\n 7.1 Committees……………………………………………….. 12<\/p>\n 7.2 Committee Action………………………………………….. 12<\/p>\n
7.3 Powers and Duties of the Administrative Committee…………….. 12<\/p>\n
7.4 Powers and Duties of the Investment Committee………………… 13<\/p>\n
7.5 Construction and Interpretation…………………………….. 13<\/p>\n
7.6 Information………………………………………………. 13<\/p>\n
7.7 Committee Compensation, Expenses and Indemnity……………….. 14<\/p>\n
7.8 Disputes ………………………………………………… 14<\/p>\n
ARTICLE VIII–MISCELLANEOUS ……………………………………………….. 15<\/p>\n
8.1 Unsecured General Creditor…………………………………. 15<\/p>\n
8.2 Restriction Against Assignment……………………………… 16<\/p>\n
8.3 Restriction Against Double Payment………………………….. 16<\/p>\n
8.4 Withholding………………………………………………. 16<\/p>\n
8.5 Amendment, Modification, Suspension or Termination……………. 16<\/p>\n
8.6 Governing Law…………………………………………….. 16<\/p>\n
8.7 Receipt or Release………………………………………… 17<\/p>\n
8.8 Administrative Delays……………………………………… 17<\/p>\n
8.9 Disputes About Payee………………………………………. 17<\/p>\n
8.10 Incorrect Payment of Benefits………………………………. 17<\/p>\n
8.11 Payments on Behalf of Persons Under Incapacity……………….. 17<\/p>\n
8.12 Limitation of Rights and Employment Relationship……………… 18<\/p>\n
8.13 Headings ………………………………………………… 18
\n<\/c><\/s><\/caption>\n<\/table>\n
(ii)<\/p>\n
NORTHROP GRUMMAN<\/p>\n
DEFERRED COMPENSATION PLAN<\/p>\n
WHEREAS, Northrop Grumman Corporation (the “Company”) desires to
\nestablish this unfunded Deferred Compensation Plan (the “Plan”) for a select
\ngroup of management and highly compensated employees;<\/p>\n
NOW, THEREFORE, effective as of December 1, 2000, this Plan is hereby
\nadopted to read as follows:<\/p>\n
ARTICLE I<\/p>\n
DEFINITIONS
\n ———–<\/p>\n
1.1 Definitions
\n ———–<\/p>\n
Whenever the following words and phrases are used in this
\nPlan, with the first letter capitalized, they shall have the meanings specified
\nbelow.<\/p>\n
(a) “Account” shall mean the recordkeeping account set up for each
\nParticipant to keep track of amounts to his or her credit.<\/p>\n
(b) “Administrative Committee” means the committee in charge of Plan
\nadministration, as described in Article VII.<\/p>\n
(c) “Affiliated Companies” shall mean the Company and any entity
\naffiliated with the Company under Code sections 414(b) or (c).<\/p>\n
(d) “Base Salary” shall mean a Participant’s annual base salary,
\nexcluding bonuses, commissions, incentive and all other remuneration for
\nservices rendered to the Affiliated Companies and prior to reduction for any
\nsalary contributions to a plan established pursuant to section 125 of the Code
\nor qualified pursuant to section 401(k) of the Code.<\/p>\n
(e) “Beneficiary” or “Beneficiaries” shall mean the person or
\npersons, including a trustee, personal representative or other fiduciary, last
\ndesignated in writing by a Participant in accordance with procedures established
\nby the Administrative Committee to receive the benefits specified hereunder in
\nthe event of the Participant’s death.<\/p>\n
(1) No Beneficiary designation shall become effective until it is
\nfiled with the Administrative Committee.<\/p>\n
(2) Any designation shall be revocable at any time through a
\nwritten instrument filed by the Participant with the Administrative Committee
\nwith or without the consent of the previous Beneficiary.<\/p>\n
(3) No designation of a Beneficiary other than the Participant’s
\nspouse shall be valid unless consented to in writing by such spouse. If there is
\nno such designation or if there is no surviving designated Beneficiary, then the
\nParticipant’s surviving spouse shall be the Beneficiary. If there is no
\nsurviving spouse to receive any benefits payable in accordance with the
\npreceding sentence, the duly appointed and currently acting personal
\nrepresentative of the Participant’s estate (which shall include either the
\nParticipant’s probate estate or living trust) shall be the Beneficiary. In any
\ncase where there is no such personal representative of the Participant’s estate
\nduly appointed and acting in that capacity within 90 days after the
\nParticipant’s death (or such extended period as the Administrative Committee
\ndetermines is reasonably necessary to allow such personal representative to be
\nappointed, but not to exceed 180 days after the Participant’s death), then
\nBeneficiary shall mean the person or persons who can verify by affidavit or
\ncourt order to the satisfaction of the Administrative Committee that they are
\nlegally entitled to receive the benefits specified hereunder.<\/p>\n
(4) In the event any amount is payable under the Plan to a minor,
\npayment shall not be made to the minor, but instead be paid (a) to that person’s
\nliving parent(s) to act as custodian, (b) if that person’s parents are then
\ndivorced, and one parent is the sole custodial parent, to such custodial parent,
\nor (c) if no parent of that person is then living, to a custodian selected by
\nthe Administrative Committee to hold the funds for the minor under the Uniform
\nTransfers or Gifts to Minors Act in effect in the jurisdiction in which the
\nminor resides. If no parent is living and the Administrative Committee decides
\nnot to select another custodian to hold the funds for the minor, then payment
\nshall be made to the duly appointed and currently acting guardian of the estate
\nfor the minor or, if no guardian of the estate for the minor is duly appointed
\nand currently acting within 60 days after the date the amount becomes payable,
\npayment shall be deposited with the court having jurisdiction over the estate of
\nthe minor.<\/p>\n
(5) Payment by the Affiliated Companies pursuant to any unrevoked
\nBeneficiary designation, or to the Participant’s estate if no such designation
\nexists, of all benefits owed hereunder shall terminate any and all liability of
\nthe Affiliated Companies.<\/p>\n
(f) “Board” shall mean the Board of Directors of the Company.<\/p>\n
(g) “Bonuses” shall mean the bonuses earned under the Company’s
\nformal incentive plans as defined by the Administrative Committee.<\/p>\n
(h) “Code” shall mean the Internal Revenue Code of 1986, as amended.<\/p>\n
(i) “Committees” shall mean the Committees appointed by the Board to
\nadminister the Plan and investments in accordance with Article VII.<\/p>\n
(j) “Company” shall mean Northrop Grumman Corporation and any
\nsuccessor.<\/p>\n
(k) “Compensation” shall be Base Salary plus Bonuses.<\/p>\n
(l) “Disability” shall mean the Participant’s inability to perform
\neach and every duty of his or her occupation or position of employment due to
\nillness or injury as determined in the sole and absolute discretion of the
\nAdministrative Committee.<\/p>\n
-2-<\/p>\n
(m) “Early Distribution” shall mean an election by a Participant
\nin accordance with Section 6.2 to receive a withdrawal of amounts from his or
\nher Account prior to the time at which such Participant would otherwise be
\nentitled to such amounts.<\/p>\n
(n) “Employee” shall mean any common law employee of the
\nAffiliated Companies.<\/p>\n
(o) “Effective Date” shall be December 1, 2000.<\/p>\n
(p) “Eligible Employee” shall mean any Employee who meets the
\nfollowing conditions:<\/p>\n
(1) he or she is initially treated by the Affiliated
\nCompanies as an Employee and not as an independent contractor; and<\/p>\n
(2) he or she meets the eligibility criteria set by the
\nAdministrative Committee.<\/p>\n
(q) “ERISA” shall mean the Employee Retirement Income Security
\nAct of 1974, as it may be amended from time to time.<\/p>\n
(r) “Hardship Distribution” shall mean a severe financial
\nhardship to the Participant resulting from a sudden and unexpected illness or
\naccident of the Participant or of his or her dependent (as defined in Section
\n152(a) of the Code), loss of a Participant’s property due to casualty, or other
\nsimilar or extraordinary and unforseeable circumstances arising as a result of
\nevents beyond the control of the Participant. The circumstances that would
\nconstitute an unforseeable emergency will depend upon the facts of each case,
\nbut, in any case, a Hardship Distribution may not be made to the extent that
\nsuch hardship is or may be relieved (i) through reimbursement or compensation by
\ninsurance or otherwise, (ii) by liquidation of the Participant’s assets, to the
\nextent the liquidation of assets would not itself cause severe financial
\nhardship, or (iii) by cessation of deferrals under this Plan.<\/p>\n
(s) “Initial Election Period” shall mean<\/p>\n
(1) in the case of an employee who becomes an Eligible
\nEmployee upon the Effective Date of the Plan, the 30-day period prior to the
\nEffective Date of the Plan;<\/p>\n
(2) in the case of an Employee who becomes an Eligible
\nEmployee after the Effective Date under Section 2.1(a)(2)(a new hire), the
\n30-day period following the time the Employee first becomes an Eligible
\nEmployee; and<\/p>\n
(3) in the case of an Employee who becomes an Eligible
\nEmployee after the Effective Date under Section 2.1(b)(because of a raise or
\npromotion), the next Open Enrollment Period.<\/p>\n
(t) “Investment Committee” means the committee in charge of
\ninvestment aspects of the Plan, as described in Article VII.<\/p>\n
-3-<\/p>\n
(u) “Open Enrollment Period” means the period near the end of
\neach Plan Year designated by the Administrative Committee for electing deferrals
\nfor the following Plan Year.<\/p>\n
(v) “Participant” shall mean any Eligible Employee who becomes
\na participant in this Plan in accordance with Article II and retains a positive
\nbalance to his or her account under the Plan.<\/p>\n
(w) “Payment Date” shall mean:<\/p>\n
(1) for distributions upon early termination under Section
\n6.1(a), a date after the end of the month in which termination of employment
\noccurs;<\/p>\n
(2) for distributions after Retirement, Disability or death
\nunder Section 6.1(b), a date after the end of the month in which occurs
\nRetirement, the determination of Disability by the Administrative Committee, or
\nthe notification of the Administrative Committee of the Participant’s death (or
\nlater qualification of the Beneficiary or Beneficiaries), as applicable; and<\/p>\n
(3) for distributions with a scheduled withdrawal date under
\nSection 6.1(c), a date after the December 31 prior to the elected payment year,
\nthe exact date in each case to be determined by the Administrative Committee to
\nallow time for administrative processing.<\/p>\n
(x) “Plan” shall be the Northrop Grumman Deferred Compensation
\nPlan.<\/p>\n
(y) “Plan Year” shall be the calendar year.<\/p>\n
(z) “Retirement” shall mean termination of employment with the
\nAffiliated Companies after reaching age 55.<\/p>\n
(aa) “Scheduled Withdrawal Date” shall mean the distribution date
\nelected by the Participant for an in-service withdrawal of amounts deferred in a
\ngiven Plan Year, and earnings and losses attributable thereto, as set forth on
\nthe election form for such Plan Year.<\/p>\n
ARTICLE II<\/p>\n
PARTICIPATION
\n ————-<\/p>\n
2.1 In General
\n ———-<\/p>\n
(a) An Eligible Employee may become a Participant if he or she:<\/p>\n
(1) is an Eligible Employee on the Effective Date, or<\/p>\n
-4-<\/p>\n
(2) he or she is newly hired by the Affiliated Companies
\nafter the Effective Date and he or she is an Eligible Employee as of the first
\ndate of employment with the Affiliated Companies.<\/p>\n
(b) Someone who becomes an Eligible Employee after the
\nEffective Date because he or she receives a raise or promotion will not be
\nentitled to participate in the Plan until the next Open Enrollment Period.<\/p>\n
(c) Anyone eligible to participate under (a) or (b) may become
\na Participant by complying with the procedures set out by the Administrative
\nCommittee.<\/p>\n
2.2 Disputes as to Employment Status
\n ——————————–<\/p>\n
(a) Because there may be disputes about an individual’s proper
\nstatus as an Employee or non-Employee, this Section describes how such disputes
\nare to be handled with respect to Plan participation.<\/p>\n
(b) The Affiliated Companies will make the initial
\ndetermination of an individual’s employment status.<\/p>\n
(1) If an individual is not treated by the Affiliated
\nCompanies as a common law employee, then the Plan will not consider the
\nindividual to be an “Eligible Employee” and he or she will not be entitled to
\nparticipate in the Plan.<\/p>\n
(2) This will be so even if the individual is told he or
\nshe is entitled to participate in the Plan and given a summary plan description
\nand enrollment forms or other actions are taken indicating that he or she may
\nparticipate.<\/p>\n
(c) Disputes may arise as to an individual’s employment status.
\nAs part of the resolution of the dispute, an individual’s status may be changed
\nby the Affiliated Companies from non-Employee to Employee. Such Employees are
\nnot Eligible Employees.<\/p>\n
2.3 Cessation of Eligibility
\n ————————<\/p>\n
If the Administrative Committee determines or reasonably believes
\nthat a Participant has ceased to be a management or highly compensated employee
\nwithin the meaning of ERISA Title I, the Participant will no longer be able to
\ndefer any further compensation under the Plan.<\/p>\n
ARTICLE III<\/p>\n
DEFERRAL ELECTIONS
\n ——————<\/p>\n
3.1 Elections to Defer Compensation
\n ——————————-<\/p>\n
(a) Initial Election Period. Subject to the provisions of
\n ———————–
\nArticle II, each Eligible Employee may elect to defer an amount of Compensation
\nby filing an election with the Administrative Committee no later than the last
\nday of his or her Initial Election Period.<\/p>\n
-5-<\/p>\n
(b) General Rule. The amount of Compensation which an Eligible
\n ————
\nEmployee may elect to defer is such Compensation earned after the time at which
\nthe Eligible Employee elects to defer in accordance with Section 3.1(a). The
\nAdministrative Committee may set limits and other requirements on the amount
\nwhich may be deferred as well as procedures for elections. The Administrative
\nCommittee may change these rules from time to time. The minimum contribution
\nwhich may be made in any Plan Year by an Eligible Employee shall not be less
\nthan $5,000, provided such minimum contribution can be satisfied from any
\nelement of Compensation.<\/p>\n
(c) Initial and Subsequent Elections. An Eligible Employee’s
\n ——————————–
\ninitial election to defer Compensation must be made by the Effective Date and is
\nto be effective with respect to Compensation received in 2001.<\/p>\n
(1) In the case of an Employee who becomes an Eligible
\nEmployee after the Effective Date under Section 2.1(a)(2) (a new hire), such
\nEligible Employee shall have 30 days from the date he or she has become an
\nEligible Employee to make an initial election with respect to Compensation. Such
\nelection shall be for Compensation earned during the remainder of the Plan Year,
\nin the event the Plan Year has commenced.<\/p>\n
(2) In the case of an Employee who becomes an Eligible
\nEmployee after the Effective Date under Section 2.1(b) (because of a raise or
\npromotion), such Eligible Employee may make an initial election to defer
\nCompensation earned in the following Plan Year during the next Open Enrollment
\nPeriod.<\/p>\n
(3) Participants may maintain, increase, decrease or
\nterminate a deferral election with respect to Compensation for any subsequent
\nPlan Year by filing a new election in the Open Enrollment Period each year.<\/p>\n
(4) These elections for a Plan Year are irrevocable.<\/p>\n
(d) Committee Rules. All elections must be made in accordance
\n —————
\nwith the rules, procedures and utilizing the forms prescribed by the
\nAdministrative Committee. The Administrative Committee may change the rules,
\nprocedures and forms from time to time and without prior notice to Participants.<\/p>\n
3.2 Investment Elections
\n ——————–<\/p>\n
(a) The Investment Committee will establish a number of
\ndifferent types of investment for the Plan. The Investment Committee may change
\nthe investments from time to time, without prior notice to Participants.<\/p>\n
(b) Participants may elect how their future contributions and
\nexisting account balances will be invested in the various types of investment
\nand may change their elections from time to time.<\/p>\n
(c) Although the Participants may designate the type of
\ninvestments, the Investment Committee is not bound to invest in any particular
\ninvestment. The Investment Committee will select from time to time, in its sole
\nand absolute discretion, commercially<\/p>\n
-6-<\/p>\n
available investments of each of the types offered. All investments remain the
\nproperty of the Affiliated Companies (or the rabbi trust under Section 4.2) and
\nare not Plan assets. Investments are used solely for purposes of measuring the
\ndeemed earnings and losses in Participants’ Accounts under Section 4.1.<\/p>\n
(d) Selections of the types of investments, changes and
\ntransfers must be made according to the rules and procedures of the
\nAdministrative Committee.<\/p>\n
(1) The Administrative Committee may prescribe rules which
\nmay include, among other matters, limitations on the amounts which may be
\ntransferred and procedures for electing transfers.<\/p>\n
(2) The Administrative Committee may prescribe rules for
\nvaluing accounts for purposes of transfers. Such rules may, in the
\nAdministrative Committee’s discretion, use averaging methods to determine values
\nand accrue estimated expenses.<\/p>\n
(3) The Administrative Committee may prescribe the periods
\nand frequency with which Participants may change investment elections and make
\ntransfers.<\/p>\n
(4) The Administrative Committee may change its rules from
\ntime to time and without prior notice to Participants.<\/p>\n
3.3 Investment Return Not Guaranteed
\n ——————————–<\/p>\n
Investment performance under the Plan is not guaranteed at any
\nlevel. Participants may lose all or a portion of their contributions due to poor
\ninvestment performance.<\/p>\n
ARTICLE IV<\/p>\n
ACCOUNTS AND TRUST FUNDING
\n ————————–<\/p>\n
4.1 Accounts
\n ——–<\/p>\n
The Administrative Committee shall establish and maintain an
\nAccount for each Participant under the Plan. Each Participant’s Account shall be
\nfurther divided into separate subaccounts (“investment subaccounts”), each of
\nwhich corresponds to an investment type elected by the Participant pursuant to
\nSection 3.2(a). A Participant’s Account shall be credited as follows:<\/p>\n
(a) The Administrative Committee shall credit the investment
\nsubaccounts of the Participant’s Account with an amount equal to Compensation
\ndeferred by the Participant in accordance with the Participant’s election under
\nSection 3.2(b); that is, the portion of the Participant’s deferred Compensation
\nthat the Participant has elected to be deemed to be invested in a certain type
\nof investment shall be credited to the investment subaccount corresponding to
\nthat investment type.<\/p>\n
(b) The investment subaccounts of Participants’ Accounts will
\nbe credited with earnings or losses based on the earnings or losses of the
\ncorresponding investments selected<\/p>\n
-7-<\/p>\n
by the Investment Committee and valued in accordance with the rules and
\nprocedures of the Administrative Committee.<\/p>\n
(1) The Administrative Committee may set regular valuation dates
\nand times and also use special valuation dates and times and procedures from
\ntime to time under unusual circumstances and to protect the financial integrity
\nof the Plan.<\/p>\n
(2) The Administrative Committee may use averaging methods to
\ndetermine values and accrue estimated expenses.<\/p>\n
(3) The Administrative Committee may change its valuation rules
\nand procedures from time to time and without prior notice to Participants.<\/p>\n
(c) In the event that a Participant elects for a given Plan Year’s
\ndeferral of Compensation to have a Scheduled Withdrawal Date, all amounts
\nattributed to the deferral of Compensation for such Plan Year shall be accounted
\nfor in a manner which allows separate accounting for the deferral of
\nCompensation and investment gains and losses associated with such Plan Year’s
\ndeferral of Compensation.<\/p>\n
4.2 Use of a Trust
\n ————–<\/p>\n
The Company may set up a trust to hold any assets or insurance
\npolicies under the Plan. Any trust set up will be a rabbi trust.<\/p>\n
ARTICLE V<\/p>\n
VESTING
\n ——-<\/p>\n
5.1 In General
\n ———-<\/p>\n
A Participant’s interest in his or her Account will be nonforfeitable.<\/p>\n
5.2 Exceptions
\n ———-<\/p>\n
The following exceptions apply to the vesting rule:<\/p>\n
(a) Forfeitures on account of a lost payee. See Section 6.4.<\/p>\n
(b) Forfeitures under an escheat law. See Section 6.4.<\/p>\n
(c) Recapture of amounts improperly credited to a Participant’s
\nAccount or improperly paid to or with respect to a Participant.<\/p>\n
(d) Expenses paid from a Participant’s Account.<\/p>\n
(e) Investment losses.<\/p>\n
(f) Forfeitures resulting from early withdrawals. See Section 6.2.<\/p>\n
-8-<\/p>\n
ARTICLE VI<\/p>\n
DISTRIBUTIONS
\n ————-<\/p>\n
6.1 Distribution of Deferred Compensation Contributions
\n —————————————————<\/p>\n
(a) Distributions Upon Early Termination.
\n ————————————<\/p>\n
(1) Voluntary Termination. If a Participant voluntarily
\n ———————
\nterminates employment with the Affiliated Companies before age 55 or Disability,
\ndistribution of his or her Account will be made in a lump sum on the
\nParticipant’s Payment Date.<\/p>\n
(2) Involuntary Termination. If a Participant involuntarily
\n ———————–
\nterminates employment with the Affiliated Companies before age 55, distribution
\nof his or her Account will generally be made in quarterly installments over a 5,
\n10 or 15-year period, commencing on the Participant’s Payment Date, in
\naccordance with the Participant’s original election on his or her deferral
\nelection form. Payment will be made in a lump sum if the Participant had
\noriginally elected a lump sum, if the Account balance is $50,000 or less, or if
\nthe Administrative Committee so requires.<\/p>\n
(b) Distribution After Retirement, Disability or Death. In the case of
\n ————————————————–
\na Participant who separates from service with the Affiliated Companies on
\naccount of Retirement, Disability or death and has an Account balance of more
\nthan $50,000, the Account shall be paid to the Participant (and after his or her
\ndeath to his or her Beneficiary) in substantially equal quarterly installments
\nover 10 years commencing on the Participant’s Payment Date.<\/p>\n
(1) An optional form of benefit may be elected by the
\nParticipant, on the form provided by Administrative Committee, during his or her
\nInitial Election Period from among those listed below:<\/p>\n
(A) A lump sum distribution on the Participant’s Payment
\nDate.<\/p>\n
(B) Quarterly installments over 5 years beginning on the
\nParticipant’s Payment Date.<\/p>\n
(C) Quarterly installments over 15 years beginning on the
\nParticipant’s Payment Date.<\/p>\n
(2) A Participant from time to time may modify the form of
\nbenefit that he or she has previously elected. Upon his or her separation from
\nservice under this Section, the most recently elected form of distribution
\nsubmitted at least 12 months prior to separation will govern. If no such
\nelection exists, distributions will be paid under the 10-year installment
\nmethod.<\/p>\n
(3) In the case of a Participant who terminates employment with
\nthe Affiliated Companies on account of Retirement, Disability or death with an
\nAccount balance of $50,000 or less, the Account shall be paid to the Participant
\nin a lump sum distribution on the Participant’s Payment Date.<\/p>\n
-9-<\/p>\n
(4) In general, upon the Participant’s death, payment of any
\nremaining Account balance will be made to the Beneficiary in a lump sum on the
\nPayment Date. But the Beneficiary will receive any remaining installments
\n(starting on the Payment Date) if the Participant was receiving installments, or
\nif the Participant died on or after age 55 with an Account balance over $50,000
\nand with an effective installment payout election in place. In such cases, the
\nBeneficiary may still elect a lump sum payment of the remaining Account balance,
\nbut only with the Administrative Committee’s consent.<\/p>\n
(5) The Participant’s Account shall continue to be credited with
\nearnings pursuant to Section 4.1 of the Plan until all amounts credited to his
\nor her Account under the Plan have been distributed.<\/p>\n
(c) Distribution With Scheduled Withdrawal Date. A Participant who
\n ——————————————-
\nhas elected a Scheduled Withdrawal Date for a distribution while still in the
\nemploy of the Affiliated Companies, will receive the designated portion of his
\nor her Account as follows:<\/p>\n
(1) A Participant’s Scheduled Withdrawal Date can be no earlier
\nthan two years from the last day of the Plan Year for which the deferrals of
\nCompensation are made.<\/p>\n
(2) A Participant may extend the Scheduled Withdrawal Date for
\nany Plan Year, provided such extension occurs at least one year before the
\nScheduled Withdrawal Date and is for a period of not less than two years from
\nthe Scheduled Withdrawal Date. The Participant shall have the right to twice
\nmodify any Scheduled Withdrawal Date.<\/p>\n
(3) Payments under this subsection may be in the form of a lump
\nsum, or 2, 3, 4 or 5-year quarterly installments. The default form will be a
\nlump sum. If the Account balance to be distributed is $25,000 or less, payment
\nwill automatically be made in a lump sum. Payments will commence on the
\nScheduled Withdrawal Date.<\/p>\n
(4) In the event a Participant terminates employment with the
\nAffiliated Companies prior to the commencement or completion of a distribution
\nunder this subsection, the portion of the Participant’s Account associated with
\na Scheduled Withdrawal Date which has not been distributed prior to such
\ntermination shall be distributed in accordance with Section 6.1(a) and (b) along
\nwith the remainder of the Account.<\/p>\n
6.2 Early Non-Scheduled Distributions
\n ———————————<\/p>\n
A Participant shall be permitted to elect an Early Distribution from
\nhis or her Account prior to a Payment Date under Section 6.1, subject to the
\nfollowing restrictions:<\/p>\n
(a) The election to take an Early Distribution shall be made by
\nfiling a form provided by and filed with the Administrative Committee prior to
\nthe end of any calendar month.<\/p>\n
(b) The amount of the Early Distribution shall equal up to 90% of his
\nor her Account balance.<\/p>\n
(c) The amount described in subsection (b) above shall be paid in a
\nlump sum as of a date after the receipt by the Administrative Committee of the
\nrequest for a withdrawal<\/p>\n
-10-<\/p>\n
under this Section. The exact date will be determined by the Administrative
\nCommittee to allow time for administrative processing.<\/p>\n
(d) A Participant shall forfeit 10% of the amount of the requested
\ndistribution. The Affiliated Companies shall have no obligation to the
\nParticipant or his or her Beneficiary with respect to such forfeited amount.<\/p>\n
(1) Example 1: A Participant requests a distribution of 100% of
\n ———
\nthe Account. The Participant receives 90%. The amount forfeited is 10% of the
\nAccount.<\/p>\n
(2) Example 2: A Participant requests a distribution of 50% of
\n ———
\nthe Account. The Participant receives 45%. The amount forfeited is 5% of the
\nAccount.<\/p>\n
(e) If a Participant receives an Early Distribution of either all or
\na part of his or her Account, the Participant will be ineligible to participate
\nin the Plan for the balance of the Plan Year and the following Plan Year. All
\ndistributions shall be made on a pro rata basis from among a Participant’s
\ninvestment subaccounts.<\/p>\n
6.3 Hardship Distribution
\n ———————<\/p>\n
A Participant shall be permitted to elect a Hardship Distribution from
\nhis or her Account prior to a Payment Date under Section 6.1, subject to the
\nfollowing restrictions:<\/p>\n
(a) The election to take a Hardship Distribution shall be made by
\nfiling a form provided by and filed with the Administrative Committee prior to
\nthe end of any calendar month.<\/p>\n
(b) The Administrative Committee shall have made a determination that
\nthe requested distribution constitutes a Hardship Distribution.<\/p>\n
(c) The amount determined by the Administrative Committee as a
\nHardship Distribution shall be paid in a lump sum as of a date after the
\napproval by the Administrative Committee of the request for a withdrawal under
\nthis Section. The exact date will be determined by the Administrative Committee
\nto allow time for administrative processing.<\/p>\n
6.4 Payments Not Received At Death
\n ——————————<\/p>\n
In the event of the death of a Participant before receiving a payment,
\npayment will be made to his or her estate if death occurs on or after the date
\nof a check which has been issued by the Plan. Otherwise, payment of the amount
\nwill be made to the Participant’s Beneficiary.<\/p>\n
6.5 Inability to Locate Participant
\n ——————————-<\/p>\n
In the event that the Administrative Committee is unable to locate a
\nParticipant or Beneficiary within two years following the required Payment Date,
\nthe amount allocated to the Participant’s Deferral Account shall be forfeited.
\nIf, after such forfeiture, the Participant or Beneficiary later claims such
\nbenefit, such benefit shall be reinstated without interest or earnings for the
\nforfeiture period.<\/p>\n
-11-<\/p>\n
6.6 Committee Rules
\n —————<\/p>\n
All distributions are subject to the rules and procedures of the
\nAdministrative Committee. The Administrative Committee may also require the use
\nof particular forms. The Administrative Committee may change its rules,
\nprocedures and forms from time to time and without prior notice to Participants.<\/p>\n
ARTICLE VII<\/p>\n
ADMINISTRATION
\n ————–<\/p>\n
7.1 Committees
\n ———-<\/p>\n
A Deferred Compensation Administrative Committee and an Investment
\nCommittee (together, the “Committees”), each of one or more persons, shall be
\nappointed by, and serve at the pleasure of, the Board. The number of members
\ncomprising the Committees shall be determined by the Board, which may from time
\nto time vary the number of members. A member of the Committees may resign by
\ndelivering a written notice of resignation to the Board. The Board may remove
\nany member by delivering a certified copy of its resolution of removal to such
\nmember. Vacancies in the membership of the Committees shall be filled promptly
\nby the Board.<\/p>\n
7.2 Committee Action
\n —————-<\/p>\n
Each Committee shall act at meetings by affirmative vote of a majority
\nof the members of that Committee. Any action permitted to be taken at a meeting
\nmay be taken without a meeting if, prior to such action, a written consent to
\nthe action is signed by all members of the Committee and such written consent is
\nfiled with the minutes of the proceedings of the Committee. A member of the
\nCommittees shall not vote or act upon any matter which relates solely to himself
\nor herself as a Participant. The Chairman or any other member or members of each
\nCommittee designated by the Chairman may execute any certificate or other
\nwritten direction on behalf of the Committee of which he or she is a member.<\/p>\n
7.3 Powers and Duties of the Administrative Committee
\n ————————————————-<\/p>\n
The Administrative Committee, shall enforce the Plan in accordance
\nwith its terms, shall be charged with the general administration of the Plan,
\nand shall have all powers necessary to accomplish its purposes, including, but
\nnot by way of limitation, the following:<\/p>\n
(a) To construe and interpret the terms and provisions of this Plan;<\/p>\n
(b) To compute and certify to the amount and kind of benefits payable
\nto Participants and their Beneficiaries;<\/p>\n
(c) To maintain all records that may be necessary for the
\nadministration of the Plan;<\/p>\n
-12-<\/p>\n
(d) To provide for the disclosure of all information and the filing
\nor provision of all reports and statements to Participants, Beneficiaries or
\ngovernmental agencies as shall be required by law;<\/p>\n
(e) To make and publish such rules for the regulation of the Plan and
\nprocedures for the administration of the Plan as are not inconsistent with the
\nterms hereof;<\/p>\n
(f) To appoint a Plan administrator or any other agent, and to
\ndelegate to them such powers and duties in connection with the administration of
\nthe Plan as the Administrative Committee may from time to time prescribe
\n(including the power to subdelegate);<\/p>\n
(g) To exercise powers granted the Administrative Committee under
\nother Sections of the Plan; and<\/p>\n
(h) To take all actions necessary for the administration of the Plan,
\nincluding determining whether to hold or discontinue insurance policies
\npurchased in connection with the Plan.<\/p>\n
7.4 Powers and Duties of the Investment Committee
\n ———————————————<\/p>\n
The Investment Committee, shall have all powers necessary to
\naccomplish its purposes, including, but not by way of limitation, the following:<\/p>\n
(a) To select types of investment and the actual investments against
\nwhich earnings and losses will be measured;<\/p>\n
(b) To oversee the rabbi trust; and<\/p>\n
(c) To appoint agents, and to delegate to them such powers and duties
\nin connection with its duties as the Investment Committee may from time to time
\nprescribe (including the power to subdelegate).<\/p>\n
7.5 Construction and Interpretation
\n ——————————-<\/p>\n
The Administrative Committee shall have full discretion to construe
\nand interpret the terms and provisions of this Plan and to remedy possible
\ninconsistencies and omissions. The Administrative Committee’s interpretations,
\nconstructions and remedies shall be final and binding on all parties, including
\nbut not limited to the Affiliated Companies and any Participant or Beneficiary.
\nThe Administrative Committee shall administer such terms and provisions in a
\nuniform and nondiscriminatory manner and in full accordance with any and all
\nlaws applicable to the Plan.<\/p>\n
7.6 Information
\n ———–<\/p>\n
To enable the Committees to perform their functions, the Affiliated
\nCompanies adopting the Plan shall supply full and timely information to the
\nCommittees on all matters relating to the Compensation of all Participants,
\ntheir death or other events which cause<\/p>\n
-13-<\/p>\n
termination of their participation in this Plan, and such other pertinent facts
\nas the Committees may require.<\/p>\n
7.7 Committee Compensation, Expenses and Indemnity
\n ———————————————-<\/p>\n
(a) The members of the Committees shall serve without compensation
\nfor their services hereunder.<\/p>\n
(b) The Committees are authorized to employ such legal counsel as
\nthey may deem advisable to assist in the performance of their duties hereunder.<\/p>\n
(c) To the extent permitted by ERISA and applicable state law, the
\nCompany shall indemnify and hold harmless the Committees and each member
\nthereof, the Board and any delegate of the Committees who is an employee of the
\nAffiliated Companies against any and all expenses, liabilities and claims,
\nincluding legal fees to defend against such liabilities and claims arising out
\nof their discharge in good faith of responsibilities under or incident to the
\nPlan, other than expenses and liabilities arising out of willful misconduct.
\nThis indemnity shall not preclude such further indemnities as may be available
\nunder insurance purchased by the Company or provided by the Company under any
\nbylaw, agreement or otherwise, as such indemnities are permitted under ERISA and
\nstate law.<\/p>\n
7.8 Disputes
\n ——–<\/p>\n
(a) Claims
\n ——<\/p>\n
A person who believes that he or she is being denied a benefit to
\nwhich he or she is entitled under this Plan (hereinafter referred to as
\n“Claimant”) must file a written request for such benefit with the Administrative
\nCommittee, setting forth his or her claim.<\/p>\n
(b) Claim Decision
\n ————–<\/p>\n
Upon receipt of a claim, the Administrative Committee shall advise the
\nClaimant that a reply will be forthcoming within ninety (90) days and shall, in
\nfact, deliver such reply within such period. The Administrative Committee may,
\nhowever, extend the reply period for an additional ninety (90) days for special
\ncircumstances.<\/p>\n
If the claim is denied in whole or in part, the Administrative
\nCommittee shall inform the Claimant in writing, using language calculated to be
\nunderstood by the Claimant, setting forth: (A) the specific reason or reasons
\nfor such denial; (B) specific references to pertinent provisions of this Plan on
\nwhich such denial is based; (C) a description of any additional material or
\ninformation necessary for the Claimant to perfect his or her claim and an
\nexplanation of why such material or such information is necessary; (D)
\nappropriate information as to the steps to be taken if the Claimant wishes to
\nsubmit the claim for review; and (E) the time limits for requesting a review
\nunder subsection (c).<\/p>\n
-14-<\/p>\n
(c) Request For Review
\n ——————<\/p>\n
Within sixty (60) days after the receipt by the Claimant of the
\nwritten opinion described above, the Claimant may request in writing that the
\nAdministrative Committee review the initial claim determination. The Claimant or
\nhis or her duly authorized representative may, but need not, review the
\npertinent documents and submit issues and comments in writing for consideration
\nby the Administrative Committee. If the Claimant does not request a review
\nwithin such sixty (60) day period, he or she shall be barred and estopped from
\nchallenging the initial determination.<\/p>\n
(d) Review of Decision
\n ——————<\/p>\n
Within sixty (60) days after the Administrative Committee’s receipt of
\na request for review, after considering all materials presented by the Claimant,
\nthe Administrative Committee will inform the Participant in writing, in a manner
\ncalculated to be understood by the Claimant, the decision setting forth the
\nspecific reasons for the decision containing specific references to the
\npertinent provisions of this Plan on which the decision is based. If special
\ncircumstances require that the sixty (60) day time period be extended, the
\nAdministrative Committee will so notify the Claimant and will render the
\ndecision as soon as possible, but no later than one hundred twenty (120) days
\nafter receipt of the request for review.<\/p>\n
(e) Limitation on Claims
\n ——————–<\/p>\n
No action may be brought in court on a claim for benefits under this
\nPlan after the later of:<\/p>\n
(1) Two years after the claim arose, or<\/p>\n
(2) One year after the decision on appeal under this Section (or
\none year after the expiration of the time to take an appeal if no appeal is
\ntaken).<\/p>\n
ARTICLE VIII<\/p>\n
MISCELLANEOUS
\n ————-<\/p>\n
8.1 Unsecured General Creditor
\n ————————–<\/p>\n
Participants and their Beneficiaries, heirs, successors, and assigns
\nshall have no legal or equitable rights, claims, or interest in any specific
\nproperty or assets of the Affiliated Companies. No assets of the Affiliated
\nCompanies shall be held in any way as collateral security for the fulfilling of
\nthe obligations of the Affiliated Companies under this Plan. Any and all of the
\nAffiliated Companies’ assets shall be, and remain, the general unpledged,
\nunrestricted assets of the Affiliated Companies. The obligation under the Plan
\nof the Affiliated Companies adopting the Plan shall be merely that of an
\nunfunded and unsecured promise of those Affiliated Companies to pay money in the
\nfuture, and the rights of the Participants and Beneficiaries shall be no greater
\nthan those of unsecured general creditors. It is the intention of the Affiliated
\nCompanies that this Plan be unfunded for purposes of the Code and for purposes
\nof Title I of ERISA.<\/p>\n
-15-<\/p>\n
8.2 Restriction Against Assignment
\n ——————————<\/p>\n
(a) The Company shall pay all amounts payable hereunder only to the
\nperson or persons designated by the Plan and not to any other person or
\ncorporation. No part of a Participant’s Accounts shall be liable for the debts,
\ncontracts, or engagements of any Participant, his or her Beneficiary, or
\nsuccessors in interest, nor shall a Participant’s Accounts be subject to
\nexecution by levy, attachment, or garnishment or by any other legal or equitable
\nproceeding, nor shall any such person have any right to alienate, anticipate,
\nsell, transfer, commute, pledge, encumber, or assign any benefits or payments
\nhereunder in any manner whatsoever. If any Participant, Beneficiary or successor
\nin interest is adjudicated bankrupt or purports to anticipate, alienate, sell,
\ntransfer, commute, assign, pledge, encumber or charge any distribution or
\npayment from the Plan, voluntarily or involuntarily, the Administrative
\nCommittee, in its discretion, may cancel such distribution or payment (or any
\npart thereof) to or for the benefit of such Participant, Beneficiary or
\nsuccessor in interest in such manner as the Administrative Committee shall
\ndirect.<\/p>\n
(b) The actions considered exceptions to the vesting rule under
\nSection 5.2 will not be treated as violations of this Section.<\/p>\n
8.3 Restriction Against Double Payment
\n ———————————-<\/p>\n
If a court orders an assignment of benefits despite the previous
\nSection, the affected Participant’s benefits will be reduced accordingly. The
\nAdministrative Committee may use any reasonable actuarial assumptions to
\naccomplish the offset under this Section.<\/p>\n
8.4 Withholding
\n ———–<\/p>\n
There shall be deducted from each payment made under the Plan or any
\nother Compensation payable to the Participant (or Beneficiary) all taxes which
\nare required to be withheld by the Affiliated Companies in respect to such
\npayment or this Plan. The Affiliated Companies shall have the right to reduce
\nany payment (or compensation) by the amount of cash sufficient to provide the
\namount of said taxes.<\/p>\n
8.5 Amendment, Modification, Suspension or Termination
\n ————————————————–<\/p>\n
The Administrative Committee may amend, modify, suspend or terminate
\nthe Plan in whole or in part, except that no amendment, modification, suspension
\nor termination may reduce a Participant’s Account balance below its dollar value
\nas determined under Section 4.1(b) immediately prior to the amendment. The
\npreceding sentence is not intended to protect Participants against investment
\nlosses. In the event that this Plan is terminated, the amounts allocated to a
\nParticipant’s Account shall be distributed to the Participant or, in the event
\nof his or her death, to his or her Beneficiary in a lump sum.<\/p>\n
8.6 Governing Law
\n ————-<\/p>\n
To the extent not preempted by ERISA, this Plan shall be construed,
\ngoverned and administered in accordance with the laws of Delaware.<\/p>\n
-16-<\/p>\n
8.7 Receipt or Release
\n ——————<\/p>\n
Any payment to a Participant or the Participant’s Beneficiary in
\naccordance with the provisions of the Plan shall, to the extent thereof, be in
\nfull satisfaction of all claims against the Committees and the Affiliated
\nCompanies. The Administrative Committee may require such Participant or
\nBeneficiary, as a condition precedent to such payment, to execute a receipt and
\nrelease to such effect.<\/p>\n
8.8 Administrative Delays
\n ———————<\/p>\n
If the amount of any payment cannot be determined by the date it is
\nsupposed to be paid, or if it is not possible to make payments on time because
\nthe Administrative Committee cannot find the payee, or adequate information is
\nnot available to make the distribution, or the payee has failed to file the
\napplicable forms with the Administrative Committee, or because of other legal,
\nfinancial or administrative obstacles, payments may be made no later than 60
\ndays after the date payment becomes possible.<\/p>\n
8.9 Disputes About Payee
\n ——————–<\/p>\n
In the event that the Administrative Committee determines that there
\nis some uncertainty as to whom any Plan payment is due, the Administrative
\nCommittee is authorized to delay payment, seek agreements from the interested
\nparties, make payment to an appropriate judicial forum and allow the court to
\ndetermine the identity of the proper payee, and\/or take any other necessary or
\nappropriate steps to protect the Plan and the interested parties.<\/p>\n
8.10 Incorrect Payment of Benefits
\n —————————–<\/p>\n
If the Administrative Committee determines in its full discretion that
\nthe Plan made an incorrect payment of benefits, and that a correction is
\nnecessary or desirable under the law, then:<\/p>\n
(a) If the Plan makes an overpayment of the amount of any benefits
\ndue any payee under the Plan, the Plan may recover the amounts either by
\nrequiring the payee to return the excess to the Plan, by reducing any future
\nPlan payments to the payee, or by any other method deemed reasonable by the
\nAdministrative Committee.<\/p>\n
(b) If the Plan makes a late payment or an underpayment of the amount
\nof any benefits due any payee under the Plan, correct payment will be made as
\nsoon as possible after the late payment or underpayment is discovered.<\/p>\n
8.11 Payments on Behalf of Persons Under Incapacity
\n ———————————————-<\/p>\n
In the event that any amount becomes payable under the Plan to a
\nperson who, in the sole judgment of the Administrative Committee, is considered
\nby reason of physical or mental condition to be unable to give a valid receipt
\ntherefore, the Administrative Committee may direct that such payment be made to
\nany person found by the Committee, in its sole judgment, to have assumed the
\ncare of such person. Any payment made pursuant to such<\/p>\n
-17-<\/p>\n
determination shall constitute a full release and discharge of the
\nAdministrative Committee and the Company.<\/p>\n
8.12 Limitation of Rights and Employment Relationship
\n ————————————————<\/p>\n
Neither the establishment of the Plan and Trust nor any modification
\nthereof, nor the creating of any fund or account, nor the payment of any
\nbenefits shall be construed as giving to any Participant, or Beneficiary or
\nother person any legal or equitable right against the Affiliated Companies or
\nany trustee except as provided in the Plan and any trust agreement; and in no
\nevent shall the terms of employment of any Employee or Participant be modified
\nor in any way be affected by the provisions of the Plan and any trust agreement.<\/p>\n
8.13 Headings
\n ——–<\/p>\n
Headings and subheadings in this Plan are inserted for convenience of
\nreference only and are not to be considered in the construction of the
\nprovisions hereof.<\/p>\n
-18-<\/p>\n
FIRST AMENDMENT TO THE
\n NORTHROP GRUMMAN
\n DEFERRED COMPENSATION PLAN<\/p>\n
The following changes to the Northrop Grumman Deferred Compensation Plan
\neffective December 1, 2000 (the “Plan”), as described below, are intended to
\nprovide for the acceptance of a transfer of certain liabilities from the
\nNorthrop Grumman Executive Deferred Compensation Plan, effective March 1, 2001.<\/p>\n
1. A new Appendix A is added as follows:<\/p>\n
APPENDIX A<\/p>\n
TRANSFER OF LIABILITIES
\n ———————–<\/p>\n
A.1 Background
\n ———-<\/p>\n
Effective March 1, 2001, all liabilities under the Northrop
\n Grumman Executive Deferred Compensation Plan other than the Estate
\n Enhancement Program Account, were transferred to this Plan. This Appendix
\n describes the treatment of those liabilities (plus earnings) (“Transferred
\n Liabilities”) and the Participant to whom those liabilities are owed
\n (“Transferred Participant”).<\/p>\n
A.2 Treatment of Transferred Liabilities
\n ————————————<\/p>\n
The Transferred Liabilities will generally be treated under the Plan
\nlike Compensation deferred in accordance with Article III.<\/p>\n
A.3 Investments
\n ———–<\/p>\n
The Transferred Participant may make investment elections for the
\nTransferred Liabilities in accordance with Section 3.2. Section 3.3 will also
\napply.<\/p>\n
A.4 Distributions
\n ————-<\/p>\n
Distributions of amounts corresponding to the Transferred Liabilities
\nwill generally be made in accordance with the provisions of Article VI. The
\nfollowing exceptions and special rules apply:<\/p>\n
(a) Section 6.1.
\n ———–<\/p>\n
(1) For purposes of Sections 6.1(a)(2) and 6.1(b)(1), the
\nTransferred Participant will be deemed to have made an election of 5 or 10-year
\ninstallments corresponding to his elections of 5 or 10-year installments under
\nSection 9(b)(2) of the Northrop Grumman Executive Deferred Compensation Plan.<\/p>\n
(2) The Transferred Participant may utilize Section 6.1(b)(2) to
\nvary the form of his distribution.<\/p>\n
(3) Distributions under Section 6.1(c) are not available.<\/p>\n
2<\/p>\n
(b) Section 6.2. The Early Non-Scheduled Distribution election
\n ———–
\nis available. The Transferred Liabilities will be aggregated with any other
\namounts in the Transferred Participant’s Account for purposes of distributions
\nunder Section 6.2.<\/p>\n
(c) Sections 6.3-6.6. These Sections are fully applicable.
\n —————-<\/p>\n
A.5 Other Provisions
\n —————-<\/p>\n
The Transferred Liabilities and the Transferred Participant will
\nbe fully subject to the provisions of Articles IV, V, VII and VIII.<\/p>\n
3<\/p>\n
SECOND AMENDMENT TO THE<\/p>\n
NORTHROP GRUMMAN DEFERRED COMPENSATION PLAN<\/p>\n
This amendment to the Northrop Grumman Deferred Compensation Plan effective
\nDecember 1, 2000 (“Plan”), as described below, changes the Plan to account for
\nthe acquisition of Litton Industries, Inc. and the associated corporate
\nreorganization. The changes in this amendment are effective upon adoption.<\/p>\n
1. A new Section 8.14 is added to read as follows:<\/p>\n
8.14 2001 Reorganization
\n ——————-<\/p>\n
Effective as of the 2001 Reorganization Date in (d), the corporate
\nstructure of Northrop Grumman Corporation and its affiliates was modified.
\nEffective as of the Litton Acquisition Date in (e), Litton Industries, Inc. was
\nacquired and became a subsidiary of the Northrop Grumman Corporation (the
\n“Litton Acquisition”).<\/p>\n
(a) The former Northrop Grumman Corporation was renamed Northrop Grumman
\nSystems Corporation. It became a wholly-owned subsidiary of the new parent of
\nthe reorganized controlled group.<\/p>\n
(b) The new parent corporation resulting from the restructuring is called
\nNorthrop Grumman Corporation. All references in this Plan to the former Northrop
\nGrumman Corporation and its Board of Directors now refer to the new parent
\ncorporation bearing the same name and its Board of Directors.<\/p>\n
(c) As of the 2001 Reorganization Date, the new Northrop Grumman
\nCorporation became the sponsor of this Plan, and its Board of Directors assumed
\nauthority over this Plan.<\/p>\n
(d) 2001 Reorganization Date. The date as of which the corporate
\n ————————
\nrestructuring described in (a) and (b) occurred.<\/p>\n
(e) Litton Acquisition Date. The date as of which the conditions for the
\n ———————–
\ncompletion of the Litton Acquisition were satisfied in accordance with the
\n“Amended and Restated Agreement and Plan of Merger Among Northrop Grumman
\nCorporation, Litton Industries, Inc., NNG, Inc., and LII Acquisition Corp.”<\/p>\n
2<\/p>\n
THIRD AMENDMENT TO THE
\n NORTHROP GRUMMAN
\n DEFERRED COMPENSATION PLAN<\/p>\n
The following changes to the Northrop Grumman Deferred Compensation Plan
\neffective December 1, 2000 (the “Plan”), as described below, are intended to
\nprovide for the acceptance of a transfer of certain liabilities from certain
\nnonqualified deferred compensation plans of Aerojet-General Corporation,
\neffective as of the Closing Date specified in the April 19, 2001 Asset Purchase
\nAgreement by and Between Aerojet-General Corporation and Northrop Grumman
\nSystems Corporation.<\/p>\n
1. A new Appendix B is added as follows:<\/p>\n
APPENDIX B
\n AEROJET-GENERAL LIABILITIES
\n —————————<\/p>\n
B.1 Background
\n ———-<\/p>\n
(a) Effective as of the Closing Date specified in the April 19,
\n 2001 Asset Purchase Agreement by and Between Aerojet-General Corporation
\n and Northrop Grumman Systems Corporation (the “APA”), certain liabilities
\n (“Transferred Liabilities”) under the Benefits Restoration Plan for
\n Salaried Employees of GenCorp Inc. and Certain Subsidiary Companies and the
\n GenCorp Inc. and Participating Subsidiaries Deferred Bonus Plan were
\n transferred to this Plan.<\/p>\n
(b) The transfer took place pursuant to section 10.6 of the APA,
\n under which Northrop Grumman acquired the Azusa and Colorado Operations
\n units from Aerojet-General Corporation. That section reads:<\/p>\n
* * * * *<\/p>\n
10.6 Unfunded Deferred Compensation
\n ——————————<\/p>\n
(a) Subject to legal requirements for employee
\n acquiescence, as of the effective time of the Closing, the Purchaser
\n shall assume any and all obligations of the Seller to pay any and all
\n unfunded deferred compensation as set forth on Schedule 10.6 for all
\n Transferring Employees, provided such benefits are adequately
\n reflected on the Balance Sheet.<\/p>\n
(b) The Seller shall retain any and all legal obligation to
\n pay any and all unfunded deferred compensation for all Aerojet
\n Employees that are not Transferring Employees.<\/p>\n
* * * * *<\/p>\n
(c) This Appendix is intended to effectuate the assumption of
\n certain of the liabilities contemplated by section 10.6 of the APA. It
\n describes the treatment of those liabilities (plus earnings) and the
\n Participants to whom those liabilities are owed (“Transferred
\n Participants”).<\/p>\n
2<\/p>\n
(d) The only liabilities assumed by this Plan are:<\/p>\n
(1) those from the GenCorp Inc. and Participating
\n Subsidiaries Deferred Bonus Plan, and<\/p>\n
(2) those liabilities under the Benefits Restoration Plan
\n for Salaried Employees of GenCorp Inc. and Certain Subsidiary Companies
\n which represent supplements with respect to an Aerojet defined contribution
\n plan. No liabilities are assumed which represent supplements with respect
\n to an Aerojet defined benefit plan.<\/p>\n
(e) The assumed liabilities will be represented by starting
\n Account balances for the Transferred Participants, determined in the
\n discretion of the Administrative Committee.<\/p>\n
B.2 Treatment of Transferred Liabilities
\n ————————————<\/p>\n
The Transferred Liabilities will generally be treated under the
\n Plan like Compensation deferred in accordance with Article III.<\/p>\n
B.3 Investments
\n ———–<\/p>\n
The Transferred Participants may make investment elections for
\n the Transferred Liabilities in accordance with Section 3.2. Section 3.3
\n will also apply.<\/p>\n
B.4 Distributions
\n ————-<\/p>\n
Distributions of amounts corresponding to the Transferred
\n Liabilities will generally be made in accordance<\/p>\n
3<\/p>\n
with the provisions of Article VI. The following exceptions and special
\n rules apply:<\/p>\n
(a) Section 6.1.
\n ———–<\/p>\n
(1) For purposes of Sections 6.1(a)(2) and 6.1(b)(1), the
\n Transferred Participants will be deemed to have made an election of 10-year
\n installments.<\/p>\n
(2) The Transferred Participants may utilize Section
\n 6.1(b)(2) to vary the form of their distributions.<\/p>\n
(3) Distributions under Section 6.1(c) are not available.<\/p>\n
(b) Section 6.2. The Early Non-Scheduled Distribution election
\n ———–
\n is available. The Transferred Liabilities will be aggregated with any other
\n amounts in the Transferred Participants’ Accounts for purposes of
\n distributions under Section 6.2.<\/p>\n
(c) Sections 6.3-6.6. These Sections are fully applicable.
\n —————-<\/p>\n
B.5 Other Provisions
\n —————-<\/p>\n
The Transferred Liabilities and the Transferred Participants will
\n be fully subject to the provisions of Articles IV, V, VII and VIII.<\/p>\n
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