Document:

EX-10.(q)

Exhibit 10(q)

Severance Plan for

Elected and Appointed Officers of

Northrop Grumman Corporation

As amended and restated effective August 1, 2010

 

 

1.    Purpose of Plan. The purpose of the Plan is to provide severance benefits for eligible
elected and appointed officers of Northrop Grumman Corporation who reside and work in the United
States. The terms of this amended and restated Plan are effective as of August 1, 2010.

2.    Definitions. The terms defined in this section shall have the meaning given below:

	 	(a)	 	“Committee” means the Compensation Committee of the Board of Directors of the Company
or any successor to the Committee.
	 
	 	(b)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(c)	 	“Company” means Northrop Grumman Corporation.
	 
	 	(d)	 	“CPC” means the Corporate Policy Council.
	 
	 	(e)	 	“Disability” means any disability of an Officer recognized as a disability for
purposes of the Company’s long-term disability plan, or similar plan later adopted by the
Company in place of such plan.
	 
	 	(f)	 	“Key Employee” means an employee treated as a “specified employee” as of his
Separation from Service under Code section 409A(a)(2)(B)(i) of the Company or its
affiliate (i.e., a key employee (as defined in Code section 416(i) without regard to
paragraph (5) thereof)) if the 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 Officers 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.
	 
	 	(g)	 	“Officer” means an elected or appointed officer of Northrop Grumman Corporation,
other than the Company’s Chief Executive Officer, who resides and works in the United
States.
	 
	 	(h)	 	“Plan” means this Severance Plan for Elected and Appointed Officers of Northrop
Grumman Corporation, as it may be amended from time to time.
	 
	 	(i)	 	“Qualifying Termination” means any one of the following (i) an Officer’s involuntary
termination of employment with the Company, other than Termination for Cause or mandatory
retirement, or (ii) an Officer’s election to terminate employment with the Company in lieu
of accepting a downgrade to a non-Officer position or status. “Qualifying Termination”
does not include any change in the Officer’s employment status due to any transfer within
the Company or to an affiliate, or to a purchaser of assets or a portion of the business
of the Company or an affiliate in connection with the purchase, Disability, voluntary
termination or normal retirement.
	 
	 	(j)	 	“Release” means the Company’s Confidential Separation Agreement and General Release
as in effect at the time of the Officer’s termination of employment.
	 
	 	(k)	 	“Separation from Service” or “Separate from Service” means a “separation from
service” within the meaning of Code section 409A.

 

 

	 	(l)	 	“Termination for Cause” means an Officer’s termination of employment with the Company
because of:

	 	(i)	 	The continued failure by the Officer to devote reasonable time and effort
to the performance of his duties (other than a failure resulting from the Officer’s
incapacity due to physical or mental illness) after written demand for improved
performance has been delivered to the Officer by the Company which specifically
identifies how the Officer has not devoted reasonable time and effort to the
performance of his duties;
	 
	 	(ii)	 	The willful engaging by Officer in misconduct which is substantially
injurious to the Company, monetarily or otherwise; or
	 
	 	(iii)	 	The Officer’s conviction for committing an act of fraud, embezzlement,
theft, or other act constituting a felony (other than traffic related offenses or as
a result of vicarious liability).

A Termination for Cause shall not include a termination attributable to:

	 	(i)	 	Bad judgment or negligence on the part of the Officer other than habitual
negligence; or
	 
	 	(ii)	 	An act or omission believed by the Officer in good faith to have been in or
not opposed to the best interests of the Company and reasonably believed by the
Officer to be lawful.

3.    Eligibility Requirements.

	 	(a)	 	Benefits under the Plan are subject to the Company’s sole discretion and approval.
	 
	 	(b)	 	To be considered to receive benefits under the Plan an Officer must meet the
following conditions:

	 	(i)	 	The Officer must experience a Qualifying Termination that results in
termination of employment. If, before termination of employment occurs due to the
Qualifying Termination event, the Officer voluntarily quits, retires, or experiences
a Termination for Cause, the Officer will not receive benefits under this Plan.
	 
	 	(ii)	 	The Officer must sign the Release. The Company’s current Confidential
Separation Agreement and General Release is attached hereto as Exhibit A, however the
Company may amend and make changes to this agreement at any time (with such
amendments including, without limitation, any amendments that the Company may
determine to be necessary or advisable to help ensure that the agreement is
enforceable to the fullest extent permissible under applicable law at the time of the
Officer’s termination of employment).

4.    Severance Benefits. Upon the Qualifying Termination of any eligible Officer, the terminated
Officer shall be entitled to the following benefits under the Plan: (a) a lump-sum severance cash
payment, (b) an extension of the Officer’s existing medical and dental coverage, (c) a prorated
annual cash bonus payment, and (d) certain other fringe benefits.

	 	(a)	 	Lump-sum Cash Severance Payment. The designated Appendix describes the lump
sum severance benefit available to the Officer.
	 
	 	(b)	 	Extension of Medical and Dental Benefits. The Company will continue to pay
its portion of the Officer’s medical and dental benefits for the period of time following
the Officer’s termination

2

 

	 	 	 	date that is specified in the designated Appendix. Such continuation coverage shall run
concurrently with COBRA continuation coverage (or similar state law). The Officer must
continue to pay his portion of the cost of this coverage with after-tax dollars. If rates
for active employees increase during this continuation period, the contribution amount
will increase proportionately. Also, if medical and dental benefits are modified,
terminated or changed in any way for active employees during this continuation period the
Officer will also be subject to such modification, termination or change. Following the
continuation period specified in the designated Appendix the Officer will be eligible to
receive COBRA benefits for any remaining portion of the applicable COBRA period (typically
18 months) at normal COBRA rates. The unreimbursed COBRA period (e.g., the period when
the Officer must pay full COBRA rates in order to receive COBRA benefits) starts the first
day of the month following the end of the continuation period specified in the designated
Appendix.

Example: A Non-CPC Officer receives a layoff notice on June 15, 2004, and his last day of
work is June 30, 2004. The Officer’s 18-month COBRA period commences July 1, 2004. The
Officer will continue to receive medical and dental coverage from July 1, 2004 through June
30, 2005, as long as the Officer continues to pay the appropriate contribution. Full COBRA
rates will apply to the Officer from July 1, 2005 until the end of the remaining COBRA
period on December 31, 2005.

If the Officer is not covered by medical and dental benefits at the time of his termination, this
section 4(b) will not apply and no continuation coverage will be offered. No health or welfare
benefits other than medical and dental will be continued pursuant to the Plan, including but not
limited to disability benefits.

The medical and dental benefits to be provided or payments to be made under this section 4(b) shall
be reduced to the extent that the Officer is eligible for benefits or payments for the same
occurrence under another employer sponsored plan to which the Officer is entitled because of his
employment subsequent to the Qualifying Termination.

To the extent the benefits under this section 4(b) are, or ever become, taxable to the Officer and
to the extent the benefits continue beyond the period in which the Officer would be entitled (or
would, but for the Plan, be entitled) to COBRA continuation coverage if the Officer elected such
coverage and paid the applicable premiums, the Company shall administer such continuation of
coverage consistent with the following additional requirements as set forth in Treas. Reg. §
1.409A-3(i)(1)(iv):

	 	(i)	 	Officer’s eligibility for benefits in one year will not affect Officer’s
eligibility for benefits in any other year;
	 
	 	(ii)	 	Any reimbursement of eligible expenses will be made on or before the last
day of the year following the year in which the expense was incurred; and
	 
	 	(iii)	 	Officer’s right to benefits is not subject to liquidation or exchange for
another benefit.

In the event the preceding sentence applies and the Officer is a Key Employee, provision of these
benefits after the COBRA period shall commence on the first day of the seventh month following the
Officer’s Separation from Service (or, if earlier, the first day of the month after the Officer’s
death).

	 	(c)	 	Company Performance Related Payment. The Officer will be eligible for a
severance payment equal to a pro-rata portion of the bonus he or she would have received
under the Company annual incentive plan in which he or she was a participant for the year
in which the Qualifying Termination occurred, in addition to the lump-sum cash severance
payment described in 

3

 

	 	 	 	section 4(a). For this purpose, the pro-rated bonus (if any) will be based on the applicable
annual incentive plan payout formula, with any applicable individual performance factor
set at 1.00, prorated from the beginning of the performance period (January 1st) to the
Officer’s date of termination. The severance payment contemplated by this Section 4(c)
will be paid when the annual bonuses are paid to active employees between February 15 and
March 15 of the year following termination. Notwithstanding anything to the contrary in
this section 4(c), if the Officer’s bonus opportunity for the fiscal year in which his or
her termination occurs is covered by the Company’s Incentive Compensation Plan (or similar
successor bonus program designed to comply with the performance-based compensation
exception under Section 162(m) of the Code), then the Officer’s severance payment pursuant
to this section 4(c) shall not exceed the maximum bonus the Officer would have been
entitled to receive under the Company’s Incentive Compensation Plan for that fiscal year,
assuming the Officer had been employed through the date bonuses are paid under such plan
for that year, and otherwise calculated under the terms of such plan based on actual
performance for that fiscal year (but without giving effect to any discretion of the plan
administrator to reduce the bonus amount from the maximum otherwise determined in
accordance with such plan).

	 	(d)	 	Other Fringe Benefits. All reimbursements will be within the limits
established in the Executive Perquisite Program. These perquisites will cease as of the
date of termination except for the following:

	 	(i)	 	Financial Planning. If an Officer is eligible for financial
planning reimbursement at the time of termination, the Officer will be reimbursed for
any financial planning fees as specified in the designated Appendix. For these
purposes, “financial planning reimbursement” includes any income tax preparation fee
reimbursement the Officer may be entitled to under the financial planning
reimbursement terms and conditions applicable to the Officer at the time of
termination. The financial planning (including income tax preparation fee)
reimbursements contemplated by the Appendices are subject to any other applicable
limitations that may apply under the financial planning reimbursement terms and
conditions applicable to the Officer at the time of termination (for example, and
without limitation, annual caps on amounts that may be used in connection with income
tax preparation). All such reimbursements pursuant to this section 4(d)(i) shall be
administered consistent with the following additional requirements as set forth in
Treas. Reg. § 1.409A-3(i)(1)(iv): (1) Officer’s eligibility for benefits in one year
will not affect Officer’s eligibility for benefits in any other year; (2) any
reimbursement of eligible expenses will be made on or before the last day of the year
following the year in which the expense was incurred; and (3) Officer’s right to
benefits is not subject to liquidation or exchange for another benefit. In addition,
no reimbursements shall be made to an Officer who is a Key Employee for six months
following the Officer’s Separation from Service.
	 
	 	(ii)	 	Outplacement Service. The Officer will be reimbursed for the cost
of reasonable outplacement services provided by the Company’s outplacement service
provider for services provided within one year after the Officer’s date of
termination; provided, however, that the total reimbursement shall be limited to an
amount equal to fifteen percent (15%) of the Officer’s base salary as of the date of
termination. All services will be subject to the current contract with the provider,
and all such expenses shall be reimbursed as soon as practicable, but in no event
later than the end of the year following the year the Officer Separates from Service.

	 	(e)	 	Time and Form of Payment. The severance benefits under section 4(a) will be
paid to the eligible Officer in a lump sum as soon as practicable following the Officer’s
Separation from

4

 

	 	 	 	Service, but in no event beyond thirty (30) days from such date, provided the Officer
signs the Release within twenty one (21) days following the Officer’s Separation from
Service. Notwithstanding the foregoing, if the Officer is a Key Employee, the lump sum
payment shall be made on or within thirty (30) days after the first day of the seventh
month following the Officer’s Separation from Service (or, if earlier, the first day of
the month after the Officer’s death), provided the Officer signs the Release within
twenty-one (21) days following the Officer’s Separation from Service. This amount will be
paid after all regular taxes and withholdings have been deducted. No payment made
pursuant to the Plan is eligible compensation under any of the Company’s benefit plans,
including without limitation, pension, savings, or deferred compensation plans.

5.    Limitation of Plan Benefits. Notwithstanding anything contained in this Plan to the contrary,
if upon or following a change in the “ownership or effective control” of the Company or in the
“ownership of a substantial portion of the assets” of the Company (each within the meaning of
Section 280G of the Code), the tax imposed by Section 4999 of the Code or any similar or successor
tax (the “Excise Tax”) applies, solely because of such transaction, to any payments, benefits
and/or amounts received by the Officer pursuant to the Plan or otherwise, including, without
limitation, any amounts received, or deemed received within the meaning of any provision of the
Code, by the Officer as a result of (and not by way of limitation) any automatic vesting, lapse of
restrictions and/or accelerated target or performance achievement provisions, or otherwise,
applicable to outstanding grants or awards to the Officer under any of the Company’s incentive
plans, including without limitation, the 2001 Long-Term Incentive Stock Plan and the 1993 Long Term
Incentive Stock Plan (collectively, the “Total Payments”), then the Total Payments shall be reduced
(but not below zero) so that the maximum amount of the Total Payments (after reduction) shall be
one dollar ($1.00) less than the amount which would cause the Total Payments to be subject to the
Excise Tax; provided that such reduction to the Total Payments shall be made only if the total
after-tax benefit to the Officer is greater after giving effect to such reduction than if no such
reduction had been made. If such a reduction is required, the Company shall reduce or eliminate
the Total Payments by first reducing or eliminating any cash severance benefits, then by reducing
or eliminating any accelerated vesting of stock options, then by reducing or eliminating any
accelerated vesting of other equity awards, then by reducing or eliminating any other remaining
Total Payments, in each case in reverse order beginning with the payments which are to be paid the
farthest in time from the date of the transaction triggering the Excise Tax. The preceding
provisions of this section 5 shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Officer’s rights and entitlements to any benefits or
compensation.

6.    Offset for Other Benefits Received. The benefits under the Plan are in lieu of, and not in
addition to, any other severance or separation benefits for which the Officer is eligible under any
Company plan, policy or arrangements (including but not limited to, severance benefits provided
under any employment agreement, retention incentive agreement, or similar benefits under any
individual change in control agreements, plans, policies, arrangements and change in control
agreements of acquired companies or business units) (collectively, “severance plans”); provided
that if the Officer is otherwise entitled to receive benefits under the Plan and severance benefits
under the Northrop Grumman Corporation Change-In-Control Severance Plan (version January 2010 or
later) and/or a Northrop Grumman Corporation Special Agreement (version January 2010 or later),
benefits shall be paid under such Change-In-Control Severance Plan and/or Special Agreement rather
than under the Plan. If an Officer receives any benefit under any severance plan, such benefit
shall cause a corresponding reduction in benefits under this Plan. If, despite any release that
the Officer signs in connection with the Plan, such Officer is later awarded and receives benefits
under any other severance plan(s), any benefits that the Officer receives under the Plan will be
treated as having been received under those other severance plans for purposes of calculating total
benefits received under those other severance plans (that is, benefits under those other severance
plans will be reduced by amounts received under the Plan).

5

 

7.     Administration. The Plan shall be administered by the Chief Human Resources Officer of the
Company (the “administrator”). The administrator has sole and absolute discretion to interpret the
terms of the Plan, eligibility for benefits, and determine questions of fact. The administrator
may delegate any of his duties or authority to any individual or entity. Authority to hear appeals
has been delegated to the corporate Severance Plan Review Committee.

8.    Claims and Appeals Procedures.

Claims Procedure. If an Officer believes that he or she is entitled to benefits under the
Plan and has not received them, the Officer or his authorized representative (each, a “claimant”)
may file a claim for benefits by writing to the Chief Human Resources Officer, in care of the
Company. The letter must state the reason why the claimant believes the Officer is entitled to
benefits, and the letter must be received no later than 90 days after the Officer’s termination of
employment, or 90 days after a payment was due, whichever comes first.

If the claim is denied, in whole or in part, the claimant will receive a written response within 90
days. This response will include (i) the reason(s) for the denial, (ii) reference(s) to the
specific Plan provisions on which denial is based, (iii) a description of any additional
information necessary to perfect the claim, and (iv) a description of the Plan’s claims and appeals
procedures. In some cases more than 90 days may be needed to make a decision, in which case the
claimant will be notified prior to the expiration of the 90 days that more time is needed to review
the claim and the date by which the Plan expects to render the decision. In no event will the
extension be for more than an additional 90 days.

Appeal of Denied Claim. The claimant may appeal a denied claim by filing an appeal with
the corporate Severance Plan Review Committee within 60 days after the claim is denied. The appeal
should be sent to the Severance Plan Review Committee c/o the Company. As part of the appeal
process the claimant will be given the opportunity to submit written comments and information and
be provided, upon request and free or charge, with copies of documents and other information
relevant to the claim. The review on appeal will take into account all information submitted on
appeal, whether or not it was provided for in the initial benefit determination. A decision will
be made on the appeal within 60 days, unless additional time is needed. If more time is needed,
the claimant will be notified prior to the expiration of the 60 days that up to an additional 60
days is needed and the date by which the Plan expects to render the decision. If the claim is
denied, in whole or in part, on appeal the claimant will receive a written response which will
include (i) the reason(s) for the denial, (ii) references to the specific Plan provisions on which
the denial is based, (iii) a statement that the claimant is entitled to receive, upon request and
free of charge, copies of all documents and other information relevant to the claim on appeal, and
(iv) a description of the Plan’s claims and appeals procedures.

If the claim is denied on appeal, the Officer has the right to bring an action under Section 502(a)
of the Employee Retirement Income Security Act of 1974, as amended. Any claimant must pursue all
claims and appeals procedures described in the Plan document before seeking any other legal
recourse with respect to Plan benefits. In addition, any lawsuit must be filed within six months
from the date of the denied appeal, or two years from the Officer’s termination date, whichever
occurs first.

9.      Amendment. The Company (acting through the Committee) reserves the right at any time to
terminate or amend this Plan in any respect and without the consent of any Officer.

10.    Unfunded Obligations. All benefits due an Officer or the Officer’s beneficiary under this Plan
are unfunded and unsecured and are payable out of the general funds of the Company. The Company,
in its sole and absolute discretion, may establish a trust associated with the payment of Plan
benefits, provided that the trust does not alter the characterization of the Plan as an “unfunded
plan” for purposes of the

6

 

Employee Retirement Income Security Act, as amended. Any such trust shall make distributions in
accordance with the terms of the Plan.

11.    Transferability of Benefits. The right to receive payment of any benefits under this Plan
shall not be transferred, assigned or pledged except by beneficiary designation or by will or under
the laws of descent and distribution.

12.    Taxes. The Company may withhold from any payment due under this Plan any taxes required to be
withheld under applicable federal, state or local tax laws or regulations.

13.    Gender. The use of masculine pronouns in this Plan shall be deemed to include both males and
females.

14.    Construction, Governing Laws. The Plan is intended as (i) a pension plan within the meaning of
Section 3(2) of the Employee Retirement Income Security Act, as amended (“ERISA”), and (ii) an
unfunded pension plan maintained by the Company for a select group of management or highly
compensated employees within the meaning of Department of Labor Regulation 2520.104-23 promulgated
under ERISA, and Sections 201, 301, and 401 of ERISA. Nothing in this Plan creates a vested right
to benefits in any employee or any right to be retained in the employ of the Company. Except to
the extent that federal legislation or applicable regulation shall govern, the validity and
construction of the Plan and each of its provisions shall be subject to and governed by the laws of
the State of California.

15.    Severability. If any provision of the Plan is found, held or deemed to be void, unlawful or
unenforceable under any applicable statute or other controlling law, the remainder of the Plan
shall continue in full force and effect.

7

 

Appendix for Corporate Policy Council (CPC) Officers other than the Chief Executive Officer

The following benefits shall apply for purposes of eligible Officers (other than the Company’s
Chief Executive Officer) who are members of the CPC:

Section 4(a). Lump-sum Cash Severance Payment. The lump sum cash severance payment
shall equal one and one half (1.5) times the sum of (A) one year’s base salary as in effect on
the effective date of the Officer’s termination, plus (B) the Officer’s target annual bonus
established under the Company’s annual incentive plan in which he or she was a participant for
the fiscal year in which the date of termination occurs. No supplemental bonuses or other
bonuses will be combined with the Officer’s annual bonus for purposes of this computation.

Section 4(b). Extension of Medical and Dental Benefits. The Company will continue to
pay its portion of the Officer’s medical and dental benefits for eighteen months following the
Officer’s termination date.

Section 4(d)(i). Financial Planning. If the Officer is eligible for financial
planning reimbursement at the time of termination, the Officer will be reimbursed for any
financial planning fees incurred before his termination date. In addition, the Officer will
be reimbursed for the following financial planning fees incurred after his termination date:
(i) any fees incurred in the year in which the date of termination occurs, provided that the
total financial planning reimbursement for such year (including fees incurred before and after
the date of termination) shall not exceed $15,000 and (ii) any fees incurred in the year
following the year in which the date of termination occurs, provided that the total financial
planning reimbursement for such year shall not exceed $15,000.

 

 

Appendix for non-CPC Officers

The following benefits shall apply for purposes of eligible Officers who are not members of the
CPC:

Section 4(a). Lump-sum Cash Severance Payment. The lump sum cash severance payment
shall equal the sum of (A) one year’s base salary as in effect on the effective date of the
Officer’s termination, plus (B) the Officer’s target annual bonus established under the
Company’s annual incentive plan in which he or she was a participant for the fiscal year in
which the date of termination occurs. No supplemental bonuses or other bonuses will be
combined with the Officer’s annual bonus for purposes of this computation.

Section 4(b). Extension of Medical and Dental Benefits. The Company will continue to
pay its portion of the Officer’s medical and dental benefits for one year following the
Officer’s termination date.

Section 4(d)(i). Financial Planning. If the Officer is eligible for financial
planning reimbursement at the time of termination, the Officer will be reimbursed for any
financial planning fees incurred before his termination date. In addition, the Officer will
be reimbursed for the following financial planning fees incurred after his termination date:
(i) any fees incurred in the year in which the date of termination occurs, provided that the
total financial planning reimbursement for such year (including fees incurred before and after
the date of termination) shall not exceed $5,000 and (ii) any fees incurred in the year
following the year in which the date of termination occurs, provided that the total financial
planning reimbursement for such year shall not exceed $5,000.

 

 

Exhibit A

CONFIDENTIAL SEPARATION AGREEMENT

AND GENERAL RELEASE

	1.0	 	PARTIES:    The parties to this Confidential Separation Agreement and General Release
(“Agreement”) are John Doe (“Mr. Doe”) and NORTHROP GRUMMAN CORPORATION (“Northrop Grumman” or
“the Company”).

	 
	2.0	 	RECITALS:   This Agreement is made regarding the following facts:

	 	2.1	 	Mr. Doe is currently an appointed officer of Northrop Grumman.

	 
	 	2.2	 	In connection with his separation from employment with the Company, Mr. Doe has
been offered severance benefits under the Company’s Severance Plan for Elected and
Appointed Officers (the “Severance Plan”).

	 
	 	2.3	 	The Severance Plan requires that, to receive such benefits, an officer must
sign a Confidential Separation Agreement and General Release. This Agreement satisfies
this requirement.

	 
	 	2.4	 	Mr. Doe has decided to accept the Company’s offer of severance benefits and to
enter into this Agreement.

	3.0	 	CONSIDERATION:    In exchange for Mr. Doe’s promise to abide by all of the terms of
this Agreement, the Company agrees to provide Mr. Doe the severance benefits specified in
section 4 of the Severance Plan in accordance with the terms of the Severance Plan, which
severance benefits include:

	 	3.1	 	Lump-sum Cash Severance.   A payment equal to the sum of $_________,
less applicable withholding. This amount represents the total of [one] times the sum
of (i) Mr. Doe’s annual base salary of $________; and (ii) Mr. Doe’s target annual
bonus of $________ under the Company’s annual incentive plan in which Mr. Doe was a
participant. This amount will be paid to Mr. Doe in a lump sum in accordance with the
terms of the Severance Plan.

	 
	 	3.2	 	Pro Rata Bonus.   A severance payment equal to a pro rata portion of the
bonus Mr. Doe would have received for the ____ performance year pursuant to the terms
of the Company’s annual incentive plan in which Mr. Doe was a participant, in addition
to the lump-sum cash severance payment described in Section 3.1. The bonus will be pro
rated from the beginning of the performance period (January 1) to Mr. Doe’s Separation
Date. For purposes of this severance payment, the pro rata bonus will be based on the
applicable annual incentive plan payout

 

 

	 	 	 	formula, with any Individual Performance Factor (IPF) for Mr. Doe set at 1.00. If
Mr. Doe is covered by the Incentive Compensation Plan (ICP), this severance
payment will not exceed the maximum bonus Mr. Doe would have earned under the ICP
had he remained employed. This severance payment will be paid when annual bonuses
are paid to active employees between February 15 and March 15, ____.

	 	 	 	[Alternative Section 3.2 if termination occurs at year end: Mr. Doe will be paid
a bonus for calendar year _____ pursuant to the terms of the Annual Incentive Plan
(and not the Severance Plan), which will be based on the applicable incentive plan
payout formula, with the Individual Performance Factor for Mr. Doe set at no less
than 1.0. This bonus will be paid to Mr. Doe when annual bonuses are paid to
employees between February 15 and March 15, ____.]

	 
	 	3.3	 	Medical and Dental Coverage Continuation.    Mr. Doe may elect to
continue his medical and dental coverage in effect as of the Separation Date (as
defined in Section 4.0 below) for [twelve] months, provided he pays his portion of the
cost of such coverage with after-tax dollars. The Company will continue to pay its
portion of the cost of Mr. Doe’s medical and dental benefits for the [twelve] month
continuation period. If rates for active employees increase during this continuation
period, Mr. Doe’s contribution will increase proportionately. Also, if medical and
dental benefits are modified or terminated for active employees during this
continuation period, Mr. Doe’s benefits shall be subject to this modification or
termination. Mr. Doe’s medical and dental benefits shall be reduced to the extent Mr.
Doe is eligible for benefits or payments for the same occurrence under another
employer-sponsored plan to which Mr. Doe is entitled because of his employment after
the Separation Date. This continuation coverage shall run concurrently with coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (or similar
state law coverage) and shall be in lieu of such coverage. Following the continuation
period, Mr. Doe shall be eligible to receive COBRA benefits for any remaining portion
of the applicable COBRA period at normal COBRA rates.

	 
	 	3.4	 	Other Fringe Benefits.      Pursuant to the terms of the Executive
Perquisite Program for appointed officers (the “Program”), Mr. Doe will be reimbursed
for any eligible financial planning fees incurred during [year of Separation Date]
(regardless of whether such fees are incurred before or after the Separation Date) and
the immediately following year, subject to a maximum reimbursement for each year equal
to [$5,000]. Mr. Doe will be reimbursed for the cost of reasonable outplacement
services from the Company’s outplacement service provider during the one year period
following his Separation Date; provided, however that the total outplacement services
reimbursement shall be no greater than $______. All outplacement services will be
subject to the Company’s

2

 

	 	 	 	current contract with the provider. The reimbursements provided for in this
Section 3.4 are subject to the terms and conditions of, and will be reimbursed to
Mr. Doe within the applicable time periods specified in, the Severance Plan.
Except as provided in this Section 3.4, all perquisites shall cease as of the
Separation Date.

	 	3.5	 	Not Pension Eligible Compensation.    [If alternative Section 3.2 is
used: Except for the bonus provided in Section 3.2,] None of the consideration or
payments made pursuant to the Severance Plan and specified in this Agreement shall be
eligible as compensation under any Company retirement, pension or benefit plan.

	4.0	 	SEPARATION FROM EMPLOYMENT:      Mr. Doe’s employment will be terminated by the Company
effective _________. This shall be his Separation Date.

	 
	5.0	 	COMPLETE RELEASE:     In exchange for the consideration described in Section 3, Mr. Doe
RELEASES the Company from liability for any claims, demands or causes of action (except as
described in Section 5.5). This Release applies not only to the “Company” itself, but also to
all Northrop Grumman subsidiaries, affiliates, related companies, predecessors, successors,
its or their employee benefit plans, trustees, fiduciaries and administrators, and any and all
of its and their respective past or present officers, directors, agents and employees
(“Released Parties”). For purposes of this Release, the term “Mr. Doe” includes not only Mr.
Doe himself, but also his heirs, spouses or former spouses, domestic partners or former
domestic partners, executors and agents. Except as described in Section 5.5, this Release
extinguishes all of Mr. Doe’s claims, demands or causes of action, known or unknown, against
the Company and the Released Parties, based on anything occurring on or before the date Mr.
Doe signs this Agreement.

	 	5.1	 	This Release includes, but is not limited to, claims relating to Mr. Doe’s
employment or termination of employment by the Company and any Released Party, any
rights of continued employment, reinstatement or reemployment by the Company and any
Released Party, claims relating to or arising under Company or Released Party dispute
resolution procedures, claims for any costs or attorneys’ fees incurred by Mr. Doe, and
claims for severance benefits other than those listed herein. Mr. Doe acknowledges and
agrees that payment to him of the benefits set forth in this Agreement will fully
satisfy any rights he may have for benefits under any severance plan of any of the
Released Parties.

	 
	 	5.2	 	This Release includes, but is not limited to, claims arising under the Age
Discrimination in Employment Act, the Family and Medical Leave Act, the Employee
Retirement Income Security Act, the False Claims Act, Executive Order No. 11246, the
Civil Rights Act of 1991, and 42 U.S.C. § 1981. It also includes, but is not limited
to, claims under 

3

 

	 	 	 	Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment based on
race, color, religion, sex or national origin, and retaliation; the Americans with
Disabilities Act, which prohibits discrimination in employment based on
disability, and retaliation; any laws prohibiting discrimination in employment
based on veteran status; any applicable state human rights statutes including the
[insert applicable state law, such as: California Fair Employment and Housing
Act, which prohibits discrimination in employment based on race, religious creed,
color, national origin, ancestry, physical disability, mental disability, medical
condition, marital status, sex, age, or sexual orientation]; and any other
federal, state or local laws, ordinances, regulations and common law, to the
fullest extent permitted by law.

	 	5.3	 	This Release also includes, but is not limited to, any rights, claims, causes
of action, demands, damages or costs arising under or in relation to the personnel
policies or employee handbooks of the Company and any Released Party, or any oral or
written representations or statements made by the Company and any Released Party, past
and present, or any claim for wrongful discharge, breach of contract (including any
employment agreement), breach of the implied covenant of good faith and fair dealing,
intentional or negligent infliction of emotional distress, intentional or negligent
misrepresentation, or defamation.

	 
	 	5.4	 	[California version:]

	 
	 	 	 	Mr. Doe waives and gives up all rights he may have under Section 1542 of the
California Civil code, which provides as follows:

A general release does not extend to claims which the
creditor does not know or suspect to exist in his or her
favor at the time of executing the release, which if
known by him or her must have materially affected his or
her settlement with the debtor.

	 	 	 	Notwithstanding the provisions of Section 1542, Mr. Doe agrees that his Release
includes claims which he did not know of or suspect to exist at the time he signed
this Agreement, and that this Release extinguishes all known and unknown claims.

	 
	 	 	 	[Alternative outside CA:]
	 
	 	 	 	[This Release includes both known and unknown claims. Mr. Doe agrees that this
Release includes claims he did not know or suspect to exist at the time he signed
this Agreement, and that this Release extinguishes all known and unknown claims.]

	 
	 	5.5	 	However, this Release does not include any rights Mr. Doe may have:

4

 

	 	 	 	(1) to enforce this Agreement and his rights to receive the benefits described in Section 3
of this Agreement; (2) to any indemnification rights Mr. Doe may have for expenses or
losses incurred in the course and scope of his employment; (3) to test the knowing and
voluntary nature of this Agreement under The Older Workers Benefit Protection Act; (4)
to workers’ compensation benefits; (5) to earned, banked or accrued but unused vacation
pay; (6) to rights under minimum wage and overtime laws; (7) to vested benefits under
any pension or savings plan; (8) to continued benefits in accordance with COBRA; (9) to
government-provided unemployment insurance; (10) to file a claim or charge with any
government administrative agency (although Mr. Doe is releasing any rights he may have
to recover damages or other relief in connection with the filing of such a claim or
charge); (11) to claims that cannot lawfully be released; (12) to any rights Mr. Doe
may have for retiree medical coverage; (13) to any rights Mr. Doe may have with respect
to his existing equity grants under the Company’s Long Term Incentive Stock Plan; or
(14) to claims arising after the date Mr. Doe signs this Agreement.

	6.0	 	ARBITRATION:  If either the Company or Mr. Doe decides to sue the other over the
enforceability of this Agreement, or for violating this Agreement, all such claims will be
determined through final and binding arbitration, rather than through litigation in court, in
accordance with Northrop Grumman Corporate Procedure H103A. If the Company or Mr. Doe wants
immediate relief, before the arbitration is finished, then either party may go to a court with
jurisdiction over the dispute, and ask the court for provisional injunctive or other equitable
relief until the arbitrator has issued an award or the dispute is otherwise resolved. Any
court with jurisdiction over the dispute may enter judgment on the arbitrator’s award.
Notwithstanding the provisions of H103A, the Company and Mr. Doe agree that the prevailing
party in the arbitration shall be entitled to receive from the losing party reasonably
incurred attorneys’ fees and costs incurred in enforcing this Agreement, except in any
challenge by Mr. Doe to the validity of this Agreement under the Age Discrimination in
Employment Act and/or Older Workers Benefit Protection Act.

	 
	7.0	 	CONFIDENTIALITY:

	 	7.1	 	Mr. Doe agrees that he will keep the terms and fact of the Agreement completely
confidential, and that he will not disclose any specific information regarding the
terms and conditions of the Agreement to anyone other than his spouse, domestic
partner, attorney, or accountant, except as necessary to enforce the Agreement, to
comply with the law or lawful discovery, in response to a court order, or for tax or
accounting purposes.

	 
	 	7.2	 	Should Mr. Doe choose to disclose the terms or fact of this Agreement to his
spouse, domestic partner, attorney, or accountant, Mr. Doe agrees

5

 

	 	 	 	that he will advise them that they will also be under an obligation to keep the
terms and fact of this Agreement completely confidential.

	 	7.3	 	Despite this confidentiality obligation, Mr. Doe, his legal counsel, his spouse
or domestic partner, and his accountant are permitted to: (1) disclose the terms or the
fact of this Agreement when required to do so by law, by any court or administrative
agency (including state or federal taxing authorities), and by any tribunal of
appropriate jurisdiction; and (2) provide truthful testimony about Mr. Doe’s employment
with the Company or the Company’s business activities to any government or regulatory
agency, or in any court proceeding.

	8.0	 	RETURN OF COMPANY PROPERTY:    Mr. Doe agrees to return any and all property and
equipment of the Company and any Released Party that he may have in his possession no later
than the Separation Date, except to the extent this Agreement explicitly provides to the
contrary.

	 
	9.0	 	FULL DISCLOSURE:   Mr. Doe acknowledges that he is not aware of, or has fully
disclosed to the Company any matters for which he was responsible or came to his attention as
an employee, which might give rise to any claim or cause of action against the Company and any
Released Party. Mr. Doe has reported to the Company all work-related injuries, if any, that
he has suffered or sustained during his employment with the Company and any Released Party.
Mr. Doe has properly reported all hours he worked.

	 
	10.0	 	NO UNRESOLVED CLAIMS:    This Agreement has been entered into with the understanding
that there are no unresolved claims of any nature which Mr. Doe has against the Company. Mr.
Doe acknowledges and agrees that except as specified in Section 3, all compensation, benefits,
and other obligations due Mr. Doe by the Company, whether by contract or by law, have been
paid or otherwise satisfied in full.

	 
	11.0	 	WITHHOLDING OF TAXES:    The Company shall be entitled to withhold from any amounts
payable or pursuant to this Agreement all taxes as legally shall be required (including,
without limitation, United States federal taxes, and any other state, city or local taxes).

	 
	12.0	 	ADVICE OF COUNSEL; PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT:     The Company
encourages Mr. Doe to seek and receive advice about this Agreement from an attorney of his
choosing. Mr. Doe has twenty-one (21) calendar days [Alternative: forty-five (45) calendar
days. Note: If this alternative is used, add attachments re program eligibility factors,
selection information, and job titles and ages of employees selected/not selected] from his
initial receipt of this Agreement to review and consider it. Mr. Doe understands that he may
use as much of this review period as he wishes before signing this Agreement. If Mr. Doe has
executed this Agreement before the end of such review period, he represents and agrees that he
does so voluntarily and of his

6

 

	 	 	own free will.

	 
	13.0	 	RIGHT TO REVOKE AGREEMENT:  Mr. Doe may revoke this Agreement within seven (7)
calendar days of his signature date. To do so, Mr. Doe must deliver a written revocation
notice to [fill in name, title and address.] Mr. Doe must deliver the notice to [name] no
later than 4:30 p.m. [PT] on the seventh calendar day after Mr. Doe’s signature date. If Mr.
Doe revokes this Agreement, it shall not be effective or enforceable, and Mr. Doe will not
receive the benefits described in Section 3 of this Agreement.

	 
	14.0	 	DENIAL OF WRONGDOING:  Neither party, by signing this Agreement, admits any
wrongdoing or liability to the other. Both the Company and Mr. Doe deny any such wrongdoing
or liability.

	 
	15.0	 	COOPERATION:  Mr. Doe agrees that, for at least two (2) years following the
Separation Date, he will reasonably cooperate with Company and any Released Party regarding
requests for assistance by serving as a witness or providing information about matters
connected with Mr. Doe’s prior employment with the Company or any Released Party. The Company
or the Released Party requesting assistance shall reimburse Mr. Doe for any travel costs he
incurs in connection with his cooperation, in accordance with its travel cost reimbursement
policy for active employees.

	 
	16.0	 	NON-SOLICITATION AND NON-DISPARAGEMENT:

	 	16.1	 	By Mr. Doe:  For a period of one year following the Separation Date,
Mr. Doe shall not, directly or indirectly, through aid, assistance, or counsel, on his
own behalf or on behalf of another person or entity (i) solicit or offer to hire
[Alternative outside CA: , or hire,] any person who was within a period of six months
prior to the Separation Date employed by the Company, or (ii) by any means issue or
communicate any public statement that may be critical or disparaging of the Company,
its products, services, officers, directors, or employees; provided that the foregoing
shall not apply to any truthful statements made in compliance with legal process or
governmental inquiry.

	 
	 	16.2	 	By the Company:  For a period of one year following the Separation
Date, the Company shall not by any means issue or communicate any public statement that
may be critical or disparaging of Mr. Doe, provided that the foregoing shall not apply
to truthful statements made in compliance with legal process, governmental inquiry, or
as required by legal filing or disclosure requirements.

	17.0	 	SEVERABILITY:  The provisions of this Agreement are severable. If any part of this
Agreement, other than Section 5, is found to be illegal or invalid and thereby unenforceable,
then the unenforceable part shall be removed, and the rest of the Agreement shall remain valid
and enforceable.

7

 

	18.0	 	SOLE AND ENTIRE AGREEMENT:    This Agreement, together with relevant provision of the
Severance Plan, expresses the entire understanding between the Company and Mr. Doe on the
matters it covers. It supersedes all prior discussions, agreements, understandings and
negotiations between the parties on these matters, except that any writing between the Company
and Mr. Doe relating to protection of Company trade secrets or intellectual property shall
remain in effect.

	 
	19.0	 	MODIFICATION:   Once this Agreement takes effect, it may not be cancelled or changed,
unless done so in a document signed by both Mr. Doe and an authorized Company representative.

	 
	20.0	 	GOVERNING LAW:    This Agreement shall be interpreted and enforced in accordance with
the laws of the State of [California], without regard to rules regarding conflicts of law.

	 
	21.0	 	ADVICE OF COUNSEL; VOLUNTARY AGREEMENT:

	 
	 	 	MR. DOE ACKNOWLEDGES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS, CONFER
WITH COUNSEL, AND CONSIDER ALL OF THE PROVISIONS OF THIS AGREEMENT BEFORE
SIGNING IT. HE FURTHER AGREES THAT HE HAS READ THIS AGREEMENT
CAREFULLY, THAT HE UNDERSTANDS IT, AND THAT HE IS VOLUNTARILY
ENTERING INTO IT. MR. DOE UNDERSTANDS AND ACKNOWLEDGES THAT THIS AGREEMENT
CONTAINS HIS RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

	 	 	 	 	 	 	 	 	 	 	 
	 

	Date:

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	  Northrop Grumman Corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	  Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

8EX-10.(u)

Exhibit 10(u)

NORTHROP GRUMMAN

DEFERRED COMPENSATION PLAN

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

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	ARTICLE I DEFINITIONS	 	2
	 
	 	 	 	 
	1.1
	 	Definitions	 	2
	 
	 	 	 	 
	ARTICLE II PARTICIPATION	 	6
	 
	 	 	 	 
	2.1
	 	In General	 	6
	2.2
	 	Disputes as to Employment Status	 	6
	2.3
	 	Cessation of Eligibility	 	6
	 
	 	 	 	 
	ARTICLE III DEFERRAL ELECTIONS	 	7
	 
	 	 	 	 
	3.1
	 	Elections to Defer Compensation	 	7
	3.2
	 	Crediting of Deferrals.	 	7
	3.3
	 	Investment Elections	 	7
	3.4
	 	Investment Return Not Guaranteed	 	8
	 
	 	 	 	 
	ARTICLE IV ACCOUNTS AND TRUST FUNDING	 	9
	 
	 	 	 	 
	4.1
	 	Accounts	 	9
	4.2
	 	Use of a Trust	 	9
	 
	 	 	 	 
	ARTICLE V VESTING	 	10
	 
	 	 	 	 
	5.1
	 	In General	 	10
	5.2
	 	Exceptions	 	10
	 
	 	 	 	 
	ARTICLE VI DISTRIBUTIONS	 	11
	 
	 	 	 	 
	6.1
	 	Distribution of Deferred Compensation Contributions	 	11
	6.2
	 	Withdrawals for Unforeseeable Emergency	 	13
	6.3
	 	Payments Not Received At Death	 	13
	6.4
	 	Inability to Locate Participant	 	13
	6.5
	 	Committee Rules	 	13
	 
	 	 	 	 
	ARTICLE VII ADMINISTRATION	 	14
	 
	 	 	 	 
	7.1
	 	Committees	 	14
	7.2
	 	Committee Action	 	14
	7.3
	 	Powers and Duties of the Administrative Committee	 	14
	7.4
	 	Powers and Duties of the Investment Committee	 	15
	7.5
	 	Construction and Interpretation	 	15
	7.6
	 	Information	 	16
	7.7
	 	Committee Compensation, Expenses and Indemnity	 	16
	7.8
	 	Disputes	 	16

 

 

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS	 	17
	 
	 	 	 	 
	8.1
	 	Unsecured General Creditor	 	17
	8.2
	 	Restriction Against Assignment	 	17
	8.3
	 	Restriction Against Double Payment	 	18
	8.4
	 	Withholding	 	18
	8.5
	 	Amendment, Modification, Suspension or Termination	 	18
	8.6
	 	Governing Law	 	19
	8.7
	 	Receipt or Release	 	19
	8.8
	 	Payments on Behalf of Persons Under Incapacity	 	19
	8.9
	 	Limitation of Rights and Employment Relationship	 	19
	8.10
	 	Headings	 	19
	8.11
	 	2001 Reorganization	 	19
	 
	 	 	 	 
	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
	B.2
	 	Early Non-Scheduled Distributions	 	2
	B.3
	 	Hardship Distribution	 	3
	B.4
	 	Plan Termination	 	3
	 
	 	 	 	 
	APPENDIX C TRANSFER OF LIABILITIES —  NORTHROP GRUMMAN EXECUTIVE DEFERRED
COMPENSATION PLAN	 	1
	 
	 	 	 	 
	C.1
	 	Background	 	1
	C.2
	 	Treatment of Transferred Liabilities	 	1
	C.3
	 	Investments	 	1
	C.4
	 	Distributions	 	1
	C.5
	 	Other Provisions	 	2
	 
	 	 	 	 
	APPENDIX D TRANSFER OF LIABILITIES —  AEROJET-GENERAL LIABILITIES	 	1
	 
	 	 	 	 
	D.1
	 	Background	 	1
	D.2
	 	Treatment of Transferred Liabilities	 	2
	D.3
	 	Investments	 	2
	D.4
	 	Distributions	 	2
	D.5
	 	Other Provisions	 	2

-ii-

 

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	APPENDIX E TRANSFER OF LIABILITIES — TASC, INC. SUPPLEMENTAL RETIREMENT PLAN	 	1
	 
	 	 	 	 
	E.1
	 	Background	 	1
	E.2
	 	Treatment of Transferred Liabilities	 	1
	E.3
	 	Investments	 	1
	E.4
	 	Distributions	 	1
	E.5
	 	Other Provisions	 	1
	 
	 	 	 	 
	APPENDIX F 2008 TRANSITION RELIEF	 	1

-iii-

 

NORTHROP GRUMMAN

DEFERRED COMPENSATION PLAN

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

The Northrop Grumman Deferred Compensation Plan (the “Plan”) was amended and restated effective as
of January 1, 2009. This restatement, effective January 1, 2011, amends the January 1, 2009 version
of the Plan and provides that no further amounts shall be deferred under the Plan.

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.

-1-

 

ARTICLE I

DEFINITIONS

	 	1.1	 	Definitions

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

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

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

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

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

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

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

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

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

-2-

 

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

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

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

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

          (g) “Bonuses” shall mean the bonuses earned under the Company’s formal incentive plans, as
defined by the Administrative Committee, and payable while a Participant is an Employee.

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

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

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

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

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

-3-

 

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

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

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

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

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

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

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

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

          (r) “Initial Election Period” shall mean:

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

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

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

-4-

 

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

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

          (w) “Payment Date” shall mean:

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

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

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

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

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

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

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

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

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

-5-

 

ARTICLE II

PARTICIPATION

	 	2.1	 	In General

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

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

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

	 	2.2	 	Disputes as to Employment Status

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

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

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

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

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

	 	2.3	 	Cessation of Eligibility

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

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

-6-

 

ARTICLE III

DEFERRAL ELECTIONS

	 	3.1	 	Elections to Defer Compensation

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

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

          (c) General Rules for all Elections. The Administrative Committee may establish
procedures for elections and set limits and other requirements on the amount of Compensation that
may be deferred. The Administrative Committee may change these rules from time to time. Deferral
elections shall address distribution of the deferred amounts as described in Section 6.1.

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

          (e) Cancellation of Election. If a Participant becomes disabled (as defined under Code
Section 409A) or obtains a distribution on account of an Unforeseeable Emergency under Section 6.2
during a Plan Year, his deferral election for such Plan Year shall be cancelled.

	 	3.2	 	Crediting of Deferrals.

          (a) In General. 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.

          (b) Cessation of Crediting. Effective January 1, 2011, no further amounts will be
deferred under the Plan and credited to Participant Accounts.

	 	3.3	 	Investment Elections

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

-7-

 

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

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

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

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

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

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

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

	 	3.4	 	Investment Return Not Guaranteed

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

-8-

 

ARTICLE IV

ACCOUNTS AND TRUST FUNDING

	 	4.1	 	Accounts

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

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

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

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

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

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

	 	4.2	 	Use of a Trust

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

-9-

 

ARTICLE V

VESTING

	 	5.1	 	In General

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

	 	5.2	 	Exceptions

          The following exceptions apply to the vesting rule:

          (a) Forfeitures on account of a lost payee. See Section 6.4.

          (b) Forfeitures under an escheat law.

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

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

          (e) Investment losses.

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

-10-

 

ARTICLE VI

DISTRIBUTIONS

	 	6.1	 	Distribution of Deferred Compensation Contributions

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

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

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

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

-11-

 

coincident with or next following
the Participant’s Separation from Service. The initial payment
of such an installment series shall include any installment payments that would have otherwise
been made during the period of delay.

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

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

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

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

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

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

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

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

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

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

-12-

 

	 	6.2	 	Withdrawals for Unforeseeable Emergency

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

	 	6.3	 	Payments Not Received At Death

          In the event of the death of a Participant before receiving a payment, payment will be made to
his or her estate if death occurs on or after the date of a check which has been issued by the
Plan. Otherwise, payment of the amount will be made to the Participant’s Beneficiary.

	 	6.4	 	Inability to Locate Participant

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

	 	6.5	 	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.

-13-

 

ARTICLE VII

ADMINISTRATION

	 	7.1	 	Committees

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

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

	 	7.2	 	Committee Action

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

	 	7.3	 	Powers and Duties of the Administrative Committee

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

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

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

-14-

 

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

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

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

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

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

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

	 	7.4	 	Powers and Duties of the Investment Committee

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

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

          (b) To oversee any rabbi trust; and

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

	 	7.5	 	Construction and Interpretation

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

-15-

 

	 	7.6	 	Information

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

	 	7.7	 	Committee Compensation, Expenses and Indemnity

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

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

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

	 	7.8	 	Disputes

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

-16-

 

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;

-17-

 

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

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

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

	 	8.3	 	Restriction Against Double Payment

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

	 	8.4	 	Withholding

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

	 	8.5	 	Amendment, Modification, Suspension or Termination

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

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

-18-

 

	 	8.6	 	Governing Law

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

	 	8.7	 	Receipt or Release

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

	 	8.8	 	Payments on Behalf of Persons Under Incapacity

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

	 	8.9	 	Limitation of Rights and Employment Relationship

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

	 	8.10	 	Headings

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

	 	8.11	 	2001 Reorganization

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

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

-19-

 

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

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

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

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

* * *

          IN WITNESS WHEREOF, this Amendment and Restatement is hereby executed by a duly authorized
officer on this 20th day of December, 2010.

	 	 	 	 	 
	 	NORTHROP GRUMMAN CORPORATION

 	 
	 	By:  	/s/ Debora L. Catsavas
 	 
	 	 	Debora L. Catsavas 	 
	 	 	Vice President, Compensation, Benefits &
International 	 

-20-

 

	 	 	 	 	 

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.

-A1-

 

APPENDIX B

DISTRIBUTION RULES FOR PRE-2005 AMOUNTS

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

	 	B.1 	 	 Distribution of Contributions

          (a) Distributions Upon Early Termination

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

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

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

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

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

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

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

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

-B1-

 

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

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

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

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

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

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

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

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

	 	B.2 	 	 Early Non-Scheduled Distributions

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

-B2-

 

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

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

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

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

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

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

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

	 	B.3 	 	 Hardship Distribution

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

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

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

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

	 	B.4 	 	 Plan Termination

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

-B3-

 

APPENDIX C

TRANSFER OF LIABILITIES — 

NORTHROP GRUMMAN EXECUTIVE DEFERRED COMPENSATION PLAN

	 	C.1 	 	 Background

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

	 	C.2 	 	 Treatment of Transferred Liabilities

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

	 	C.3 	 	 Investments

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

	 	C.4  	 	Distributions

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

          (a) Section B.1

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

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

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

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

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

-C1-

 

	 	C.5 	 	 Other Provisions

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

-C2-

 

APPENDIX D

TRANSFER OF LIABILITIES — 

AEROJET-GENERAL LIABILITIES

	 	D.1 	 	 Background

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

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

* * * * *

	 	10.6	 	Unfunded Deferred Compensation

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

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

* * * * *

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

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

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

-D1-

 

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

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

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

	 	D.2 	 	 Treatment of Transferred Liabilities

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

	 	D.3 	 	 Investments

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

	 	D.4 	 	 Distributions

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

          (a) Section B.1

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

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

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

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

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

	 	D.5 	 	 Other Provisions

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

-D2-

 

APPENDIX E

TRANSFER OF LIABILITIES — TASC, INC. SUPPLEMENTAL RETIREMENT PLAN

	 	E.1 	 	 Background

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

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

	 	E.2 	 	 Treatment of Transferred Liabilities

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

	 	E.3 	 	 Investments

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

	 	E.4 	 	 Distributions

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

	 	E.5 	 	 Other Provisions

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

-E1-

 

APPENDIX F

2008 TRANSITION RELIEF

     Pursuant to transition rules under Code section 409A, during a specified period in 2008,
Participants who had previously elected in 2008 to defer amounts that would otherwise be payable in
2009 may make a new election with respect to such amounts. Such an election must provide for a
lower deferral percentage for each compensation category than the originally elected percentage.
And if a Participant makes such an election, the Participant may also make a new distribution
election (in accordance with the Plan’s distribution rules in Section 6.1) for such amounts.

-F1-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00184-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00184-of-00352.parquet"}]]