Document:

Transition Agreement dated as of February 19, 2003

Exhibit 10(mm) 
 
TRANSITION AGREEMENT 
 
This TRANSITION AGREEMENT (this “Agreement”) is entered into as of February 19, 2003 by and
between NORTHROP GRUMMAN CORPORATION, a Delaware corporation (the “Company”), and KENT KRESA (“Mr. Kresa”). 
 
RECITALS 
 
WHEREAS, Mr. Kresa is currently employed by and is the Chairman of the Board of Directors (the “Board”) and Chief
Executive Officer of the Company; 
 
WHEREAS, Mr. Kresa will attain age 65 in March 2003 and has determined to retire from employment with and as Chief Executive Officer of the Company as of April 1, 2003 pursuant to the Company’s policy regarding the
retirement of officers at age 65; 
 
WHEREAS, following his retirement on April 1, Mr. Kresa will continue as a non-employee member of the Company’s Board and as Chairman of the Board until the Board elects a different Chairman, which is not anticipated to
occur any sooner than six months following Mr. Kresa’s retirement from employment; 
 
WHEREAS, the Company desires to have the continued benefit of Mr. Kresa’s knowledge and expertise for a two-year period following the date that Mr. Kresa ceases to be Chairman of the Board
and Mr. Kresa desires to provide such services as the Company may reasonably require during such period of time; 
 
AGREEMENT 
 
Mr. Kresa and the Company agree as follows: 
 

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	I.	 	ENGAGEMENT 

 
Following his retirement from employment, Mr. Kresa shall continue to serve as a non-employee Chairman of the Board until the Board
determines to elect a new Chairman. Mr. Kresa shall resign as Chairman of the Board, as a member of the Board, and as a member of any Board of Directors of any Company affiliate on which he may then serve, when a new Chairman of the Board is elected
(such date is referred to as the “Consulting Period Commencement Date”). The Company hereby retains Mr. Kresa to provide such advice, and participate in such meetings and events for the Company’s benefit, as may be requested by the
Company during the “Consulting Period” described in Section IV.B. Mr. Kresa’s principal point of contact at the Company with respect to the specific nature and scope of the services to be provided during the Consulting Period shall be
the Company’s Chief Executive Officer or his designee. Mr. Kresa shall provide reports of his activities as the Company may reasonably require from time to time. Notwithstanding anything else contained herein to the contrary, this Agreement
shall be null and void in its entirety if Mr. Kresa either: (1) does not retire from employment with the Company and its affiliates on or about April 1, 2003; (2) does not execute and deliver to the Company upon or within the thirty day period
following his retirement date a release substantially in the form of Attachment A hereto; or (3) revokes such release. 
 

	II.	 	SPECIAL BENEFITS IN CONNECTION WITH MR. KRESA’S RETIREMENT.  

 
A. Benefits Subject to Tax Gross-Up. Mr.
Kresa (or, in the event of his death, his widow) shall be allowed to retain the personal computer, cell phone and similar electronic equipment provided to Mr. Kresa by the Company that he was using as of the date of his retirement. The Company will
transfer to Mr. Kresa (or, in the event of his death at a time when he is married, his widow) 
 

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and/or permit him (or her) to retain the membership in the Los Angeles Country Club which is currently
used by him. Until the earlier of Mr. Kresa’s death or April 1, 2008, the Company shall provide Mr. Kresa with a suitable furnished office and all related reasonable office support (including reasonable office equipment and parking), reasonable
information technology support, secretarial support, and substantially the same level of home security protection as is currently provided to Mr. Kresa by the Company. 
 
In the event that Mr. Kresa (or, in the event of his death at a time when he is married, his widow) incurs
any tax liability related to the benefits referred to in the preceding paragraph, the Company shall make an additional payment to Mr. Kresa (or his widow, as applicable) (a “gross-up payment”) to put him (or her) in the same after-tax
position as if such benefits were not taxable to Mr. Kresa (or his widow, as the case may be). 
 
B. Pro-Rata ICP Payment. Pursuant to the retirement practices of the Company, Mr. Kresa shall be eligible to receive an annual bonus for 2003 under the Company’s 2002
Incentive Compensation Plan. The amount of such bonus shall be calculated pursuant to the terms of the Incentive Compensation Plan in which Mr. Kresa currently participates multiplied by a fraction, the numerator of which is the number of days in
2003 that Mr. Kresa was employed by the Company prior to his retirement and the denominator of which is 365. 
 
C. Equity and Incentive Plan Awards. Mr. Kresa’s rights with respect to stock options, restricted stock rights
(“RSRs”), and restricted stock performance rights (“RPSRs”) previously granted by the Company shall be governed by the terms of the applicable grant agreements (as previously amended), the applicable stock incentive plan, and the
guide to administration for the applicable stock incentive plan. Mr. Kresa shall not be entitled to any new equity or incentive plan award. By way of clarification to the existing terms of Mr. Kresa’s awards, if a Change in Control (as such
term is defined in the Special 
 

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Agreement) of the Company occurs after the date of this Agreement, the then-outstanding and previously
unvested stock options and RSRs granted by the Company to Mr. Kresa shall thereupon become fully vested and the RPSR performance period will be prorated and grants will be made based upon Company performance at that time. 
 
D. Benefits Not Subject to Tax
Gross-up. The Company shall provide Mr. Kresa with the following benefits until the earlier of (1) Mr. Kresa’s death, or (2) April 1, 2008: 
 

	 	•	 	reimbursement of up to $30,000 per year, in the aggregate, for Mr. Kresa’s financial planning and income tax preparation expenses and club memberships; and

 

	 	•	 	reasonable access to Company aircraft for personal use, subject to availability and payment or reimbursement by Mr. Kresa at direct operating cost.

 
In the event that Mr. Kresa dies
before April 1, 2008 and he is married at the time of his death, the Company shall continue to reimburse Mr. Kresa’s widow for up to $30,000 per year, in the aggregate (and after reducing any reimbursement obligation for the year of Mr.
Kresa’s death by the amount of any such expenses incurred by Mr. Kresa in that year and prior to his death that the Company is obligated to reimburse pursuant to the foregoing), for her financial planning and income tax preparation expenses and
club memberships; provided that such reimbursement obligation shall terminate on the earlier of Mr. Kresa’s widow’s death or April 1, 2008. 
 
In addition to the foregoing, at the time of his retirement Mr. Kresa may purchase the two Dawson paintings that are currently in his
office for their fair market value. 
 
E.
Retirement and Other Benefits. Mr. Kresa’s rights to receive benefits under retirement, deferred compensation, estate enhancement and 
 

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welfare plans and programs of Northrop Grumman will be determined in accordance with the existing terms of
such plans and programs. These benefits include post-retirement medical coverage under the Special Officer Retiree Medical Plan. 
 

	III.	 	COMPENSATION FOR SERVICES AS A DIRECTOR 

 
As consideration for Mr. Kresa’s continued services as Chairman of the Board, the Company shall pay Mr. Kresa a director’s fee
of $164,500 for each full or partial month of Mr. Kresa’s services as Chairman of the Board commencing with April 2003 and ending with the month in which Mr. Kresa ceases to be Chairman of the Board. Mr. Kresa shall have no right to any other
compensation (including, without limitation, directors fees, stock options or other equity awards, or other compensation or benefits otherwise payable or to be paid to the other members of the Board) for his services as a non-employee Chairman and
as a non-employee member of the Board for such period of time. However, Mr. Kresa will be reimbursed for expenses pursuant to Section V A of this Agreement. 
 

	IV.	 	CONSULTING SERVICES 

 
A. Place of Engagement. Mr. Kresa shall perform the services called for under this Agreement during the
Consulting Period in Los Angeles, California and in such other places and at such times as the Company and Mr. Kresa may mutually agree. 
 
B. Term of Consulting Period. This Consulting Period shall commence as of the Consulting Period Commencement
Date and shall end on the second anniversary of the Consulting Period Commencement Date. The Consulting Period may be renewed or extended for such time as the Company and Mr. Kresa may agree upon in writing. 
 

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C.
Consulting Fee. Mr. Kresa agrees to make himself available to perform services for the Company no less than three (3) days per month during the Consulting Period. The Company shall pay Mr. Kresa a fixed $15,000 per full or partial
month during the Consulting Period for such services. To the extent that Mr. Kresa performs services for the Company on more than (3) days in any month during the Consulting Period, the Company shall pay Mr. Kresa an additional amount equal to
$5,000 multiplied by the result of (A) the total number of full or partial days worked by Mr. Kresa in performing services for the Company during such month, less (B) three (3). Mr. Kresa shall, on a monthly basis, notify the Company in writing of
his services performed for the Company in the preceding month in the event he performed services for the Company in such month on more than three (3) days. Any consulting fee due for a calendar month shall be paid by the Company promptly after the
end of such month (or, in the case of any amount due for services in excess of the minimum three (3) day commitment, promptly after the earlier of the end of such month or the Company’s receipt of a report from Mr. Kresa which notifies the
Company of such services). Mr. Kresa acknowledges and agrees that by accepting these consulting payments he is certifying his compliance with the provisions of this Agreement. 
 

	V.	 	EXPENSES; MISCELLANEOUS COMPENSATION PROVISIONS 

 
A. Expenses. The Company shall reimburse Mr. Kresa for all reasonable and necessary
business expenses, including first class airfare and accommodations, incurred by Mr. Kresa in connection with the rendering of services hereunder. Claims for expenses must be in accordance with the Company’s established policies and limitations
pertaining to allowable expenses and documented pursuant to the procedures applicable to the Company’s officers. Mr. Kresa shall be entitled to reasonable and necessary use of Company aircraft in connection with the rendering of services
hereunder, subject 
 

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to availability and the Company’s aircraft policies in effect from time to time applicable to the
Company’s officers. 
 
B. Full
Extent Of Compensation. Unless otherwise specifically stated in writing, this Agreement describes the full extent of compensation Mr. Kresa shall receive for his services to the Company on and after the date hereof. 
 
C. Warranty. Mr. Kresa certifies and
warrants that in the course of performing services under this Agreement, no payments will be made to government officials or customer representatives, that no government official or customer representative has any direct or indirect investment
interest or interest in the revenues or profits of Mr. Kresa, and that no expenditure for other than lawful purposes will be made. 
 
D. Exclusion Of Lobbying Costs From Overhead Rates. The Company is prohibited from charging, directly or indirectly,
costs associated with lobbying activities to its contracts with the United States Government. Unallowable costs associated with lobbying activities are defined at Federal Acquisition Regulations (FAR) 31.205-22, effective as of the date of this
Agreement. Mr. Kresa agrees that in the event that Mr. Kresa performs lobbying activities under this Agreement, Mr. Kresa shall provide the Company with a detailed accounting of time expended, individual agency/congressional employees contacted, and
the Company programs discussed in the required activity report. 
 

	VI.	 	MARCH 2000 SPECIAL AGREEMENT 

 
Mr. Kresa and the Company entered into a March 2000 Special Agreement on or about September 15, 1999 (the “Special Agreement”).
Effective April 1, 2003 Mr. Kresa hereby waives and relinquishes any and all rights and benefits he may have under the Special Agreement, and he agrees not to make 
 

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any claim, now or in the future, for benefits which accrue under the Special Agreement after that date.
Mr. Kresa acknowledges that he is currently due no amount or benefit under the Special Agreement. Mr. Kresa and the Company hereby terminate the Special Agreement in its entirety effective April 1, 2003. 
 

	VII.	 	TRADE SECRETS AND PROPRIETARY INFORMATION 

 
A. Disclosure To Third Parties Prohibited. Mr. Kresa shall not divulge, disclose or
communicate any information concerning any matters affecting or relating to the business of the Company without the express written consent of the Company or as may be required for Mr. Kresa to fulfill his obligations as Chairman or as a member of
the Board. The terms of this Section shall remain in full force and effect after the termination or expiration of this Agreement. 
 
B. Ideas, Improvements and Inventions. Any and all ideas, improvements and inventions conceived of, developed, or first
reduced to practice in the performance of work hereunder for the Company shall become the exclusive property of the Company and ideas and developments accruing therefrom shall all be fully disclosed to the Company and shall be the exclusive property
of the Company and may be treated and dealt with by the Company as such without payment of further consideration than is hereinabove specified. Mr. Kresa shall preserve such ideas, improvements and inventions as confidential during the term of the
contract and thereafter and will execute all papers and documents necessary to vest title to such ideas, developments, information, data, improvements and inventions in the Company and to enable the Company to apply for and obtain letters patent on
such ideas, developments, information, data, improvements and inventions in any and all countries and to assign to the Company the entire right, title and interest thereto. 
 

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C.
Notes, Memoranda, Reports and Data. Mr. Kresa agrees that the original and all copies of notes, memoranda, reports, findings or other data prepared by Mr. Kresa in connection with the services performed hereunder shall become the sole and
exclusive property of the Company. 
 
D.
Disclosure of Confidential or Proprietary Information of Third Parties Prohibited. Mr. Kresa will not disclose to the Company or induce the Company to use any secret process, trade secret, or other confidential or proprietary
knowledge or information belonging to others, including but not limited to the United States. Such information includes but is not limited to information relating to bids, offers, technical proposals, responses to requests for procurement, rankings
of competitors and other similar procurement sensitive information. 
 

	VIII.	 	PRESERVATION OF TRADE NAMES, TRADE MARKS AND PATENT RIGHTS 

 
All trade names, trade marks and patent rights of the Company pertaining to Company products, including the
names “Northrop,” “Grumman” “Litton,” “Newport News Shipbuilding,” “Ingalls,” “Avondale,” “TRW,” and “Northrop Grumman Corporation” shall remain the sole property of the
Company and Mr. Kresa agrees, upon request, to take such reasonable action as may be requested by the Company to protect and preserve such trade names, trade marks and patent rights from claims by other persons or entities. 
 

	IX.	 	COOPERATION WITH THE COMPANY 

 
During and after the expiration of this Agreement, Mr. Kresa shall cooperate with the Company in regard to any matter, dispute or
controversy in which the Company is involved, or may become involved and of which Mr. Kresa may have knowledge. Such cooperation shall be subject to further agreement 
 

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providing payment for Mr. Kresa’s expenses and reasonable compensation for his time. 
 

	X.	 	INDEMNIFICATION; INDEPENDENT CONTRACTOR 

 
Mr. Kresa shall render all services hereunder during the Consulting Period as an independent contractor and shall not hold out himself or
herself as an agent of the Company. Nothing herein shall be construed to create or confer upon Mr. Kresa the right during the Consulting Period to make contracts or commitments for or on behalf of the Company. Mr. Kresa and the Company entered into
an Indemnification Agreement that was effective on or about October 12, 1987 (the “Indemnification Agreement”). The Indemnification Agreement provides that the Company will indemnify Mr. Kresa for certain losses that Mr. Kresa may incur in
connection with providing services that are within Mr. Kresa’s “Corporate Status” with the Company. Mr. Kresa’s services as Chairman and as a member of the Board, and Mr. Kresa’s other services pursuant to this Agreement,
shall constitute “Corporate Status” for purposes of the Indemnification Agreement. 
 

	XI.	 	TAXES 

 
Mr. Kresa shall provide all services contemplated by this Agreement (during both the period of time that he is a member and Chairman of
the Board and during the Consulting Period) as a non-employee of the Company and the Company shall withhold (or not withhold, as applicable) income and employment taxes on such basis. 
 
Except as provided below and in Section II A, Mr. Kresa shall pay all taxes which are imposed on him with
respect to the compensation paid hereunder (including, without limitation, all taxes that may be due if the classification 
 

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contemplated by the preceding paragraph is erroneous or if the Company is required to revise such
classification). 
 
If upon or following a change
in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company (as these terms are used for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”)) (a “Change in Control”), the tax imposed by Section 4999 of the Code or any similar or successor tax (the “Excise Tax”) applies, solely because of the Change in Control, to any payments, benefits and/or amounts
received by Mr. Kresa from the Company (including, without limitation, any fees, costs and expenses paid under this Agreement) and/or any amounts received or deemed received, within the meaning of any provision of the Code, by Mr. Kresa 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 Mr. Kresa under any of the Company’s
incentive plans, including without limitation, the 2001 Long Term Incentive Stock Plan, the 1993 Long Term Incentive Stock Plan, the 1987 Long Term Incentive Plan and the 1981 Long-Term Incentive Plan, the Company shall pay to Mr. Kresa in cash an
additional amount or amounts (the “Gross-Up Payment(s)”) such that the net amount retained by Mr. Kresa after the deduction of any Excise Tax on such payments, benefits and/or amounts so received and any Federal, state and local income tax
and Excise Tax upon the Gross-Up Payment(s) provided for by this Section shall be equal to such payments, benefits and/or amounts so received had they not been subject to the Excise Tax. Such payment(s) shall be made by the Company to Mr. Kresa as
soon as practicable following the receipt or deemed receipt of any such payments, benefits and/or amounts so received, but in all events shall be made within thirty (30) days of the receipt or deemed receipt by Mr. Kresa of any such payment, benefit
and/or amount. 
 

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The
Company’s obligation to make a Gross-Up Payment, and the amount of any Gross-Up Payment, shall be determined by the Company’s independent auditors. For purposes of determining whether any payments, benefits and/or amounts will be subject
to Excise Tax, and the amount of any such Excise Tax: 
 

	 	•	 	Any other payments, benefits and/or amounts received or to be received by Mr. Kresa in connection with or contingent upon a Change in Control of the Company (whether
pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, or with any person whose actions result in a Change in Control of the Company or any person affiliated with the Company or such persons) shall be
combined to determine whether Mr. Kresa has received any “parachute payment” within the meaning of Section 280G(b)(2) of the Code, and if so, the amount of any “excess parachute payments” within the meaning of Section 280G(b)(1)
that shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company’s independent auditors, such other payments, benefits and/or amounts (in whole or in part) do not constitute parachute payments, or
such excess parachute payments represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise
not subject to the Excise Tax; and 

 

	 	•	 	The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. 

 
For purposes of determining the amount of the Gross-Up Payment, Mr. Kresa shall be deemed to pay Federal income taxes at the highest marginal rate 
 

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of Federal income taxation in the calendar year in which the Gross-Up Payment is to be made. Such highest
marginal rate shall take into account the loss of itemized deductions by Mr. Kresa and shall also include the effect of employment taxes and state and local income taxes at the highest marginal rate of taxation in the state and locality of Mr.
Kresa’s residence, net of the maximum reduction in Federal income taxes that could be obtained from the deduction of such taxes. 
 
In the event the Internal Revenue Service adjusts the computation of the Company’s independent auditors under this Section so that
Mr. Kresa did not receive the greatest net benefit, the Company shall reimburse Mr. Kresa as provided herein for the full amount necessary to place Mr. Kresa in the same after-tax position as he would have been in had no Excise Tax applied.

 

	XII.	 	OBSERVANCE OF APPLICABLE LAWS AND REGULATIONS 

 
A. United States Laws. Mr. Kresa shall comply with and do all things necessary for the
Company to comply with United States laws and regulations and express policies of the United States Government, including but not limited to the requirements of the Foreign Corrupt Practices Act, 15 U.S.C. Section 78 dd-1 et seq.; the
Federal Acquisition Regulations, 48 CFR Section 1.101 et seq., (“FAR”); the International Traffic in Arms Regulations, 22 CFR Parts 120 through 130 and applicable regulations; the Byrd Amendment (31 U.S.C. Section 1352) and
applicable regulations; the Office of Federal Procurement Policy Act (41 U.S.C. Section 423) and applicable regulations; and the DoD Joint Ethics Regulation (DoD 5500.7-R). No part of any compensation or fee paid by the Company will be used directly
or indirectly to make any kickbacks to any person or entity, or to make payments, gratuities, emoluments or to confer any other benefit to an official of any government or any political party. Mr. Kresa shall not seek, nor relay to the Company, any
classified, proprietary or source selection information not generally available to the public. Mr. Kresa shall also comply 
 

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with and do all things necessary for the Company to comply with provisions of contracts between agencies
of the United States Government or their contractors and the Company that relate either to patent rights or the safeguarding of information pertaining to the security of the United States. This entire Agreement and/or the contents thereof may be
disclosed to the United States Government. 
 
B.
No Selling Agency Employed. Mr. Kresa further represents and warrants that, in the event he is authorized pursuant to Section XV hereof to utilize or employ a third party, no person or selling agency has been or will be employed or
retained to solicit or secure any contract, including but not limited to a United States Government contract, upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide
established commercial or selling agencies maintained by Mr. Kresa for the purpose of receiving business. In the event of a breach or violation of this warranty, the Company shall have the right to annul this Agreement without liability or in its
discretion to deduct from the fee or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage or contingent fee. 
 
C. State Law And Regulations. Mr. Kresa shall comply with and do all things necessary for Mr. Kresa and the Company each to
comply with all laws and regulations of the State of California and any other state, including the Commonwealth of Virginia and the District of Columbia, in which services hereunder are or may be rendered. 
 
D. Maintenance Of Time And Expense Records. Mr.
Kresa shall maintain appropriate time and expense records pertaining to the services performed under this Agreement. Said records shall be subject to examination and audit by the Company and the United States Government until notified by the Company
in writing, that the records no longer need to be maintained. 
 

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E.
Certification. This Agreement is made in material reliance upon the representations and warranties made by Mr. Kresa herein and in Attachment B hereto. The effectiveness of this Agreement is contingent upon and will not commence until
receipt by the Company of the certifications set forth in Attachment B hereto. In the event that the Company has reason to believe that these certifications are incorrect, the Company may treat this Agreement as being null and void or may terminate
this Agreement pursuant to Section XVIII. 
 
F.
Standards of Business Conduct. Mr. Kresa hereby acknowledges that he has received a copy of the Company’s Values, Ethics and Business Conduct For Northrop Grumman Associates (or amendment thereof) and agrees to conduct his
activities for or on behalf of the Company in accordance with such principles as a condition of this Agreement. In connection with the execution of this Agreement, Mr. Kresa shall also execute the Certificate attached hereto as Attachment D.

 

	XIII.	 	ASSIGNMENT OF RIGHTS 

 
This Agreement and the rights, benefits, duties and obligations contained herein may not be assigned or otherwise transferred in any
manner to third parties without the express written approval of the Company and Mr. Kresa, except by operation of law. Any such assignment or transfer without prior approval of the Company and Mr. Kresa or by operation of law will be null, void and
without effect. 
 

	XIV.	 	MODIFICATION 

 
No waiver or modification of this Agreement or of any covenant, condition, or limitation herein shall be valid and enforceable unless such
waiver or modification is in writing. 
 

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	XV.	 	USE OR EMPLOYMENT OF THIRD PARTIES 

 
Mr. Kresa shall not utilize or employ any third party, individual or entity, in connection with Mr. Kresa’s performance of services
under this Agreement during the Consulting Period without the express written approval of the Company. 
 

	XVI.	 	CONFLICTS OF INTEREST 

 
No business or legal conflicts of interest shall exist between services performed or to be performed by Mr. Kresa on behalf of the Company
and by Mr. Kresa on behalf of any other client. The identity of Mr. Kresa’s directorship’s, other employment and clients shall be fully disclosed by Mr. Kresa in Attachment C hereto. Mr. Kresa shall promptly notify the Company in writing
of any change in his directorships, employment, and clients. 
 

	XVII.	 	EXCLUSIVITY OF CONSULTING ARRANGEMENT 

 
During the Consulting Period Mr. Kresa shall not directly or indirectly engage in any activities designed to deprive or which may have the
effect of depriving the Company of the good will of customers or potential customers of its products and services. Further, Mr. Kresa shall not, prior to the expiration of the Consulting Period, represent, act as representative for, or market or
sell, directly or indirectly, products competing with Company products and services. 
 

	XVIII.	 	TERMINATION 

 
A. Violation Of Term Or Condition. In the event of a violation by Mr. Kresa of any term or condition, express or implied, of
this Agreement or of any federal or state law or regulation pertaining to or arising from Mr. Kresa’s 
 

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performance of services under this Agreement, the Company may, in its discretion, terminate this Agreement
immediately, without notice and in such event, Mr. Kresa shall only be entitled to compensation up to the time of such violation. 
 
B. Bankruptcy; Death. In the event that Mr. Kresa dies or is adjudicated a bankrupt or petitions for relief under
bankruptcy, reorganization, receivership, liquidation, compromise or other arrangement or attempts to make an assignment for the benefit of creditors, this Agreement shall be deemed terminated automatically, without requirement of notice, without
further liability or obligation to the Company (except, in the event of Mr. Kresa’s death, for (A) obligations to Mr. Kresa expressly contemplated by Sections II B, C and E and to Mr. Kresa’s widow expressly contemplated by Sections II A
and D; (B) any amount then due Mr. Kresa pursuant to Sections IV and V; (C) any indemnification obligation pursuant to Section X; and (D) any tax obligation owed to Mr. Kresa pursuant to Section XI.) 
 

	XIX.	 	SEVERABILITY OF PROVISIONS 

 
All provisions contained herein are severable and in the event any of them are held to be invalid by any competent court, this Agreement
shall be interpreted as if such invalid provision was not contained herein. 
 

	XX.	 	AVAILABILITY OF EQUITABLE REMEDIES 

 
Mr. Kresa understands and agrees that any breach or evasion of any of the terms of this Agreement may result in immediate and irreparable
injury to the Company and will entitle the Company to all legal and equitable remedies including, without limitation, injunction or specific performance. 
 

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	XXI.	 	GOVERNING LAW 

 
This Agreement and the performance hereunder shall be governed by and construed in accordance with the laws of the State of California
(excluding any conflicts of laws provisions) which shall be the exclusive applicable law. 
 

	XXII.	 	SETTLEMENT OF DISPUTES 

 
A. The Company and Mr. Kresa hereby consent to the resolution by arbitration of all disputes, issues, claims or controversies
arising out of or in connection with this Agreement, Mr. Kresa’s employment with and/or retirement from the Company, and/or Mr. Kresa’s services to the Company, that the Company may have against Mr. Kresa, or that Mr. Kresa may have
against the Company, or against its officers, directors, employees or agents acting in their capacity as such. Each party’s promise to resolve all such claims, issues, or disputes by arbitration in accordance with this Agreement rather than
through the courts, is consideration for the other party’s like promise. It is further agreed that the decision of an arbitrator on any issue, dispute, claim or controversy submitted for arbitration, shall be final and binding upon the Company
and Mr. Kresa and that judgment may be entered on the award of the arbitrator in any court having proper jurisdiction. 
 
B. Except as otherwise provided herein or by mutual agreement of the parties, any arbitration shall be administered in accordance
with the then-current Commercial Arbitration Procedures of the American Arbitration Association (AAA) before a single arbitrator who is a retired federal or state court judge in the state in which the arbitration is convened. The arbitration shall
be held in Los Angeles, California or at any other location mutually agreed upon by the parties. 
 
C. The parties shall attempt to agree upon the arbitrator. If the parties cannot agree on the arbitrator, the AAA shall then provide the names of nine (9) 
 

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arbitrators experienced in business employment matters along with their resumes and fee schedules. Each
party may strike all names on the list it deems unacceptable. If more than one common name remains on the list of all parties, the parties shall strike names alternately until only one remains. The party who did not initiate the claim shall strike
first. If no common name remains on the lists of the parties, the AAA shall furnish an additional list until an arbitrator is selected. 
 
D. The arbitrator shall interpret this Agreement, and any applicable Company policy or rules and regulations, any applicable
substantive law (and the law of remedies, if applicable) of the State of California, or applicable federal law. In reaching his or her decision, the arbitrator shall have no authority to change or modify any lawful Company policy, rule or
regulation, or this Agreement. The arbitrator, and not any federal, state or local court or agency, shall have exclusive and broad authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this
Agreement, including, but not limited to, any claim that all or any part of this Agreement is voidable. 
 

	XXIII.	 	NOTICE 

 
Any notice to be given hereunder shall be in writing, mailed by certified or registered mail with return receipt requested addressed to
the Company: 
 
Northrop Grumman
Corporation 
1840 Century Park East 
Los Angeles, CA 90067 
Attn.: Chief Human Resources Officer 
 
or to Mr. Kresa: 
 
Kent Kresa 
[address omitted] 
 
or to such other address as may have been furnished at the date of mailing either by the Company or Mr. Kresa in writing.

 

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	XXIV.	 	COMPLETE AGREEMENT 

 
Effective April 1, 2003 this Agreement constitutes the entire agreement of the parties with respect to the engagement of Mr. Kresa by the
Company and supersedes any and all other agreements between the parties (other than the Indemnification Agreement which is outside of the scope of the foregoing and the Company’s employee benefit programs in which Mr. Kresa participated and is
due a benefit or in which he continues to participate in accordance with this Agreement, including, but not limited to, annual bonuses which are payable to him under incentive compensation plans, grants under long term incentive plans, and benefits
under retirement, deferred compensation, estate enhancement and welfare plans and programs). The parties stipulate and agree that neither of them has made any representation with respect to this Agreement except such representations that are
specifically set forth herein. The parties acknowledge that any other payments or representations that may have been made are of no effect and that neither party has relied on such payments or representations in connection with this Agreement or the
performance of services contemplated herein. 
 
[Remainder of
page intentionally left blank.] 
 

20 

 
IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be entered into and executed as set forth below. 
 

	 NORTHROP GRUMMAN CORPORATION

	
	 /s/ J. Michael Hateley

	 J. Michael Hateley
 Corporate Vice President and Chief Human
 Resources and Administrative Officer

	
	 Date:
	 	 February 19, 2003

	
	 KENT KRESA

	
	 /s/ Kent Kresa

	 Kent Kresa

	
	 Date:
	 	 February 19, 2003

	
	 TIN:
	 	 [omitted]

 

21 

 
ATTACHMENT A

 
 
KENT KRESA 
 
RELEASE 
 

	1.	 	PARTIES: The parties to this Release Agreement (referred to hereafter as “Agreement”) are KENT KRESA (referred to
hereafter as “Executive”) and NORTHROP GRUMMAN CORPORATION (referred to hereafter as “Northrop Grumman” or the “Company”). 

 

	2.	 	RECITALS: This Agreement is made with reference to the following facts: 

 

	 	2.1	 	Executive retired from employment with and as Chief Executive Officer of the Company on or about April 1, 2003. 

 

	 	2.2	 	Executive and the Company entered into a Transition Agreement, dated February 19, 2003 (the “Transition Agreement”) that provides for certain
enhanced retirement benefits, and for Executive’s continued service as a non-employee member of the Company’s Board of Directors, as Chairman of the Company’s Board of Directors, and as a consultant to the Company for certain
specified periods following Executive’s retirement. 

 

	 	2.3	 	This Agreement is the release Executive is required to sign in order to receive the enhanced retirement benefits set forth in the Transition Agreement.

 

A-1 

 

	3.	 	CONSIDERATION: In exchange for the Executive’s agreement to abide by all of the terms of this Agreement, Northrop Grumman will
provide Executive with the enhanced retirement benefits set forth in the Transition Agreement. 

 

	4.	 	COMPLETE RELEASE: In consideration of the promises contained herein, and for other good and valuable consideration the receipt of which
is hereby acknowledged, Executive does hereby acknowledge full and complete satisfaction of and does hereby agree to release, absolve and discharge Releasees (as defined below) from all claims, causes of action, demands, damages or costs he may have
against Releasees on behalf of himself or others arising prior to the date he signs this Agreement. “Releasees” shall mean the Company, its subsidiaries, affiliated and related companies, past, present and future, and each of them, as well
as its and their employees, officers, directors, and agents (in their capacities as employees, officers, directors and agents), past and present, and each of them in such capacities.  

 

	 	4.1	 	This waiver and release includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under the Age Discrimination
in Employment Act, which prohibits discrimination in employment based on age, and retaliation; Title VII of 

 

A-2 

 
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 based on disability and retaliation; the
California Fair Employment and Housing Act, which prohibits discrimination in employment based on race, color, religion, sex, sexual orientation, national origin, ancestry, physical disability, mental disability, medical condition, marital status or
age, and retaliation; or any other federal, state or local laws or regulations prohibiting employment discrimination or retaliation whether such claim be based upon an action filed by Executive or by any governmental agency. 
 

	4.2	 	This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising in relation to the
Company’s employee handbook and personnel policies, or any or statements made by officers, directors, lawyers, employees or agents of the Company, past and present, and each of them, or under any state or federal law regulating wages, hours,
compensation or employment, or any claim for retaliation, wrongful discharge, breach of contract, breach of the implied covenant of good faith and fair dealing, intentional or negligent infliction of emotional distress, intentional or negligent
misrepresentation, or defamation. 

 

A-3 

 

	4.3	 	This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under or in relation to
any severance plan, program, or arrangement. 

 

	4.4	 	This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under the federal False
Claims Act. 

 

	4.5	 	This release covers both claims that Executive knows about and those he may not know about. Executive hereby specifically waives and relinquishes all rights
and benefits provided by Section 1542 of the Civil Code of the State of California, and does so understanding and acknowledging the significance of this specific waiver of Section 1542. Section 1542 of the Civil Code of the State of California
states as follows: 

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

A-4 

 

	4.6	 	Notwithstanding the provisions of Section 1542 and for the purpose of implementing a full and complete release, Executive expressly acknowledges that this
Agreement is intended to include all claims which he does not know or suspect to exist in his favor at the time of his signature on the Agreement, and that this Agreement will extinguish any such claims. 

 

	4.7	 	Notwithstanding anything to the contrary herein, this Agreement does not waive or release: (i) any rights or claims which Executive may have under the Age
Discrimination in Employment Act or other laws which arise after the date he signs this Agreement, (ii) any rights or claims Executive may have under the Transition Agreement; (iii) any rights Executive may have for indemnification from the Company;
(iv) any rights which Executive may have under the Company’s Directors and Officers liability insurance policy; (v) any rights Executive may have under stock grants, restricted stock right grants, and/or restricted performance stock right
grants provided to him by the Company; (vi) any rights Executive may have as a shareholder of Northrop Grumman; and (vii) any rights Executive may have to benefits under any Company annual incentive plan or employee benefit

 

A-5 

plan, including without limitation retirement, deferred compensation, estate enhancement
and welfare plans or programs. 
 

	5.	 	ARBITRATION: Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted
before a single arbitrator in the State of California (in the major city nearest Executive’s residence) in accordance with the procedures set forth In Section XXII B, C and D of the Transition Agreement. The decision of the arbitrator will be
final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator may, but need not, award the prevailing party in any dispute (as determined by the arbitrator) its or
his legal fees and expenses. 

 

	6.	 	PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL: Executive agrees and understands that he has been given a period of twenty-one
(21) calendar days from his receipt of this Agreement to review and consider this Agreement before signing it. Executive further understands that he may use as much of this review period as he wishes prior to signing; he can sign this Agreement at
any time prior to the expiration of the twenty-one calendar day period. At the end of this period, the offer of the enhanced retirement benefits set forth in the Transition Agreement will be deemed 

 

A-6 

 
automatically
withdrawn if not earlier signed by Executive and delivered to the Company. Executive is advised and encouraged to consult with his own legal counsel prior to signing this Agreement. 
 

	7.	 	RIGHT TO REVOKE AGREEMENT: Executive may revoke this Agreement within seven (7) calendar days of signing it. Revocation can be made by
delivering a written notice of revocation to Chief Human Resources Officer, Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA 90067. For this revocation to be effective, written notice must be received by the Chief Human
Resources Officer no later than 5:00 p.m. PST on the seventh calendar day after Executive signs this Agreement. If Executive revokes this Agreement, it shall not be effective or enforceable, and Executive will not receive the benefits described in
Section 3 of this Agreement. 

 

	8.	 	NON-ADMISSION OF LIABILITY: Nothing contained herein shall be construed as an admission by either Executive or by Northrop Grumman of liability
of any kind. 

 

	9.	 	SEVERABILITY: The provisions of this Agreement are severable, and if any part of it is found to be illegal or invalid and thereby unenforceable,
the validity of the remaining parts, terms or provisions shall not be affected and shall remain fully enforceable. The unenforceable 

 

A-7 

 
part, term or
provision shall be deemed not to be a part of this Agreement. 
 

	10.	 	SOLE AND ENTIRE AGREEMENT: Except as otherwise expressly set forth herein, this Agreement sets forth the entire agreement between the parties
hereto, and fully supersedes any and all discussions, prior agreements or understandings between the parties hereto pertaining to the subject matter of this Agreement. 

 

	11.	 	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. 

 
[Remainder of page
intentionally left blank.] 
 

A-8 

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

	 NORTHROP GRUMMAN CORPORATION

	
	  
  

	 J. Michael Hateley
 Corporate Vice President and Chief Human Resources and Administrative Officer

	 	 	 
	 Date:
	 	  

 
 

	 KENT KRESA

	
	  

	 Kent Kresa

	 	 	 
	 Date:
	 	  

 

A-9 

 
ATTACHMENT B

 
KENT KRESA 
 
CERTIFICATION 
 
The undersigned, Kent Kresa (“Mr. Kresa”), hereby
certifies, represents and warrants the following: 
 
1. In past dealings with Northrop Grumman Corporation (the “Company”) or other clients, to the best of his knowledge Mr. Kresa has complied with all applicable laws, rules, regulations and express policies of the United
States and the State or territory in which services were performed. 
 
2. In performing services under the Transition Agreement (“Agreement”), Mr. Kresa will comply with all applicable laws, rules, regulations and express policies of the United States and the State or territory in
which services will be performed. 
 
3. There have
been no kickbacks or other payments made, either directly or indirectly, to or by Mr. Kresa or to or by any member of his family. 
 
4. No kick-backs or other payments will be made, either directly or indirectly, to or by Mr. Kresa or to or by any member of his family.

 
5. Mr. Kresa will not use any part of the
compensation paid by the Company under the Agreement to make payments, gratuities, or emoluments or to confer any other benefit to an official of any government, or any political party, or official of any political party. 
 
6. No person or selling agency will be employed or retained to
solicit or secure any contract, including but not limited to a United States government 
 

B-1 

 
contract, upon an agreement or
understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial selling agencies maintained by Mr. Kresa for the purpose of receiving business. 
 
7. No classified, proprietary, source selection or procurement
sensitive information will be solicited by Mr. Kresa on behalf of or conveyed by Mr. Kresa to the Company. 
 
8. Mr. Kresa will not influence or attempt to influence any United States government official or employee in connection with the award,
extension, continuation, renewal, amendment or modification of a federal contract or otherwise engage in “non-exempt services” within the meaning of the Byrd Amendment, 31 U.S.C. Section 1352. 
 
9. Mr. Kresa will not utilize or employ any third party,
individual or entity, in connection with the performance of services under the Agreement on behalf of the Company, except as follows: (if none, state “None”). 
 
10. No business or legal conflicts of interest exist between services to be performed under the Agreement by
Mr. Kresa on behalf of the Company and by Mr. Kresa on behalf of any other client, the identities of which Mr. Kresa has fully disclosed to the Company. 
 
I declare under penalty of perjury that the foregoing certificate is true and correct. 
 
Signed: 
 
                                     
                                        
                                        
                           
 
 

B-2 

 
Kent Kresa 
 
 
Date:                                    
                                        

 
 

B-3 

 
ATTACHMENT C

 
KENT KRESA 
 
CERTIFICATION OF DIRECTORSHIPS, EMPLOYMENT AND CLIENTS

 
The following is a complete list of
directorships, employment and consulting clients: 
 
 
I.     Directorships and Employment 
 
 
Name of Company                            Responsibilities/Duties

 
 
 
 
 
II.     CLIENTS 
 
 
Name of
Company                            Services/Duties 
 

	 Signed:

	
	  
  

	 Kent Kresa

 

	
	 Date:
	 	  

 
ATTACHMENT D

 
MR. KRESA 
 
CERTIFICATE REGARDING 
 
NORTHROP GRUMMAN CORPORATION 
 
STANDARDS OF BUSINESS CONDUCT 
 
I, Kent Kresa, do hereby certify that I am familiar with and
will conform to the principles and practices set forth in the Northrop Grumman publication entitled Values, Ethics, and Business Conduct For Northrop Grumman Associates. 
 
 

	 Signed:

	
	  
  

	 Kent Kresa

 

	
	 Date:Employment Agreement dated February 19, 2003

 
Exhibit
10(nn) 
 
EMPLOYMENT AGREEMENT

 
1. PARTIES: The parties to this
Employment Agreement (hereafter referred to as this “Agreement”) are DR. RONALD D. SUGAR (hereafter referred to as “Executive”) and NORTHROP GRUMMAN CORPORATION (hereafter referred to as “Northrop Grumman”
or “the Company”). 
 
2. EMPLOYMENT:
Executive has been employed by Northrop Grumman as its President and Chief Operating Officer since September 19, 2001 and member of the Company’s Board of Directors (the “Board”) since April, 2001. Executive and Northrop Grumman
were parties to an Employment Agreement that was effective on or about September 19, 2001 (the “2001 Employment Agreement”). Northrop Grumman and Executive now wish to terminate the 2001 Employment Agreement and to enter into new
employment terms and conditions as set forth in this Agreement in connection with Executive’s election to the position of Chief Executive Officer and President of Northrop Grumman and continuation as a member of the Board. 
 
3. TERM: The term of this Agreement shall commence as of
the date (the “Effective Date”) that the Board elects the Executive as Chief Executive Officer and President of the Company and shall end at the close of business on the day before the fifth anniversary of the Effective Date, unless sooner
terminated as hereinafter provided and subject to extension as provided in the next sentence. Commencing with the day before the fifth anniversary of the Effective Date and on each subsequent annual 
 

1 

 
anniversary of such date, the
term of this Agreement shall automatically be extended for an additional one-year period unless the Executive or the Company has provided the other party hereto at least ninety (90) day’s prior written notice that the term of this Agreement
shall not be so extended (or further extended, as the case may be). Providing any such notice shall not constitute a breach of this Agreement by either party and shall not entitle the Executive to the special severance benefits set forth in Section
15. Notwithstanding anything else contained herein to the contrary, the term of this Agreement shall not extend beyond, and shall terminate on or before, the last day of the month in which the Executive attains his sixty-fifth (65th) birthday. 
 
4. POSITION AND DUTIES: Executive shall serve as Chief Executive Officer and President of the Company and shall be an elected officer
of the Company throughout the term of this Agreement. Executive will also continue as a member of the Board throughout the term of this Agreement. Executive also agrees to serve on any Company subsidiary Board to which he has been or may in the
future be elected. Executive shall, during the term hereof: 
 
A. be responsible for the general supervision, direction and control of the business and affairs of the Company and shall have such other duties and responsibilities as the Board shall designate that are consistent with
Executive’s position as Chief Executive Officer and President of the Company. Executive shall perform all of such duties and responsibilities in accordance with the legal directives of the Board and in accordance with the practices and policies
of the Company as in effect 
 

2 

 
from time to time. While
employed as Chief Executive Officer and President of the Company, Executive shall report exclusively to the Board. 
 
B. devote all of his business time (excluding periods of vacations and absences made necessary because of illness or other traditionally
approved leave purposes), energy and skill in the performance of his duties with the Company; provided, however, that the foregoing will not prevent Executive from reasonably (i) participating in charitable, civic, educational, professional,
community or industry affairs or serving on the boards of directors or advisory boards of other companies, and (ii) managing his and his family’s personal investments. 
 

	5.	 	COMPENSATION AND BENEFITS: During the term of this Agreement, the following terms shall apply: 

 
A. Base Salary: Executive’s base
salary during the term of this Agreement shall be no less than $1,100,000 per year, which amount shall be subject to periodic increases, but not decreases, in accordance with the Company’s normal salary review process. 
 
B. ICP Bonus: Executive shall continue to
participate in the Incentive Compensation Plan (“ICP”), a bonus plan for certain selected officers of the Company. 
 

3 

 
C.
Benefits: For the term of this Agreement, Executive shall participate in the Northrop Grumman welfare plans, and shall continue benefit accruals under the Northrop Grumman pension plans, in which Northrop Grumman’s elected
officers participate, as such plans may be amended from time to time. These plans currently include, but are not limited to, the Northrop Grumman Retirement Plan (the “NG Retirement Plan”), the Northrop Grumman Savings and Investment Plan,
and, for the purpose of providing non-qualified benefits in excess of Internal Revenue Code Sections 415 and 401(a)(17) limits, two non-qualified supplemental executive retirement plans known as “ERISA 1” and “ERISA 2”.

 
D. Special Pension Benefits:

 
1. CPC SERP: Executive shall be a
participant in a supplemental retirement plan known as the CPC SERP. As of January 1, 2002 Executive shall be deemed to have 5 years of vesting service under the CPC SERP and shall continue to accrue service for his employment after January 1, 2002.
His defined benefit retirement plan benefits shall include benefits accrued under the CPC SERP, the NG Retirement Plan, ERISA 1 and ERISA 2, in addition to benefits accrued under defined benefit retirement plans in which he participated at TRW Inc.
(“TRW”) and Litton Industries, Inc. (“Litton”), his prior employers. 
 
2. SRI Plan: In addition to the CPC SERP, Executive shall be a participant in the Northrop Supplemental Retirement Income Program for Senior Executives (the “SRI Plan”), which
provides for a maximum benefit of 60% of Final 
 

4 

 
Average Salary (which term is
defined to include salary and bonus) at age 65. In order to be eligible for any benefits under the SRI Plan, Executive must have 10 years of vesting service. Executive shall be deemed to have 5 years of vesting service under the SRI Plan as of
January 1, 2002 and shall continue to accrue service for his employment thereafter. In the event Executive meets this vesting requirement and terminates from employment on or after January 1, 2007, his retirement benefits from defined benefit
retirement plans shall be equal to the sum of the values of (i) the monthly benefits accrued under all the plans noted in D 1, above; plus, if any, (ii) the monthly benefits under the SRI Plan formula, which formula will incorporate an offset for
the sum of (x) the monthly benefits payable to him at retirement under all the plans noted in D 1 above, and (y) an annual benefit of $124,788 commencing at retirement (representing an offset for a portion of the retirement benefits already paid to
him under certain Litton retirement plans). Each pension benefit shall be paid under the terms (including choice of optional forms) of the plan from which it is paid. 
 
E. Stock and Stock Options: As of the Effective Date, Executive will be awarded a non-qualified
stock option covering 50,000 shares of Northrop Grumman common stock (subject to proportional adjustment to give effect to any stock splits, reverse stock splits or similar changes in capitalization that occur after the date of this Agreement and
prior to the Effective Date). These options will be subject to the terms and conditions of the Company’s 2001 Long Term Incentive Stock Plan (“LTISP”), the Guide to Administration for the LTISP (“Guide”) and the grant
certificate to be provided to Executive to evidence such options (which certificate shall be in substantially the same form as the form of option certificate customarily used by the Company for 
 

5 

 
employee stock option grants).
Executive shall also be eligible to receive future grants under the LTISP in accordance with the Company’s normal practice of awarding such grants to elected officers. 
 
6. PERQUISITES: For the term of this Agreement, Executive shall be eligible for Company perquisites that are,
in the aggregate, no less favorable than the perquisites provided by the Company to any other elected officer. The perquisites provided to the Company’s Chief Executive Officer, as currently in effect, are listed on Exhibit A of this Agreement.
The perquisites provided by the Company are subject to change from time to time. In addition, Executive shall be entitled to four weeks vacation per year. 
 
7. RETIREE MEDICAL BENEFIT: Executive shall be eligible to participate in the Special Officer Retiree Medical Program on the same terms and
conditions as other elected officers. That program currently provides lifetime medical benefits to elected officers who retire and to their spouses, if Executive has at least 5 years of service as an elected officer. 
 
In the event that the Executive terminates from employment at
any time and is not eligible to receive medical benefits under the Special Officer Retiree Medical Program, the Company will make the benefits otherwise provided under such program available to Executive and his spouse (during the lifetime of each)
provided that the Executive (or, after his death, his spouse) reimburses the Company for the full premium for such coverage. 
 

6 

 
8. SPECIAL
AGREEMENT: Executive’s March 2000 Special Agreement (the “Special Agreement”) previously entered into with the Company providing certain protections for Executive in the event of a Change in Control of the Company shall
continue in effect. 
 
9. TERMINATION OF 2001 EMPLOYMENT
AGREEMENT: Executive’s 2001 Employment Agreement shall continue in effect until the Effective Date. Executive and Northrop Grumman hereby terminate the 2001 Employment Agreement in its entirety as of the Effective Date; provided,
however, that this termination shall not affect Executive’s rights to any pension benefits which he previously accrued pursuant to the 2001 Employment Agreement and pursuant to certain agreements previously entered into with Litton, certain
pension plans (including a Benefit Equalization Plan or BEP) in which he participated at TRW, and this termination shall not affect the termination of any other agreement that was terminated pursuant to or in connection with the 2001 Employment
Agreement. 
 
10. SPECIAL RETENTION BENEFITS: The
Company awarded Executive 66,480 Restricted Stock Rights as of September 19, 2001 (the “RSRs”). In the event Executive’s employment is terminated for any of the following reasons, the RSRs then remaining outstanding and unvested shall
thereupon vest and all shares not yet issued pursuant to the grant certificate for the RSRs shall be issued as of the date of such termination: (i) the death of Executive; or (ii) Executive’s “Disability” (as hereinafter 
 

7 

 
defined); or (iii) termination
of Executive’s employment by Northrop Grumman without “Cause” (as hereinafter defined); or (iv) termination of employment by Executive for “Good Reason” (as hereinafter defined); provided further, that the Company shall have
the right to pay equivalent cash value in lieu of issuing all or a portion of the shares of stock required by this Section 10. Except as otherwise modified by this Section 10, the RSR grant shall be governed by the terms of the LTISP, the Guide, and
the grant certificate. 
 
11. TERMINATION OF EMPLOYMENT BY
THE COMPANY: 
 
A. The Company shall have
the right to terminate the term of this Agreement and Executive’s employment at any time, with or without Cause, upon giving at least 10 day’s advance written notice to the Executive of the date when such termination shall become
effective. If the Company terminates Executive’s employment without “Cause” (as that term is defined below) during the term of this Agreement, then Executive shall receive, within 30 days after he signs a release (substantially in the
form of Exhibit C hereto) which is not revoked, the Accrued Obligations (as defined below) (with the exception of certain benefits under Accrued Obligations, which will be paid as soon as administratively practicable), and all of the Special
Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation set forth in Section 15.B shall commence as of the date of such termination. 
 

8 

 
For purposes
of this Agreement, “Cause” shall mean the occurrence of either or both of the following: (i) the willful misconduct by the Executive with regard to the Company that is significantly injurious to the Company, provided, however, that no act
or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interests of the
Company; or (ii) the conviction of the Executive of (or the pleading by the Executive of nolo contendere to) any felony (other than traffic related offenses or as a result of vicarious liability). 
 
B. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless the provisions of this paragraph B are complied with. Executive shall be given written notice by the Board of the intention to terminate him for Cause, and he shall then be entitled to a meeting before
the Board to present his position, provided he requests in writing such a meeting within ten calendar days of his receipt of the written notice from the Board of the intention to terminate him. Following such a meeting, if Executive is then
furnished written notice by the Board confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, Executive shall thereupon be terminated for Cause, which determination shall be subject to review by the arbitrator
on a de novo basis. 
 
C. In the
event that Executive is terminated for “Cause,” Executive will be entitled to receive only (w) any unpaid base salary through the date of termination and any accrued and unpaid vacation; (x) any unpaid bonus for services rendered during
the 
 

9 

 
calendar year prior to the
calendar year in which the termination occurs; (y) reimbursement for any unreimbursed expenses incurred through the date of termination; and (z) all other payments, benefits or fringe benefits to which Executive may be entitled subject to, and in
accordance with, the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant (including, but not limited to, any then vested stock options, RPSRs or RSRs) (collectively, (w) through (z) are
referred to as “Accrued Obligations”), and will not receive any of the Special Severance Benefits set forth in Section 15. 
 

	12.	 	TERMINATION OF EMPLOYMENT BY DEATH OR DISABILITY OF EXECUTIVE: 

 
A. Death: In the event that Executive dies during the term of this Agreement, this Agreement
shall automatically terminate as of the date of death without further obligation on the part of the Company, except that the Company shall pay to Executive’s estate, within 30 days of death, the Accrued Obligations (with the exception of
certain benefits under certain Accrued Obligations, which shall be paid as soon as administratively practicable), all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation set forth in
Section 15.B shall apply to his eligible dependents commencing as of the date of death. 
 
B. Disability: If the Executive’s employment terminates by reason of his Disability (as defined below) during the term of this Agreement, this Agreement shall 
 

10 

 
terminate without further
obligation to Executive, except that the Company shall provide to Executive, within 30 days after he signs a release (substantially in the form of Exhibit C hereto) which is not revoked, the Accrued Obligations (with the exception of certain
benefits under Accrued Obligations, which shall be paid as soon as administratively practicable), and all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement. In such circumstances, the Benefit Continuation set
forth in Section 15.B shall commence as of the date of such termination and shall, subject to Executive’s prompt execution of a release (substantially in the form of Exhibit C hereto) which is not revoked, continue for the period of time
contemplated by Section 15.B. For purposes of this Agreement, “Disability” shall be defined as the inability of the Executive to perform his material duties hereunder due to the same or a related physical or mental injury, infirmity or
incapacity for 180 days in any 365-day period. The Company may terminate the Executive for a Disability as of the end of the aforementioned period or at any time thereafter during which the Disability continues upon 30 days prior written notice
provided the Executive has not returned to full time employment prior to the end of such 30-day period. 
 

11 

 

	13.	 	TERMINATION OF EMPLOYMENT BY EXECUTIVE FOR GOOD REASON: 

 
Executive shall have the right to terminate the term of this Agreement and his employment with Northrop
Grumman for “Good Reason” as that term is defined below. If Executive terminates his employment for “Good Reason” during the term of this Agreement, Executive shall receive, within 30 days after he signs a release (substantially
in the form of Exhibit C hereto) which is not revoked, the Accrued Obligations (with the exception of certain benefits under Accrued Obligations which shall be paid as soon as administratively practicable), and all of the Special Severance Benefits
set forth in Sections 15.A and 15.C of this Agreement. In such circumstances, the Benefit Continuation in Section 15.B shall commence as of the date of such termination and shall, subject to Executive’s prompt execution of a release
(substantially in the form of Exhibit C hereto) which is not revoked, continue for the period of time contemplated by Section 15.B. For purposes of this Agreement, “Good Reason” shall mean without the Executive’s express written
consent, the occurrence of any one or more of the following: 
 
A. any reduction or diminution in the Executive’s then titles or positions (including as a Director), a material reduction in the nature or status of the Executive’s then authorities, duties, and/or responsibilities (when
such authorities, duties, and/or responsibilities are viewed in the aggregate), other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by 
 

12 

 
the Executive; provided that
Good Reason will be deemed to exist if the Executive’s reporting relationship is changed such that the Executive does not report to the Board; 
 
B. a reduction by the Company of the Executive’s base salary as in effect on the Effective Date, or as the same shall be increased
from time to time; 
 
C. the election of a Company
employee other than Kent Kresa or Executive as Chairman of the Board (the election of a non employee to be Chairman shall not be “Good Reason”); 
 
D. any material failure by the Company to comply with any of the provisions of this Agreement, other than isolated and inadvertent
failure(s) not occurring in bad faith and remedied by the Company promptly after receipt of notice thereof given by the Executive; or 
 
E. the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the
Company’s obligations under this Agreement, as contemplated in Section 19 herein. 
 
Should Executive desire to terminate his employment for “Good Reason,” he shall first give at least 30 days prior written notice of his intent to so terminate to the Board of the Company and
give the Company an opportunity to promptly cure the event giving rise to “Good Reason.” In addition, such written notice must describe the 
 

13 

 
event(s) constituting
“Good Reason” and must be given to the Board within six months of the event(s). 
 
14. TERMINATION OF EMPLOYMENT WITHOUT GOOD REASON: The Executive shall have the right to terminate the term of this Agreement and his employment with Northrop Grumman at any time without Good Reason by
giving written notice to the Board at least thirty days in advance of such termination. In the event that Executive’s employment with the Company is terminated during the term of this Agreement by Executive without Good Reason, Executive shall
not be entitled to any additional payments or benefits hereunder, other than Accrued Obligations. 
 
15. SPECIAL SEVERANCE BENEFITS: In the event Executive’s employment terminates due to his death or Disability, or if he is terminated by Northrop Grumman without
“Cause,” or if he terminates employment for “Good Reason,” then he shall be entitled to receive the following Special Severance Benefits, provided, however, that he first signs a release of claims (in a form substantially similar
to Exhibit C) which is not revoked: 
 
A.
Salary and Bonus: A payment equal to two times the sum of (i) the Executive’s highest annual base salary in effect at any time in the six months preceding the termination of the Executive’s employment and (ii) the
highest of any of the following: (x) Executive’s target bonus percentage under the ICP multiplied by his highest annual base salary in effect at any time in the six months preceding the 
 

14 

 
termination of the
Executive’s employment; or (y) the last bonus paid to Executive under the ICP prior to his termination. In addition, the Company shall pay Executive a pro-rata portion of the Executive’s target bonus under the ICP for the calendar year in
which the Executive’s termination occurs (determined by multiplying Executive’s target bonus under the ICP for such year by a fraction, the numerator of which is the number of days during the calendar year in which the termination occurs
up to and including the date on which Executive’s employment by the Company terminates, and the denominator of which is 365). 
 
B. Stock Incentive Continuation: (i) One year of additional vesting for all stock options, RSRs and other stock incentive
grants (excluding Restricted Performance Stock Rights (“RPSRs”)); (ii) Pro-rata vesting of RPSRs; and (iii) Two year extension of the time period otherwise available to exercise options, but not to exceed the maximum time to exercise set
forth in the option grant (this extension does not apply if Executive gets the benefit of the five year exercise period due to retirement). 
 
C. Welfare Benefit Continuation: Three years of continued coverage for Executive and his eligible dependents under the
Company’s medical, dental, vision and life insurance plans and programs applicable to Executive at the time of his termination, on the same terms and conditions as apply to other elected officers during this three-year period. 
 

15 

 
D. Other
Benefits: In addition to the benefits noted above, the following additional benefits shall be paid Executive: (i) a lump sum payment equal to three times the value of his annual car allowance; (ii) continuation of his then current financial
planning benefits through the end of his third financial planning year; (iii) the income tax preparation reimbursement benefit for the year in which he terminates employment and for the following two full calendar years; (iv) outplacement benefits
provided through an outside provider selected by the Executive, at a cost not to exceed $50,000 in total; and (v) any benefits to which Executive is entitled pursuant to Sections 7, 9 or 10 of this Agreement. 
 
The foregoing severance benefits shall be offset by any
severance benefits Executive is entitled to receive under any other Company plan, program, practice or agreement, including the Special Agreement. 
 
16. GROSS-UP FOR SECTION 280G PURPOSES: In the event that the Executive becomes or has already become entitled to payments and/or benefits
or any other amounts in the “nature of compensation” which would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), (including without
limitation as a result of this Agreement, or any other plan, arrangement or agreement with the Company or any affiliate (including Litton), or from any person whose actions result in a change of ownership or effective control of the Company or
Litton covered by Section 280G(b)(2) of the Code or any person affiliated with the Company or Litton or such person), the provisions of Exhibit B shall 
 

16 

 
apply. For purposes of Exhibit
B, the term “Change in Control” shall mean a change of ownership or effective control (as such terms are used in Section 280G and the proposed regulations thereunder) heretofore or hereafter of the Company or Litton. 
 
17. NO MITIGATION; NO OFFSET EXCEPT FOR CIC BENEFITS:
Except as set forth in this Agreement, the Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation,
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others; provided, however, that any severance benefits Executive may receive as a result of a change in control of the
Company under the Special Agreement (or successor thereto) shall offset any severance benefits Executive is eligible to receive under this Agreement. In no event shall the Executive be obliged to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment thereunder be reduced by any compensation earned by the Executive as a result of employment by another employer.

 
18. TRADE SECRETS: In the course of performing his
duties for his former employer Litton and for the Company, Executive will receive, and acknowledges that he has received, confidential information, including without limitation, information not available to competitors relating to the Company’s
existing and contemplated financial plans, products, business plans, operating plans, research and development 
 

17 

 
information, and customer
information, all of which is hereinafter referred to as “Trade Secrets.” Executive agrees that he will not, either during his employment or subsequent to the termination of his employment with the Company, directly or indirectly disclose,
publish or otherwise divulge any Northrop Grumman or Litton Trade Secrets to anyone outside the Company, or use such information in any manner which would adversely affect the business or business prospects of the Company; provided, however, that
the foregoing shall not preclude Executive from complying with due legal process or governmental inquiry or from taking actions or making disclosures while employed by the Company in good faith performance of his duties and obligations hereunder.
Executive further agrees that if, at the time of the termination of his employment with the Company, he is in possession of any documents or other written or electronic materials constituting, containing or reflecting Trade Secrets, he will return
and surrender all such documents and materials to the Company upon leaving its employ. The restrictions and protection provided for in this paragraph shall be in addition to any protection afforded to Trade Secrets by law or equity. 
 
19. INVENTIONS: Executive agrees that all inventions,
discoveries and improvements, and all new ideas for manufacturing and marketing products or services of the Company, which Executive has conceived during his prior employment with Litton or may conceive while employed by the Company, whether during
or outside business hours, on the premises of the Company or elsewhere, alone or in collaboration with others, or which he has acquired or may acquire from others, whether or not the same can be patented or registered under patent, copyright, or
trademark laws, shall be and 
 

18 

 
become the sole and exclusive
property of the Company. Executive agrees to promptly disclose and fully acquaint his management with any such inventions, discoveries, improvements and ideas which he has conceived, made or acquired, and shall, at the request of the Company, make a
written disclosure of the same and execute such applications, assignments, and other written instruments as may reasonably be required to grant to the Company sole and exclusive right, title and interest thereto and therein and to enable the Company
to obtain and maintain patent, copyright and trademark protection therefore. 
 
20. NON-SOLICITATION AND NON-DISPARAGEMENT: 
 
A. For a period of one year following the termination of Executive’s employment with the Company, Executive 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 any person who was, within a period of six months prior to Executive’s termination, 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 the foregoing shall not apply to truthful statements made in compliance with legal process or governmental inquiry. 
 
B. For a period of one year following the termination of
Executive’s employment with the Company, the Company shall not by any means issue or 
 

19 

 
communicate any public
statement that may be critical or disparaging of the Executive, provided 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.

 
21. ASSIGNMENT: This Agreement is personal to
Executive and shall not be assigned by him. However, this Agreement shall be binding upon any entity succeeding to all or substantially all of the assets or business of the Company, whether by merger, consolidation, acquisition or otherwise and may
not otherwise be assigned by the Company. 
 
22. TAX
WITHHOLDING: The Company shall be entitled to withhold from any amounts payable 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). 
 
23. SAVINGS CLAUSE: If any provision under
this Agreement or its application is adjudicated to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable
provision or application. 
 
24. ENTIRE
AGREEMENT: This Agreement represents the complete agreement and understanding between Executive and the Company pertaining to the subject 
 

20 

 
matters contained herein, and
supersedes all prior agreements or understandings, written or oral, between the Parties with respect to such subject matters. The Special Agreement, as well as any and all obligations of Executive and rights of the Company, Litton, TRW Inc. or any
of their respective affiliates under any prior confidentiality or proprietary information agreement, are outside of the scope of the preceding sentence. 
 
25. INDEMNIFICATION: The Company hereby covenants and agrees to indemnify Executive and hold him harmless to the fullest extent
permitted by law and under the By-laws of the Company against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including attorney’s fees), losses, and damages resulting from the
Executive’s good faith performance of his duties and obligations with the Company or with Litton or TRW (including service prior to the Effective Date hereof). The Company, within 30 days of presentation of invoices, shall, to the extent
permitted by law, advance to Executive reimbursement of all legal fees and disbursements incurred by Executive in connection with any potentially indemnifiable matter; provided, however, that in order to receive such advanced fees and disbursements,
Executive must first sign an undertaking reasonably satisfactory to the Company that he will promptly repay the Company all advanced fees and disbursements in the event it is finally determined that Executive cannot be indemnified for the matter at
issue under applicable law or Company By-laws; and provided further, that Executive shall consult with the Company prior to selecting his counsel and shall make a reasonable effort to select counsel reasonably acceptable to the Company. In addition,
the Company and Executive have previously entered into a separate 
 

21 

 
Indemnification Agreement, in
the form previously entered into with other senior officers of the Company, which shall also be deemed to cover the Executive’s performance of services with the Company, Litton and TRW (including service prior to the effective date hereof).

 
26. LIABILITY INSURANCE: The Company shall cover
Executive under directors and officers liability insurance both during and, while potential liability exists (but no less than six years), after the term of this Agreement in the same amount and to the same extent, if any, as the Company covers its
other officers and directors. 
 
27. ARBITRATION: Any
dispute or controversy arising under or in connection with this Agreement or arising our of or in connection with Executive’s employment shall be settled exclusively by arbitration, conducted before a single arbitrator (who is a retired federal
or state court judge) in the State of California (in the major city nearest Executive’s residence) in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The
decision of the arbitrator will be final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator may, but need not, award the prevailing party in any dispute (as
determined by the arbitrator) its or his legal fees and expenses.  
 
28. SURVIVAL OF CERTAIN PROVISIONS. The following provisions of this Agreement shall survive and continue to be in effect to the extent applicable following 
 

22 

 
Executive’s termination
of employment and any purported termination of the term of this Agreement: Section 7 (retiree medical benefit); Section 10 (special retention benefits); Section 9 (termination of 2001 Employment Agreement); Section 11 (termination of employment by
the Company); Section 12 (termination of employment by death or disability of Executive); Section 13 (termination of employment by Executive for good reason); Section 14 (termination of employment without good reason); Section 15 (special severance
benefits); Section 16 (gross-up for Section 280G purposes); Section 17 (no mitigation; no offset); Section 18 (trade secrets); Section 19 (inventions); Section 20 (non-solicitation and non-disparagement); Section 22 (tax withholding); Section 25
(indemnification); Section 26 (liability insurance); Section 27 (arbitration); this Section 28 (survival of certain provisions); Section 29 (cooperation with the Company); and Section 30 (governing law). The survival of Section 16 shall also cover
payments or benefits received after the termination of employment and this Agreement if resulting from a Change in Control (as defined in Section 16) that occurs prior to such termination and during the term of this Agreement. 
 
29. COOPERATION WITH THE COMPANY: During and after the
expiration of this Agreement, the Executive shall cooperate with the Company in regard to any matter, dispute or controversy in which the Company is involved, or may become involved, and of which the Executive may have knowledge. Such cooperation at
a time when the Executive is no longer employed by the Company or a member of the Board shall be subject to further agreement providing for legally appropriate compensation. 
 

	

 
 

23 

 
30. GOVERNING
LAW: This Agreement shall be construed in accordance with and governed by the laws of the State of California without regard to principles of conflict of law. 
 

	
	 Dated:
	 	 February 19, 2003

	 	 	 	 Executive

	
	 	 	 	 	 	 	 By
	 	 /s/ Ronald D. Sugar

	 	 	 	 	 	 	 	 	 Ronald D. Sugar

 

	
	 Dated:
	 	 February 19, 2003

	 	 	 	 NORTHROP GRUMMAN CORPORATION

	
	 	 	 	 	 	 	 By:
	 	 /s/ J. Michael Hateley

	 	 	 	 	 	 	 	 	 J. Michael Hateley

	 	 	 	 	 	 	 	 	 Corporate Vice President and Chief Human

	 	 	 	 	 	 	 	 	 Resources and Administrative Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 

24 

 
Exhibit A
to Employment Agreement 
 
Executive
Perquisites for the CEO 
 

	 	•	 	Executive Life Insurance—three times base salary, up to a maximum of $1,000,000 

	 	•	 	Executive Accidental Death and Dismemberment Insurance—6 times base salary, up to a maximum of $1,000,000 

	 	•	 	Travel and Accident Insurance 

	 	•	 	Long Term Disability—covers 65% of base pay up to a maximum of $15,000 per month including social security 

	 	•	 	Executive Medical—covers 100% of covered charges for Executive and dependents 

	 	•	 	Executive Dental—covers 100% of covered benefits for Executive and dependents with a $2,000 annual maximum 

	 	•	 	Annual Executive Physical Exam 

	 	•	 	Personal Liability Insurance of $10,000,000 

	 	•	 	Car Allowance of $20,000 per year 

	 	•	 	Financial Planning and Income Tax Preparation Benefit—covers 100% of combined charges up to a maximum of $25,000 per year 

	 	•	 	Corporate Airline Travel 

	 	•	 	First Class Air Travel 

	 	•	 	Payment for Two Airline Clubs 

	 	•	 	Reimbursement for Two Private Club Membership up to $5,000 per year 

	 	•	 	Business Club Memberships 

	 	•	 	Home Security 

 
These perquisites are periodically modified by the Company. 
 
 

A-1 

 
Exhibit
B: Gross-Up Provisions 
 
Equalization
Payment. If upon or following a Change in Control, the tax imposed by Section 4999 of the Code or any similar or successor tax (the “Excise Tax”) applies, solely because of the Change in Control, to any payments, benefits and/or
amounts received by the Executive from the Company or any of its subsidiaries as severance benefits or otherwise, including without limitation, any fees, costs and expenses paid under this Agreement and/or any amounts received or deemed received,
within the meaning of any provision of the Code, by the Executive 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 Executive under any of the Company’s incentive plans, including without limitation, the 2001 Long Term incentive Stock Plan, the 1993 Long Term Incentive Stock Plan, the 1987 Long Term Incentive Plan and the
1981 Long-Term Incentive Plan, the Company shall pay to the Executive in cash an additional amount or amounts (the “Gross-Up Payment(s)”)) such that the net amount retained by the Executive after the deduction of any Excise Tax on such
payments, benefits and/or amounts so received and any Federal, state and local income tax and Excise Tax upon the Gross-Up Payment(s) provided for by this Section shall be equal to such payments, benefits and/or amounts so received had they not been
subject to the Excise Tax. Such payment(s) provided for by this Section shall be equal to such payments, benefits and/or amounts so received had they not been subject to the Excise Tax. Such payment(s) shall be made by the Company to the Executive
as soon as practicable following the receipt or deemed receipt of any such payments, benefits and/or amounts so received, and may be satisfied by the Company making a payment or payments on Executive’s account in lieu of withholding for tax
purposes but in all events shall be made within thirty (30) days of the receipt or deemed receipt by the Executive of any such payment, benefit and/or amount. 
 
Tax Computation. For purposes of determining whether any payments, benefits and/or amounts, including amounts paid as severance
benefits, will be subject to Excise Tax, and the amount of any such Excise Tax: 
 

	 	(a)	 	Any other payments, benefits and/or amounts received or to be received by the Executive in connection with or contingent upon a Change in Control of the Company or
the Executive’s termination of employment, (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, or with any Person whose actions result in a Change in Control of the Company or any
person affiliated with the Company or such Persons) shall be combined to determine whether the Executive has received any “parachute payment” within the meaning of Section 280G(b)(2) of the Code, and if so, the amount of any “excess
parachute payments” within the meaning of Section 280(G)(b)(1) that shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company’s 

 

B-1 

 
independent
auditors and acceptable to the Executive, such other payments, benefits and/or amounts (in whole or in part) do not constitute parachute payments, or such excess parachute payments represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax; 
 

	 	(b)	 	The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. 

	 	

For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar year in which the Gross-Up Payment is to be made. Such highest marginal rate shall take into account the loss of itemized
deduction by the Executive and shall also include the Executive’s share of the hospital insurance portion of FICA and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s
residence on the Effective Date of termination, net of the maximum reduction in Federal income taxes that could be obtained from the deduction of such state and local taxes. 
 
Subsequent Recalculation. In the event the Internal Revenue Service adjusts the computation of the
Company under this Section herein, so that the Executive did not receive the greatest net benefit, the Company shall reimburse the Executive as provided herein for the full amount necessary to place the Executive in the same after-tax position as he
would have been in had no Excise Tax applied. 
 
 

B-2 

 
EXHIBIT
C 
 
RELEASE AGREEMENT

 
1. PARTIES: The parties to this Release
Agreement (referred to hereafter as “Agreement”) are DR. RONALD D. SUGAR (referred to hereafter as “Executive”) and NORTHROP GRUMMAN CORPORATION (referred to hereafter as “Northrop Grumman” or the
“Company”). 
 
2. RECITALS: This Agreement
is made with reference to the following facts: 
 
2.1 Executive and Northrop Grumman are parties to an Employment Agreement, one of the terms of which provides Executive, under certain conditions, with Special Severance Benefits in exchange for a release. 
 
2.2 This Agreement is the release Executive is required
to sign in order to receive those Special Severance Benefits. 
 
3. CONSIDERATION: In exchange for the Executive’s agreement to abide by all of the terms of this Agreement, Northrop Grumman will provide Executive with the Special Severance Benefits set forth in Section 15 of the
Employment Agreement. 
 
4. COMPLETE RELEASE: In
consideration of the promises contained herein, and for other good and valuable consideration the receipt of which is hereby acknowledged, Executive 
 

C-1 

 
does hereby acknowledge full
and complete satisfaction of and does hereby agree to release, absolve and discharge Releasees (as defined below) from all claims, causes of action, demands, damages or costs he may have against Releasees on behalf of himself or others arising prior
to the date he signs this Agreement. “Releasees” shall mean the Company, its subsidiaries, affiliated and related companies, past, present and future, and each of them, as well as its and their employees, officers, directors, and agents
(in their capacities as employees, officers, directors and agents), past and present, and each of them in such capacities.  
 
4.1 This waiver and release includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs
arising under the Age Discrimination in Employment Act, which prohibits discrimination in employment based on age, and retaliation; 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 based on disability and retaliation; the California Fair Employment and Housing Act, which prohibits discrimination in employment
based on race, color, religion, sex, sexual orientation, national origin, ancestry, physical disability, mental disability, medical condition, marital status or age, and retaliation; or any other federal, state or local laws or regulations
prohibiting employment discrimination or retaliation whether such claim be based upon an action filed by Executive or by any governmental agency. 
 
4.2 This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs
arising under Executive’s Employment Agreement, or in relation to the Company’s employee handbook and personnel policies, or any oral or 
 

C-2 

 
written representations or
statements made by officers, directors, lawyers, employees or agents of the Company, past and present, and each of them, or under any state or federal law regulating wages, hours, compensation or employment, or any claim for retaliation, wrongful
discharge, breach of contract, breach of the implied covenant of good faith and fair dealing, intentional or negligent infliction of emotional distress, intentional or negligent misrepresentation, or defamation. 
 
4.3 This waiver and release also includes, but is not
limited to, any rights, claims, causes of action, demands, damages or costs arising under or in relation to any severance plan, program, or arrangement. 
 
4.4 This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs
arising under the federal False Claims Act. 
 
4.5 This release covers both claims that Executive knows about and those he may not know about. Executive hereby specifically waives and relinquishes all rights and benefits provided by Section 1542 of the Civil Code of the
State of California, and does so understanding and acknowledging the significance of this specific waiver of Section 1542. Section 1542 of the Civil Code of the State of California states as follows: 
 
“A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the 
 

C-3 

 
time of executing the release, which if known by him must have materially affected his settlement with the debtor.” 
 
4.6 Notwithstanding the provisions of Section 1542 and for the purpose of implementing a full and complete release, Executive
expressly acknowledges that this Agreement is intended to include all claims which he does not know or suspect to exist in his favor at the time of his signature on the Agreement, and that this Agreement will extinguish any such claims 
 
4.7 Notwithstanding anything to the contrary herein,
this Agreement does not waive or release: (i) any rights or claims which Executive may have under the Age Discrimination in Employment Act or other laws which arise after the date he signs this Agreement, (ii) any rights or claims Executive may have
under his Employment Agreement with the Company which survive termination of employment; (iii) any rights Executive may have for indemnification from the Company; (iv) any rights which Executive may have under the Company’s Directors and
Officers liability insurance policy; (v) any rights Executive may have under stock option, RPSR, RSR or other stock incentive grants provided to him by the Company; (vi) any rights Executive may have as a shareholder of Northrop Grumman; and (vii)
any rights Executive may have to vested benefits under any Company employee benefit plan. 
 
5. ARBITRATION: Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single 
 

C-4 

 
arbitrator in the State of
California (in the major city nearest Executive’s residence) in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the arbitrator will be final
and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator may, but need not, award the prevailing party in any dispute (as determined by the arbitrator) its or his
legal fees and expenses. 
 
6. PERIOD FOR REVIEW AND
CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL: Executive agrees and understands that he has been given a period of twenty-one (21) calendar days from his receipt of this Agreement to review and consider this Agreement before signing it.
Executive further understands that he may use as much of this review period as he wishes prior to signing; he can sign this Agreement at any time prior to the expiration of the twenty-one calendar day period. At the end of this period, this offer of
Special Severance Benefits will be deemed automatically withdrawn if not earlier signed by Executive and delivered to the Company. Executive is advised and encouraged to consult with his own legal counsel prior to signing this Agreement.

 
7. RIGHT TO REVOKE AGREEMENT: Executive may revoke
this Agreement within seven (7) calendar days of signing it. Revocation can be made by delivering a written notice of revocation to Chief Human Resources Officer, Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA 90067. For this
revocation to be effective, written notice must be received by the Chief Human Resources Officer no later than 5:00 p.m. PST on the seventh calendar day after Executive signs this Agreement. If 
 

C-5 

Executive revokes this Agreement, it shall not be effective or enforceable, and Executive will not receive
the benefits described in Section 3 of this Agreement. 
 
8.
NON-ADMISSION OF LIABILITY: Nothing contained herein shall be construed as an admission by either Executive or by Northrop Grumman of liability of any kind. 
 
9. SEVERABILITY: The provisions of this Agreement are severable, and if any part of it is found to be illegal
or invalid and thereby unenforceable, the validity of the remaining parts, terms or provisions shall not be affected and shall remain fully enforceable. The unenforceable part, term or provision shall be deemed not to be a part of this Agreement.

 
10. SOLE AND ENTIRE AGREEMENT: Except as otherwise
expressly set forth herein, this Agreement sets forth the entire agreement between the parties hereto, and fully supersedes any and all discussions, prior agreements or understandings between the parties hereto pertaining to the subject matter of
this Agreement. 
 
11. 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. 
 
EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS, CONFER WITH COUNSEL, AND TO CAREFULLY CONSIDER ALL OF THE PROVISIONS OF THIS
AGREEMENT BEFORE SIGNING IT. HE FURTHER AGREES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING INTO IT. 
 

C-6 

 
PLEASE READ THIS AGREEMENT
CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. 
 

	 	 	 	 	 EXECUTIVE

	
	 DATED:
	 	  

	 	 	 	 BY:
	 	  

	
	 	 	 	 	 NORTHROP GRUMMAN CORPORATION

	
	 DATED:
	 	  

	 	 	 	 BY:
	 	  

	 	 	 	 	 	 	 	 	 TITLE:
	 	  

 

C-7

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