Document:

exv10w6

Exhibit 10.6

NORTHROP GRUMMAN

DEFERRED COMPENSATION PLAN

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

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1.1     Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II PARTICIPATION
	 	 	5	 
	 
	 	 	 	 
	2.1     In General
	 	 	5	 
	2.2     Disputes as to Employment Status
	 	 	5	 
	2.3     Cessation of Eligibility
	 	 	6	 
	 
	 	 	 	 
	ARTICLE III DEFERRAL ELECTIONS
	 	 	6	 
	 
	 	 	 	 
	3.1     Elections to Defer Compensation
	 	 	6	 
	3.2     Crediting of Deferrals.
	 	 	7	 
	3.3     Investment Elections
	 	 	7	 
	3.4     Investment Return Not Guaranteed
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV ACCOUNTS AND TRUST FUNDING
	 	 	8	 
	 
	 	 	 	 
	4.1     Accounts
	 	 	8	 
	4.2     Use of a Trust
	 	 	9	 
	 
	 	 	 	 
	ARTICLE V VESTING
	 	 	9	 
	 
	 	 	 	 
	5.1     In General
	 	 	9	 
	5.2     Exceptions
	 	 	9	 
	 
	 	 	 	 
	ARTICLE VI DISTRIBUTIONS
	 	 	9	 
	 
	 	 	 	 
	6.1     Distribution of Deferred Compensation Contributions
	 	 	9	 
	6.2     Withdrawals for Unforeseeable Emergency
	 	 	11	 
	6.3     Payments Not Received At Death
	 	 	12	 
	6.4     Inability to Locate Participant
	 	 	12	 
	6.5     Committee Rules
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VII ADMINISTRATION
	 	 	12	 
	 
	 	 	 	 
	7.1     Committees
	 	 	12	 
	7.2     Committee Action
	 	 	13	 
	7.3     Powers and Duties of the Administrative Committee
	 	 	13	 
	7.4     Powers and Duties of the Investment Committee
	 	 	14	 
	7.5     Construction and Interpretation
	 	 	14	 
	7.6     Information
	 	 	14	 
	7.7     Committee Compensation, Expenses and Indemnity
	 	 	14	 

 

 

	 	 	 	 	 
	7.8     Disputes
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS
	 	 	15	 
	 
	 	 	 	 
	8.1      Unsecured General Creditor
	 	 	15	 
	8.2      Restriction Against Assignment
	 	 	15	 
	8.3      Restriction Against Double Payment
	 	 	16	 
	8.4      Withholding
	 	 	16	 
	8.5      Amendment, Modification, Suspension or Termination
	 	 	16	 
	8.6      Governing Law
	 	 	17	 
	8.7      Receipt or Release
	 	 	17	 
	8.8      Payments on Behalf of Persons Under Incapacity
	 	 	17	 
	8.9      Limitation of Rights and Employment Relationship
	 	 	17	 
	8.10    Headings
	 	 	17	 
	8.11    2001 Reorganization
	 	 	18	 
	8.12    Liabilities Transferred to HII
	 	 	18	 
	 
	 	 	 	 
	APPENDIX A 2005 TRANSITION RELIEF
	 	 	A-1	 
	 
	 	 	 	 
	A.1     Cash Out
	 	 	A-1	 
	A.2     Elections
	 	 	A-1	 
	A.3     Key Employees
	 	 	A-1	 
	 
	 	 	 	 
	APPENDIX B DISTRIBUTION RULES FOR PRE-2005 AMOUNTS
	 	 	B-1	 
	 
	 	 	 	 
	B.1     Distribution of Contributions
	 	 	B-1	 
	B.2     Early Non-Scheduled Distributions
	 	 	B-2	 
	B.3     Hardship Distribution
	 	 	B-3	 
	B.4     Plan Termination
	 	 	B-3	 
	 
	 	 	 	 
	APPENDIX C
TRANSFER OF LIABILITIES –  NORTHROP GRUMMAN EXECUTIVE
DEFERRED COMPENSATION PLAN
	 	 	C-1	 
	 
	 	 	 	 
	C.1     Background
	 	 	C-1	 
	C.2     Treatment of Transferred Liabilities
	 	 	C-1	 
	C.3     Investments
	 	 	C-1	 
	C.4     Distributions
	 	 	C-1	 
	C.5     Other Provisions
	 	 	C-2	 
	 
	 	 	 	 
	APPENDIX D
TRANSFER OF LIABILITIES –
AEROJET-GENERAL LIABILITIES
	 	 	D-1	 
	 
	 	 	 	 
	D.1     Background
	 	 	D-1	 
	D.2     Treatment of Transferred Liabilities
	 	 	D-2	 
	D.3     Investments
	 	 	D-2	 
	D.4     Distributions
	 	 	D-2	 
	D.5     Other Provisions
	 	 	D-2	 

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

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NORTHROP GRUMMAN

DEFERRED COMPENSATION PLAN

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

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

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

ARTICLE I

DEFINITIONS

          1.1     Definitions

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

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

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

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

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

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

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Participant in accordance with procedures established by the Administrative Committee to
receive the benefits specified hereunder in the event of the Participant’s death.

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

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

                              (3)     No designation of a Beneficiary other than the Participant’s spouse shall be valid unless
consented to in writing by such spouse. If there is no such designation or if there is no surviving
designated Beneficiary, then the Participant’s surviving spouse shall be the Beneficiary. If there
is no surviving spouse to receive any benefits payable in accordance with the preceding sentence,
the duly appointed and currently acting personal representative of the Participant’s estate (which
shall include either the Participant’s probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant’s estate duly appointed
and acting in that capacity within 90 days after the Participant’s death (or such extended period
as the Administrative Committee determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed 180 days after the Participant’s death), then
Beneficiary shall mean the person or persons who can verify by affidavit or court order to the
satisfaction of the Administrative Committee that they are legally entitled to receive the benefits
specified hereunder. Effective January 1, 2007, a Participant will automatically revoke a
designation of a spouse as primary beneficiary upon the dissolution of their marriage.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                    (r)     “Initial Election Period” shall mean:

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

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

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

                    (t)     “Key Employee” means an employee treated as a “specified employee” under Code section
409A(a)(2)(B)(i) of the Company or the Affiliated Companies (i.e., a key employee (as defined in
Code section 416(i) without regard to paragraph (5) thereof)) if the Company’s or an Affiliated
Company’s stock is publicly traded on an established securities market or otherwise. The Company
shall determine in accordance with a uniform Company policy which Participants are Key Employees as
of each December 31 in accordance with IRS regulations or other guidance under Code section 409A,
provided that in determining the compensation of individuals for this purpose, the definition of
compensation in Treas. Reg. § 1.415(c)-2(d)(3) shall be used. Such determination shall be effective
for the twelve (12) month period commencing on April 1 of the following year.

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

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

                    (w)     “Payment Date” shall mean:

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

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

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

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

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

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

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

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

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

ARTICLE II

PARTICIPATION

          2.1     In General

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

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

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

          2.2     Disputes as to Employment Status

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

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

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

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

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

          2.3     Cessation of Eligibility

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

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

ARTICLE III

DEFERRAL ELECTIONS

          3.1     Elections to Defer Compensation

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

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

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

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

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

          3.2     Crediting of Deferrals

                    (a)     In General. Amounts deferred by a Participant under the Plan shall be credited to
the Participant’s Account as soon as practicable after the amounts would have otherwise been paid
to the Participant.

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

          3.3     Investment Elections

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

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

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

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

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

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

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

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

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

          3.4     Investment Return Not Guaranteed

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

ARTICLE IV

ACCOUNTS AND TRUST FUNDING

          4.1     Accounts

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

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

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

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

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

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

          4.2     Use of a Trust

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

ARTICLE V

VESTING

          5.1     In General

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

          5.2     Exceptions

                    The following exceptions apply to the vesting rule:

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

                    (b)     Forfeitures under an escheat law.

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

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

                    (e)     Investment losses.

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

ARTICLE VI

DISTRIBUTIONS

          6.1     Distribution of Deferred Compensation Contributions

                    Appendix B governs the distribution of amounts that were earned and vested (within the meaning
of Code section 409A and regulations thereunder) under the Plan prior to 2005 (and earnings
thereon) and are exempt from the requirements of Code section 409A. Thus,

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this Section 6.1 does not apply to these pre-2005 deferrals, but does apply to all other
amounts deferred under the Plan.

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

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

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

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

                    (c)     Distribution as of Specified Date. A Participant may elect on a deferral form to
have the portion of his Account related to amounts deferred under the deferral form (and earnings
thereon) paid to the Participant as of a January that is at least two years after the year of
deferral. The Participant may elect to receive such amount as a lump sum or in quarterly
installments over 2 to 5 years. If the amount is $25,000 or less at the specified date for
distribution, the Participant will receive a lump sum distribution of the amount regardless of his

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elected distribution form. If the Participant Separates from Service before the specified date
or while receiving a distribution of an amount under this Section 6.1(c), such portion of the
Account will be distributed in accordance with the Participant’s distribution election for a
Separation from Service made at the time of the Participant’s deferral election.

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

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

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

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

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

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

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

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

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

          6.2     Withdrawals for Unforeseeable Emergency

                    A Participant may withdraw all or any portion of his Account balance for an Unforeseeable
Emergency. The amounts distributed with respect to an Unforeseeable Emergency may not exceed the
amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution, after taking into account the extent to
which such hardship is or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship) or by cessation of deferrals under the
Plan. “Unforeseeable Emergency” means for this purpose a severe financial

-11-

 

hardship to a Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss
of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant.

          6.3     Payments Not Received At Death

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

          6.4     Inability to Locate Participant

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

          6.5     Committee Rules

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

ARTICLE VII

ADMINISTRATION

          7.1     Committees

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

                    (b)     An Investment Committee of one or more persons, shall be appointed by, and serve at the
pleasure of, the Board. The number of members comprising the Investment Committee shall be
determined by the Board, who may from time to time vary the number of members. A member of the
Investment Committee may resign by delivering a written notice of

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resignation to the Board. The Board may remove any member by delivering a certified copy of its
resolution of removal to such member. Vacancies in the membership of the Investment Committee shall
be filled promptly by the Board.

          7.2     Committee Action

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

          7.3     Powers and Duties of the Administrative Committee

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

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

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

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

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

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

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

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

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

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          7.4     Powers and Duties of the Investment Committee

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

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

                    (b)     To oversee any rabbi trust; and

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

          7.5     Construction and Interpretation

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

          7.6     Information

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

          7.7     Committee Compensation, Expenses and Indemnity

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

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

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

-14-

 

provided by the Company under any bylaw, agreement or otherwise, as such indemnities are
permitted under ERISA and state law.

          7.8     Disputes

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

ARTICLE VIII

MISCELLANEOUS

          8.1     Unsecured General Creditor

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

          8.2     Restriction Against Assignment

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

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

                    (c)     Notwithstanding the foregoing, all or a portion of a Participant’s Account balance may be
paid to another person as specified in a domestic relations order that the

-15-

 

Administrative Committee determines is qualified (a “Qualified Domestic Relations Order”). For
this purpose, a Qualified Domestic Relations Order means a judgment, decree, or order (including
the approval of a settlement agreement) which is:

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

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

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

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

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

          8.3     Restriction Against Double Payment

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

          8.4     Withholding

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

          8.5     Amendment, Modification, Suspension or Termination

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

-16-

 

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

          8.6     Governing Law

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

          8.7     Receipt or Release

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

          8.8     Payments on Behalf of Persons Under Incapacity

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

          8.9     Limitation of Rights and Employment Relationship

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

          8.10   Headings

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

-17-

 

        8.11     2001 Reorganization

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

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

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

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

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

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

          8.12   Liabilities Transferred to HII

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

*   *   *

-18-

 

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

	 	 	 	 	 
	 
	 	NORTHROP GRUMMAN CORPORATION

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

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APPENDIX A

2005 TRANSITION RELIEF

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

A.1     Cash-Out

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

A.2     Elections

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

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

A.3     Key Employees

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

	 	I.	 	Delay the distributions described above for six months from the
date of Separation from Service. The delayed payments will be paid as a single
sum with interest at the end of the six month period, with the remaining
payments resuming as scheduled.

	 	II.	 	Accelerate the distributions described above into a payment in
2005 without interest adjustments.

	 	III.	 	Key Employees must elect I or II during 2005.

-A 1-

 

APPENDIX B

DISTRIBUTION RULES FOR PRE-2005 AMOUNTS

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

     B.1     Distribution of Contributions

               (a)     Distributions Upon Early Termination

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

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

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

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

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

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

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

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

-B 1-

 

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

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

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

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

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

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

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

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

     B.2     Early Non-Scheduled Distributions

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

-B 2-

 

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

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

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

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

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

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

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

          B.3     Hardship Distribution

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

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

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

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

          B.4     Plan Termination

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

-B 3-

 

APPENDIX C

TRANSFER OF LIABILITIES — 

NORTHROP GRUMMAN EXECUTIVE DEFERRED COMPENSATION PLAN

     C.1     Background

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

     C.2     Treatment of Transferred Liabilities

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

     C.3     Investments

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

     C.4     Distributions

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

                (a)     Section B.1

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

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

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

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

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

-C 1-

 

                    (c)     C.5     Other Provisions

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

-C 2-

 

APPENDIX D

TRANSFER OF LIABILITIES — 

AEROJET-GENERAL LIABILITIES

         D.1     Background

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

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

* * * * *

                   10.6     Unfunded Deferred Compensation

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

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

* * * * *

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

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

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

-D 1-

 

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

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

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

         D.2     Treatment of Transferred Liabilities

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

         D.3     Investments

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

         D.4     Distributions

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

                    (a)     Section B.1

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

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

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

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

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

         D.5     Other Provisions

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

-D 2-

 

APPENDIX E

TRANSFER
OF LIABILITIES – TASC, INC. SUPPLEMENTAL 
RETIREMENT PLAN

     E.1     Background

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

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

     E.2     Treatment of Transferred Liabilities

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

     E.3     Investments

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

     E.4     Distributions

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

     E.5     Other Provisions

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

-E 1-

 

APPENDIX F

2008 TRANSITION RELIEF

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

-F 1-exv10w7

Exhibit 10.7

NORTHROP GRUMMAN

ERISA SUPPLEMENTAL PLAN

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

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 

	INTRODUCTION
	 	 	2	 
	 
	 	 	 	 	 	 
	Article I
	 	Definitions	 	 	2	 
	1.01
	 	Affiliated Companies	 	 	2	 
	1.02
	 	CIC Plans	 	 	2	 
	1.03
	 	Code	 	 	2	 
	1.04
	 	Company	 	 	2	 
	1.05
	 	Grandfathered Amounts	 	 	2	 
	1.06
	 	Key Employee	 	 	2	 
	1.07
	 	Participant	 	 	3	 
	1.08
	 	Payment Date	 	 	3	 
	1.09
	 	Plan	 	 	3	 
	1.10
	 	Pension Plan Benefits	 	 	3	 
	1.11
	 	Pension Plan	 	 	3	 
	1.12
	 	Separation from Service	 	 	3	 
	1.13
	 	Termination of Employment	 	 	3	 
	 
	 	 	 	 	 	 
	Article II
	 	Eligibility for and Amount of Benefits	 	 	4	 
	2.01
	 	Purpose	 	 	4	 
	2.02
	 	Eligibility	 	 	4	 
	2.03
	 	Amount of Benefit	 	 	4	 
	2.04
	 	Preretirement Surviving Spouse Benefit	 	 	5	 
	2.05
	 	Forms and Times of Benefit Payments	 	 	5	 
	2.06
	 	Beneficiaries and Spouses	 	 	6	 
	2.07
	 	Plan Termination	 	 	6	 
	2.08
	 	Pension Plan Benefits	 	 	6	 
	2.09
	 	Mandatory Cashout	 	 	7	 
	2.10
	 	Optional Payment Forms	 	 	7	 
	2.11
	 	Special Tax Distribution	 	 	7	 
	 
	 	 	 	 	 	 
	Article III
	 	Lump Sum Election	 	 	8	 
	3.01
	 	In General	 	 	8	 
	3.02
	 	Retirees Election	 	 	8	 
	3.03
	 	Retirees Lump Sum	 	 	9	 
	3.04
	 	Actives Election	 	 	9	 
	3.05
	 	Actives Lump Sum – Retirement Eligible	 	 	10	 
	3.06
	 	Actives Lump Sum – Not Retirement Eligible	 	 	12	 
	3.07
	 	Lump Sums with CIC Severance Plan Election	 	 	12	 
	3.08
	 	Calculation of Lump Sum	 	 	12	 
	3.09
	 	Spousal Consent	 	 	13	 

i

 

	 	 	 	 	 	 	 

	Article IV
	 	Miscellaneous	 	 	13	 
	4.01
	 	Amendment and Plan Termination	 	 	13	 
	4.02
	 	Not an Employment Agreement	 	 	14	 
	4.03
	 	Assignment of Benefits	 	 	14	 
	4.04
	 	Nonduplication of Benefits	 	 	15	 
	4.05
	 	Funding	 	 	15	 
	4.06
	 	Construction	 	 	15	 
	4.07
	 	Governing Law	 	 	15	 
	4.08
	 	Actions By Company and Claims Procedures	 	 	15	 
	4.09
	 	Plan Representatives	 	 	15	 
	4.10
	 	Number	 	 	16	 
	4.11
	 	2001 Reorganization	 	 	16	 
	4.12
	 	Liabilities Transferred to HII	 	 	16	 
	 
	 	 	 	 	 	 
	APPENDIX A – 2005-2007 TRANSITION RULES	 	 	18	 
	A.01
	 	Election	 	 	18	 
	A.02
	 	2005 Commencements	 	 	18	 
	A.03
	 	2006 and 2007 Commencements	 	 	19	 
	 
	 	 	 	 	 	 
	APPENDIX B – POST 2007 DISTRIBUTION OF 409A AMOUNTS	 	 	20	 
	B.01
	 	Time of Distribution	 	 	20	 
	B.02
	 	Special Rule for Key Employees	 	 	20	 
	B.03
	 	Forms of Distribution	 	 	20	 
	B.04
	 	Death	 	 	20	 
	B.05
	 	Actuarial Assumptions	 	 	21	 
	B.06
	 	Accelerated Lump Sum Payouts	 	 	21	 
	B.07
	 	Effect of Early Taxation	 	 	22	 
	B.08
	 	Permitted Delays	 	 	22	 

- ii -

 

INTRODUCTION

          The Northrop Grumman ERISA Supplemental Plan (the “Plan”), formerly known as the Northrop
Corporation ERISA Supplemental Plan 1, is hereby amended and restated effective as of January 1,
2011. This restatement amends the January 1, 2009 restatement of the Plan and includes changes
that apply to Grandfathered Amounts.

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

ARTICLE I

Definitions

For purposes of the Plan, the following terms, when capitalized, will have the following meanings:

	1.01	 	Affiliated Companies. The Company and any other entity related to the Company under
the rules of section 414 of the Code. The Affiliated Companies include Northrop Grumman
Corporation and its 80%-owned subsidiaries and may include other entities as well.
	 
	1.02	 	CIC Plans. Northrop Grumman Corporation Change-In-Control Severance Plan (effective
August 1, 1996, as amended) or the Northrop Grumman Corporation March 2000 Change-In-Control
Severance Plan.
	 
	1.03	 	Code. The Internal Revenue Code of 1986, as amended.
	 
	1.04	 	Company. The Company as designated in the Pension Plans.
	 
	1.05	 	Grandfathered Amounts. Plan benefits that were earned and vested as of December 31,
2004 within the meaning of Code section 409A and official guidance thereunder.
	 
	1.06	 	Key Employee. An employee treated as a “specified employee” under Code section
409A(a)(2)(B)(i) of the Company or the Affiliated Companies (i.e., a key employee (as defined
in Code section 416(i) without regard to paragraph (5) thereof)) if the Company’s or an
Affiliated Company’s stock is publicly traded on an established securities market or
otherwise. The Company shall determine in accordance with a uniform Company policy which
Participants are Key Employees as of each December 31 in accordance with IRS regulations or
other guidance under Code section 409A, provided that in determining the compensation of
individuals for this purpose, the definition of compensation in Treas. Reg. § 1.415(c)-2(d)(3)
shall be used. Such determination shall be effective for the twelve (12) month period commencing on
April 1 of the following year.

2

 

	1.07	 	Participant. Any employee who (a) is eligible for benefits under one or both Pension
Plans, (b) meets the eligibility requirements of Section 2.02 of this Plan and (c) and has not
received full payment under the Plan.
	 
	1.08	 	Payment Date. The 1st of the month coincident with or following the later of (a) the
date the Participant attains age 55, or (b) the date the Participant Separates from Service.
	 
	1.09	 	Plan. The Northrop Grumman ERISA Supplemental Plan, formerly known as the Northrop
Corporation ERISA Supplemental Plan 1.
	 
	1.10	 	Pension Plan Benefits. This term is defined in Section 2.08 of this Plan.
	 
	1.11	 	Pension Plan and Pension Plans. Any of the following:

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

	 	 	“Aerojet Closing Date” means the Closing Date specified in the April 19, 2001 Asset Purchase
Agreement by and Between Aerojet-General Corporation and Northrop Grumman Systems
Corporation.
	 
	1.12	 	Separation from Service or Separates from Service. A “separation from
service” within the meaning of Code section 409A.
	 
	1.13	 	Termination of Employment. Complete termination of employment with the Affiliated
Companies.

	 	(a)	 	If a Participant leaves one Affiliated Company to go to work for another, he or
she will not have a Termination of Employment.
	 
	 	(b)	 	A Participant will have a Termination of Employment if he or she leaves the
Affiliated Companies because the affiliate he or she works for ceases to be an
Affiliated Company because it is sold or spunoff.

- 3 -

 

ARTICLE II

Eligibility for and Amount of Benefits

	2.01	 	Purpose. The purpose of this Plan is simply to restore to employees of the Company
the benefits they lose under the Pension Plans as a result of the benefit limits in Code
section 415, as amended, or any successor section (“section 415”), as the benefit limits are
described in the applicable Pension Plan.
	 
	2.02	 	Eligibility. Each Participant is eligible to receive a benefit under this Plan if:

	 	(a)	 	he or she has vested in benefits under one or more of the Pension Plans;
	 
	 	(b)	 	he or she has vested benefits reduced because of the application of section
415;
	 
	 	(c)	 	he or she is not eligible to receive a benefit under the Northrop Corporation
Supplemental Retirement Income Program for Senior Executives or any other plan or
program which bars an employee from participation in this Plan; and
	 
	 	(d)	 	he or she is not a “Participant” in the Charles H. Noski Executive Retirement
Plan as that term is defined under that plan.

	2.03	 	Amount of Benefit. The benefit payable from the Company under this Plan to a
Participant will equal the retirement benefit, if any, which would have been payable to the
Participant under the terms of a Pension Plan but for the restrictions of section 415 (as
described in the applicable Pension Plan).
	 
	 	 	The benefit payable under this Plan will be reduced by the amount of Pension Plan Benefits
attributable to the applicable Pension Plan.
	 
	 	 	Benefits under this Plan will only be paid to supplement benefit payments actually made from
a Pension Plan. If benefits are not payable under a Pension Plan because the Participant
has failed to vest or for any other reason, no payments will be made under this Plan with
respect to such Pension Plan.
	 
	 	 	In no event, however, (1) will this Plan pay any amount of a Participant’s retirement
benefit, if any, attributable to the “2000 Ad Hoc Increase for Retirees” Appendix added to
certain of the Company’s tax-qualified plans pursuant to the Board of Directors resolution
adopted May 17, 2000, or (2) will a Participant be entitled to a benefit (or an increased
benefit) from or as a result of participation in this Plan under the Board of Directors
resolution adopted May 17, 2000.
	 
	 	 	The following shall not be considered as compensation for purposes of determining the amount
of any benefit under the Plan:

	 	(1)	 	any payment authorized by the Compensation Committee that is (a) calculated
pursuant to the method for determining a bonus amount under the Annual

- 4 -

 

	 	 	 	Incentive Plan
(AIP) for a given year, and (b) paid in lieu of such bonus in the year prior to the
year the bonus would otherwise be paid under the AIP, and
	 
	 	(2)	 	any award payment under the Northrop Grumman Long-Term Incentive Cash Plan.

	2.04	 	Preretirement Surviving Spouse Benefit. This Section only applies to Grandfathered
Amounts.
	 
	 	 	Preretirement surviving spouse benefits will be payable under this Plan on behalf of a
Participant if such Participant’s surviving spouse is eligible for preretirement surviving
spouse benefits payable from a Pension Plan. The benefit payable will be the amount which
would have been payable under the Pension Plan but for the restrictions of section 415 (as
described in the applicable Pension Plan).
	 
	 	 	The benefit payable under this Plan will be reduced by the amount of Pension Plan Benefits
attributable to the applicable Pension Plan.
	 
	 	 	No benefit will be payable under this Plan with respect to a spouse after the death of that
spouse.
	 
	 	 	See Appendix A and Appendix B for the rules that apply to other benefits earned under the
Plan.
	 
	2.05	 	Forms and Times of Benefit Payments. This Section only applies to Grandfathered
Amounts.
	 
	 	 	The Company will determine the form and timing of benefit payments in its sole discretion.
However, for payments made to supplement those of a particular Pension Plan, the Company
will only select among the options available under that Pension Plan, and using the same
actuarial adjustments used in that Pension Plan except in cases of lump sums.
	 
	 	 	Whenever the present value of the amount payable under the Plan does not exceed $10,000, it
will be paid in the form of a single lump sum as of the first of the month following
Termination of Employment. The lump sum will be calculated using the factors and
methodology described in Section 3.08 below. (See Section 2.09 for the rule that applies as
of January 1, 2008).
	 
	 	 	No payments will commence under this Plan until a Participant has a Termination of
Employment, even in cases where benefits have commenced under a Pension Plan for
Participants over age 70-1/2.
	 
	 	 	See Appendix A and Appendix B for the rules that apply to other benefits earned under the
Plan.

- 5 -

 

	2.06	 	Beneficiaries and Spouses. This Section only applies to Grandfathered Amounts.
	 
	 	 	If the Company selects a form of payment which includes a survivor benefit, the Participant
may make a beneficiary designation, which may be changed at any time prior to commencement
of benefits. A beneficiary designation must be in writing and will be effective only when
received by the Company.
	 
	 	 	If a Participant is married on the date his or her benefits are scheduled to commence, his
or her beneficiary will be his or her spouse unless some other beneficiary is named with
spousal consent. Spousal consent, to be effective, must be submitted in writing before
benefits commence and must be witnessed by a Plan representative or notary public. No
spousal consent is necessary if the Company determines that there is no spouse or that the
spouse cannot be found.
	 
	 	 	The Participant’s spouse will be the spouse as determined under the underlying Pension Plan.
	 
	 	 	See Appendix A and Appendix B for the rules that apply to other benefits earned under the
Plan.
	 
	2.07	 	Plan Termination. No further benefits may be earned under this Plan with respect to
a particular Pension Plan after the termination of such Pension Plan.
	 
	2.08	 	Pension Plan Benefits. The term “Pension Plan Benefits” generally means the benefits
actually payable to a Participant, spouse, beneficiary or contingent annuitant under a Pension
Plan. However, this Plan is only intended to remedy pension reductions caused by the
operation of section 415 and not reductions caused for any other reason. In those instances
where pension benefits are reduced for some other reason, the term “Pension Plan Benefits”
shall be deemed to mean the benefits that would have been actually payable but for such other
reason.
	 
	 	 	Examples of such other reasons include, but are not limited to, the following:

	 	(a)	 	A reduction in pension benefits as a result of a distress termination (as
described in ERISA § 4041(c) or any comparable successor provision of law) of a Pension
Plan. In such a case, the Pension Plan Benefits will be deemed to refer to the
payments that would have been made from the Pension Plan had it terminated on a fully
funded basis as a standard termination (as described in ERISA § 4041(b) or any
comparable successor provision of law).
	 
	 	(b)	 	A reduction of accrued benefits as permitted under Code section 412(c)(8), as
amended, or any comparable successor provision of law.
	 
	 	(c)	 	A reduction of pension benefits as a result of payment of all or a portion of a
Participant’s benefits to a third party on behalf of or with respect to a Participant.

- 6 -

 

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

	 	(a)	 	Post-2007 Terminations. Participants who have a Termination of
Employment after 2007 will receive a lump sum distribution of the present value of
their Grandfathered Amounts within two months of Termination of Employment (without
interest), if such present value is below the Code section 402(g) limit in effect at
the Termination of Employment.
	 
	 	(b)	 	Pre-2008 Terminations. Participants who had a Termination of
Employment before 2008 will receive a lump sum distribution of the present value of
their Grandfathered Amounts within two months of the time they commence payment of
their underlying qualified pension plan benefits (without interest), if such present
value is below the Code section 402(g) limit in effect at the time such payments
commence.

	 	 	For purposes of calculating present values under this Section, the actual assumptions and
calculation procedures for lump sum distributions under the Northrop Grumman Pension Plan
shall be used.
	 
	2.10	 	Optional Payment Forms. Participants with Grandfathered Amounts shall be permitted
to elect (a) or (b) below:

	 	(a)	 	To receive their Grandfathered Amounts in any form of distribution available
under the Plan at October 3, 2004, provided that form remains available under the
underlying qualified pension plan at the time payment of the Grandfathered Amounts
commences. The conversion factors for these distribution forms will be based on the
factors or basis in effect under this Plan on October 3, 2004.
	 
	 	(b)	 	To receive their Grandfathered Amounts in any life annuity form not included in
(a) above but included in the underlying qualified pension plan distribution options at
the time payment of the Grandfathered Amounts commences. The conversion factors will
be based on the following actuarial assumptions:

	 	 	 	 	 	 	 

	 

	 	Interest Rate:
	 	6%	 	
	 
	 	 	 	 	 	 
	 

	 	Mortality Table:
	 	RP-2000 Mortality Table projected 15 years for future standardized
cash balance factors

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

- 7 -

 

ARTICLE III

Lump Sum Election

         This Article only applies with respect to Grandfathered Amounts. See Appendix A and Appendix
B for the distribution rules that apply to other benefits earned under the Plan.

	3.01	 	In General. This Article sets forth the rules under which Participants may elect to
receive their benefits in a lump sum. Except as provided in Section 3.08, this Article does
not apply to active employees (as defined in Section 3.04) in cases where benefits are
automatically payable in lump sum form under Article II.
	 
	3.02	 	Retirees Election. Participants and Participants’ beneficiaries already receiving
monthly benefits under the Plan at its inception will be given a one-time opportunity to elect
a lump sum payout of future benefit payments.

	 	(a)	 	The election must be made within a 60-day period determined by the Company.
Within its discretion, the Company may delay the commencement of the 60-day period in
instances where the Company is unable to timely communicate with a particular payee.
	 
	 	(b)	 	The determination as to whether a payee is already receiving monthly benefits
will be made at the beginning of the 60-day period.
	 
	 	(c)	 	An election to take a lump sum must be accompanied by a waiver of the existing
retiree medical benefits by those Participants (and their covered spouses or surviving
spouses) entitled either to have such benefits entirely paid for by the Company or to
receive such benefits as a result of their classification as an employee under
Executive Class Code II.
	 
	 	 	 	Following the waiver, waiving Participants (and covered spouses or surviving
spouses) will be entitled to the coverage offered to employees who are eligible for
Senior Executive Retirement Insurance Benefits in effect as of July 1, 1993.
	 
	 	(d)	 	If the person receiving payments as of the beginning of the 60-day period dies
prior to making a lump sum election, his or her beneficiary, if any, may not make the
lump sum election.
	 
	 	(e)	 	Elections to receive a lump sum (and waivers under (c)) must be made in writing
and must include spousal consent if the payee (whether the Participant or beneficiary)
is married. Elections and spousal consent must be witnessed by a Plan representative
or a notary public.
	 
	 	(f)	 	An election (with spousal consent, where required) to receive the lump sum made
at any time during the 60-day period will be irrevocable. If no proper election has
been made by the end of the 60-day period, payments will continue unchanged in the
monthly form that had previously been applicable.

- 8 -

 

	3.03	 	Retirees Lump Sum. If a retired Participant or beneficiary makes a valid election
under Section 3.02 within the 60-day period, monthly payments will continue in the previously
applicable form for 12 months (assuming the payees live that long).

	 	(a)	 	As of the first of the 13th month, the present value of the
remaining benefit payments will be paid in a single lump sum to the Participant, if
alive, or, if not, to the beneficiary under the previously applicable form of payment.
	 
	 	(b)	 	No lump sum payment will be made if:

	 	(1)	 	The Participant is receiving monthly benefit payments in a form
that does not provide for survivor benefits and the Participant dies before the
time the lump sum payment is due.
	 
	 	(2)	 	The Participant is receiving monthly benefit payments in a form
that does provide for survivor benefits but the Participant and the beneficiary
die before the time the lump sum payment is due.

	 	(c)	 	The following rules apply where payment is being made in the form of a 10-year
certain and continuous life annuity option:

	 	(1)	 	If the Participant is deceased at the commencement of the
60-day election period, the surviving beneficiary may not make the election if
there are less than 13 months left in the 10-year certain period.
	 
	 	(2)	 	If the Participant elects the lump sum and dies prior to the
first of the 13th month:

	 	(A)	 	if the 10-year certain period has already
ended, all monthly payments will cease at the Participant’s death and
no lump sum payment will be made;
	 
	 	(B)	 	if the 10-year certain period ends after the
Participant’s death and before the beginning of the 13th
month, monthly payments will end at the end of the 10-year certain
period and no lump sum payment will be made; and
	 
	 	(C)	 	if the 10-year certain period ends after the
beginning of the 13th month, monthly payments will continue
through the 12th month, and a lump sum payment will be made
as of the first of the 13th month, equal to the present
value of the remaining benefit payments.

	3.04	 	Actives Election. Active Participants may elect to have their benefits paid in the
form of a single lump sum under this Section.

- 9 -

 

	 	(a)	 	A Participant is considered to be “Active” under this Section if he or she is
still employed by the Affiliated Companies on or after the beginning of the initial
60-day period referred to in Section 3.02.
	 
	 	(b)	 	An election to take a lump sum may be made at any time during the 60-day period
prior to Termination of Employment and covers both—

	 	(1)	 	Benefits payable to the Participant during his or her lifetime,
and
	 
	 	(2)	 	Survivor benefits (if any) payable to the Participant’s
beneficiary, including preretirement death benefits (if any) payable to the
Participant’s spouse.

	 	(c)	 	An election does not become effective until the earlier of

	 	(1)	 	the Participant’s Termination of Employment, or
	 
	 	(2)	 	the Participant’s death.

	 	 	 	Before the election becomes effective, it may be revoked.
	 
	 	 	 	If a Participant does not have a Termination of Employment within 60 days after
making an election, the election will never take effect.
	 
	 	(d)	 	An election may only be made once. If it fails to become effective after 60
days or is revoked before becoming effective, it cannot be made again at a later time.
	 
	 	(e)	 	After a Participant has a Termination of Employment, no election can be made.
	 
	 	(f)	 	If a Participant dies before making a lump sum election, his or her spouse may
not make a lump sum election with respect to any benefits which may be due the spouse.
	 
	 	(g)	 	Elections to receive a lump sum must be made in writing and must include
spousal consent if the Participant is married. Elections and spousal consent must be
witnessed by a Plan representative or a notary public.

	3.05	 	Actives Lump Sum — Retirement Eligible. If a Participant with a valid lump sum
election in effect under Section 3.04 has a Termination of Employment after he or she is
entitled to commence benefits under the Pension Plans, payments will be made in accordance
with this Section.

	 	(a)	 	Monthly benefit payments will be made for up to 12 months, commencing the first
of the month following Termination of Employment. Payments will be made:

- 10 -

 

	 	(1)	 	in the case of a Participant who is not married on the date
benefits are scheduled to commence, based on a straight life annuity for the
Participant’s life and ceasing upon the Participant’s death should he or she
die before the 12 months elapse, or
	 
	 	(2)	 	in the case of a Participant who is married on the date
benefits are scheduled to commence, based on a joint and survivor annuity form
—

	 	(A)	 	with the survivor benefit equal to 50% of the
Participant’s benefit;
	 
	 	(B)	 	with the Participant’s spouse as the survivor
annuitant;
	 
	 	(C)	 	determined by using the contingent annuitant
option factors used to convert straight life annuities to 50% joint and
survivor annuities under the Northrop Retirement Plan; and
	 
	 	(D)	 	with all payments ceasing upon the death of
both the Participant and his or her spouse should they die before the
12 months elapse.

	 	(b)	 	As of the first of the 13th month, the present value of the
remaining benefit payments will be paid in a single lump sum. Payment of the lump sum
will be made to the Participant if he or she is still alive, or, if not, to his or her
surviving spouse, if any.
	 
	 	(c)	 	No lump sum payment will be made if:

	 	(1)	 	The Participant is receiving monthly benefit payments in the
form of a straight life annuity and the Participant dies before the time the
lump sum payment is due.
	 
	 	(2)	 	The Participant is receiving monthly benefit payments in a
joint and survivor annuity form and the Participant and his or her spouse both
die before the time the lump sum payment is due.

	 	(d)	 	A lump sum will be payable to a Participant’s spouse as of the first of the
month following the date of the Participant’s death, if:

	 	(1)	 	the Participant dies after making a valid lump sum election but
prior to commencement of any benefits under this Plan;
	 
	 	(2)	 	the Participant is survived by a spouse who is entitled to a
preretirement surviving spouse benefit under this Plan; and
	 
	 	(3)	 	the spouse survives to the first of the month following the
date of the Participant’s death.

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	3.06	 	Actives Lump Sum — Not Retirement Eligible. If a Participant with a valid lump sum
election in effect under Section 3.04, has a Termination of Employment before he or she is
entitled to commence benefits under the Pension Plans, payments will be made in accordance
with this Section.

	 	(a)	 	No monthly benefit payments will be made.
	 
	 	(b)	 	Following Termination of Employment, a single lump sum payment of the benefit
will be made on the first of the month following 12 months after the date of the
Participant’s Termination of Employment.
	 
	 	(c)	 	A lump sum will be payable to a Participant’s spouse as of the first of the
month following the date of the Participant’s death, if:

	 	(1)	 	the Participant dies after making a valid lump sum election but
prior to commencement of any benefits under this Plan;
	 
	 	(2)	 	the Participant is survived by a spouse who is entitled to a
preretirement surviving spouse benefit under this Plan; and
	 
	 	(3)	 	the spouse survives to the first of the month following the
date of the Participant’s death.

	 	(d)	 	No lump sum payment will be made if the Participant is unmarried at the time of
death and dies before the time the lump sum payment is due.

	3.07	 	Lump Sums with CIC Severance Plan Election. A Participant who elects lump sum
payments of all his or her nonqualified benefits under the CIC Plans is entitled to have his
or her benefits paid as a lump sum calculated under the terms of the applicable CIC Plan.
Otherwise, benefit payments are governed by the general provisions of this Article, which
provide different rules for calculating the amount of lump sum payments.
	 
	3.08	 	Calculation of Lump Sum. The factors to be used in calculating the lump sum are as
follows:

	 	 	 	Interest: Whichever of the following two rates that produces the smaller
lump sum:

	 	(1)	 	the discount rate used by the Company for purposes of Statement
of Financial Accounting Standards No. 87 of the Financial Accounting Standards
Board as disclosed in the Company’s annual report to shareholders for the year
end immediately preceding the date of distribution, or
	 
	 	(2)	 	the applicable interest rate that would be used to calculate a
lump sum value for the benefit under the Pension Plans.

- 12 -

 

	 	 	 	Mortality: the applicable mortality table that would be used to calculate a
lump sum value for the benefit under the Northrop Grumman Retirement Plan.
	 
	 	 	 	Increase in Section 415 Limit: 4% per year.
	 
	 	 	 	Age: Age rounded to the nearest month on the date the lump sum is payable.
	 
	 	 	 	Variable Unit Values: Variable Unit Values are presumed not to increase for
future periods after the date the lump sum is payable.

	 	 	The annuity to be converted to a lump sum will be the remaining annuity currently payable to
the Participant or his or her beneficiary at the time the lump sum is due.

	 	 	 	For example, assume a Participant is receiving benefit payments in the form of a 50%
joint and survivor annuity.
	 
	 	 	 	If the Participant and the survivor annuitant are both still alive at the time the
lump sum payment is due, the present value calculation will be based on the
remaining benefits that would be paid to both the Participant and the survivor in
the annuity form.
	 
	 	 	 	If only the survivor is alive, the calculation will be based solely on the remaining
50% survivor benefits that would be paid to the survivor.
	 
	 	 	 	If only the Participant is alive, the calculation will be based solely on the
remaining benefits that would be paid to the Participant.

	 	 	In the case of a Participant who dies prior to commencement of benefits under this Plan so
that only a preretirement surviving spouse benefit (if any) is payable, the lump sum will be
based solely on the value of the preretirement surviving spouse benefit.
	 
	 	 	In the case of a lump-sum under Section 3.07 (related to lump sums with a CIC Severance Plan
election), the lump-sum amount will be calculated as described in that section and the rules
of this Section 3.08 are not used.
	 
	3.09	 	Spousal Consent. Spousal consent, as required for elections as described above, need
not be obtained if the Company determines that there is no spouse or the spouse cannot be
located.

ARTICLE IV

Miscellaneous

	4.01	 	Amendment and Plan Termination. The Company may, in its sole discretion, terminate,
suspend or amend this Plan at any time or from time to time, in whole or in part for any
reason. This includes the right to amend or eliminate any of the provisions of the Plan with
respect to lump sum distributions, including any lump sum calculation factors,

- 13 -

 

	 	 	whether or not
a Participant has already made a lump sum election. Notwithstanding the foregoing, no
amendment or termination of the Plan shall reduce the amount of a Participant’s accrued
benefit under the Plan as of the date of such amendment or termination.
	 
	 	 	No amendment of the Plan shall apply to the Grandfathered Amounts, unless the amendment
specifically provides that it applies to such amounts. The purpose of this restriction is
to prevent a Plan amendment from resulting in an inadvertent “material modification” to the
Grandfathered Amounts.
	 
	 	 	The Company may, in its sole discretion, seek reimbursement from the Pension Plans to the
extent this Plan pays Pension Plan Benefits to which Participants were entitled to or became
entitled to under the Pension Plans.
	 
	4.02	 	Not an Employment Agreement. Nothing contained in this Plan gives any Participant
the right to be retained in the service of the Company, nor does it interfere with the right
of the Company to discharge or otherwise deal with Participants without regard to the
existence of this Plan.
	 
	4.03	 	Assignment of Benefits. A Participant, surviving spouse or beneficiary may not,
either voluntarily or involuntarily, assign, anticipate, alienate, commute, sell, transfer,
pledge or encumber any benefits to which he or she is or may become entitled under the Plan,
nor may Plan benefits be subject to attachment or garnishment by any of their creditors or to
legal process.
	 
	 	 	Notwithstanding the foregoing, all or a portion of a Participant’s benefit may be paid to
another person as specified in a domestic relations order that the plan administrator
determines is qualified (a “Qualified Domestic Relations Order”). For this purpose, a
Qualified Domestic Relations Order means a judgment, decree, or order (including the
approval of a settlement agreement) which is:

	 	(1)	 	issued pursuant to a State’s domestic relations law;
	 
	 	(2)	 	relates to the provision of child support, alimony payments or marital property
rights to a spouse, former spouse, child or other dependent of the Participant;
	 
	 	(3)	 	creates or recognizes the right of a spouse, former spouse, child or other
dependent of the Participant to receive all or a portion of the Participant’s benefits
under the Plan; and
	 
	 	(4)	 	meets such other requirements established by the plan administrator.

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

- 14 -

 

	4.04	 	Nonduplication of Benefits. This Section applies if, despite Section 4.03, with
respect to any Participant (or his or her beneficiaries), the Company is required to make
payments under this Plan to a person or entity other than the payees described in the Plan.
In such a case, any amounts due the Participant (or his or her beneficiaries) under this Plan
will be reduced by the actuarial value of the payments required to be made to such other
person or entity.

	 	 	 	Actuarial value will be determined using the factors and methodology described in
Section 3.08 above (in the case of lump sums) and using the actuarial assumptions in
the underlying Pension Plan in all other cases.
	 
	 	 	 	In dividing a Participant’s benefit between the Participant and another person or
entity, consistent actuarial assumptions and methodologies will be used so that
there is no increased actuarial cost to the Company.

	4.05	 	Funding. Participants have the status of general unsecured creditors of the Company
and the Plan constitutes a mere promise by the Company to make benefit payments in the future.
The Company may, but need not, fund benefits under the Plan through a trust. If it does so,
any trust created by the Company and any assets held by the trust to assist it in meeting its
obligations under the Plan will conform to the terms of the model trust, as described in
Internal Revenue Service Revenue Procedure 92-64, but only to the extent required by Internal
Revenue Service Revenue Procedure 92-65. It is the intention of the Company and Participants
that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA.
	 
	 	 	Any funding of benefits under this Plan will be in the Company’s sole discretion. The
Company may set and amend the terms under which it will fund and may cease to fund at any
time.
	 
	4.06	 	Construction. The Company shall have full discretionary authority to determine
eligibility and to construe and interpret the terms of the Plan, including the power to remedy
possible ambiguities, inconsistencies or omissions.
	 
	4.07	 	Governing Law. This Plan shall be governed by the law of the State of California,
except to the extent superseded by federal law.
	 
	4.08	 	Actions By Company and Claims Procedures. Any powers exercisable by the Company
under the Plan shall be utilized by written resolution adopted by the Board of Directors or
its delegate. The Board may by written resolution delegate any of the Company’s powers under
the Plan and any such delegations may provide for subdelegations, also by written resolution.
	 
	 	 	The Company’s standardized “Northrop Grumman Nonqualified Retirement Plans Claims and
Appeals Procedures” shall apply in handling claims and appeals under this Plan.
	 
	4.09	 	Plan Representatives. Those authorized to act as Plan representatives will be
designated in writing by the Board of Directors or its delegate.

- 15 -

 

	4.10	 	Number. The singular, where appearing in this Plan, will be deemed to include the
plural, unless the context clearly indicates the contrary.
	 
	4.11	 	2001 Reorganization. Effective as of the 2001 Reorganization Date in (d), the
corporate structure of Northrop Grumman Corporation and its affiliates was modified. Effective
as of the Litton Acquisition Date in (e), Litton Industries, Inc. was acquired and became a
subsidiary of the Northrop Grumman Corporation (the “Litton Acquisition”).

	 	(a)	 	The former Northrop Grumman Corporation was renamed Northrop Grumman Systems
Corporation. It became a wholly-owned subsidiary of the new parent of the reorganized
controlled group.
	 
	 	(b)	 	The new parent corporation resulting from the restructuring is called Northrop
Grumman Corporation. All references in this Plan to the former Northrop Grumman
Corporation and its Board of Directors now refer to the new parent corporation bearing
the same name and its Board of Directors.
	 
	 	(c)	 	As of the 2001 Reorganization Date, the new Northrop Grumman Corporation became
the sponsor of this Plan, and its Board of Directors assumed authority over this Plan.
	 
	 	(d)	 	2001 Reorganization Date. The date as of which the corporate
restructuring described in (a) and (b) occurred.
	 
	 	(e)	 	Litton Acquisition Date. The date as of which the conditions for the
completion of the Litton Acquisition were satisfied in accordance with the “Amended and
Restated Agreement and Plan of Merger Among Northrop Grumman Corporation, Litton
Industries, Inc., NNG, Inc., and LII Acquisition Corp.

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

*   *   *

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

	 	 	 	 	 
	 	

NORTHROP GRUMMAN CORPORATION

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

Benefits & International 	 

- 17 -

 

	 	 	 	 	 

APPENDIX
A – 2005-2007 TRANSITION RULES

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

	A.01 	 	Election. Participants scheduled to commence payments during 2005
may elect to receive both pre-2005 benefit accruals and 2005 benefit
accruals in any optional form of benefit available under the Plan as
of December 31, 2004. Participants electing optional forms of
benefits under this provision will commence payments on the
Participant’s selected benefit commencement date.
	 
	A.02	 	 2005 Commencements. Pursuant to IRS Notice 2005-1, Q&A-19 & Q&A-20,
Participants commencing payments in 2005 from the Plan may elect a
form of distribution from among those available under the Plan on
December 31, 2004, and benefit payments shall begin at the time
elected by the Participant.

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

	 	(i)	 	In order to elect a lump sum payment pursuant to IRS Notice
2005-1, Q&A-20, a Participant must be an elected or appointed officer of the
Company and eligible to commence payments under the underlying qualified
pension plan on or after June 1, 2005 and on or before December 1, 2005;
	 
	 	(ii)	 	The lump sum payment shall be made in 2005 as soon as feasible
after the election; and
	 
	 	(iii)	 	Interest and mortality assumptions and methodology for
calculating lump sum amount shall be based on the Plan’s procedures for
calculating lump sums as of December 31, 2004.

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	A.03	 	 2006 and 2007 Commencements. Pursuant to IRS transition relief, for all benefit
commencement dates in 2006 and 2007 (provided election is made in 2006 or 2007), distribution
of Plan benefits subject to Code section 409A shall begin 12 months after the later of: (a)
the Participant’s benefit election date, or (b) the underlying qualified pension plan benefit
commencement date (as specified in the Participant’s benefit election form). Payments delayed
during this 12-month period will be paid at the end of the period with interest. Interest
shall be computed using the retroactive annuity starting date rate in effect under the
Northrop Grumman Pension Plan on a month-by-month basis during such period (i.e., the rate may
change in the event the period spans two calendar years).

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APPENDIX
B – POST 2007

DISTRIBUTION OF 409A AMOUNTS

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

	B.01	 	 Time of Distribution. Subject to the special rules provided in this
Appendix B, distributions to a Participant of his vested retirement
benefit shall commence as of the Payment Date.
	 
	B.02	 	 Special Rule for Key Employees. If a Participant is a Key Employee
and age 55 or older at his Separation from Service, distributions to
the Participant shall commence on the first day of the seventh month
following the date of his Separation from Service (or, if earlier,
the date of the Participant’s death). Amounts otherwise payable to
the Participant during such period of delay shall be accumulated and
paid on the first day of the seventh month following the
Participant’s Separation from Service, along with interest on the
delayed payments. Interest shall be computed using the retroactive
annuity starting date rate in effect under the Northrop Grumman
Pension Plan on a month-by-month basis during such delay (i.e., the
rate may change in the event the delay spans two calendar years).
	 
	B.03	 	 Forms of Distribution. Subject to the special rules provided in this
Appendix B, a Participant’s vested retirement benefit shall be
distributed in the form of a single life annuity. However, a
Participant may elect an optional form of benefit up until the
Payment Date. The optional forms of payment are:

	 	(a)	 	     50% joint and survivor annuity
	 
	 	(b)	 	     75% joint and survivor annuity
	 
	 	(c)	 	     100% joint and survivor annuity.

	 	 	If a Participant is married on his Payment Date and elects a joint and survivor annuity, his
survivor annuitant will be his spouse unless some other survivor annuitant is named with
spousal consent. Spousal consent, to be effective, must be submitted in writing before the
Payment Date and must be witnessed by a Plan representative or notary public. No spousal
consent is necessary if the Company determines that there is no spouse or that the spouse
cannot be found.
	 
	B.04	 	 Death. If a married Participant dies before the Payment Date, a death benefit will
be payable to the Participant’s spouse commencing 90 days after the Participant’s death. The
death benefit will be a single life annuity in an amount equal to the survivor portion of a
Participant’s vested retirement benefit based on a 100% joint and survivor annuity determined
on the Participant’s date of death. This benefit is also payable to a

- 20 -

 

	 	 	Participant’s domestic
partner who is properly registered with the Company in
accordance with procedures established by the Company.
	 
	B.05	 	 Actuarial Assumptions.
Except as provided in
Section B.06, all forms of
payment under this Appendix
B shall be actuarially
equivalent life annuity
forms of payment, and all
conversions from one such
form to another shall be
based on the following
actuarial assumptions:

	 	 	 	 	 	 	 

	 

	 	Interest Rate:
	 	6 %	 	
	 
	 	 	 	 	 	 
	 

	 	Mortality Table:
	 	RP-2000 Mortality Table projected 15 years for future standardized cash
balance factors

	B.06	 	 Accelerated Lump Sum Payouts.

	 	(a)	 	Post-2007 Separations. Notwithstanding the provisions of this Appendix
B, for Participants who Separate from Service on or after January 1, 2008, if the
present value of (a) the vested portion of a Participant’s retirement benefit and (b)
other vested amounts under nonaccount balance plans that are aggregated with the
retirement benefit under Code section 409A, determined on the first of the month
coincident with or following the date of his Separation from Service, is less than or
equal to $25,000, such benefit amount shall be distributed to the Participant (or his
spouse or domestic partner, if applicable) in a lump sum payment. Subject to the
special timing rule for Key Employees under Section B.02, the lump sum payment shall be
made within 90 days after the first of the month coincident with or following the date
of the Participant’s Separation from Service.
	 
	 	(b)	 	Pre-2008 Separations. Notwithstanding the provisions of this Appendix
B, for Participants who Separate from Service before January 1, 2008, if the present
value of (a) the vested portion of a Participant’s retirement benefit and (b) other
vested amounts under nonaccount balance plans that are aggregated with the retirement
benefit under Code section 409A, determined on the first of the month coincident with
or following the date the Participant attains age 55, is less than or equal to $25,000,
such benefit amount shall be distributed to the Participant (or his spouse or domestic
partner, if applicable) in a lump sum payment within 90 days after the first of the
month coincident with or following the date the Participant attains age 55, but no
earlier that January 1, 2008.
	 
	 	(c)	 	Conflicts of Interest. The present value of a Participant’s vested
retirement benefit shall also be payable in an immediate lump sum to the extent
required under conflict of interest rules for government service and permissible under
Code section 409A.
	 
	 	(d)	 	Present Value Calculation. The conversion of a Participant’s
retirement benefit into a lump sum payment and the present value calculations under
this Section B.06 shall be based on the actuarial assumptions in effect under the
Northrop Grumman Pension Plan for purposes of calculating lump sum amounts, and will

- 21 -

 

	 	 	 	be based
on the Participant’s immediate benefit if the Participant is 55 or older at
Separation from Service. Otherwise, the calculation will be based on the benefit
amount the Participant will be eligible to receive at age 55.

	B.07	 	 Effect of Early Taxation. If the Participant’s benefits under the
Plan are includible in income pursuant to Code section 409A, such
benefits shall be distributed immediately to the Participant.
	 
	B.08	 	 Permitted Delays. Notwithstanding the foregoing, any payment to a
Participant under the Plan shall be delayed upon the Company’s
reasonable anticipation of one or more of the following events:

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

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

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

- 22 -

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