Document:

exv10w4

Exhibit 10.4

NORTHROP GRUMMAN

ELECTRONIC SYSTEMS EXECUTIVE PENSION PLAN

(Amended and Restated Effective as of January 1, 2011)

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	ARTICLE 1—Introduction
	 	 	2	 
	Section 1.01. Introduction
	 	 	2	 
	Section 1.02. Effective Date
	 	 	2	 
	Section 1.03. Sponsor

	 	 	2	 
	Section 1.04. Predecessor Plan
	 	 	2	 
	Section 1.05. 2001 Reorganization
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 2—Definitions
	 	 	3	 
	Section 2.01. Affiliated Companies
	 	 	3	 
	Section 2.02. Annual Incentive Programs
	 	 	3	 
	Section 2.03. Average Annual Compensation
	 	 	3	 
	Section 2.04. Board
	 	 	3	 
	Section 2.05. Code
	 	 	3	 
	Section 2.06. Committee
	 	 	3	 
	Section 2.07. Company
	 	 	3	 
	Section 2.08. Defined Contribution Plan
	 	 	3	 
	Section 2.09. Designated Entity
	 	 	3	 
	Section 2.10. ERISA
	 	 	3	 
	Section 2.11. ES Pension Plan
	 	 	3	 
	Section 2.12. Executive
	 	 	3	 
	Section 2.13. Executive Benefit Service
	 	 	4	 
	Section 2.14. Executive Pension Base
	 	 	4	 
	Section 2.15. Executive Pension Supplement
	 	 	4	 
	Section 2.16. Grandfathered Amounts
	 	 	4	 
	Section 2.17. Key Employee
	 	 	4	 
	Section 2.18. Maximum Contribution
	 	 	5	 
	Section 2.19. Participating Company
	 	 	5	 
	Section 2.20. Payment Date
	 	 	5	 
	Section 2.21. Pension Plan and Pension Plans
	 	 	5	 
	Section 2.22. Plan
	 	 	6	 
	Section 2.23. Qualified Plan Benefit
	 	 	6	 
	Section 2.24. Retirement Eligible
	 	 	6	 
	Section 2.25. Separation from Service or Separates from Service
	 	 	7	 
	Section 2.26. Westinghouse
	 	 	7	 
	Section 2.27. Westinghouse Acquisition
	 	 	7	 
	Section 2.28. Westinghouse Plan
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 3—Qualification for Benefits; Mandatory Retirement
	 	 	7	 
	Section 3.01. Qualification for Benefits
	 	 	7	 
	Section 3.02. Mandatory Retirement
	 	 	8	 
	Section 3.03. Certain Transfers
	 	 	8	 

 

 

	 	 	 	 	 

	ARTICLE 4—Calculation of Executive Pension Supplement
	 	 	9	 
	Section 4.01. In General
	 	 	9	 
	Section 4.02. Amount 
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 5—Death in Active Service
	 	 	9	 
	Section 5.01. Eligibility For an Immediate Benefit
	 	 	9	 
	Section 5.02. Calculation of Immediate Benefit
	 	 	10	 
	Section 5.03. Eligibility For a Deferred Benefit
	 	 	10	 
	Section 5.04. Calculation of Deferred Benefit
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 6—Executive Pension Base
	 	 	10	 
	Section 6.01. In General
	 	 	10	 
	Section 6.02. Executive Pension Base
	 	 	10	 
	Section 6.03. Average Annual Compensation
	 	 	11	 
	Section 6.04. Annual Incentive Programs
	 	 	11	 
	Section 6.05. Executive Benefit Service
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 7—Payment of Benefits
	 	 	12	 
	Section 7.01. Limitation on Benefits
	 	 	12	 
	Section 7.02. Normal Form and Commencement of Benefits
	 	 	12	 
	Section 7.03. Guaranteed Benefit
	 	 	13	 
	Section 7.04. Guaranteed Surviving Spouse Benefit
	 	 	13	 
	Section 7.05. Lump Sum Payments
	 	 	13	 
	Section 7.06. Mandatory Cashout
	 	 	13	 
	Section 7.07. Optional Payment Forms
	 	 	14	 
	Section 7.08. Rehires
	 	 	14	 
	Section 7.09. Special Tax Distribution
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 8—Conditions to Receipt of Executive Pension Supplement
	 	 	15	 
	Section 8.01. Non-Competition Condition
	 	 	15	 
	Section 8.02. Breach of Condition
	 	 	15	 
	Section 8.03. Waiver After 65
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 9—Administration
	 	 	15	 
	Section 9.01. Committee
	 	 	15	 
	Section 9.02. Claims Procedures
	 	 	15	 
	Section 9.03. Trust
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 10—Modification or Termination
	 	 	16	 
	Section 10.01. Amendment and Plan Termination
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 11—Miscellaneous
	 	 	16	 
	Section 11.01. Benefits Not Assignable
	 	 	16	 
	Section 11.02. Facility of Payment
	 	 	17	 
	Section 11.03. Committee Rules
	 	 	17	 
	Section 11.04. Limitation on Rights
	 	 	17	 
	Section 11.05. Benefits Unsecured
	 	 	17	 

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	Section 11.06. Governing Law
	 	 	17	 
	Section 11.07. Severability
	 	 	17	 
	Section 11.08. Expanded Benefits
	 	 	18	 
	Section 11.09. Plan Costs
	 	 	18	 
	Section 11.10. Termination of Participation
	 	 	18	 
	Section 11.11. Transfer of Liabilities to HII
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 12—Change in Control
	 	 	18	 
	Section 12.01. Definition
	 	 	18	 
	Section 12.02. Vesting and Funding Rules
	 	 	19	 
	Section 12.03. Special Retirement Provisions
	 	 	20	 
	Section 12.04. Calculation of Present Value
	 	 	20	 
	Section 12.05. Calculation of Offset
	 	 	20	 
	Section 12.06. Limitation on Amendment, Suspension and Termination
	 	 	21	 
	 
	 	 	 	 
	APPENDIX A—Executive Buyback
	 	 	22	 
	Section A.01. Introduction
	 	 	22	 
	Section A.02. Buy Back Offer
	 	 	22	 
	Section A.03. One-Time Opportunity
	 	 	22	 
	Section A.04. Payment
	 	 	22	 
	Section A.05. Refund of Buy Back Payment
	 	 	22	 
	Section A.06. Effective Date
	 	 	23	 
	 
	 	 	 	 
	APPENDIX B—Rehired Executives
	 	 	24	 
	Section B.01. Retired Executives Rehired as Executives
	 	 	24	 
	Section B.02. Former Executives with Vested Pensions Rehired as Executives
	 	 	25	 
	Section B.03. Retired Executives Rehired in Non-Executive Positions
	 	 	25	 
	Section B.04. Events That Span Westinghouse Acquisition
	 	 	26	 
	Section B.05. Breaks Spanning March 1, 1996
	 	 	26	 
	 
	 	 	 	 
	APPENDIX C—Coordination With Westinghouse Plan
	 	 	27	 
	Section C.01. In General
	 	 	27	 
	Section C.02. Pre-Acquisition Benefits
	 	 	27	 
	Section C.03. Coordination of Pre and Post-Acquisition Benefits
	 	 	27	 
	Section C.04. No Duplication of Benefits
	 	 	27	 
	 
	 	 	 	 
	APPENDIX D 2005-2007 Transition Rules
	 	 	28	 
	Section D.01. Election
	 	 	28	 
	Section D.02. 2005 Commencements
	 	 	28	 
	Section D.03. 2006 and 2007 Commencements
	 	 	28	 
	 
	 	 	 	 
	APPENDIX E Post 2007 Distribution of 409A Amounts
	 	 	30	 
	Section E.01. Time of Distribution
	 	 	30	 
	Section E.02. Special Rule for Key Employees
	 	 	30	 
	Section E.03. Forms of Distribution
	 	 	30	 
	Section E.04. Death
	 	 	30	 
	Section E.05. Actuarial Assumptions
	 	 	31	 

- iii -

 

	 	 	 	 	 

	Section E.06. Accelerated Lump Sum Payouts
	 	 	31	 
	Section E.07. Effect of Early Taxation
	 	 	32	 
	Section E.08. Permitted Delays
	 	 	32	 

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NORTHROP GRUMMAN

ELECTRONIC SYSTEMS EXECUTIVE PENSION PLAN

(Amended and Restated Effective as of January 1, 2011)

          The Northrop Grumman Electronic Systems Executive Pension Plan (the “Plan”) is hereby amended
and restated effective as of January 1, 2011, except as otherwise provided. This restatement of the
Plan amends the prior January 1, 2011 restatement and includes changes that apply to Grandfathered
Amounts.

          The Plan is intended to comply with Code section 409A and official guidance issued thereunder
(except for Grandfathered Amounts). Notwithstanding any other provision of this Plan, this Plan
shall be interpreted, operated and administered in a manner consistent with this intention.

 

 

ARTICLE 1

Introduction

          Section 1.01. Introduction. The Northrop Grumman Electronic Systems Executive
Pension Plan is a supplemental pension plan that provides nonqualified deferred compensation for a
select group of management or highly compensated employees.

          Section 1.02. Effective Date. The Plan became effective March 1, 1996.

          Section 1.03. Sponsor. The Plan sponsor is Northrop Grumman Corporation.

          Section 1.04. Predecessor Plan. The Plan was established as a successor to
the Westinghouse Executive Pension Plan, maintained by Westinghouse Electric Corporation
(“Westinghouse”) for the benefit of certain executive employees of the Westinghouse Electronic
Systems Group as of February 29, 1996 who became employees of the Northrop Grumman Electronic
Sensors & Systems Division as of March 1, 1996 as a result of the Westinghouse Acquisition, and
certain other executive employees who may become employed by the Northrop Grumman Electronic
Sensors & Systems Division on or after March 1, 1996. The Northrop Grumman Electronic Sensors &
Systems Division became the Northrop Grumman Electronic Sensors & Systems Sector effective August
24, 1998.

          Section 1.05. 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.

          (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.

- 2 -

 

ARTICLE 2

Definitions

          Capitalized terms which are defined in the ES Pension Plan will have the same meanings in this
Plan unless otherwise expressly stated. In addition, the following terms when used and capitalized
will have the following meanings:

          Section 2.01. Affiliated Companies. The Company and any other entity related
to the Company under the rules of section 414 of the Code. The Affiliated Companies include
Northrop Grumman Corporation and its 80%-owned subsidiaries and may include other entities as well.

          Section 2.02. Annual Incentive Programs. See Article 6.

          Section 2.03. Average Annual Compensation. See Article 6.

          Section 2.04. Board. Board means the Board of Directors of Northrop Grumman
Corporation, or its delegate.

          Section 2.05. Code. The Internal Revenue Code of 1986, as amended, and as it
may be amended.

          Section 2.06. Committee. A committee of not less than three members appointed
by the Board with responsibility for the general administration of the Plan. The Committee is the
“plan administrator” under ERISA.

          Section 2.07. Company. Northrop Grumman Corporation.

          Section 2.08. Defined Contribution Plan. A defined contribution plan within
the meaning of ERISA § 3(34), but not including:

          (a)     the Northrop Grumman Electronic Systems Savings Program or any similar program of a
Participating Company or a Designated Entity or

          (b)     any amount received pursuant to a cash or deferred arrangement (as that term is defined in
the Code) maintained by a Participating Company or a Designated Entity.

          Section 2.09. Designated Entity. Designated Entity means an Affiliated
Company or other entity that has been and is still designated by the Committee as participating in
the Plan.

          Section 2.10. ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and as it may be amended.

          Section 2.11. ES Pension Plan. The Northrop Grumman Electronic Systems
Pension Plan, formerly known as the ESSD Pension Plan.

          Section 2.12. Executive. Executive means an individual who satisfies
(a) and (b) and is not excluded by (c) or (d):

- 3 -

 

          (a)     An Employee who is employed by ES (or by a Participating Company, Designated
Entity, or other Affiliated Company) in a position that is determined by the Company’s
Chief Executive Officer or Vice President and Chief Human Resources and Administrative
Officer to be eligible as an Executive position under this Plan based on the duties and
responsibilities of the position.

          (b)     The Employee has been notified by the Committee in writing that he or she is
eligible for benefits under the Plan.

          (c)     No Employee may receive benefits under this Plan if he or she is currently
accruing supplemental benefits under any other nonqualified deferred compensation plan,
contract, or arrangement maintained by the Affiliated Companies or to which the Affiliated
Companies contribute with the exception of the Officers Supplemental Executive Retirement
Program under the Northrop Grumman Supplemental Plan 2.

          (d)     Notwithstanding any provision of the Plan to the contrary, effective as of July 1,
2003, no Employee will first become eligible to participate in the Plan or otherwise
receive credit for service or compensation for purposes of calculating a benefit under the
Plan unless the Employee was classified as an Executive eligible to participate in the Plan
before that date. Executives that terminate employment and are later rehired into positions
that are determined to be eligible as Executive positions under the Plan will be eligible
to resume participation in the Plan and will be subject to Appendix B.

          Section 2.13. Executive Benefit Service. See Article 6.

          Section 2.14. Executive Pension Base. See Article 6.

          Section 2.15. Executive Pension Supplement. The pension calculated pursuant to
Articles 4 and 5 of this Plan. There will
be no Executive Pension Supplement payable if the Executive’s Qualified Plan Benefit equals or
exceeds his or her Executive Pension Base.

          Section 2.16. Grandfathered Amounts. Plan benefits that were earned and
vested as of December 31, 2004 within the meaning of Code section 409A and official guidance
thereunder.

          Section 2.17. Key Employee. 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
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
Executives 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.

- 4 -

 

          Section 2.18. Maximum Contribution. An Employee will be deemed to have made
the Maximum Contribution if he or she has made the contributions under (a) and (b), as interpreted
under (c):

          (a)     During such time as the Employee was eligible to participate in the ES Pension Plan and
the Westinghouse Pension Plan, he or she contributed the maximum amount the Employee was permitted
to contribute under those plans, and

          (b)     During such time as the Employee was employed by a Designated Entity (which includes for
this purpose a “Designated Entity” under the Westinghouse Plan during periods before the
Westinghouse Acquisition),

                    (1)     The Employee contributed the maximum amount he or she was permitted to contribute, if any,
to that Designated Entity’s defined benefit pension or Defined Contribution Plan, if any, and

                    (2)     The Employee paid to the Company (or to Westinghouse, before the Westinghouse Acquisition)
an amount of each of his or her annual incentive compensation awards based on the maximum ES
Pension Plan contribution formula (or Westinghouse Pension Plan contribution formula, as
appropriate) applied to 50% of his or her awards. This payment is pre-tax and is made by a deferral
election entered into prior to the year in which the annual incentive compensation award is
determined and paid.

          (c)     This Plan is intended as essentially a continuation of the Westinghouse Plan (see Appendix
C). Accordingly, this Section is to be interpreted as requiring an Executive to have made the
Maximum Contribution not only under this Plan but also under the Westinghouse Plan.

          Section 2.19. Participating Company. Any of the “Participating Companies”
under the ES Pension Plan.

          Section 2.20. Payment Date. The 1st of the month coincident with or following
the later of (a) the date the Executive attains age 55, or (b) the date the Executive Separates
from Service.

          Section 2.21. Pension Plan and Pension Plans. Any of the following:

	  	 (a)	 	The Northrop Grumman Retirement Plan
	 
	  	 (b)	 	The Northrop Grumman Retirement Plan — Rolling Meadows
Site
	 
	  	 (c)	 	The Northrop Grumman Retirement Value Plan (effective as of
January 1, 2000)
	 
	  	 (d)	 	The Northrop Grumman Electronics Systems — Space Division Salaried Employees’
Pension Plan (effective as of the Aerojet Closing Date)
	 
	  	 (e)	 	The Northrop Grumman Electronics Systems — Space Division Union Employees’
Pension Plan (effective as of the Aerojet Closing Date)

- 5 -

 

          “Aerojet Closing Date” means the Closing Date specified in the April 19, 2001 Asset Purchase
Agreement by and Between Aerojet-General Corporation and Northrop Grumman Systems Corporation.

          Section 2.22. Plan. The Northrop Grumman Electronic Systems Executive Pension
Plan.

          Section 2.23. Qualified Plan Benefit.

          (a)     The Qualified Plan Benefit is equal to the sum of:

	 	(1)	 	the annual amount of pension the Executive has accrued under
the ES Pension Plan and any applicable defined benefit pension plan of a
Designated Entity based on Benefit Service accumulated up to the earlier of the
Executive’s actual retirement date or death;

	 	(2)	 	the amount the Executive is entitled to receive on a life
annuity basis for retirement under any applicable Defined Contribution Plan of
a Designated Entity;

	 	(3)	 	in any case where service included in the Executive’s Vesting
Service also entitles that Executive to benefits under one or more retirement
plans (whether a defined benefit or Defined Contribution Plan or both) of
another company, the amount the Executive is entitled to receive on a life
annuity basis for retirement from those plans; and

	 	(4)	 	the amount of any “Qualified Plan Benefits” taken into account
under the Westinghouse Plan (or which would have been taken into account, but
for the Westinghouse Acquisition) with respect to plans that were not acquired
by the Affiliated Companies as part of the Westinghouse Acquisition;

provided, the method of benefit measurement, in the case of (2), (3) and (4) above, will be on the
basis of procedures determined by the Committee on a plan-by-plan basis.

          (b)     The Qualified Plan Benefit does not include any early pension retirement supplement.

          (c)     The term Qualified Plan Benefit will also include amounts accrued under an excess benefit
plan or other similar arrangement in which the Executive is a participant.

          Section 2.24. Retirement Eligible. An Executive is Retirement Eligible if he
or she is accruing Vesting Service and:

          (a)     has attained age 65 and completed five or more years of Vesting Service;

          (b)     has attained age 60 and completed 10 or more years of Vesting Service;

- 6 -

 

          (c)     has attained age 58 and completed 30 or more years of Vesting Service; or

          (d)     has satisfied the requirements for an immediate pension under the Special Retirement
Benefit provisions of the ES Pension Plan.

          Section 2.25. Separation from Service or Separates from Service. A
“separation from service” within the meaning of Code section 409A.

          Section 2.26. Westinghouse. Westinghouse Electric Corporation.

          Section 2.27. Westinghouse Acquisition. The acquisition by Northrop Grumman
Corporation of the Electronic Systems Group of Westinghouse effective March 1, 1996.

          Section 2.28. Westinghouse Plan. The Westinghouse Executive Pension Plan, as
it existed from time to time.

ARTICLE 3

Qualification for Benefits; Mandatory Retirement

          Section 3.01. Qualification for Benefits. Subject to Article 8 and
other applicable provisions of the Plan, if any, each Executive will be entitled to the
benefits of this Plan on separation from service from a Participating Company, a Designated
Entity, or any other Affiliated Company, provided that such Executive meets the following
four conditions:

          (a)     He or she has been employed in a position that meets the definition of Executive for five
or more continuous years immediately preceding the earlier of the Executive’s actual retirement
date or the Executive’s Normal Retirement Date. For purposes of this five-year requirement (but not
for purposes of determining Executive Benefit Service under Section 6.05), the General Manager of
ES and the Vice President of Human Resources for ES may determine that one or more years of an
Employee’s service with an Affiliated Company prior to the Employee’s transfer to ES shall be
counted as having been in an Executive position.

          (b)     He or she has made the Maximum Contribution during each year of Vesting Service from the
date he or she first became an Executive until the earliest of his or her date of death, actual
retirement date or Normal Retirement Date;

          (c)     He or she is a participant in the ES Pension Plan or in the defined benefit plan or
Defined Contribution Plan of a Designated Entity, if any;

          (d)     He or she is Retirement Eligible on the date of voluntary or involuntary separation from
service from a Participating Company or a Designated Entity or, in the case of a Surviving Spouse
benefit, satisfies the requirements for benefits under Article 5 of the Plan.

                    An Executive who meets the following requirements will be treated as “Retirement Eligible”
even though not meeting the Plan’s definition of this term:

- 7 -

 

                    (1)     The Executive is involuntarily terminated without cause, or terminated due to a
divestiture of his business unit on or after December 1, 2010,

                    (2)     The Executive has attained age 53 with 10 or more years of Early Retirement Eligibility
Service, or 75 points (age plus Years of Credited Service) at date of termination, and

                    (3)     The Executive is actively accruing benefits at date of termination and has satisfied both
the rule of Section 3.01(a) and the rule of Section 3.01(b) on the date of termination.

                    Benefits that become payable based on the Executive’s termination meeting the three
requirements above shall be subject to Code Section 409A and payable in accordance with the terms
of Appendix E. Reduction factors will apply in cases where benefit payments commence prior to age
58 (if the Executive has 30 or more years of Vesting Service) or age 60 (if the Executive has 10 -
29 years of Vesting Service). The reduction will be an actuarial one from
age 58 or 60 (whichever age applies) to the actual payment commencement date. The reduction
factor will be based on the actuarial assumptions used for determining lump sum actuarial
equivalents in the Northrop Grumman Cash Balance Plan Program.

          Section 3.02. Mandatory Retirement. Pursuant to this Plan, the Company will
be entitled, at its option, to retire any Executive who has attained age 65 and who, for the
two-year period immediately before his or her retirement, has participated in this Plan, if such
Executive is entitled to an immediate nonforfeitable annual retirement benefit from a pension,
profit-sharing, savings or deferred compensation plan, or any combination of such plans, of a
Participating Company or any Affiliated Company, which equals, in the aggregate, at least $44,000.
The calculation of the $44,000 (or greater) amount will be performed in a manner consistent with 29
U.S.C. § 631(c)(2).

          Section 3.03. Certain Transfers. Except as otherwise provided in (e) below,
if an Executive transfers to a position with an Affiliated Company that is not covered by a
Participating Company or Designated Entity:

          (a)     He or she will immediately cease to accrue Executive Benefit Service.

          (b)     He or she will continue to earn Vesting Service (for purposes of the Plan other than
Executive Benefit Service) for periods of employment with the Affiliated Company.

          (c)     His or her Average Annual Compensation will include earnings as an employee from the
Affiliated Company for periods after the transfer until his or her termination of employment with
all Affiliated Companies.

          (d)     He or she may receive benefits under the Plan if he or she subsequently retires from the
Company and satisfies the Plan’s eligibility requirements.

          (e)     Effective as of July 1, 2003, if an Executive transfers to a position with an Affiliated
Company that has been determined by the Company’s Chief Executive Officer or Vice

- 8 -

 

President and
Chief Human Resources and Administrative Officer to be an eligible position under the Plan, (a)-(d)
above will not apply and the Executive will continue to be classified as an active participant for
all purposes under the Plan until the Executive’s separation from service from all Affiliated
Companies.

ARTICLE 4

Calculation of Executive Pension Supplement

          Section 4.01. In General. The Executive Pension Supplement for an Executive
who meets the qualifications of Article 3 of the Plan retiring on an Early, Normal or Special
Retirement Date will be calculated as described in Section 4.02(a) or (b).

          Section 4.02. Amount.

          (a)     If the Executive

                    (1)     has attained age 60 and completed 10 or more years of Vesting Service,

                    (2)     has attained age 65, or

                    (3)     has satisfied the eligibility requirements for an immediate pension under the “Special
Retirement Benefit” provisions of the ES Pension Plan,

the Executive Pension Supplement is determined by subtracting the Executive’s Qualified Plan
Benefit that would be payable if he or she elected a Life Annuity Option (after any reduction for
early retirement, if applicable) from his or her Executive Pension Base.

          (b)     If the Executive has not met the requirements of paragraph (a) above but has attained age
58 and completed 30 or more years of Vesting Service, the Executive Pension Supplement is
determined by subtracting the Executive’s Qualified Plan Benefit that would be payable if he or she
elected a Life Annuity Option (before any reduction for retirement prior to age 60) from his or her
Executive Pension Base.

          (c)     If the Executive has not met the requirements of paragraph (a) or (b) above but is deemed
to be Retirement Eligible under Section 3.01(d) based on the circumstances of the Executive’s
termination, the Executive Pension Supplement is determined by subtracting the Executive’s
Qualified Plan Benefit projected to age 60 as a Life Annuity from his or her Executive Pension
Base.

ARTICLE 5

Death in Active Service

          Section 5.01. Eligibility For an Immediate Benefit. If an Executive dies in
active service and, on his or her date of death, satisfies the requirements of the “Special
Surviving

- 9 -

 

Spouse Benefit” under the ES Pension Plan and satisfied the requirements of Section
3.01(b) and (c) of this Plan at the time of death, a Surviving Spouse benefit will also be payable
under this Plan if his or her Executive Pension Base exceeds his or her Qualified Plan Benefit. The
requirement of Section 3.01(a) is waived.

          Section 5.02. Calculation of Immediate Benefit. The amount of the immediate
Surviving Spouse benefit under Section 5.01 will be the Executive Pension Supplement reduced in the
same manner as though the benefit were a “Special Surviving
Spouse Benefit” under the ES Pension
Plan. For purposes of this Section, the Executive Pension Supplement will be calculated as follows:

          (a)     If the Executive had attained age 60 or if the Executive had completed 30 years of Vesting
Service, the Executive Pension Supplement would be calculated as described in Section 4.02(a);

          (b)     Otherwise, the Executive Pension Supplement would be 80% of the difference between the
Executive Pension Base and the unreduced Qualified Plan Benefit.

          Section 5.03. Eligibility For a Deferred Benefit. If an Executive dies in
active service who does not satisfy the requirements of Section 5.01 but who satisfies the
requirements of the “Surviving Spouse Benefit” under the ES Pension Plan and satisfied the
requirements of Section 3.01(b) and (c) of this Plan at the time of death, a Surviving Spouse
benefit will also be payable under this Plan if his or her Executive Pension Base exceeds his or
her Qualified Plan Benefit. The requirement of Section 3.01(a) is waived.

          Section 5.04. Calculation of Deferred Benefit. The amount of the deferred
Surviving Spouse benefit under Section 5.03 will be the Executive Pension Supplement reduced in the
same manner as though the benefit were payable under the ES Pension Plan. For purposes of this
paragraph, the Executive Pension Supplement will be calculated by subtracting the Executive’s
Qualified Plan Benefit (before any reductions) from his or her Executive Pension Base.

ARTICLE 6

Executive Pension Base

          Section 6.01. In General. This Article sets forth the rules for determining a
Participant’s Executive Pension Base.

          Section 6.02. Executive Pension Base. The Executive Pension Base = (a) x (b)
x (c) as follows:

          (a)     1.47%;

          (b)     Average Annual Compensation;

          (c)     the number of years of Executive Benefit Service accrued to the earliest of:

- 10 -

 

                    (1)     the Executive’s actual retirement date, or

                    (2)     the date of the Executive’s death.

          Section 6.03. Average Annual Compensation. Average Annual Compensation = (a)
+ (b) as follows:

          (a)     12 times the average of the five highest of the Executive’s December l monthly base
salaries during the 10-year period immediately preceding the earliest of:

                    (1)     the Executive’s date of death, or

                    (2)     the Executive’s actual retirement date.

          (b)     the average of the Executive’s five highest annual incentive compensation awards paid
under the Annual Incentive Programs or equivalent annual program or programs during the 10-year
period ending with the earliest of:

                    (1)     the year of the Executive’s death, or

                    (2)     the year of the Executive’s actual retirement date.

          (c)     No earnings before March 1, 1996 are taken into account under this Article.

          (d)     Notwithstanding the foregoing, for Executives terminating employment with the Affiliated
Companies after 2004, the averages in subsection (a) and (b) above shall be based on salaries and
annual incentive compensation awards paid in 1995 or later and shall not be limited to the 10-year
periods described in subsections (a) and (b). All amounts accrued as a result of this change shall
be subject to Code section 409A.

          (e)     Average Annual Compensation normally includes only pay earned while an Executive. But see
Section 3.03.

          (f)     The following shall not be considered as compensation for purposes of determining the
amount of any benefit under the Plan:

                    (1)     any payment authorized by the Company’s Compensation Committee that is (a) calculated
pursuant to the method for determining a bonus amount under the Annual Incentive Programs (AIP) for
a given year, and (b) paid in lieu of such bonus in the year prior to the year the bonus would
otherwise be paid under the AIP, and

                    (2)     any award payment under the Northrop Grumman Long-Term Incentive Cash Plan.

          Section 6.04. Annual Incentive Programs. The Annual Incentive Programs are
the Timely Awards Program, Management Achievement Plan, the Incentive Compensation Plan, the
Incentive Management Achievement Plan and the Performance Achievement Plan of the Company.

- 11 -

 

          Section 6.05. Executive Benefit Service. An Executive’s Executive Benefit
Service is determined under (a) or (b) as appropriate, and subject to (c) and (d):

          (a)     Executive Benefit Service is an Executive’s total years of Vesting Service under the ES
Pension Plan if:

                    (l)     the Executive was making the Maximum Contribution during each of those years; or

                    (2)     the use of the Executive Buy Back process has been authorized by the Committee and the
Executive:

                              (A)     was making the Maximum Contribution during each of those years after the date he or she
first became an Executive and

                              (B)     has complied with the provisions of the Executive Buy Back process (as set forth in
Appendix A) as to those years prior to his or her first becoming an Executive.

          (b)     Otherwise, Executive Benefit Service is the Executive’s period of Vesting Service during
which he or she made the Maximum Contribution.

          (c)     No service before March 1, 1996 is taken into account under this Article.

          (d)     Notwithstanding the foregoing, for an Executive terminating employment with the Affiliated
Companies after 2004, Executive Benefit Service accruals after 2004 equal (1) minus (2) below:

                    (1)     Elapsed time while the Executive was making the Maximum Contributions, including time
purchased under the Executive Buy Back process (as set forth in Appendix A);

                    (2)     Executive Benefit Service accrued as of December 31, 2004.

                    All amounts accrued as a result of this change shall be subject to Code section 409A.

ARTICLE 7

Payment of Benefits

          Section 7.01. Limitation on Benefits. No benefits will be payable under this
Plan to any Executive whose employment terminates for any reason other than death prior to becoming
Retirement Eligible.

          Section 7.02. Normal Form and Commencement of Benefits. This Section only
applies to Grandfathered Amounts. The Executive Pension Supplement will be paid for life in monthly

- 12 -

 

installments, each equal to l/12th of the annual amount determined in Article 4 or 5, whichever is
applicable.

          (a)     The Committee will determine the form and commencement of benefit payments in its sole
discretion.

          (b)     The Committee will choose among the various forms of payment, other than the lump sum,
then available under the ES Pension Plan, subject to the same reductions or other provisions that
apply to the elected form of payment under the ES Pension Plan.

          (c)     No payments may commence under this Plan until payments to the Executive or Surviving
Spouse have commenced under the ES Pension Plan or other tax-qualified defined benefit plan or
Defined Contribution Plan maintained by a Participating Company or Designated Entity.

See Appendix D and Appendix E for the rules that apply to other benefits earned under the Plan.

          Section 7.03. Guaranteed Benefit. This Section only applies to Grandfathered
Amounts. Regardless of the form of payment elected by the Committee, after the Executive retires
and begins receiving an Executive Pension Supplement, a minimum of 60 times the monthly payment he
or she would have received on a life annuity basis is guaranteed.

See Appendix D and Appendix E for the rules that apply to other benefits earned under the Plan.

          Section 7.04. Guaranteed Surviving Spouse Benefit. This Section only applies
to Grandfathered Amounts. Once a Surviving Spouse Benefit determined under Sections 5.01 and 5.02
has commenced, a minimum of 60 times the monthly benefit payable to the Surviving Spouse is
guaranteed. See Appendix D and Appendix E for distribution rules that apply to death benefits that
are not Grandfathered Amounts

          Section 7.05. Lump Sum Payments. This Section only applies to Grandfathered
Amounts. An Executive who elects lump sum payments of all his or her nonqualified benefits under
the Northrop Grumman Corporation Change-In-Control Severance Plan (effective August 1, 1996, as
amended) or the Northrop Grumman Corporation March 2000 Change-In-Control Severance Plan
(collectively, the “CIC Plans”) is entitled to have his or her Executive Pension Supplement paid as
a lump sum calculated under the terms of the applicable CIC Plan. Otherwise, Executive Pension
Supplement payments are governed by the general provisions of this Article, which do not provide
for lump sum payments.

          Northrop Grumman Corporation may, in its sole discretion, amend or eliminate any provision of
the Plan with respect to lump sum distributions at any time. This applies whether or not a
Participant has already made a lump sum election.

See Appendix D and Appendix E for the rules that apply to other benefits earned under the Plan

          Section 7.06. Mandatory Cashout. Notwithstanding any other provisions in the
Plan, Executives with Grandfathered Amounts who have not commenced payment of such benefits prior
to January 1, 2008 will be subject to the following rules:

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          (a)     Post-2007 Terminations. Executives who have a complete termination of employment
with the Affiliated Companies after 2007 will receive a lump sum distribution of the present value
of their Grandfathered Amounts within two months of such termination (without interest), if such
present value is below the Code section 402(g) limit in effect at the termination.

          (b)     Pre-2008 Terminations. Executives who had a complete termination of employment
with the Affiliated Companies before 2008 will receive a lump sum distribution of the present value
of their Grandfathered Amounts within two months of the time they commence payment of their
underlying qualified pension plan benefits (without interest), if such present value is below the
Code section 402(g) limit in effect at the time such payments commence.

For purposes of calculating present values under this Section, the actual assumptions and
calculation procedures for lump sum distributions under the Northrop Grumman Pension Plan shall be
used.

          Section 7.07. Optional Payment Forms. Executives with Grandfathered Amounts
shall be permitted to elect (a) or (b) below:

          (a)     To receive their Grandfathered Amounts in any form of distribution available under the
Plan at October 3, 2004, provided that form remains available under the underlying qualified
pension plan at the time payment of the Grandfathered Amounts commences. The conversion factors for
these distribution forms will be based on the factors or basis in effect under this Plan on October
3, 2004.

          (b)     To receive their Grandfathered Amounts in any life annuity form not included in (a) above
but included in the underlying qualified pension plan distribution options at the time payment of
the Grandfathered Amounts commences. The conversion factors will be based on the following
actuarial assumptions:

	 	 	 

	Interest Rate:

	 	 6%
	 
	 	 
	Mortality Table:

	 	RP-2000 Mortality Table projected 15 years for future
	 

	 	standardized cash balance factors

          Section 7.08. Rehires. In the event that an Executive retires or otherwise
ceases to be an Employee of a Participating Company or a Designated Entity and is later rehired by
one of those entities, the provisions of Appendix B will apply.

          Section 7.09. Special Tax Distribution. On the date an Executive’s retirement
benefit is reasonably ascertainable within the meaning of IRS regulations under Code section
3121(v)(2), an amount equal to the Executive’s portion of the FICA tax withholding will be
distributed in a single lump sum payment. This payment will be based on all benefits under the
Plan, including Grandfathered
Amounts. This payment will reduce the Executive’s future benefit payments under the Plan on an
actuarial basis.

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ARTICLE 8

Conditions to Receipt of Executive Pension Supplement

          Section 8.01. Non-Competition Condition. Payments of benefits under this Plan
to Executives are subject to the condition that the recipient will not compete with the Company.

          (a)     Competition for this purpose means engaging directly or indirectly in any business which
is at the time competitive with any business, part of a business, or activity then conducted by the
Company, any of its subsidiaries or any other corporation, partnership, joint venture or other
entity of which the Company directly or indirectly holds a 10% or greater interest (together, the
“Affiliated Group”) in the area in which such business, part of a business, or activity is then
being conducted by the Affiliated Group.

          (b)     The condition of this Section may be waived with respect to a recipient but only in
writing and only by the Compensation Committee of the Board.

          Section 8.02. Breach of Condition. Breach of the condition contained in
Section 8.01 will be deemed to occur immediately upon an Executive’s engaging in competitive
activity.

          (a)     Payments suspended for breach of the condition will not be resumed whether or not the
Executive terminates the competitive activity.

          (b)     A recipient will be deemed to be engaged in such a business indirectly if he or she is an
employee, officer, director, trustee, agent or partner of, or a consultant or advisor to or for, a
person, firm, corporation, association, trust or other entity which is engaged in such a business
or if he or she owns, directly or indirectly, in excess of 5% of any such firm, corporation,
association, trust or other entity.

          Section 8.03. Waiver After 65. The ongoing condition of this Article will not
apply to an Executive age 65 or older.

ARTICLE 9

Administration

          Section 9.01. Committee. This Plan will be administered by the Committee. The
Committee will have the right to make reasonable rules from time to time regarding the Plan. All
such rules will be consistent with the policy provided
by this Plan document. The Committee will have full discretion to interpret the Plan, and to
resolve ambiguities and inconsistencies. The Committee’s interpretations will in all cases be final
and not be subject to appeal.

          Section 9.02. Claims Procedures. The Company’s standardized “Northrop Grumman
Nonqualified Retirement Plans Claims and Appeals Procedures” shall apply in handling claims and
appeals under this Plan.

- 15 -

 

          Section 9.03. Trust. The Board may authorize the establishment of one or more
trusts and the appointment of a trustee or trustees (“Trustee”) to hold any and all assets of the
Plan in trust. The Board may delegate this power to the Committee.

ARTICLE 10

Modification or Termination

          Section 10.01. Amendment and Plan Termination. The Company may, in its sole
discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in
part for any reason. This includes the right to amend or eliminate any of the provisions of the
Plan with respect to lump sum distributions, including any lump sum calculation factors, whether or
not an Executive has already made a lump sum election. Notwithstanding the foregoing, no amendment
or termination of the Plan shall reduce the amount of an Executive’s accrued benefit under the Plan
as of the date of such amendment or termination.

          No amendment of the Plan shall apply to the Grandfathered Amounts, 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 the
Grandfathered Amounts.

ARTICLE 11

Miscellaneous

          Section 11.01. Benefits Not Assignable.

          (a)     No Executive, former Executive or Surviving Spouse shall have the right to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or otherwise subject to lien any of the
benefits provided under this Plan. Such rights may not be subject to the debts, contracts,
liabilities, engagements or torts of the Executive, former Executive or Surviving Spouse of an
Executive.

          (b)     Notwithstanding the foregoing, all or a portion of an Executive’s Plan benefits may be
paid to another person as specified in a domestic relations order that the 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 Executive;

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

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

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

          Section 11.02. Facility of Payment. If the Committee deems any person
entitled to receive any payment under the Plan incapable of receiving it by reason of age, illness,
infirmity, mental incompetency or incapacity of any kind, the Committee may, in its discretion,
direct that payment be made in any one or more of the following manners:

          (a)     Applying the amount directly for the comfort, support and maintenance of the payee;

          (b)     Reimbursing any person for any such support supplied by any other person to the payee;

          (c)     Paying the amount to a legal representative or guardian or any other person selected by
the Committee on behalf of the payee; or

          (d)     Depositing the amount in a bank account to the credit of the payee.

          Section 11.03. Committee Rules. Payment of benefits will be made in
accordance with the rules and procedures of the Committee.

          Section 11.04. Limitation on Rights. The Company, in adopting this Plan,
will not be held to create or vest in any Executive or any other person any interest, pension or
benefits other than the benefits specifically provided herein, or to confer upon any Executive the
right to remain in the service of the Company.

          Section 11.05. Benefits Unsecured. Any assets purchased by the Company to
provide benefits under this Plan will at all times remain subject to the claims of general
creditors of the Company and any Executive, former Executive or
Surviving Spouse of an Executive participating in the Plan has only an unsecured promise to pay
benefits from the Company.

          Section 11.06. Governing Law. To the extent not preempted by federal law,
the law of the State of Maryland will govern the construction and administration of the Plan.

          Section 11.07. Severability. If any provision of this Plan or its
application to any circumstance or person is held to be invalid by a court of competent
jurisdiction, the remainder of the Plan and the application of such provision to other
circumstances or persons will not be affected thereby.

- 17 -

 

          Section 11.08. Expanded Benefits. The Board or the Compensation Committee
of the Board may, from time to time and without notice, by resolution of the Board or of the
Compensation Committee of the Board, authorize the payment of benefits or expand the benefits
otherwise payable or to be payable to any one or more individuals. Notwithstanding the foregoing,
this Section 11.08 shall not apply to any benefits under the Plan that are not Grandfathered
Amounts.

          Section 11.09. Plan Costs. Benefits payable under the Plan and any expenses
in connection therewith will be paid by the Company to the extent they are not available to be paid
from any trust fund established by the Company to help defray the costs of providing Plan benefits.

          Section 11.10. Termination of Participation. Participation in the Plan will
terminate:

          (a)     in the case of a nonvested Executive, upon separation from service with a Participating
Company or Designated Entity;

          (b)     in the case of a vested Executive, when payment of all amounts due with respect to the
Executive are paid, or purported to be paid, by the Plan.

          Section 11.11. Transfer of Liabilities to HII. Northrop Grumman Corporation
distributed its interest in Huntington Ingalls Industries, Inc. (“HII”) to its shareholders on
March 31, 2011 (the “HII Distribution Date”). Pursuant to an agreement between Northrop Grumman
Corporation and HII, on the HII Distribution Date certain employees and former employees of HII
ceased to participate in the Plan and the liabilities for these participants’ benefits under the
Plan were transferred to HII. On and after the HII Distribution Date, the Company and the Plan, and
any successors thereto, shall have no further obligation or liability to any such participant with
respect to any benefit, amount, or right due under the Plan.

ARTICLE 12

Change in Control

          Section 12.01. Definition. The term “Change in Control” means the
occurrence of one or more of the following events:

          (a)     There will be consummated:

                    (1)     Any consolidation or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company’s common stock would be converted
into cash, securities or other property, other than a merger of the Company in which the holders of
the Company’s common stock immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger; or

                    (2)     Any sale, lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; or

- 18 -

 

          (b)     The stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or

          (c)     (1)     Any person (as such term is defined in section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), corporation or other entity will purchase any common stock
of the Company (or securities convertible into Company common stock) for cash, securities or any
other consideration pursuant to a tender offer or exchange offer, unless, prior to the making of
such purchase of Company common stock (or securities convertible into Company common stock), the
Board will determine that the making of such purchase will not constitute a Change in Control; or

                    (2)     Any person (as such term is defined in section 13(d) of the Exchange Act), corporation or
other entity (other than the Company or any benefit plan sponsored by the Affiliated Companies)
will become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act:),
directly or indirectly, of securities of the Company representing twenty percent or more of the
combined voting power of the Company’s then outstanding securities ordinarily (and apart from any
rights accruing under special circumstances) having the right to vote in the election of directors
(calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities),
unless, prior to such person so becoming such beneficial owner, the Board will determine that such
person so becoming such beneficial owner will not constitute a Change in Control; or

          (d)     At any time during any period of two consecutive years, individuals who at the beginning
of such period constituted the entire Board will cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election of each new director during
such two-year period was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such two-year period.

          Section 12.02. Vesting and Funding Rules. Notwithstanding any other
provision of the Plan, upon a Change in Control, as defined above, all Executives will be deemed
fully vested under this Plan, but only such vesting as to the otherwise applicable five-year
service requirement. In addition, upon a Change in
Control, but only under circumstances where the successor, surviving or parent company of Northrop
Grumman Corporation or the successor plan sponsor or any successor thereto, if any, does not agree
to assume the obligation to provide benefits under this Plan as they become due and payable, then
an amount sufficient to fund all unpaid benefits and any Surviving Spouse benefits payable under
this Plan will be paid immediately by the Company to a Trustee pursuant to a Trust Agreement for
the payment of such benefits at the earliest date available in accordance with the provisions of
the Plan and on such terms as the committee composed of the Company’s Chief Executive Officer,
Chief Financial Officer and General Counsel, will deem appropriate (including a direction to the
Trustee to pay immediately all benefits that are Grandfathered Amounts on a present value basis
and/or such other terms as they may deem appropriate). Notwithstanding this funding, the Company
will be obligated to pay benefits to Executives and to Surviving Spouses of Executives to the
extent such funding proves to be insufficient. To the extent such funding proves to be more than
sufficient, any excess will revert to the Company.

- 19 -

 

          Section 12.03. Special Retirement Provisions. Upon a Change in Control, for
any Executive in the Plan who is involuntarily separated and who is not then eligible for a Normal
or Special Retirement Pension under the ES Pension Plan, such separation will be deemed to be a
separation due to a “Permanent Job Separation”, and the Special Retirement Pension provisions under
the ES Pension Plan will be used for purposes of determining eligibility and payment of benefits to
such Executive under the Plan, provided that distribution of amounts that are not Grandfathered
Amounts will still be controlled by Appendix D and Appendix E.

          Section 12.04. Calculation of Present Value. The present value of benefits
payable by the Trustee will be calculated for specific groups of Executives at the time of the
Change in Control as follows:

          (a)     The present value of the benefits payable from this Plan to Executives who have retired at
the time of the Change in Control (as well as benefits payable from this Plan to any Surviving
Spouse of an Executive) will be calculated by using the PBGC immediate discount rate established
and in effect for the beginning of the calendar year in which the Change in Control occurs.

          (b)     The present value of the benefits payable from this Plan to Executives who are eligible to
retire under the terms of this Plan at the time of the Change in Control will be calculated by
using the PBGC immediate discount rates established and in effect at the beginning of the calendar
year in which the Change in Control occurs, assuming a pension which is immediately payable at the
time of the Change in Control.

          (c)     The present value of the benefits payable from this Plan to Executives who have completed
at least 30 years of service with a Participating Company or a Designated Entity but have not yet
attained age 58 at the time of the Change in Control will be calculated by using the PBGC deferred
discount rates established and in effect for the beginning of the calendar year in which the Change
in Control occurs, assuming a pension which is payable at age 58.

          (d)     The present value of benefits payable from this Plan to Executives who have completed at
least 10 years of service with a Participating Company or a Designated Entity but
less than 30 years of service at the time of the Change in Control, but have not yet attained age
60 at the time of the Change in Control, will be calculated by using the PBGC deferred discount
rates established and in effect for the beginning of the calendar year in which the Change in
Control occurs, assuming a pension which is payable at age 60.

          (e)     The present value of benefits payable from this Plan to Executives who have completed less
than 10 years of service with a Participating Company or a Designated Entity at the time of the
Change in Control will be calculated by using the PBGC deferred discount rates established and in
effect for the beginning of the calendar year in which the Change in Control occurs, assuming a
pension which is payable at age 65.

          Section 12.05. Calculation of Offset. In calculating the benefit payable
to each Executive, any offset for the ES Pension Plan or other plan in which the Executive
participates, will be based upon the last official pension file data available, adjusted to the
date of any Change in Control by assuming that the most recent salary reflected in the pension file
remains constant.

- 20 -

 

          Section 12.06. Limitation on Amendment, Suspension and Termination.
Notwithstanding any provision of this Plan, this Plan may not be:

          (a)     Amended such that future benefits would be reduced;

          (b)     Suspended; or

          (c)     Terminated;

as to the further accrual of benefits, for a period of 24 months following a Change in Control; and
as to the payment of benefits, at any time prior to the last payment, determined in accordance with
the provisions of this Plan, to each Executive, former Executive receiving benefits under the Plan,
or eligible spouse.

*   *   *

                    IN WITNESS WHEREOF, this Amendment and Restatement is hereby executed by a duly
authorized officer on this 27th day of June, 2011.

	 	 	 	 	 
	 	NORTHROP GRUMMAN CORPORATION

 	 
	 	By: 	/s/  Debora
L. Catsavas

	 
	 	Debora L. Catsavas 	 
	 	Vice President, Compensation,

Benefits & International 	 

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APPENDIX A

Executive Buyback

          Section A.01. Introduction. The Executive Buy Back process permits newly
eligible Executives to “buy back” past years of Executive Benefit Service under the Plan for
periods of time during which they did not make the Maximum Contribution.

          Section A.02. Buy Back Offer. If an Employee did not make the Maximum
Contribution during each of the years of his or her Vesting Service prior to the time he or she
first became an Executive, the Employee will be permitted to pay make-up payments of Maximum
Contributions in order to “buy back” his or her non-contributory years of service.

          (a)     The make-up payments required are the Maximum Contributions that would have been payable
during the 10 years prior to the date he or she first became an Executive (or such lesser period
from the date the Employee was employed by a Participating Company or a Designated Entity) plus
compounded interest on those amounts.

          (b)     This Plan is intended as essentially a continuation of the Westinghouse Plan (see Appendix
C). Accordingly, this Section is to be interpreted as requiring an Executive to make up Maximum
Contributions not only for his or her periods of participation under this Plan but also Maximum
Contributions that would have been due under the Westinghouse Plan. The terms of (a) will be
interpreted to include the corresponding terms under the Westinghouse Plan and the 10-year period
will include periods before the Westinghouse Acquisition.

          Section A.03. One-Time Opportunity. Upon qualifying as an Executive, an
Executive will be offered an Executive Buy Back opportunity at the time he or she first becomes an
Executive (or when this Appendix first becomes effective, if later). The actual terms of the
Executive Buy Back will be determined from time to time by the Committee. This election will be
offered one time to the Executive and his or her decision whether or not to “buy back” will be
irrevocable.

          Section A.04. Payment. Executive Buy Back payments are pre-tax and are made
from compensation by deferral elections entered into prior to the year in which the compensation is
determined and paid. Executive Buy Back payments will not be deposited into the ES Pension Plan
trust and will not increase the Executive’s Qualified Plan Benefit.

          Section A.05. Refund of Buy Back Payment. If, at some point, an Employee is
no longer an Executive or otherwise becomes ineligible to receive an Executive Pension Supplement,
any Executive Buy Back payments the Employee has made (including any interest the Employee paid)
plus any other amount as defined in Section 2.16(b)(2) in the definition of Maximum Contribution
paid by the Employee to the Company will be refunded, with interest at such time as the Employee
meets one of the following criteria:

          (a)     Termination or retirement from a Participating Company or a Designated Entity; or

          (b)     Death;

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provided, however, no refund will be made if the Employee is an eligible Executive, whether or not
the amount of his or her Executive Pension Supplement exceeds zero. All interest rates will be
determined at the discretion of the Committee.

Any amounts that are refundable under this Section A.05 that are not Grandfathered Amounts will be
paid in a lump sum upon the Executive’s Separation from Service, subject to the six-month delay
rule in Section E.02.

          Section A.06. Effective Date. The provisions of this Appendix permitting Buy
Backs will become effective on a date specified by resolution of the Committee specifically citing
this Section.

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APPENDIX B

Rehired Executives

          Section B.01. Retired Executives Rehired as Executives. If an Executive who
retired from a Participating Company or a Designated Entity and who received or is receiving an
Executive Pension Supplement as a lump sum or on a monthly basis is rehired in an Executive
position by a Participating Company, Designated Entity, or any other Affiliated Company, the
following provisions apply:

          (a)     Monthly Payments: For an Executive with a monthly Executive Pension Supplement:

                    (1)     The Plan will suspend all Executive Pension Supplement payments that are Grandfathered
Amounts;

                    (2)     If, but only if, the Executive is Retirement Eligible at the time of subsequent actual
retirement:

                              (A)     Previous years of Vesting Service and Executive Benefit Service accrued prior to the
Executive’s retirement will be restored; and

                              (B)     The Executive’s Executive Pension Supplement will be recalculated in accordance with the
Plan at his or her subsequent actual retirement date as long as the Executive then meets all Plan
benefit qualification requirements;

                    (3)     The Executive, having previously met the requirement of five years of continuous service
as an Executive prior to his or her first retirement, need not again meet that requirement;

                    (4)     The Executive’s Average Annual Compensation will be computed without regard to the break
in service, using zero for any periods during which the Executive was a retiree;

                    (5)     If the Executive elected to take a lump sum Qualified Plan Benefit with respect to his or
her initial retirement, then in any subsequent calculation of the Executive’s Executive Pension
Supplement, the Executive’s Executive Pension Base will be reduced by both the Executive’s
Qualified Plan Benefit received at the time of the initial retirement and the Executive’s Qualified
Plan Benefit accrued from the date of rehire through the date of his or her subsequent retirement.

                    (6)     If the Executive continued to receive payments that were not Grandfathered Amounts during
the period of rehire, an actuarial reduction will apply at his subsequent termination.

          (b)     Lump Sums: For an Executive who received a lump sum Executive Pension Supplement
and who is Retirement Eligible at the time of subsequent actual retirement:

- 24 -

 

                    (1)     Previous years of Vesting Service will be restored but not previous years of Executive
Benefit Service;

                    (2)     The Plan will calculate the Executive’s additional Executive Pension Supplement at his or
her subsequent actual retirement date on the basis of years of service after the rehire in
accordance with the Plan as the Executive then meets all Plan benefit qualification requirements;

                    (3)     The Executive, having previously met the requirement of five years of continuous service
as an Executive prior to his or her first retirement, need not again meet that requirement;

                    (4)     The Executive’s Average Annual Compensation will be computed without regard to the break
in service, using zero for any periods during which the Executive was a retiree;

                    (5)     If the Executive elected a monthly Qualified Plan Benefit with respect to his or her
initial retirement, then the Executive’s Qualified Plan Benefit accrued from the date of rehire
through the subsequent date of actual retirement will be subtracted from the Executive’s Executive
Pension Base in calculating the Executive’s additional Executive Pension Supplement at his or her
subsequent retirement.

          Section B.02. Former Executives with Vested Pensions Rehired as Executives.
If the employment of an Executive of a Participating Company or a Designated Entity who was
eligible only for a vested pension under the relevant qualified defined benefit or Defined
Contribution Plan, if any, was terminated and the Executive is rehired by a Participating Company,
Designated Entity, or any other Affiliated Company, the following provisions apply:

          (a)     Previous years of Vesting Service and Executive Benefit Service accrued prior to the
Executive’s termination of employment will be restored;

          (b)     The Executive must meet the requirement of five years of continuous service as an
Executive prior to a subsequent actual retirement, counting only years of service after the rehire;

          (c)     Only base salary and incentive awards earned after the rehire will be used in computing
Average Annual Compensation;

          (d)     If the Executive elected to take his or her vested pension as a lump sum, in any
calculation of an Executive Pension Supplement at actual retirement, the Executive’s Executive
Pension Base will be reduced by both the Executive’s Qualified Plan Benefit at the time of the
initial termination of employment and the Executive’s Qualified Plan Benefit accrued from the date
of rehire through the date of actual retirement.

          Section B.03. Retired Executives Rehired in Non-Executive Positions. If an
Executive who retired from a Participating Company or a Designated Entity and who received or is
receiving an Executive Pension Supplement as a lump sum or on a monthly basis is rehired by a

- 25 -

 

Participating Company, Designated Entity, or any other Affiliated Company in a non-Executive
position, the following provisions apply:

          (a)     For a former Executive who was receiving a monthly Executive Pension Supplement:

                    (1)     The Plan will suspend all Executive Pension Supplement payments that are Grandfathered
Amounts;

                    (2)     If, but only if, the former Executive is still Retirement Eligible at the time of
subsequent actual retirement, the Plan will recommence Executive Pension Supplement payments that
were suspended at the time of the Executive’s subsequent actual retirement without recalculation of
amount;

                    (3)     At subsequent actual retirement, the former Executive may receive any form of payment of
his or her Executive Pension Supplement then permitted under the Plan, as selected by the
Committee.

          (b)     For a former Executive who received his or her Executive Pension Supplement as a lump sum,
no further benefits will be paid by the Plan.

          Section B.04. Events That Span Westinghouse Acquisition. This Plan is
intended as essentially a continuation of the Westinghouse Plan (see Appendix C) and this Appendix
is to be interpreted accordingly.

          (a)     Reductions for payments of Qualified Plan Benefits will be interpreted to include
reductions for payments of similar benefits under Westinghouse plans.

          (b)     Determination of the form of Qualified Plan Benefits will take into account the form of
payments under Westinghouse plans.

          (c)     The terms of this Appendix will be interpreted, where appropriate, to include the
corresponding terms under the Westinghouse Plan and to take into account events both before and
after the Westinghouse Acquisition.

          Section B.05. Breaks Spanning March 1, 1996. There may be Executives who
participated in the Westinghouse Plan but because of a break in their service did not become
employees of the Affiliated Companies on March 1, 1996 as a result of the Westinghouse Acquisition.

          (a)     Those Executives might be hired later by the Electronic Sensors & Systems Division.

          (b)     They will in no case be entitled to service or compensation credits or benefits under this
Plan with respect to any service or compensation prior to their first hire by the Electronic
Sensors & Systems Division after March 1, 1996. The Executives will not be considered to have
previously met the requirement of five years of continuous service as an Executive.

- 26 -

 

APPENDIX C

Coordination With Westinghouse Plan

          Section C.01. In General. As part of the Westinghouse Acquisition, this Plan
was established by Northrop Grumman Corporation.

          (a)     This Plan is intended to be a continuation of the Westinghouse Plan with only minor
changes.

          (b)     This Plan assumes remaining liabilities of the Westinghouse Plan with regard to those
participants of the Westinghouse Plan who became Employees of the Northrop Grumman controlled group
on March 1, 1996 as a result of the Westinghouse Acquisition. Accordingly, benefits earned by
Participants of this Plan under the Westinghouse Plan before March 1, 1996 are payable under this
Appendix.

          (c)     Employees first hired after the Westinghouse Acquisition will therefore not be affected by
this Appendix and will have their pension benefits governed entirely by the other Articles and
Appendices of this Plan.

          Section C.02. Pre-Acquisition Benefits.

          (a)     Except as provided in Sections C.03 and C.04, benefits earned under the Westinghouse
Executive Pension Plan are in addition to the benefits which may be earned under Articles 4 and 5.

          (b)     The Westinghouse Plan benefits will be calculated taking into account all pertinent facts
for determining benefits under the Westinghouse Plan’s provisions (including benefits and
contributions under Westinghouse plans) as they have existed from time to time.

          Section C.03. Coordination of Pre and Post-Acquisition Benefits. The Plan
will be interpreted in light of events before and after the Westinghouse Acquisition to coordinate
the calculation of benefits (including service and compensation components, benefits and
contributions under Westinghouse plans and rehire provisions) under this Appendix and benefits
based on Articles 4 and 5 so that the Plan will function as if it were essentially a continuation
of the Westinghouse Plan.

          Section C.04. No Duplication of Benefits. Because this Plan is intended as a
continuation of the Westinghouse Plan, this Plan will not pay any benefits already paid or payable
by the Westinghouse Plan itself.

- 27 -

 

APPENDIX D

2005-2007 Transition Rules

          This Appendix D provides the distribution rules that apply to the portion of benefits under
the Plan subject to Code section 409A for Executives with benefit commencement dates after January
1, 2005 and before January 1, 2008.

          Section D.01. Election. Executives scheduled to commence payments during 2005
may elect to receive both pre-2005 benefit accruals and 2005 benefit accruals in any optional form
of benefit available under the Plan as of December 31, 2004. Executives electing optional forms of
benefits under this provision will commence payments on the Executive’s selected benefit
commencement date.

          Section D.02. 2005 Commencements. Pursuant to IRS Notice 2005-1, Q&A-19 &
Q&A-20, Executives commencing payments in 2005 from the Plan may elect a form of distribution from
among those available under the Plan on December 31, 2004, and benefit payments shall begin at the
time elected by the Executive.

          (a)     Key Employees. A Key Employee Separating from Service on or after July 1, 2005,
with Plan distributions subject to Code section 409A scheduled to be paid in 2006 and within six
months of his date of Separation from Service, shall have such distributions delayed for six months
from the Key Employee’s date of Separation from Service. The delayed distributions shall be paid
as a single sum with interest at the end of the six month period and Plan distributions will resume
as scheduled at such time. Interest shall be computed using the retroactive annuity starting date
rate in effect under the Northrop Grumman Pension Plan on a month-by-month basis during such period
(i.e., the rate may change in the event the period spans two calendar years). Alternatively, the
Key Employee may elect under IRS Notice 2005-1, Q&A-20 to have such distributions accelerated and
paid in 2005 without the interest adjustment, provided, such election is made in 2005.

          (b)     Lump Sum Option. During 2005, a temporary immediate lump sum feature shall be
available as follows:

                    (1)     In order to elect a lump sum payment pursuant to IRS Notice 2005-1, Q&A-20, an Executive
must be an elected or appointed officer of the Company and eligible to commence payments under the
underlying qualified pension plan on or after June 1, 2005 and on or before December 1, 2005;

                    (2)     The lump sum payment shall be made in 2005 as soon as feasible after the election; and

                    (3)     Interest and mortality assumptions and methodology for calculating lump sum amount shall
be based on the Plan’s procedures for calculating lump sums as of December 31, 2004.

          Section D.03. 2006 and 2007 Commencements. Pursuant to IRS transition relief,
for all benefit commencement dates in 2006 and 2007 (provided election is made in 2006 or 2007),

- 28 -

 

distribution of Plan benefits subject to Code section 409A shall begin 12 months after the later
of: (a) the Executive’s benefit election date, or (b) the underlying qualified pension plan
benefit commencement date (as specified in the Executive’s benefit election form). Payments
delayed during this 12-month period will be paid at the end of the period with interest. Interest
shall be computed using the retroactive annuity starting date rate in effect under the Northrop
Grumman Pension Plan on a month-by-month basis during such period (i.e., the rate may change in the
event the period spans two calendar years).

- 29 -

 

APPENDIX E

Post 2007 Distribution of 409A Amounts

          The provisions of this Appendix E shall apply only to the portion of benefits under the Plan
that are subject to Code section 409A with benefit commencement dates on or after January 1, 2008.
Distribution rules applicable to the Grandfathered Amounts are set forth in Article VII, and
Appendix D addresses distributions of amounts subject to Code section 409A with benefit
commencement dates after January 1, 2005 and prior to January 1, 2008

          Section E.01. Time of Distribution. Subject to the special rules provided in
this Appendix E, distributions to an Executive of his vested retirement benefit shall commence as
of the Payment Date.

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

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

          (a)     50% joint and survivor annuity

          (b)     75% joint and survivor annuity

          (c)     100% joint and survivor annuity.

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

          Section E.04. Death. If a married Executive dies before the Payment Date, a
death benefit will be payable to the Executive’s spouse commencing 90 days after the Executive’s
death. The death benefit will be a single life annuity in an amount equal to the survivor portion
of an Executive’s vested retirement benefit based on a 100% joint and survivor annuity determined
on the Executive’s date of death. This benefit is also payable to an Executive’s

- 30 -

 

domestic partner
who is properly registered with the Company in accordance with procedures established by the
Company.

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

	 	 	 

	Interest Rate:

	 	6%
	 
	 	 
	Mortality Table:

	 	RP-2000 Mortality Table projected 15 years for future standardized
	 

	 	cash balance factors

          Section E.06. Accelerated Lump Sum Payouts.

          (a)     Post-2007 Separations. Notwithstanding the provisions of this Appendix E, for
Executives who Separate from Service on or after January 1, 2008, if the present value of (a) the
vested portion of an Executive’s retirement benefit and (b) other vested amounts under nonaccount
balance plans that are aggregated with the retirement benefit under Code section 409A, determined
on the first of the month coincident with or following the date of his Separation from Service, is
less than or equal to $25,000, such benefit amount shall be distributed to the Executive (or his
spouse or domestic partner, if applicable) in a lump sum payment. Subject to the special timing
rule for Key Employees under Section E.02, the lump sum payment shall be made within 90 days after
the first of the month coincident with or following the date of the Executive’s Separation from
Service.

          (b)     Pre-2008 Separations. Notwithstanding the provisions of this Appendix E, for
Executives who Separate from Service before January 1, 2008, if the present value of (a) the vested
portion of an Executive’s retirement benefit and (b) other vested amounts under nonaccount balance
plans that are aggregated with the retirement benefit under Code section 409A, determined on the
first of the month coincident with or following the date the Executive attains age 55, is less than
or equal to $25,000, such benefit amount shall be distributed to the Executive (or his spouse or
domestic partner, if applicable) in a lump sum payment within 90 days after the first of the month
coincident with or following the date the Executive attains age 55, but no earlier that January 1,
2008.

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

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

- 31 -

 

          Section E.07. Effect of Early Taxation. If the Executive’s benefits under the
Plan are includible in income pursuant to Code section 409A, such benefits shall be distributed
immediately to the Executive.

          Section E.08. Permitted Delays. Notwithstanding the foregoing, any payment to
an Executive under the Plan shall be delayed upon the Company’s reasonable anticipation of one or
more of the following events:

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

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

          provided, that any payment delayed pursuant to this Section E.08 shall be paid in accordance
with Code section 409A.

- 32 -exv10w5

Exhibit 10.5

NORTHROP GRUMMAN

SAVINGS EXCESS PLAN

(Amended and Restated Effective as of January 1, 2011)

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	INTRODUCTION
	 	 	2	 
	 	 	 	 	 
	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	 
	 	 	 	 	 
	ARTICLE III DEFERRAL ELECTIONS
	 	 	7	 
	3.1    Elections to Defer Eligible Compensation
	 	 	7	 
	3.2    Contribution Amounts
	 	 	7	 
	3.3    Crediting of Deferrals
	 	 	8	 
	3.4    Maximum Contributions
	 	 	8	 
	3.5    Investment Elections
	 	 	8	 
	3.6    Investment Return Not Guaranteed
	 	 	9	 
	 	 	 	 	 
	ARTICLE IV ACCOUNTS
	 	 	9	 
	4.1    Accounts
	 	 	9	 
	4.2    Valuation of Accounts
	 	 	9	 
	4.3    Use of a Trust
	 	 	10	 
	 	 	 	 	 
	ARTICLE V VESTING AND FORFEITURES
	 	 	10	 
	5.1    In General
	 	 	10	 
	5.2    Exceptions
	 	 	10	 
	 	 	 	 	 
	ARTICLE VI DISTRIBUTIONS
	 	 	11	 
	6.1    Distribution Rules for Non-RAC Amounts
	 	 	11	 
	6.2    Distribution Rules for RAC Subaccount
	 	 	12	 
	6.3    Effect of Taxation
	 	 	12	 
	6.4    Permitted Delays
	 	 	12	 
	6.5    Payments Not Received At Death
	 	 	12	 
	6.6    Inability to Locate Participant
	 	 	12	 
	6.7    Committee Rules
	 	 	13	 
	 	 	 	 	 
	ARTICLE VII ADMINISTRATION
	 	 	13	 
	7.1    Committees
	 	 	13	 
	7.2    Committee Action
	 	 	13	 
	7.3    Powers and Duties of the Administrative Committee
	 	 	14	 
	7.4    Powers and Duties of the Investment Committee
	 	 	14	 
	7.5    Construction and Interpretation
	 	 	15	 
	7.6    Information
	 	 	15	 
	7.7    Committee Compensation, Expenses and Indemnity
	 	 	15	 
	7.8    Disputes
	 	 	15	 
	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS
	 	 	16	 
	8.1    Unsecured General Creditor
	 	 	16	 
	8.2    Restriction Against Assignment
	 	 	16	 

i

 

	 	 	 	 	 

	8.3    Restriction Against Double Payment
	 	 	17	 
	8.4    Withholding
	 	 	17	 
	8.5    Amendment, Modification, Suspension or Termination
	 	 	17	 
	8.6    Governing Law
	 	 	18	 
	8.7    Receipt and Release
	 	 	18	 
	8.8    Payments on Behalf of Persons Under Incapacity
	 	 	18	 
	8.9    Limitation of Rights and Employment Relationship
	 	 	18	 
	8.10  Headings
	 	 	18	 
	8.11  Liabilities Transferred to HII
	 	 	18	 
	 	 	 	 	 
	APPENDIX A – 2005 TRANSITION RELIEF
	 	 	1	 
	A.1    Cash-Out
	 	 	1	 
	A.2    Elections
	 	 	1	 
	A.3    Key Employees
	 	 	1	 
	 	 	 	 	 
	APPENDIX B – DISTRIBUTION RULES FOR PRE-2005 AMOUNTS
	 	 	1	 
	B.1    Distribution of Contributions
	 	 	1	 
	 	 	 	 	 
	APPENDIX C – MERGED PLANS
	 	 	1	 
	C.1    Plan Mergers
	 	 	1	 
	C.2    Merged Plans – General Rule
	 	 	1	 

ii

 

INTRODUCTION

                    The Northrop Grumman Savings Excess Plan (the “Plan”) was last amended and restated effective
as of January 1, 2011. This restatement amends that version of the Plan, and is also effective
January 1, 2011. This restatement includes changes that apply to amounts earned and vested under
the Plan prior to 2005.

                    Northrop Grumman Corporation (the “Company”) established this Plan for participants in the
Northrop Grumman Savings Plan who exceed the limits under sections 401(a)(17) or 415(c) of the
Internal Revenue Code. 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.

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)     “Basic Contributions” shall have the same meaning as that term is defined in the NGSP.

                    (f)     “Beneficiary” or “Beneficiaries” shall mean the person or persons, including a trustee,
personal representative or other fiduciary, last designated in writing by a

2

 

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.

                                    
    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 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. Any payment made pursuant to such determination shall constitute a full
release and discharge of the Plan, the Administrative Committee and the Company. Effective January
1, 2007, a Participant will automatically revoke a designation of a spouse as primary beneficiary
upon the dissolution of their marriage.

                              (3)     
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. Any payment made pursuant to such determination
shall constitute a full release and discharge of the Plan, the Administrative Committee and the
Company.

                              (4)     
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.

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

3

 

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

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

                    (j)     “Committees” shall mean the Committees appointed as provided in Article VII.

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

                    (l)     “Company Contributions” shall mean contributions by the Company to a Participant’s
Account.

                    (m)     “Compensation” shall be Compensation as defined by Section 5.01 of the NGSP.

                    (n)     “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.

                    (o)     “Eligible Compensation” shall mean (1) Compensation prior to January 1, 2009, and (2)
after 2008, Base Salary and Bonuses, reduced by the amount of any deferrals made from such amounts
under the Northrop Grumman Deferred Compensation Plan.

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

                              (1)     he or she is eligible to participate in the NGSP;

                              (2)     he or she is classified by the Affiliated Companies as an Employee and not as an
independent contractor; and

                              (3)     he or she meets any additional eligibility criteria set by the Administrative Committee.

Additional eligibility criteria established by the Administrative Committee
may include specifying 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.

                    (q)     “Employee” shall mean any common law employee of the Affiliated Companies who is
classified as an employee by the Affiliated Companies.

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

4

 

                    (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 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)     “NGSP” means the Northrop Grumman Savings Plan.

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

                    (w)     “Participant” shall mean any Eligible Employee who participates in this Plan in accordance
with Article II or any Employee who is a RAC Participant.

                    (x)     “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; and

                              (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.

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

                    (y)     “Plan” shall be the Northrop Grumman Savings Excess Plan.

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

                    (aa)     “RAC Contributions” shall mean the Company contributions under Section 3.2(b)(2).

                    (bb)      “RAC Participant” shall mean an Employee who is eligible to participate in the NGSP,
receives Retirement Account Contributions under the NGSP, and is classified by the Affiliated
Companies as an Employee and not as an independent contractor. Notwithstanding the foregoing, an
Employee who becomes eligible to participate in the Officers Supplemental Executive Retirement
Program II (“OSERP II”) under the Northrop Grumman Supplemental Plan 2 shall immediately cease to
be eligible for RAC Contributions.

5

 

                    (cc)     “RAC Subaccount” shall mean the portion of a Participant’s Account made up of RAC
Contributions and earnings thereon.

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

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

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. Anyone who becomes an Eligible Employee
will be entitled to become a Participant during an Open Enrollment Period.

                    (b)     A RAC Participant will become a Participant when RAC Contributions are first made to his
or her RAC Subaccount.

                    (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 and will not be entitled to participate in the
Plan.

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ARTICLE III

DEFERRAL ELECTIONS

          3.1     Elections to Defer Eligible Compensation

                    (a)     Timing. An Eligible Employee who meets the requirements of Section 2.1(a) may
elect to defer Eligible Compensation earned in a Plan Year by filing an election in the Open
Enrollment Period for the Plan Year. An election to participate for a Plan Year is irrevocable.

                    (b)     Election Rules. An Eligible Employee’s election may be made in writing,
electronically, or as otherwise specified by the Administrative Committee. Such election shall
specify the Eligible Employee’s rate of deferral for contributions to the Plan, which shall be
between 1% and 75%, and shall address distribution of the deferred amounts as described in Section
6.1. All elections must be made in accordance with the 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.

                    (c)     Cancellation of Election. If a Participant becomes disabled (as defined under Code
section 409A) during a Plan Year, his deferral election for such Plan Year shall be cancelled.

          3.2     Contribution Amounts

                    (a)     Participant Contributions. An Eligible Employee’s contributions under the Plan for
a Plan Year will begin once his or her Compensation for the Plan Year exceeds the Code section
401(a)(17) limit for the Plan Year. The Participant’s elected deferral percentage will be applied
to his or her Eligible Compensation for the balance of the Plan Year.

                    (b)     Company Contributions. The Company will make Company Contributions to a
Participant’s Account as provided in (1), (2) and (3) below.

                              (1)     Matching Contributions. The Company will make a Company Contribution equal to the
matching contribution rate for which the Participant is eligible under the NGSP for the Plan Year
multiplied by the amount of the Participant’s contributions under subsection (a).

                              (2)     RAC Contributions. Effective July 1, 2008, the Company will make RAC Contributions
equal to a percentage of a RAC Participant’s Compensation for a Plan Year in excess of the Code
section 401(a)(17) limit. The percentage used to calculate a RAC Participant’s contribution for a
Plan Year shall be based on the RAC Participant’s age on the last day of the Plan Year as follows:

                                        (i)     Three percent if not yet age 35.

                                        (ii)     Four percent if 35 or older, but not yet 50.

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                                        (iii)     
Five percent if age 50 or older.

                              (3)     Make-Up Contributions for Contribution Limitation. If an Eligible Employee’s Basic
Contributions under the NGSP for a Plan Year are limited by the Code section 415(c) contribution
limit before the Eligible Employee’s Basic Contributions under the NGSP are limited by the Code
section 401(a)(17) compensation limit, the Company will make a Company Contribution equal to the
amount of matching contributions for which the Eligible Employee would have been eligible under the
NGSP were Code section 415(c) not applied, reduced by the actual amount of matching contributions
made for the Plan Year under the NGSP.

          3.3     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.
Company contributions other than those under Section 3.2(b)(3) will be credited to Accounts as
soon as practicable after each payroll cycle in which they accrue. Company contributions under
Section 3.2(b)(3) will be credited to Accounts as soon as practicable after each Plan Year.

          3.4     Maximum Contributions

                    Effective January 1, 2011, the total amount of contributions under Sections 3.2(a) and (b)
made to the Plan on behalf of each Corporate Policy Council member (“CPC Participant”) shall not
exceed $5 million (the “Lifetime Cap”). The following items will not count toward the Lifetime
Cap: (a) investment gains or earnings, and (b) amounts originally contributed to other plans that
have been or are merged into the Plan. Notwithstanding the foregoing, Company Contributions shall
continue to be made to a CPC Participant’s Account until the end of the Plan Year in which the CPC
Participant reaches the Lifetime Cap, and any deferral election made by a CPC Participant that is
irrevocable under Code section 409A on the date the Lifetime Cap is reached shall remain effective.

          3.5     Investment Elections

                    (a)     The Investment Committee will establish a number of different investment funds or other
investment options for the Plan. The Investment Committee may change the funds or other investment
options from time to time, without prior notice to Participants.

                    (b)     Participants may elect how their future contributions and existing Account balances will
be deemed invested in the various investment funds and may change their elections from time to
time. If a Participant does not elect how future contributions will be deemed invested,
contributions will be deemed invested in the qualified default investment alternative (“QDIA”) that
applies to the Participant under the NGSP.

                    (c)     The deemed investments for a RAC Participant’s RAC Subaccount must be the same as the
deemed investments for the RAC Participant’s Company contributions under Section 3.2(b)(1).

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                    (d)     Selections 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 that may include, among other matters,
limitations on the amounts that may be transferred and procedures for electing transfers.

                              (2)     The Administrative Committee may prescribe valuation rules for purposes of investment
elections and transfers. Such rules may, in the Administrative Committee’s discretion, use
averaging methods to determine values and accrue estimated expenses. The Administrative Committee
may change the methods it uses for valuation from time to time.

                              (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 and procedures from time to time and
without prior notice to Participants.

                    (e)     Effective January 13, 2011, Participant investment elections involving a Company stock
investment fund (e.g., transfers into or out of the fund) may be restricted, including in
accordance with Company policies generally applicable to employee transactions in Company stock.

          3.6     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.

ARTICLE IV

ACCOUNTS

          4.1     Accounts

                    The Administrative Committee shall establish and maintain a recordkeeping Account for each
Participant under the Plan.

          4.2     Valuation of Accounts

                    The valuation of Participants’ recordkeeping Accounts will reflect earnings, losses, expenses
and distributions, and will be made in accordance with the rules and procedures of the
Administrative Committee.

                    (a)     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.

9

 

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

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

          4.3     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.

ARTICLE V

VESTING AND FORFEITURES

          5.1     In General

                    A Participant’s interest in his or her Account will be nonforfeitable, subject to the
exceptions in Section 5.2.

          5.2     Exceptions

                    The following exceptions apply to the vesting rule:

                    (a)     A RAC Participant shall become vested in his RAC Subaccount upon completing three years of
service. For this purpose, years of service shall be calculated in the same manner as for purposes
of determining vesting in Retirement Account Contributions under the NGSP (including the treatment
of a break in service).

                    (b)     Forfeitures on account of a lost payee. See Section 6.6.

                    (c)     Forfeitures under an escheat law.

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

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

                    (f)     Investment losses.

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ARTICLE VI

DISTRIBUTIONS

          6.1     Distribution Rules for Non-RAC Amounts

                    The rules in this Section 6.1 apply to distribution of a Participant’s Account other than the
RAC Subaccount.

                    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 from the requirements of Code section 409A.
Thus, this Section 6.1 does not apply to these pre-2005 deferrals, but does apply to all other
amounts deferred under the Plan.

                    (a)     Separate Distribution Election. A Participant must make a separate distribution
election for each year’s contributions. A Participant generally makes a distribution election at
the same time the Participant makes the deferral election, i.e., during the Open Enrollment Period.

                    (b)     Distribution Upon Separation. A Participant may elect on a deferral form to have
the portion of his Account related to amounts deferred under the deferral form and Company
contributions for the same year (and earnings thereon) distributed in a lump sum or in quarterly or
annual installments over a period of 1 to 15 years. Lump sum payments under the Plan will be made
in the month following the Participant’s Separation from Service. Installment payments shall
commence in the March, June, September or December next following the month of Separation from
Service. If a Participant does not make a distribution election and his Account balance exceeds
$50,000 and the Participant is age 55 or older at the time the Participant Separates from Service,
the Participant will receive quarterly installments over a 10-year period. Otherwise, a
Participant not making an election will receive a lump sum payment. Notwithstanding the foregoing,
if the Participant’s Account balance is $50,000 or less or the Participant is under age 55 at the
time the Participant Separates from Service, the full Account balance shall be distributed in a
lump sum payment in the month following the Participant’s Separation from Service.

                              Notwithstanding the timing rules in the foregoing paragraph, 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 payments that would otherwise be made during this period of delay shall be accumulated and
paid six months after the date payments would have commenced absent the six month delay.

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

11

 

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

                              (2) The distribution will be made exactly five (5) years from the date the distribution would
have otherwise been made.

          6.2     Distribution Rules for RAC Subaccount

                    The full balance in a RAC Subaccount shall be distributed in a lump sum upon a RAC
Participant’s Separation from Service. Notwithstanding the foregoing, distribution will not be
made to a Key Employee upon a Separation from Service until 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).

          6.3     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.

          6.4     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:

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

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

                    (c)     provided, that any payment delayed pursuant to this Section 6.4 shall be paid in
accordance with Code section 409A.

          6.5     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 that has been issued by the Plan.
Otherwise, payment of the amount will be made to the Participant’s Beneficiary.

          6.6     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 and prior to termination of the
Plan, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated
without interest or earnings for the forfeiture period.

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          6.7     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.

ARTICLE VII

ADMINISTRATION

          7.1     Committees

                    (a)     Effective April 27, 2006, the Administrative Committee shall be comprised of the
individuals (in their corporate capacity) who are members of the Administrative Committee for
Northrop Grumman Deferred Compensation Plan. If no such Administrative Committee exists, the
members of the Administrative Committee for the Plan shall be individuals holding the following
positions within the Company (as such titles may be modified from time to time), or their
successors in office: the Corporate Vice President and Chief Human Resources and Administration
Officer; the Corporate Vice President, Controller and Chief Accounting Officer; the Vice President,
Taxation; the Vice President, Compensation, Benefits and HRIS; and the Corporate Director, Benefits
Administration and Services. A member of the Administrative Committee may resign by delivering a
written notice of resignation to the Corporate Vice President and Chief Human Resources and
Administration Officer.

                    (b)     Prior to April 27, 2006, the Administrative Committee shall be comprised of the
individuals appointed by the Compensation Committee of the Board (the “Compensation Committee”).

                    (c)     An Investment Committee (referred to together with the Administrative Committee as, the
“Committees”), comprised of one or more persons, shall be appointed by and serve at the pleasure of
the Board (or its delegate). The number of members comprising the Investment Committee shall be
determined by the Board, which 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 determination of action of a Committee may be made or taken by a majority of a
quorum present at any meeting thereof, or without a meeting, by resolution or written memorandum
signed by a majority of the members of the Committee then in office. 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 or any other member or members of each Committee

13

 

designated by the Chairman may execute any certificate or other written direction on behalf of
the Committee of which he or she is a member.

                    The Compensation Committee shall appoint a Chairman from among the members of the
Administrative Committee and a Secretary who may or may not be a member of the Administrative
Committee. The Administrative Committee shall conduct its business according to the provisions of
this Article and the rules contained in the current edition of Robert’s Rules of Order or such
other rules of order the Administrative Committee may deem appropriate. The Administrative
Committee shall hold meetings from time to time in any convenient location.

          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 and make all factual
determinations;

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

                    (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:

14

 

                    (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, to make factual determinations 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.

          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 that 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 accounting, consultants or 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

                    The Company’s standardized “Northrop Grumman Nonqualified Retirement Plans Claims and Appeals
Procedures” shall apply in handling claims and appeals under this Plan.

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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;

16

 

                              (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 Section 8.2, 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 Company may, in its sole discretion, terminate, suspend or amend this Plan at any time or
from time to time, in whole or in part for any reason. Notwithstanding the foregoing, no amendment
or termination of the Plan shall reduce the amount of a Participant’s Account balance as of the
date of such amendment or termination. Upon termination of the Plan, distribution of balances in
Accounts shall be made to Participants and Beneficiaries in the manner and at 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.

17

 

          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 and Release

                    Any payment to a payee in accordance with the provisions of the Plan shall, to the extent
thereof, be in full satisfaction of all claims against the Plan, the Committees and the Affiliated
Companies. The Administrative Committee may require such payee, 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    Liabilities Transferred to HII

                    Northrop Grumman Corporation distributed its interest in Huntington Ingalls Industries, Inc.
(“HII) to its shareholders on March 31, 2011 (the “HII Distribution Date”). Pursuant to an
agreement between Northrop Grumman Corporation and HII, on the HII Distribution Date certain
employees and former employees of HII ceased to participate in the Plan and the liabilities for
these participants’ benefits under the Plan were transferred to HII. On and after the HII
Distribution Date, the Company and the Plan, and any successors thereto, shall have no further
obligation or liability to any such participant with respect to any benefit, amount, or right due
under the Plan.

*   *   *

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                    IN WITNESS WHEREOF, this Amendment and Restatement is hereby executed by a duly authorized
officer on this 27th day of June, 2011.

	 	 	 	 	 
	 	NORTHROP GRUMMAN CORPORATION

 	 
	 	By: 	/s/ Debora L. Catsavas

	 
	 	Debora L. Catsavas  	 
	 	Vice President, Compensation, Benefits & International 	 

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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.

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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 or annual installments over a fixed number of whole years not to exceed 15 years,
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 specifies.

                    (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 unless an optional form of
benefit has been specified pursuant to Section B.1(b)(1).

                              (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:

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

          (ii)     Quarterly installments over a period of at least 1 and no more
than 15 years beginning on the Participant’s Payment Date.

          (iii)     Annual installments over a period of at least 2 and no more than
15 years beginning on the Participant’s Payment Date.

                              (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.

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                              (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.

                              (5)     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.

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APPENDIX
C – MERGED PLANS

          C.1     Plan Mergers

                    (a) Merged Plans. As of their respective effective dates, the plans listed in (c)(the
“Merged Plans”) are merged into this Plan. All amounts from those plans that were merged into this
Plan are held in their corresponding Accounts.

                    (b) Accounts. Effective as of the dates below, Accounts are established for
individuals who, before the merger, had account balances under the merged plans. These individuals
will not accrue benefits under this Plan unless they become Participants by virtue of being hired
into a covered position with an Affiliated Company, but they will be considered Participants for
purposes of the merged accounts. The balance credited to the Participant’s merged plan account
will, effective as of the date provided in the table below, be invested in accordance with the
terms of this Plan. Except as provided in section C.2 below, amounts merged into this Plan from the
merged plans are governed by the terms of this Plan.

                    (c) Table.

	 	 	 	 	 
	 	 	Merger Effective	 	Merged Account
	Name of Merged Plans	 	Dates	 	Names
	 
	Northrop Grumman Benefits 

Equalization Plan

	 	December 10, 2004
	 	NG BEP Account
	Northrop Grumman Space &
Mission Systems Corp.
Deferred Compensation Plan

	 	December 10, 2004
	 	S & MS Deferred

Compensation

Account
	BDM International, Inc. 1997
Executive Deferred
Compensation Plan (“BDM
Plan”)

	 	April 29, 2005
	 	BDM Account

          C.2     Merged Plans — General Rule

                    (a)     NG BEP Account and S & MS Deferred Compensation Account. Distributions from
Participants’ NG BEP and S & MS Deferred Compensation Accounts are made under the provisions of
Appendix B, except as provided in this Section.

                              (1)     Amounts in the Participant’s NG BEP Account and the S & MS Deferred Compensation Account
shall be paid out in accordance with elections made under the Merged Plans.

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                              (2)     The Participant’s “Payment Date” for amounts in the NG BEP Account and the S & MS Deferred
Compensation Account shall be deemed to be the end of January following the Participant’s
termination of employment.

                              (3)     The reference to $50,000 in the provisions of Appendix B shall be deemed to be $5,000 with
respect to amounts in the NG BEP Account and the S & MS Deferred Compensation Account.

                              (4)     The Administrative Committee shall assume the rights and responsibilities of the
Directors/Committee with respect to determining whether a Participant’s NG BEP Account may be paid
out in a form other than the automatic form of payment.

                              (5)     The Administrative Committee shall assume the rights and responsibilities of the Committee
or Special Committee with respect to determining whether a Participant’s S & MS Deferred
Compensation Account may be paid out in a form other than the automatic form of payment.

                              (6)     For purposes of determining the time of payment of a Participant’s NG BEP Account, a
Participant’s employment will not be deemed to have terminated following the Participant’s layoff
until the earlier of the end of the twelve-month period following layoff (without a return to
employment with the Affiliated Companies) or the date on which the Participant retires under any
pension plan maintained by the Affiliated Companies.

                              (7)     A Participant’s S & MS Deferred Compensation Account shall be paid to the Participant no
later than the January 5 next preceding the Participant’s 80th birthday.

                              (8)     In no event will payments of amounts in the Participant’s NG BEP Account and the S & MS
Deferred Compensation Account be accelerated or deferred beyond the payment schedule provided under
the Merged Plans. However, any election to change the time or form of payment for such an amount
may be made based on the terms of the relevant Merged Plan as in effect on October 3, 2004.

                    (b)     BDM Account. Distributions of a Participant’s vested BDM Account balance shall be
made in accordance with this Section C.2(b), and Article VI shall not apply to such distributions.
A Participant shall be vested in his BDM Account balance in accordance with the vesting provisions
of the BDM Plan.

                              (1)     Timing of Payment: A Participant’s vested BDM Account balance shall be distributed
in accordance with elections made under the BDM Plan. For those Participants who have not commenced
distributions as of April 29, 2005, payments from the BDM Account will commence at the time
designated on his or her BDM enrollment and election form, unless extended prior to such date.
However, if such a Participant did not elect a fixed date (or elect the earlier of a fixed date or
termination of employment), his or her vested BDM Account balance will be paid as soon as
administratively practicable following termination of employment in the form designated under
Section C.2(b)(2) below.

                              (2)     Form of Payment: A Participant’s vested BDM Account balance shall be paid in cash.
The vested BDM Account balance will be paid in (i) a lump sum, (ii) five

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(5) or ten (10) substantially equal annual installments (adjusted for gains and losses), or
(iii) a combination thereof, as selected by the Participant (or Beneficiary) prior to the date on
which amounts are first payable to the Participant (or Beneficiary) under Section C.2(b)(1) above.
If the Participant fails to designate properly the manner of payment, such payment will be made in
a lump sum.

                              (3)     Death Benefits: If a Participant dies before commencement of payment of his BDM
Account balance, the entire Account balance will be paid at the times provided in Section C.2(b)(2)
above to his or her Beneficiary. If a Participant dies after commencement but before he or she has
received all payments from his vested BDM Account balance, the remaining installments shall be paid
annually to the Beneficiary. For purposes of this Section C.2(b), a Participant’s Beneficiary,
unless subsequently changed, will be the designated beneficiary(ies) under the BDM Plan or if none,
the Participant’s spouse, if then living, but otherwise the Participant’s then living descendants,
if any, per stirpes, but, if none, the Participant’s estate.

                              (4)     Lost Participant: In the event that the Administrative Committee is unable to
locate a Participant or Beneficiary within three years following the payment date under Section
C.2(b)(1) above, the amount allocated to the Participant’s BDM Account shall be forfeited. If,
after such forfeiture and prior to termination of the Plan, the Participant or Beneficiary later
claims such benefit, such benefit shall be reinstated without interest or earnings for the
forfeiture period. In lieu of such a forfeiture, the Administrative Committee has the discretion to
direct distribution of the vested BDM Account balance to any one or more or all of the
Participant’s next of kin, and in the proportions as the Administrative Committee determines.

                              (5)     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.

                              (6)     Payment Schedule: In no event will payments of amounts in the Participant’s BDM
Account be accelerated or deferred beyond the payment schedule provided under the BDM Plan.

                              (7)     Application to Trustee: BDM International, Inc. set aside amounts in a grantor
trust to assist it in meeting its obligations under the BDM Plan. Notwithstanding Section C.2(b)(5)
above and the claims procedures provided in Section 7.8, a Participant may make application for
payment of benefits under this Section C.2(b) directly to the trustee of such trust.

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