be subject to the
terms of the Warrant Agreement upon execution thereof.

     2. Payment of Purchase Price. The purchase price for the Insider Warrants shall be tendered in
full at the applicable closing by one or a combination of the following means:

     (a) wiring of immediately available United States funds to an account for the benefit
of the Company, pursuant to wire instructions provided by the Company in advance; or

     (b) by delivery of a cashier’s check to the Company of immediately available United
States funds.

     3. Acceptance or Rejection of Agreement. The Company has the right to reject this Agreement
and any subscription for the Insider Warrants represented hereby in whole or in part, for any
reason and at any time prior to a closing, notwithstanding receipt by Purchaser of prior notice of
acceptance of such subscription. The Insider Warrants subscribed for herein will not be deemed
issued to or owned by Purchaser until a copy of this Agreement has been executed by the Company and
Purchaser and a closing with respect to such Insider Warrants has occurred. In the event that a
closing does not take place for any reason with respect to some or all of the Insider Warrants, all
cash proceeds delivered by Purchaser in accordance herewith with respect to such Insider Warrants
shall be returned to Purchaser as soon as practicable, without interest, offset or deduction.

     4. Limitations on Transfer. The Insider Warrants (and any underlying securities) will be
subject to the applicable restrictions on transfer described in the registration statement for the
IPO.

     5. Restrictive Legends. All certificates representing the Insider Warrants (and any underlying
securities) shall have endorsed thereon legends in substantially the following forms (in addition
to any other legend which may be required by other agreements between the parties hereto):

     (a) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.”

     (b) Any legend required pursuant to the terms of the Warrant Agreement.

     (c) Any legend required by appropriate blue sky officials.

     6. Investment Representations. In connection with the purchase of the Insider Warrants,
Purchaser represents to the Company the following:

     (a) Purchaser has been furnished with all materials relating to the Company’s business
affairs and financial condition and materials related to the offer and sale of the Insider
Warrants that have been requested by Purchaser and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the Insider Warrants.
Purchaser has been afforded the opportunity to ask questions of the executive officers and
directors of the Company. Purchaser understands that its investment in the Insider Warrants
involves a high degree of risk. Purchaser has sought such accounting, legal and tax advice
as

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Purchaser has considered necessary to make an informed investment decision with respect
to Purchaser’s acquisition of the Insider Warrants. Purchaser has such knowledge and
expertise in financial and business matters, knows of the high degree of risk associated
with investments generally and particularly investments in the securities of companies in
the development stage such as the Company, is capable of evaluating the merits and risks of
an investment in the Insider Warrants, and is able to bear the economic risk of an
investment in the Insider Warrants in the amount contemplated hereunder. Purchaser has
adequate means of providing for its current financial needs and contingencies and will have
no current or anticipated future needs for liquidity which would be jeopardized by the
investment in the Insider Warrants. Purchaser can afford a complete loss of its investment
in the Insider Warrants. Purchaser is purchasing the Insider Warrants for investment for
Purchaser’s own account only and not with a view to, or for resale in connection with, any
“distribution” thereof within the meaning of the Securities Act of 1933, as amended (the
“Act”). Purchaser understands that the Company is a blank check development stage
company recently formed for the purpose of consummating an initial business combination (a
“Business Combination”) and understands that there is no assurance as to the future
performance of the Company and that the Company may never effectuate a Business Combination.

     (b) Purchaser understands that the Insider Warrants (and the underlying securities)
have not been registered under the Act or any state securities law by reason of a specific
exemption therefrom, and that the Company is relying on the truth and accuracy of, and
Purchaser’s compliance with, the representations and warranties and agreements of Purchaser
set forth herein to determine the availability of such exemptions and the eligibility of
Purchaser to acquire such Insider Warrants, including, but not limited to, the bona fide
nature of Purchaser’s investment intent as expressed herein.

     (c) Purchaser further acknowledges and understands that the Insider Warrants (and the
underlying securities) must be held indefinitely, unless the Insider Warrants (and the
underlying securities) are subsequently registered under the Act or an exemption from such
registration is available. Purchaser understands that the certificates evidencing the
Insider Warrants (and the underlying securities) will be imprinted with a legend which
prohibits the transfer of the Insider Warrants (and the underlying securities) unless the
Insider Warrants (and the underlying securities) are registered or such registration is not
required in the opinion of counsel for the Company.

     (d) Purchaser is familiar with the provisions of Rule 144 under the Act, as in effect
from time to time (“Rule 144”), which, in substance, permit limited public resale of
“restricted securities” acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the satisfaction of
certain conditions. Unless the Company registers the Insider Warrants (and the underlying
securities) under the Act, the Insider Warrants (and the underlying securities) may be
resold by Purchaser only in certain limited circumstances subject to the provisions of Rule
144, which may require , among other things: (i) the availability of certain public
information about the Company and (ii) the resale occurring following the required holding
period under Rule 144 after Purchaser has purchased, and made full payment of (within the
meaning of Rule 144), the securities to be sold.

     (e) Purchaser further understands that at the time Purchaser wishes to sell the Insider
Warrants there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, Purchaser may be precluded
from selling the Insider Warrants (and the underlying securities) under Rule 144 even if the
minimum holding

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period requirement had been satisfied. Notwithstanding Sections 6(d) and
(e) hereof, Purchaser understands that the Insider Warrants (and the underlying securities)
may not be resold under Rule 144 in certain circumstances until one year after the
consummation of a Business Combination.

     (f) Purchaser represents that Purchaser is an “accredited investor” as that term is
defined in Rule 501 of Regulation D promulgated by the U.S. Securities and Exchange
Commission under the Act.

     (g) Purchaser has all necessary limited liability company power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. All limited
liability company action necessary to be taken by Purchaser to authorize the execution,
delivery and performance of this Agreement and all other agreements and instruments
delivered by Purchaser in connection with the transactions contemplated hereby has been duly
and validly taken, and this Agreement has been duly executed and delivered by Purchaser.
Subject to the terms and conditions of this Agreement, this Agreement constitutes the valid,
binding and enforceable obligation of Purchaser, enforceable in accordance with its terms,
except as enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general application now
or hereafter in effect affecting the rights and remedies of creditors and by general
principles of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity); and (ii) the applicability of the federal and state securities laws and public
policy as to the enforceability of the indemnification provisions of this Agreement. The
purchase by Purchaser of the Insider Warrants does not conflict with the organizational
documents of Purchaser or with any material contract by which Purchaser or its property is
bound, or any laws or regulations or decree, ruling or judgment of any court applicable to
Purchaser or its property. The principal place of business of Purchaser is as set forth on
the signature page hereto.

     (h) Purchaser did not decide to enter into this Agreement as a result of any general
solicitation or general advertising within the meaning of Rule 502(c) of the Act.

     (i) Purchaser understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or endorsement of
the Insider Warrants or the fairness or suitability of the investment in the Insider
Warrants, nor have such authorities passed upon or endorsed the merits of the offering of
the Insider Warrants.

     7. Company Representations and Warranties. The Company hereby represents and warrants to
Purchaser that the Company has all necessary corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. All corporate action necessary to
be taken by the Company to authorize the execution, delivery and performance of this Agreement and
all other agreements and instruments delivered by the Company in connection with the transactions
contemplated hereby has been duly and validly taken and this Agreement has been duly executed and
delivered by the Company. Subject to the terms and conditions of this Agreement, this Agreement
constitutes the valid, binding and enforceable obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general application now or
hereafter in effect affecting the rights and remedies of creditors and by general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in equity); and
(ii) the applicability of the federal and state securities laws and public policy as to the
enforceability of the indemnification provisions of this Agreement. The sale by the Company of the
Insider Warrants does not conflict with the certificate of incorporation or by-laws of the Company
or any material contract by which the Company or its property

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is bound, or any federal or state
laws or regulations or decree, ruling or judgment of any United States or state court applicable to
the Company or its property.

     8. Indemnification. Purchaser hereby agrees to indemnify and hold harmless the Company and the
Company’s officers, directors, stockholders, employees, agents, and attorneys against any and all
losses, claims, demands, liabilities and expenses (including reasonable legal or other expenses
incurred by each such person in connection with defending or investigating any such claims or
liabilities, whether or not resulting in any liability to such person or whether incurred by the
indemnified party in any action or proceeding between the indemnitor and indemnified party or
between the indemnified party and any third party) to which any such indemnified party may become
subject, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact made by Purchaser
and contained herein, or (b) arise out of or are based upon any breach by Purchaser of any
representation, warranty or agreement made by Purchaser contained herein.

     9. Miscellaneous.

     (a) Notices. All notices required or permitted hereunder shall be in writing and shall
be deemed effectively given: (i) upon personal delivery to the party to be notified,
(ii) when sent by confirmed facsimile if sent during normal business hours of the recipient,
and if not during normal business hours of the recipient, then on the next business day,
(iii) five calendar days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the other party hereto at such party’s address
hereinafter set forth on the signature page hereof, or at such other address as such party
may designate by ten days advance written notice to the other party hereto.

     (b) Successors and Assigns. This Agreement shall inure to the benefit of the successors
and assigns of the Company and, subject to the restrictions on transfer herein set forth,
shall be binding upon Purchaser and Purchaser’s successors and assigns.

     (c) Attorneys’ Fees; Specific Performance. Purchaser shall reimburse the Company for
all costs incurred by the Company in enforcing the performance of, or protecting its rights
under, any part of this Agreement, including reasonable costs of investigation and
attorneys’ fees.

     (d) Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the principles of
conflicts of law thereof. The parties agree that any action brought by either party to
interpret or enforce any provision of this Agreement shall be brought in, and each party
agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state
or federal court for the district encompassing the Company’s principal place of business.

     (e) Further Execution. The parties agree to take all such further action(s) as may
reasonably be necessary to carry out and consummate this Agreement as soon as practicable,
and to take whatever steps may be necessary to obtain any governmental approval in
connection with or otherwise qualify the issuance of the securities that are the subject of
this Agreement.

     (f) Independent Counsel. Purchaser acknowledges that this Agreement has been prepared
on behalf of the Company by Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Company
and that Skadden, Arps, Slate, Meagher & Flom LLP does not represent, and is not

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acting on behalf of, Purchaser. Purchaser has been provided with an opportunity to consult with
Purchaser’s own counsel with respect to this Agreement.

     (g) Entire Agreement; Amendment. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes and merges all
prior agreements or understandings, whether written or oral. This Agreement may not be
amended, modified or revoked, in whole or in part, except by an agreement in writing signed
by each of the parties hereto.

     (h) Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be excluded from this
Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were
so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with
its terms.

     (i) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.
This Agreement or any counterpart may be executed via facsimile or electronic mail
transmission, and any such executed facsimile or electronic mail copy shall be treated as an
original.

     (j) Survival. The representations and warranties contained herein will survive the
delivery of, and the payment for, the Insider Warrants.

     (k) Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally
waives the right to a trial by jury in any action, suit, counterclaim or other proceeding
(whether based on contract, tort or otherwise) arising out of, connected with or relating to
this Agreement, the transactions contemplated hereby, or the actions of Purchaser in the
negotiation, administration, performance or enforcement hereof.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	FREEDOM TRAIL CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kevin P. Clark
 

	 	 
	 

	 	 	 	Name: Kevin P. Clark	 	 
	 

	 	 	 	Title: Treasurer	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	One Liberty Lane	 	 
	 

	 	 	 	Hampton, NH 03842	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	 	 	LIBERTY LANE FUNDING LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul M. Meister	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Paul M. Meister	 	 
	 

	 	 	 	Title: Co-President	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	One Liberty Lane	 	 
	 

	 	 	 	Hampton, NH 03842	 	 

7exv10wx2y

 

Exhibit 10(2)

NORTHROP GRUMMAN CORPORATION

SPECIAL OFFICER RETIREE MEDICAL PLAN

(Amended and Restated Effective January 1, 2008)

ARTICLE 1 INTRODUCTION

	1.01	 	Purpose. The purpose of the Northrop Grumman Corporation Special Officer Retiree
Medical Plan (“Plan”) is to provide lifetime retiree medical and life insurance benefits to
eligible elected officers of Northrop Grumman Corporation (“the Company”) and their eligible
dependents as described in the Plan. The Plan provides for the continuation of welfare
benefits to a select group of management or highly compensated employees within the meaning of
Department of Labor Regulation 29 CFR section 2520.104-24 and Sections 201, 301, and 401 of
the Employee Retirement Income Security Act of 1974 (“ERISA”).

	 
	1.02	 	Substantive Benefits. This document describes the standard eligibility provisions
and terms of coverage under the Plan. The actual medical benefit coverage will be provided
pursuant to the terms of the Northrop Grumman Executive Medical Plan (“Executive Medical
Plan”) as amended from time to time and the insurance contract or contracts issued by an
insurance carrier or carriers selected by the Company. The actual life insurance coverage
will be provided through an insurance contract or contracts issued by an insurance carrier or
carriers selected by the Company.

ARTICLE 2 DEFINITIONS

	2.01	 	Board. The Company’s Board of Directors.
	 
	2.02	 	Committee. The Compensation and Management Development Committee of the Board.

	 
	2.03	 	Continuation Coverage. Continued medical coverage under the Plan after a Qualifying
Event has occurred. Such medical coverage is identical to the medical coverage as provided
under the Plan to similarly situated persons with respect to whom a Qualifying Event has not
occurred.

	 
	2.04	 	Continuation Coverage Election Period. The period beginning on the date of the
Qualifying Event and ending sixty (60) days after the later of (a) the date the Qualified
Beneficiary would lose medical coverage on account of the Qualifying Event, or (b) the date
that the Qualified Beneficiary is provided with notice of his or her right to elect
Continuation Coverage.

	 
	2.05	 	Grandfathered Participants. Participants who were actively employed by the Company
on September 30, 2003.

	 
	2.06	 	Participant. An elected officer of the Company who is designated by the Board or the
Committee as eligible to participate in the Plan.

 

 

	2.07	 	Prior Plan. The Northrop Grumman Special Officer Retiree Medical Plan as in effect
prior to October 1, 2003.

	 
	2.08	 	Qualified Beneficiary. A retired Vested Participant’s spouse or dependent who, on
the day before a Qualifying Event, has medical coverage under the Plan. In the case of a
Qualifying Event described in subsection 2.09(iv) below, Qualified Beneficiary means a retired
Vested Participant who had retired on or before the date of substantial elimination of medical
coverage and any person who on the day before the Qualifying Event is the spouse or Surviving
Spouse of the retired Vested Participant or a covered dependent child of the retired Vested
Participant or Surviving Spouse.

	 
	2.09	 	Qualifying Event. Any of: (i) the death of a retired Vested Participant, but only
with respect to a beneficiary who is not the Surviving Spouse of the retired Vested
Participant; (ii) the divorce or legal separation of a retired Vested Participant from his
spouse; (iii) a dependent child ceasing to be eligible for medical coverage as a dependent
child of a retired Vested Participant under the dependent eligibility provisions of the
Executive Medical Plan; or (iv) a proceeding in a case under Title 11 of the United States
Code with respect to the Company; provided, however, that any such event will be a Qualifying
Event only if it will cause the Qualified Beneficiary an immediate or deferred loss of medical
coverage under the Plan. For purposes of this subsection, a loss of medical coverage means to
cease to be eligible for medical benefits under the Plan under the same terms and conditions
as in effect immediately before the Qualifying Event. A loss of medical coverage will be
considered a deferred loss of medical coverage for purposes of this provision if the loss of
medical coverage does not occur at the time of the Qualifying Event but occurs before the end
of what would be the maximum period of Continuation Coverage under section 8.04 below. In the
case of a Qualifying Event described in (iv), a loss of medical coverage includes a
substantial elimination of medical coverage with respect to a Qualified Beneficiary within one
year before or after the date of commencement of the bankruptcy proceeding.

	 
	2.10	 	Surviving Spouse. The individual to whom the retired Vested Participant was legally
married under applicable State law both at the time of the retired Vested Participant’s
retirement and at the time of the retired Vested Participant’s death.

	 
	2.11	 	Vested Participant. A Participant with either five years of service as an elected
officer of the Company or 30 years of total service with the Company and its affiliates.

ARTICLE 3 ELIGIBILITY

	3.01	 	Eligibility. Eligibility for the Plan is limited to those elected officers of the
Company who are designated as eligible to participate in the Plan by the Board or the
Committee. The eligible spouse and dependents of a Vested Participant will be eligible for
medical benefits under the Plan commencing at the same time the Vested Participant’s medical
benefits commence. Spouse and dependent eligibility will be determined in accordance with the
terms of the Executive Medical Plan. A Vested Participant’s eligibility for life insurance
coverage will be subject to the terms of the life insurance contract or contracts

2

 

	 	 	through which such coverage is provided. The spouse and dependents of a Vested Participant are not
eligible for life insurance coverage under the Plan.

	 
	3.02	 	Revocation of Eligibility. The Board or Committee may revoke a non-Vested
Participant’s Plan eligibility without the Participant’s consent. The Board or Committee may
revoke a Vested Participant’s or Surviving Spouse’s Plan eligibility, provided that the Vested
Participant or, after the Vested Participant’s death, his or her Surviving Spouse, consents to
the revocation.

	 
	3.03	 	Automatic Cessation of Eligibility. A Participant who is not a Vested Participant
will automatically cease to be a Participant under the Plan upon the earlier of the following:
(i) the date the Participant terminates employment with the Company; or (ii) the date the
Participant ceases to be an elected officer of the Company. However, the Board or the
Committee may make provision for a Participant who ceases to be an elected officer of the
Company, but does not terminate employment with the Company, to continue to accrue service
credited toward becoming a Vested Participant. The spouse or dependent of a Participant will
cease to be eligible for medical benefits under the Plan upon the earlier of the following:
(i) the date the Participant ceases to be a Participant under the Plan; or (ii) the date the
spouse or dependent ceases to be eligible in accordance with the terms of the Executive
Medical Plan.

	 
	3.04	 	Plan Freeze. No elected officer whose date of election is effective after March 21,
2007 shall be designated as eligible to participate in the Plan. An elected officer who is a
Participant as of March 21, 2007 may continue to earn service toward becoming a Vested
Participant after that date in accordance with the terms of the Plan.

ARTICLE 4 COMMENCEMENT OF BENEFITS AND COSTS

	4.01	 	Commencement of Benefits. A Vested Participant may elect to commence benefits under
the Plan coincident with retirement from the Company under the terms of the supplemental
executive retirement plan in which the Vested Participant participates. If the election to
commence is not made at the time of retirement, the Vested Participant and his or her
dependents cease to be eligible for the Plan. No subsequent election to commence benefits
will be allowed.

	 
	4.02	 	Duration of Benefits. Subject to the Company’s right to amend or terminate the Plan
(as limited by subsection 6.01(b)), life insurance coverage will be provided for the life of
the Vested Participant and medical coverage will be provided for the life of the Vested
Participant and the life of his or her Surviving Spouse, if any. Eligible dependent medical
coverage will only be available during the life of the Vested Participant and the life of his
or her Surviving Spouse, if any, subject to ARTICLE 8.

	 
	4.03	 	Coverage Provided. Medical coverage will be provided pursuant to the terms of the
Executive Medical Plan, as such Executive Medical Plan is modified from time to time for
active executives. Life insurance coverage will be provided through an insurance contract or
contracts issued by an insurance carrier or carriers selected by the Company.

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	 	 	Life insurance coverage will be in the amount of $450,000 at the Vested Participant’s retirement
and will be reduced by $50,000 effective as of each January 1 thereafter until the amount
reaches $250,000.

	 
	4.04	 	Medicare. A Vested Participant, spouse or Surviving Spouse must enroll in Medicare
Parts A and B when first eligible in order to receive benefits under this Plan. If he or she
fails to enroll, medical benefit coverage under this Plan will cease upon the date the Vested
Participant, spouse or Surviving Spouse first becomes eligible for Medicare Parts A and B.

	 
	4.05	 	Costs of Coverage.

	 	(a)	 	Medical Coverage.

	 	(i)	 	The Vested Participant (or Surviving Spouse, following the
death of a Vested Participant) will be responsible for any participant cost
items, such as contributions toward the cost of coverage, copayments, and
deductibles, as determined by the Company in its discretion and described in
the Executive Medical Plan; provided, however, that subject to subsection
(a)(ii) below, the level of participant contributions toward the cost of
coverage will be frozen as of the date the Vested Participant commences
benefits under this Plan.

	 
	 	(ii)	 	A Vested Participant’s or Surviving Spouse’s contribution
toward the cost of coverage may vary based on the level of coverage
(one-person, two or more persons, etc.) in effect.

	 	(b)	 	Life Insurance Coverage. The cost of life insurance coverage will be paid in
full by the Company.

	4.06	 	Cessation of Medical Coverage. Eligibility for the continuation of medical benefits
pursuant to the Plan will cease if any payment required to be made by the Vested Participant
or dependent (for example, participant contributions, copayments or deductibles) is not
timely paid in accordance with procedures established by the Company.

ARTICLE 5 SPECIAL COVERAGE PROVISIONS

	5.01	 	Grandfathered Participants. Grandfathered Participants have the right, if otherwise
eligible for the Plan at the time of retirement, to elect to be covered: (i) under the terms
of the Prior Plan as in effect as of September 30, 2003; or (ii) the Plan as in effect at the
time of such Participant’s retirement. Such election will be made pursuant to forms and
procedures specified by the Company.

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ARTICLE 6 CHANGE IN CONTROL

	6.01	 	Effect of Change in Control. Upon the occurrence of a “change in control” as defined
in the Company’s Change-In-Control Severance Plan (as in effect at the time of the event),
each of the following will occur:

	 	(a)	 	Each Participant will become a “Vested Participant.”

	 
	 	(b)	 	The Plan may not be terminated or amended in any manner that adversely affects
the benefits of a Participant without his or her consent.

	 
	 	(c)	 	All Participant contributions, co-pays, deductibles and any other participant
or dependent cost items pursuant to the terms of the Executive Medical Plan will be
frozen as of the date of the change in control.

ARTICLE 7 CLAIMS AND APPEALS PROCEDURES

	7.01	 	Claim for Medical or Life Insurance Benefit. A claim or appeal relating to medical
benefits under the Plan will be subject to the claims and appeals procedures set forth in the
Executive Medical Plan. A claim or appeal relating to life insurance benefits under the Plan
will be subject to the claims and appeals procedures set forth in the insurance contract
through which such coverage is provided or the applicable coverage certificate relating to
such insurance contract.

	 
	7.02	 	Administrative Claims. A claim or appeal relating to eligibility to participate in
the Plan, status as a Vested Participant, required contributions or any other claim or appeal
that is not a claim or appeal relating to a medical or life insurance benefit under the Plan
will be considered an “Administrative Claim” and will be subject to the claims and appeals
procedures set forth in this section 7.02. Administrative Claims will be decided by the Vice
President, Compensation, Benefits and HRIS, or his or her delegate, who will be the claims
administrator and the appropriate named fiduciary with respect to such claims.

	 	(a)	 	Notice of decision on any Administrative Claim will be furnished to the
claimant within 90 days after receipt of the Administrative Claim by the claims
administrator. The claims administrator may take one 90 day extension if circumstances
warrant.

	 
	 	(b)	 	A claimant whose Administrative Claim is denied in whole or in part will
receive written notice of the denial within the timeframe specified in subsection
7.02(a) above setting forth: (i) the specific reasons for the denial; (ii) reference to
the specific Plan provisions on which the denial is based; (iii) a description of any
additional material or information necessary for the claimant to perfect the
Administrative Claim and an explanation of why such material or information is
necessary; and (iv) information as to the steps the claimant must take to submit his or
her claim for review, including the time limit for submitting the claim for review.

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	 	(c)	 	A claimant whose Administrative Claim is denied in whole or in part may request
review of the denied Administrative Claim not later than 60 days after receipt of
written notification of the denial. A claimant’s request for review must be in
writing. The claimant may submit written comments, documents, records and other
information relating to the Administrative Claim and the claimant will be provided
upon request with reasonable access to and copies of documents, records and other
information relevant to his or her Administrative Claim. The claims administrator,
in his or her sole discretion, will determine whether a document, record or other
information is relevant to a claimant’s Administrative Claim.

	 
	 	(d)	 	Notice of decision on review of an Administrative Claim will be furnished to
the claimant within 60 days after receipt of the request for review by the claims
administrator. The claims administrator may take one 60 day extension if circumstances
warrant.

	 
	 	(e)	 	A claimant whose Administrative Claim is denied upon review will be furnished
with written notice of the denial within the timeframe specified in subsection 7.02(d)
above setting forth: (i) the specific reasons for the denial; (ii) reference to the
specific Plan provisions on which the denial is based; (iii) a statement that the
claimant is entitled to receive, upon request and free of charge, reasonable access to
and copies of documents, records and other information relevant to his or her
Administrative Claim; and (iv) a statement of the claimant’s right to bring an action
under section 502(a) of ERISA. The claims administrator, in his or her sole discretion,
will determine whether a document, record or other information is relevant to a
claimant’s Administrative Claim. The decision of the claims administrator on a
claimant’s request for review shall be final and conclusive.

ARTICLE 8 CONTINUATION OF MEDICAL COVERAGE

	8.01	 	General. In addition to the Surviving Spouse medical coverage described above,
Continuation Coverage under the Plan may be purchased after the date medical coverage would
ordinarily terminate under the Plan as a result of a Qualifying Event.

	 
	8.02	 	Participant/Beneficiary Notice Requirements. In the case of the Qualifying Events
described in subsections 2.09(ii) and (iii) above, the retired Vested Participant or his or
her spouse or dependent must provide notice of the occurrence of the Qualifying Event not
later than 60 days after the occurrence. Such notice must be provided to the COBRA
administrator for the Executive Medical Plan.

	 
	8.03	 	Availability of Continuation Coverage. Upon the occurrence of a Qualifying Event,
each Qualified Beneficiary will be offered an opportunity to purchase Continuation Coverage
under the Plan. The election to purchase Continuation Coverage must be made during the
Continuation Coverage Election Period in such form and manner as the Company prescribes. A
Qualified Beneficiary who fails to elect Continuation Coverage during the Continuation
Coverage Election Period following a Qualifying Event will not be entitled to elect
Continuation Coverage with respect to such Qualifying Event.

6

 

	8.04	 	Period of Continuation Coverage. Continuation Coverage as elected by the Qualified
Beneficiary will extend for the period beginning on the date of loss of coverage as a result
of the Qualifying Event and ending on the earliest of the following dates:

	 	(a)	 	If the Qualifying Event was divorce or legal separation, death of the retired
Vested Participant, or loss of dependent child status, 36 months after the date
Continuation Coverage began;

	 
	 	(b)	 	If the Qualifying Event was a proceeding in a case under Title 11 of the United
States Code: (i) for a Qualified Beneficiary who is the retired Vested Participant, the
retired Vested Participant’s date of death; (ii) for a Qualified Beneficiary who is the
surviving spouse (determined without regard to whether such spouse was married to the
Vested Participant at the time of his or her termination of employment with the Company
and its affiliates) or dependent child of the retired Vested Participant, 36 months
after the date of death of the retired Vested Participant;

	 
	 	(c)	 	The first day for which timely payment for Continuation Coverage is not made
with respect to the Qualified Beneficiary as provided in section 8.05 below;

	 
	 	(d)	 	The date upon which the Company ceases to maintain any group health plan;

	 
	 	(e)	 	The date upon which the Qualified Beneficiary first becomes covered under
another group health plan after the date Continuation Coverage is elected; provided,
Continuation Coverage will not terminate if the other group health plan contains an
exclusion or limitation with respect to any preexisting condition that affects the
Qualified Beneficiary, unless that limitation or exclusion does not apply to the
Qualified Beneficiary because of the requirements of the Health Insurance Portability
and Accountability Act of 1996;

	 
	 	(f)	 	The date that the Qualified Beneficiary first becomes entitled to Medicare
benefits under Title XVIII of the Social Security Act after the date Continuation
Coverage is elected.

	 	 	Notwithstanding anything herein to the contrary, the Company may terminate the Continuation
Coverage of a Qualified Beneficiary on the same basis that the Company terminates medical
coverage under the Plan for a similarly situated Participant with respect to whom a
Qualifying Event has not occurred.

	 
	8.05	 	Payment for Continuation Coverage. 

	 	(a)	 	Each Qualified Beneficiary who has elected to purchase Continuation Coverage
will make a monthly payment to the Company in an amount up to 102% of the applicable
premium determined by the Company in accordance with Internal Revenue Code Section
4980B(f)(4).

7

 

	 	(b)	 	The payment for the period of Continuation Coverage beginning on the date a
Qualified Beneficiary would otherwise lose coverage as a result of a Qualifying Event
and ending on the last day of the month during which the Qualified Beneficiary elects
Continuation Coverage will be due on the date the Qualified Beneficiary elects
Continuation Coverage and payment made within forty-five (45) days of such date will be
deemed timely payment. The monthly payments for the remainder of the period of
Continuation Coverage will be due as of the first day of the month for which the
coverage is provided and payment made within thirty (30) days of the due date for each
monthly installment will be deemed timely payment.

ARTICLE 9 GENERAL PROVISIONS

	9.01	 	Amendment and Plan Termination. Except as provided in ARTICLE 6, the Company may
amend or terminate the Plan at any time for any reason.

	 
	9.02	 	Assignment of Benefits. A Vested Participant or dependent may not, either voluntarily
or involuntarily, assign, anticipate, alienate, commute, sell, transfer, pledge or encumber
any benefits to which he or she is or may become entitled under the Plan, nor may Plan
benefits be subject to attachment or garnishment by any of his or her creditors or to legal
process.

	 
	9.03	 	Nonduplication of Benefits. This Section applies if the Company is required to make
payments under this Plan to a person or entity other than the payees described in the Plan. In
such a case, any coverage due the Participant (or his or her dependent) under the Plan will be
reduced by the actuarial value of the coverage extended or payments made to such other person
or entity.

	 
	9.04	 	Medicare Primary. Medicare coverage is primary to medical coverage offered pursuant
to the Plan. Plan coverage will be secondary to Medicare to the maximum extent permissible
under law.

	 
	9.05	 	Funding. Participants have the status of general unsecured creditors of the Company
and the Plan constitutes a mere promise by the Company to continue eligibility for executive
medical and life insurance coverage pursuant to the terms of the Plan.

	 
	9.06	 	Construction. The Committee will have full and sole discretionary authority to
determine eligibility, construe and interpret the terms of the Plan, and determine factual
issues, including the power to remedy possible ambiguities, inconsistencies or omissions.

	 
	9.07	 	Governing Law. This Plan will be governed by the law of the State of California,
except to the extent superseded by federal law.

8

 

	9.08	 	Non-Standard Provisions. The Board or Committee may in their discretion apply
eligibility requirements or terms of coverage other than the standard provisions with respect
to an individual.

	 	 	 	 	 
	 	NORTHROP GRUMMAN CORPORATION

 	 
	 	By:  	/s/ Debora Catsavas
 	 
	 	 	Debora Catsavas 	 
	 	 	Vice President

Compensation, Benefits and HRIS
	 
	 	

Date: 4/16/08
	 
	 

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