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Published: 2008-03-26

Employment Agreement - Northrop Grumman Corp. and Ralph D. Crosby Jr.



                                    AGREEMENT

1.   PARTIES: The Parties to this Agreement are Ralph D. Crosby, Jr. ("Mr.
     Crosby") and Northrop Grumman Corporation ("Northrop Grumman" or the
     "Company").

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

     2.1  Mr. Crosby is currently a Corporate Vice President and President of
          the Integrated Systems sector of Northrop Grumman. He has indicated
          his desire to resign from employment as soon as practicable to pursue
          other interests.

     2.2  It is in the best interests of Northrop Grumman to offer a Retention
          Incentive to retain Mr. Crosby's services for a period of time in
          order to permit a smooth transition of his critical responsibilities.

     2.3  It is also in the best interests of Northrop Grumman to offer Mr.
          Crosby severance benefits in recognition of and compensation for his
          many contributions to the Company, and to induce him to enter into
          this Agreement.



     2.4  Mr. Crosby wishes to accept the Company's offer and enter into this
          Agreement.

3.   CONTINUED EMPLOYMENT; TERMINATION OF EMPLOYMENT: Mr. Crosby agrees to
     remain employed through January 11, 2002. During the remaining period of
     his employment, Mr. Crosby agrees to work diligently to insure a smooth
     transition of his responsibilities and to complete a close out of 2001
     activities for the Integrated Systems sector. Mr. Crosby will separate from
     employment on January 11, 2002. Following his separation from employment,
     he will be eligible for all benefits he has accrued under the employee
     benefit plans in which he participates. If Mr. Crosby dies prior to
     commencing his pension benefits under the Northrop Grumman Retirement Plan
     and excess nonqualified pension plans, his surviving spouse shall be
     entitled to pre-retirement survivor annuities under the terms of those
     plans.

4.   RETENTION INCENTIVE: In consideration of Mr. Crosby's continuing his
     employment through December 11, 2001, he will be paid a Retention Incentive
     in the amount of $825,000 no later than December 18, 2001. This incentive
     is eligible compensation for pension calculation purposes.

5.   SEVERANCE BENEFITS: Provided that Mr. Crosby continues employment through
     January 11, 2002 on the terms set forth above, the following benefits shall
     be payable:

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     A.   Cash Severance: Within 30 days following his termination from
          employment, Mr. Crosby will be paid a cash severance payment of
          $505,000, representing one year's base salary.

     B.   Early Retirement Subsidy Differential: Within 30 days following his
          termination from employment, Mr. Crosby will be paid an early
          retirement subsidy differential in the amount of $2,400,000.

     C.   Retiree Medical: Following his termination from employment, Mr. Crosby
          shall be eligible for the Special Officer Retiree Medical Plan in
          accordance with the terms of that Plan.

     D.   Accelerated Vesting of Certain Equity Grants: The following provisions
          shall apply to Mr. Crosby's unvested equity grants notwithstanding
          anything to the contrary in the grant certificates:

          1.   Restricted Stock Rights ("RSRs"): Upon Mr. Crosby's termination
               from employment on January 11, 2002, 2,000 unvested RSRs granted
               to him in November of 1999 shall accelerate and vest.

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               2.   Stock Options: Upon Mr. Crosby's termination from employment
                    on January 11, 2002, the following unvested stock options
                    which have previously been granted to him will accelerate
                    and vest:

                                                  Number of Unvested Options
          Option Grant Date      Strike Price     Which Will Vest At Termination
          -----------------      ------------     ------------------------------

            December 1998          $88.125                   9,375
            December 1998          $99.141                   9,375

                    Mr. Crosby shall have two years after his termination from
                    employment within which he may exercise his Northrop Grumman
                    stock options, after which the options will no longer be
                    exercisable.

               3.   Restricted Performance Stock Rights ("RPSRs"): In December
                    of 1998, Mr. Crosby received a grant of RPSRs. Upon his
                    termination from employment on January 11, 2002, he will be
                    eligible to receive a pro-rata portion of the grant in the
                    amount of a target number of 5,000 shares for the 12/31/2001
                    period, 2,000 shares for the 12/31/2002 period and 2,000
                    shares for the 12/31/2003 period. These RPSRs shall become
                    payable in accordance with the terms of the RPSR grant
                    certificate and the Guide to Administration of the Company's
                    Long-Term Incentive Stock Plan.

          E.   Relocation: Within 30 days following his termination from
               employment on January 11, 2002, Mr. Crosby will be paid a cash
               payment of $250,000

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          (grossed up for income tax purposes, such that Mr. Crosby receives a
          net of $250,000 after applicable tax withholding) for relocation
          expenses.

     F.   Additional Benefits: Within 30 days following his termination from
          employment on January 11, 2002, Mr. Crosby shall be paid the lump sum
          equivalent value of one year of his current car allowance and one year
          of his current financial planning/tax preparation benefit, as well as
          a payment of $50,000 to cover the cost of outplacement services.

6.   2001 BONUS: Provided that Mr. Crosby remains employed through December 31,
     2001, he shall receive a bonus under the Northrop Grumman Incentive
     Compensation Plan ("ICP") for his performance during 2001, with the
     calculation of this bonus to be made based upon normal ICP factors as
     approved by the Compensation and Management Development Committee of the
     Board of Directors as soon as administratively practical following the
     February 2002 Board of Directors meeting.

7.   NON-DISPARAGEMENT:

     A.   Mr. Crosby agrees that, following his termination from employment, he
          shall not issue or communicate any statement that may be critical or
          disparaging of the Company, its products, services, officers,
          directors or employees; provided, however, that the foregoing shall
          not apply to

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       truthful statements made in compliance with legal process or governmental
       inquiry.

   B.  Northrop Grumman agrees that, following Mr. Crosby's termination from
       employment, the Company shall not issue or communicate any statement that
       may be critical or disparaging of Mr. Crosby; provided, however, that the
       foregoing shall not apply to truthful statements made in compliance with
       legal process, governmental inquiry or as required by legal filing or
       disclosure requirements.

8. COOPERATION: Mr. Crosby agrees that, during the two year period following his
termination from employment, he will reasonably cooperate with Northrop Grumman
requests for assistance in connection with serving as a witness or providing
information as to matters connected with his prior employment with Northrop
Grumman.

9. INDEMNIFICATION: Northrop Grumman agrees to indemnify Mr. Crosby and hold him
harmless to the fullest extent permitted by law and under the By-laws of the
Company against and in respect to any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including attorney's fees), losses
and damages resulting from Mr. Crosby's good faith performance of his duties and
obligations with the Company. This agreement is in addition to Mr. Crosby's
rights under his current August 5, 1994 Indemnification Agreement with the
Company.

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10.  COMPLETE RELEASE: In consideration of the severance benefits provided
herein, Mr. Crosby does hereby acknowledge full and complete satisfaction of and
does hereby agree to release, absolve and discharge the Company, its subsidiary,
affiliated and related companies, past, present and future, and each of them, as
well as its and their employees, officers, directors and agents, past and
present, and each of them (collectively referred to as "Releasees"), from all
claims, causes of action, demands, damages or costs he may have against
Releasees on behalf of himself or others arising out of or relating to his
employment with the Company or the termination of such employment.

     10.1  This waiver and release includes, but is not limited to, any rights,
           claims, causes of actions, demands, damages or costs arising under
           the Age Discrimination in Employment Act, which prohibits
           discrimination in employment based on age, and retaliation; Title VII
           of the Civil Rights Act of 1964, which prohibits discrimination in
           employment based on race, color, religion, sex or national origin,
           and retaliation; the Americans With Disabilities Act, which prohibits
           discrimination in employment based on disability, and retaliation; or
           any other federal, state or local laws or regulations which prohibits
           employment discrimination or retaliation whether such claim is based
           on an action filed by Mr. Crosby or by any governmental agency.

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

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

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

          10.5  This release covers both claims that Mr. Crosby knows about and
                those he may not know about. Mr. Crosby expressly acknowledges
                that this Agreement is intended to include all claims which he
                does not know or

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           suspect to exist in his favor at the time of his signature on this
           Agreement, and this Agreement will extinguish such claims.

     10.6  Notwithstanding anything to the contrary herein, this Agreement does
           not waive or release (i) any rights or claims which Mr. Crosby may
           have under the Age Discrimination in Employment Act or other laws
           which arise after the date on which he signs this Agreement; (ii) any
           claims Mr. Crosby may have for vested benefits under any Northrop
           Grumman employee benefit plan; or (iii) any rights or claims Mr.
           Crosby may have for breach of this Agreement.

11.  PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL: Mr.
     Crosby agrees and understands that he has been given a period of 21
     calendar days from his receipt of this Agreement to review and consider
     this Agreement before signing it. Mr. Crosby further understands that he
     may use as much of this review period as he wishes prior to signing; he can
     sign this Agreement at any time prior to the expiration of the 21-calendar
     day period. Mr. Crosby is advised and encouraged to consult with his own
     legal counsel prior to signing this Agreement.

12.  RIGHT TO REVOKE AGREEMENT: Mr. Crosby may revoke this Agreement within 7
     calendar days of signing it. Revocation may be made by delivering a written
     notice of revocation to Chief Human Resources Officer,

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     Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA
     90067. For this revocation to be effective, written notice must be received
     by the Chief Human Resources Officer no later than 5:00 pm PST on the
     seventh calendar day after Mr. Crosby signs this Agreement. If Mr. Crosby
     revokes this Agreement, it shall not be effective or enforceable, and Mr.
     Crosby will not receive the benefits described in this Agreement.

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

14.  ENTIRE AGREEMENT: This Agreement sets forth the entire agreement between
     the Parties hereto, and fully supersedes any and all discussions, prior
     agreements or understandings between the Parties hereto pertaining to the
     subject matter of this Agreement.

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15.  GOVERNING LAW: This Agreement shall be interpreted and enforced in
     accordance with the law of the State of Texas without regard to principles
     regarding conflicts of law.


                                        RALPH D. CROSBY, JR.


Dated: December 13, 2001                By: /s/  RALPH D. CROSBY, JR.
       -----------------                    -------------------------


                                        NORTHROP GRUMMAN CORPORATION


Dated: December 22, 2001                By: /s/  J. MICHAEL HATELEY
       -----------------                    -----------------------

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