Attached files
file | filename |
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10-Q - FORM 10-Q - NORTHROP GRUMMAN CORP /DE/ | v55417e10vq.htm |
EX-15 - EX-15 - NORTHROP GRUMMAN CORP /DE/ | v55417exv15.htm |
EX-31.1 - EX-31.1 - NORTHROP GRUMMAN CORP /DE/ | v55417exv31w1.htm |
EX-32.1 - EX-32.1 - NORTHROP GRUMMAN CORP /DE/ | v55417exv32w1.htm |
EX-10.4 - EX-10.4 - NORTHROP GRUMMAN CORP /DE/ | v55417exv10w4.htm |
EX-12.A - EX-12.A - NORTHROP GRUMMAN CORP /DE/ | v55417exv12wa.htm |
EX-31.2 - EX-31.2 - NORTHROP GRUMMAN CORP /DE/ | v55417exv31w2.htm |
EX-10.3 - EX-10.3 - NORTHROP GRUMMAN CORP /DE/ | v55417exv10w3.htm |
EX-10.5 - EX-10.5 - NORTHROP GRUMMAN CORP /DE/ | v55417exv10w5.htm |
EX-32.2 - EX-32.2 - NORTHROP GRUMMAN CORP /DE/ | v55417exv32w2.htm |
EXCEL - IDEA: XBRL DOCUMENT - NORTHROP GRUMMAN CORP /DE/ | Financial_Report.xls |
Exhibit 10.2
NORTHROP GRUMMAN CORPORATION
TERMS AND CONDITIONS APPLICABLE TO
2010 RESTRICTED PERFORMANCE STOCK RIGHTS
GRANTED UNDER THE 2001 LONG-TERM INCENTIVE STOCK PLAN
TERMS AND CONDITIONS APPLICABLE TO
2010 RESTRICTED PERFORMANCE STOCK RIGHTS
GRANTED UNDER THE 2001 LONG-TERM INCENTIVE STOCK PLAN
These Terms and Conditions (Terms) apply to certain Restricted Performance Stock
Rights (RPSRs) granted by Northrop Grumman Corporation (the Company) in 2010. If you were
granted an RPSR award by the Company in 2010, the date of grant of your RPSR award and the target
number of RPSRs applicable to your award are set forth in the letter from the Company announcing
your RPSR award grant (your Grant Letter) and are also reflected in the electronic stock plan
award recordkeeping system (Stock Plan System) maintained by the Company or its designee. These
Terms apply only with respect to your 2010 RPSR award. If you were granted an RPSR award, you are
referred to as the Grantee with respect to your award. Capitalized terms are generally defined
in Section 10 below if not otherwise defined herein.
Each RPSR represents a right to receive one share of the Companys Common Stock, or cash of
equivalent value as provided herein, subject to vesting as provided herein. The performance
period applicable to your award is January 1, 2010 to December 31, 2012 (the Performance
Period). The target number of RPSRs subject to your award is subject to adjustment as
provided herein. The RPSR award is subject to all of the terms and conditions set forth in
these Terms, and is further subject to all of the terms and conditions of the Plan, as it may
be amended from time to time, and any rules adopted by the Committee, as such rules are in
effect from time to time.
1. | Vesting; Payment of RPSRs. |
The RPSRs are subject to the vesting and payment provisions established (or to be established,
as the case may be) by the Committee with respect to the Performance Period. RPSRs that vest based
on such provisions will be paid as provided below. No fractional shares will be issued.
1.1 Performance-Based Vesting of RPSRs. At the conclusion of the Performance Period, the
Committee shall determine whether and the extent to which the applicable performance criteria have
been achieved for purposes of determining earnouts and RPSR payments. Based on its determination,
the Committee shall determine the percentage of target RPSRs subject to the award (if any) that
have vested for the Performance Period in accordance with the earnout schedule established (or to
be established, as the case may be) by the Committee with respect to the Performance Period (the
Earnout Percentage). Any RPSRs subject to the award that are not vested as of the conclusion of
the Performance Period after giving effect to the Committees determinations under this Section 1.1
shall terminate and become null and void immediately following such determinations.
1.2 Payment of RPSRs. The number of RPSRs payable at the conclusion of the Performance
Period (Earned RPSRs) shall be determined by multiplying the Earnout Percentage by the target
number of RPSRs subject to the award. The Earned RPSRs may be paid out in either an equivalent
number of shares of Common Stock, or, in the discretion of the Committee, in cash or in a
combination of shares of Common Stock and cash. In the event of a cash payment, the amount of the
payment for each Earned RPSR to be paid in cash will equal the Fair Market Value of a share of
Common Stock as of the date the Committee determines the extent to which the applicable RPSR
performance criteria have been achieved. RPSRs will be paid in the calendar year following the
calendar year containing the last day of the Performance Period (and generally will be paid in the
first 75 days of such year).
2. | Early Termination of Award; Termination of Employment. |
2.1 General. The RPSRs subject to the award shall terminate and become null and void prior
to the conclusion of the Performance Period if and when (a) the award terminates in connection with
a Change in Control pursuant to Section 5 below, or (b) except as provided below in this Section 2
and in Section 5, the Grantee ceases for any reason to be an employee of the Company or one of its
subsidiaries.
2.2 Termination of Employment Due to Retirement, Death or Disability. The number of RPSRs
subject to the award shall vest on a prorated basis as provided herein if the Grantees employment
by the Company and its subsidiaries terminates due to the Grantees Retirement, death, or
Disability and, in each case, only if the Grantee has completed at least six (6)
consecutive calendar months of employment with the Company or a subsidiary during the three-year
Performance Period. Such prorating of RPSRs shall be based on the number of full months the
Grantee was actually employed by the Company or one of its subsidiaries out of the thirty-six month
Performance Period. Partial months of employment during the Performance Period, even if
substantial, shall not be
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counted for purposes of prorated vesting. Any RPSRs subject to the award that do not vest in
accordance with this Section 2.2 upon a termination of the Grantees employment due to Retirement,
death or Disability shall terminate immediately upon such termination of employment.
Death or Disability. In the case of death or Disability (a) the Performance Period used to
calculate the Grantees Earned RPSRs will be deemed to have ended as of the most recent date that
performance has been measured by the Company with respect to the RPSRs (but in no event shall such
date be more than one year before the Grantees termination of employment), (b) the Earnout
Percentage of the Grantees RPSRs will be determined based on actual performance for that short
Performance Period, and (c) payment of Earned RPSRs will be made in the calendar year containing
the 75th day following the date of the Grantees death or Disability (and generally will
be paid on or about such 75th day).
Retirement in General. Subject to the following provisions of this Section 2.2, in the case
of Retirement, (a) the entire Performance Period will be used to calculate the Grantees Earned
RPSRs, (b) the Earnout Percentage of the Grantees RPSRs will be determined based on actual
performance for the Performance Period, and (c) payment of Earned RPSRs will be made in the
calendar year following the calendar year containing the last day of the Performance Period (and
generally will be paid in the first 75 days of such year).
In determining the Grantees eligibility for Retirement, service is measured by dividing (a)
the number of days the Grantee was employed by the Company or a subsidiary in the period commencing
with his or her last date of hire by the Company or a subsidiary through and including the date on
which the Grantee is last employed by the Company or a subsidiary, by (b) 365. If the Grantee
ceased to be employed by the Company or a subsidiary and was later rehired by the Company or a
subsidiary, the Grantees service prior to the break in service shall be disregarded in determining
service for such purposes; provided that, if the Grantees employment with the Company or a
subsidiary had terminated due to the Grantees Retirement, or by the Company as part of a reduction
in force (in each case, other than a termination by the Company or a subsidiary for cause) and,
within the two-year period following such termination of employment (the break in service) the
Grantee was subsequently rehired by the Company or a subsidiary, then the Grantees period of
service with the Company or a subsidiary prior to and ending with the break in service will be
included in determining service for such purposes. In the event the Grantee is employed by a
business that is acquired by the Company or a subsidiary, the Company shall have discretion to
determine whether
the Grantees service prior to the acquisition will be included in determining
service for such purposes.
Retirement Due to Government Service. In the case of Retirement where the Grantee accepts a
position in the federal government or a state or local government and an accelerated distribution
under the award is permitted under Code Section 409A based on such government employment and
related ethics rules (a) the Performance Period used to calculate the Grantees Earned RPSRs will
be deemed to have ended as of the most recent date that performance has been measured by the
Company with respect to the RPSRs prior to the Grantees Retirement (but in no event shall such
date be more than one year before the Grantees Retirement), (b) the Earnout Percentage of the
Grantees RPSRs will be determined based on actual performance for that short Performance Period,
and (c) payment of Earned RPSRs will be made within 10 days after Retirement.
2.3 Other Terminations of Employment. Subject to Section 5.2, all RPSRs subject to the
award terminate immediately upon a termination of the Grantees employment: (a) for any reason
other than due to the Grantees Retirement, death or Disability; or (b) for Retirement, death or
Disability, if the six-month employment requirement under Section 2.2 above is not satisfied.
2.4 Leave of Absence. Unless the Committee otherwise provides (at the time of the leave or
otherwise), if the Grantee is granted a leave of absence by the Company, the Grantee (a) shall not
be deemed to have incurred a termination of employment at the time such leave commences for
purposes of the award, and (b) shall be deemed to be employed by the Company for the duration of
such approved leave of absence for purposes of the award. A termination of employment shall be
deemed to have occurred if the Grantee does not timely return to active employment upon the
expiration of such approved leave or if the Grantee commences a leave that is not approved by the
Company.
2.5 Salary Continuation. Subject to Section 2.4 above, the term employment as used herein
means active employment by the Company and salary continuation without active employment (other
than a leave of absence approved by the Company that is covered by Section 2.4) will not, in and of
itself, constitute employment for purposes hereof (in the case of salary continuation without
active employment, the Grantees cessation of active employee status shall, subject to Section 2.4,
be deemed to be a termination of employment for purposes hereof). Furthermore, salary
continuation will not, in and of itself, constitute a leave of absence approved by the Company for
purposes of the award.
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2.6 Sale or Spinoff of Subsidiary or Business Unit. For purposes of the RPSRs subject to
the award, a termination of employment of the Grantee shall be deemed to have occurred if the
Grantee is employed by a subsidiary or business unit and that subsidiary or business unit is sold,
spun off, or otherwise divested and the Grantee does not Retire upon or immediately before such
event and the Grantee does not otherwise continue to be employed by the Company or one of its
subsidiaries after such event.
2.7 Continuance of Employment Required. Except as expressly provided in Sections 2.2 and
2.4 above and in Section 5 below, the vesting of the RPSRs subject to the award requires continued
employment through the last day of the Performance Period as a condition of the payment of such
RPSRs. Employment for only a portion of the Performance Period, even if a substantial portion,
will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment. Nothing contained in these
Terms, the Grant Letter, the Stock Plan System, or the Plan constitutes an employment commitment by
the Company or any subsidiary, affects the Grantees status (if the Grantee is otherwise an
at-will employee) as an employee at will who is subject to termination without cause,
confers upon the Grantee any right to continue in the employ of the Company or any subsidiary, or
interferes in any way with the right of the Company or of any subsidiary to terminate such
employment at any time.
2.8 Death. In the event of the Grantees death subsequent to the vesting of RPSRs but prior
to the delivery of shares or other payment with respect to such RPSRs, the Grantees Successor
shall be entitled to any payments to which the Grantee would have been entitled under this
Agreement with respect to such RPSRs.
3. | Non-Transferability and Other Restrictions. |
3.1 Non-Transferability. The award, as well as the RPSRs subject to the award, are
non-transferable and shall not be subject in any manner to sale, transfer, anticipation,
alienation, assignment, pledge, encumbrance or charge. The foregoing transfer restrictions shall
not apply to transfers to the Company. Notwithstanding the foregoing, the Company may honor any
transfer required pursuant to the terms of a court order in a divorce or similar domestic relations
matter to the extent that such transfer does not adversely affect the Companys ability to register
the offer and sale of the underlying shares on a Form S-8 Registration Statement and such transfer
is otherwise in compliance with all applicable legal, regulatory and listing requirements.
3.2 Recoupment of Awards. Any payments or issuances of shares with respect to the award are
subject
to recoupment pursuant to the Companys Policy Regarding the Recoupment of Certain
Performance-Based Compensation Payments as in effect from time to time, and the Grantee shall
promptly make any reimbursement requested by the Board or Committee pursuant to such policy with
respect to the award. Further, the Grantee agrees, by accepting the award, that the Company and
its affiliates may deduct from any amounts it may owe the Grantee from time to time (such as wages
or other compensation) to the extent of any amounts the Grantee is required to reimburse the
Company pursuant to such policy with respect to the award.
4. | Compliance with Laws; No Stockholder Rights Prior to Issuance. |
The Companys obligation to make any payments or issue any shares with respect to the award is
subject to full compliance with all then applicable requirements of law, the Securities and
Exchange Commission, the Commissioner of Corporations of the State of California, or other
regulatory agencies having jurisdiction over the Company and its shares, and of any exchange upon
which stock of the Company may be listed. The Grantee shall not have the rights and privileges of
a stockholder, including without limitation the right to vote or receive dividends, with respect to
any shares which may be issued in respect of the RPSRs until the date appearing on the
certificate(s) for such shares (or, in the case of shares entered in book entry form, the date that
the shares are actually recorded in such form for the benefit of the Grantee), if such shares
become deliverable.
5. | Adjustments; Change in Control. |
5.1 Adjustments. The RPSRs and the shares subject to the award are subject to adjustment
upon the occurrence of events such as stock splits, stock dividends and other changes in
capitalization in accordance with Section 6(a) of the Plan. In addition, for RPSRs that do not use
a relative total shareholder return metric as the applicable performance criterion, the Committee
shall adjust the applicable performance criteria to eliminate the effects of the gain, loss, income
or expense or other extraordinary items resulting from (i) changes in accounting principles that
become effective during the Performance Period, (ii) the purchase or disposition of a business
during the Performance Period, and (iii) extraordinary charges not foreseen at the date of grant of
the RPSRs, provided that the Committee shall have the discretion not to make any such adjustment if
not making such adjustment would result in a reduction in the number of Earned RPSRs. In the event
of any adjustment, the Company will give the Grantee written notice thereof which will set forth
the nature of the adjustment.
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5.2 Possible Acceleration on Change in Control. Notwithstanding the provisions of Section 2
hereof, and further subject to the Companys ability to terminate the award as provided in Section
5.3 below, the Grantee shall be entitled to proportionate vesting of the award as provided below if
the Grantee is not otherwise entitled to a pro-rata payment pursuant to Section 2 and in the event
of the Grantees termination of employment in the following circumstances:
(a) | if the Grantee is covered by a Change in Control Severance Arrangement at the time of the termination, and the termination of employment constitutes a Qualifying Termination (as such term, or any similar successor term, is defined in such Change in Control Severance Arrangement) that triggers the Grantees right to severance benefits under such Change in Control Severance Arrangement. | ||
(b) | if the Grantee is not covered by a Change in Control Severance Arrangement at the time of the termination, the termination occurs either within the Protected Period corresponding to a Change in Control of the Company or within twenty-four (24) calendar months following the date of a Change in Control of the Company, and the Grantees employment by the Company and its subsidiaries is involuntarily terminated by the Company and its subsidiaries for reasons other than Cause or by the Grantee for Good Reason. |
Notwithstanding anything else contained herein to the contrary, the termination of the
Grantees employment (or other events giving rise to Good Reason) shall not entitle the Grantee to
any accelerated vesting pursuant to clause (b) above if there is objective evidence that, as of the
commencement of the Protected Period, the Grantee had specifically been identified by the Company
as an employee whose employment would be terminated as part of a corporate restructuring or
downsizing program that commenced prior to the Protected Period and such termination of employment
was expected at that time to occur within six (6) months. The applicable Change in Control
Severance Arrangement shall govern the matters addressed in this paragraph as to clause (a) above.
In the event the Grantee is entitled to a prorated payment in accordance with the foregoing
provisions of this Section 5.2, then the Grantee will be eligible for a prorated portion of the
RPSRs determined in accordance with the following formula: (a) the Earnout Percentage determined
in accordance with Section 1 but calculated based on performance for the portion of the three-year
Performance Period ending on the last day of the month coinciding with or immediately preceding the
date of the termination of the Grantees employment, multiplied by
(b) the target number of RPSRs
subject to the award, multiplied by (c) a fraction the numerator of which is the total number of
full months that the Grantee was an employee of the Company or a subsidiary on and after the
beginning of the Performance Period and through the date of the termination of the Grantees
employment (but not in excess of 36 months) and the denominator of which is 36. Payment of any
amount due under this Section 5.2 will be made in the calendar year following the calendar year
containing the last day of the Performance Period (and generally will be paid in the first 75 days
of such year).
5.3 Automatic Acceleration; Early Termination. If the Company undergoes a Change in Control
triggered by clause (iii) or (iv) of the definition thereof and the Company is not the surviving
entity and the successor to the Company (if any) (or a Parent thereof) does not agree in writing
prior to the occurrence of the Change in Control to continue and assume the award following the
Change in Control, or if for any other reason the award would not continue after the Change in
Control, then upon the Change in Control the Grantee shall be entitled to a prorated payment of the
RPSRs as provided below and the award shall terminate. Unless the Committee expressly provides
otherwise in the circumstances, no acceleration of vesting of the award shall occur pursuant to
this Section 5.3 in connection with a Change in Control if either (a) the Company is the surviving
entity, or (b) the successor to the Company (if any) (or a Parent thereof) agrees in writing prior
to the Change in Control to assume the award. The Committee may make adjustments pursuant to
Section 6(a) of the Plan and/or deem an acceleration of vesting of the award pursuant to this
Section 5.3 to occur sufficiently prior to an event if necessary or deemed appropriate to permit
the Grantee to realize the benefits intended to be conveyed with respect to the shares underlying
the award; provided, however, that, the Committee may reinstate the original terms of the award if
the related event does not actually occur.
In the event the Grantee is entitled to a prorated payment in accordance with the foregoing
provisions of this Section 5.3, then the Grantee will be eligible for a prorated portion of the
RPSRs determined in accordance with the following formula: (a) the Earnout Percentage determined
in accordance with Section 1 but calculated based on performance for the portion of the three-year
Performance Period ending on the date of the Change in Control of the Company, multiplied by (b)
the target number of RPSRs subject to the award, multiplied by (c) a fraction the numerator of
which is the total number of full months that the Grantee was an employee of the Company or a
subsidiary on and after the beginning of the Performance Period and before the occurrence of the
Change in Control (but not in excess of 36 months) and the denominator of which is 36. Payment of
any amount due under this Section 5.3 will be made in the calendar
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year following the calendar year containing the last day of the Performance Period (and
generally will be paid in the first 75 days of such year).
6. | Tax Matters. |
6.1 Tax Withholding. The Company or the subsidiary which employs the Grantee shall be
entitled to require, as a condition of making any payments or issuing any shares upon vesting of
the RPSRs, that the Grantee or other person entitled to such shares or other payment pay any sums
required to be withheld by federal, state, local or other applicable tax law with respect to such
vesting or payment. Alternatively, the Company or such subsidiary, in its discretion, may make
such provisions for the withholding of taxes as it deems appropriate (including, without
limitation, withholding the taxes due from compensation otherwise payable to the Grantee or
reducing the number of shares otherwise deliverable with respect to the award (valued at their then
Fair Market Value) by the amount necessary to satisfy such withholding obligations).
6.2 Transfer Taxes. The Company will pay all federal and state transfer taxes, if any, and
other fees and expenses in connection with the issuance of shares in connection with the vesting of
the RPSRs.
6.3 Compliance with Code. The Committee shall administer and construe the award, and may
amend the Terms of the award, in a manner designed to comply with the Code and to avoid adverse tax
consequences under Code Section 409A or otherwise.
6.4 Unfunded Arrangement. The right of the Grantee to receive payment under the award shall
be an unsecured contractual claim against the Company. As such, neither the Grantee nor any
Successor shall have any rights in or against any specific assets of the Company based on the
award. Awards shall at all times be considered entirely unfunded for tax purposes.
7. | Committee Authority. |
The Committee has the discretionary authority to determine any questions as to the date when
the Grantees employment terminated and the cause of such termination and to interpret any
provision of these Terms, the Grant Letter, the Stock Plan System, the Plan, and any other
applicable rules. Any action taken by, or inaction of, the Committee relating to or pursuant to
these Terms, the Grant Letter, the Stock Plan System, the Plan, or any other applicable rules shall
be within the absolute discretion of the Committee and shall be conclusive and binding on all
persons.
8. | Plan; Amendment. |
The RPSRs subject to the award are governed by, and the Grantees rights are subject to, all
of the terms
and conditions of the Plan and any other rules adopted by the Committee, as the
foregoing may be amended from time to time. The Grantee shall have no rights with respect to any
amendment of these Terms or the Plan unless such amendment is in writing and signed by a duly
authorized officer of the Company. In the event of a conflict between the provisions of the Grant
Letter and/or the Stock Plan System and the provisions of these Terms and/or the Plan, the
provisions of these Terms and/or the Plan, as applicable, shall control.
9. | Required Holding Period. |
The holding requirements of this Section 9 shall apply to any Grantee who is an elected or
appointed officer of the Company on the date Earned RPSRs are paid (or, if earlier, on the date the
Grantees employment by the Company and its subsidiaries terminates for any reason). Any Grantee
subject to this Section 9 shall not be permitted to sell, transfer, anticipate, alienate, assign,
pledge, encumber or charge 50% of the total number (if any) of shares of Common Stock the Grantee
receives as payment for Earned RPSRs until the earlier of (A) the third anniversary of the date
such shares of Common Stock are paid to the Grantee, or (B) the date the Grantees employment by
the Company and its subsidiaries terminates due to the Grantees death or Disability. Should the
Grantees employment by the Company and its subsidiaries terminate (regardless of the reason for
such termination, but other than due to the Grantees death or Disability), such holding period
requirement shall not apply as to any shares acquired upon payment of Earned RPSRs to the extent
such payment is made more than one year after such termination of employment. (For purposes of
clarity, in such circumstances the holding period requirement will apply as to any shares acquired
upon payment of Earned RPSRs within one year after such a termination of employment.) For purposes
of this Section 9, the total number of shares of Common Stock the Grantee receives as payment for
Earned RPSRs shall be determined on a net basis after taking into account any shares otherwise
deliverable with respect to the award that the Company withholds to satisfy tax obligations
pursuant to Section 6.1. Any shares of Common Stock received in respect of shares that are
covered by the holding period requirements of this Section 9 (such as shares received in respect of
a stock split or stock dividend) shall be subject to the same holding period requirements as the
shares to which they relate.
10. | Definitions. |
Whenever used in these Terms, the following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word is capitalized:
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Board means the Board of Directors of the Company.
Cause means the occurrence of either or both of the following:
(i) | The Grantees conviction for committing an act of fraud, embezzlement, theft, or other act constituting a felony (other than traffic related offenses or as a result of vicarious liability); or | ||
(ii) | The willful engaging by the Grantee in misconduct that is significantly injurious to the Company. However, no act, or failure to act, on the Grantees part shall be considered willful unless done, or omitted to be done, by the Grantee not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. |
Change in Control is used as defined in the Plan.
Change in Control Severance Arrangement means a Special Agreement entered into by and
between the Grantee and the Company that provides severance protections in the event of certain
changes in control of the Company or the Companys Change-in-Control Severance Plan, as each may be
in effect from time to time, or any similar successor agreement or plan that provides severance
protections in the event of a change in control of the Company.
Code means the United States Internal Revenue Code of 1986, as amended.
Committee means the Companys Compensation Committee or any successor committee appointed by
the Board to administer the Plan.
Common Stock means the Companys common stock.
Disability means, with respect to a Grantee, that the Grantee: (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than twelve months; or (ii) is, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering employees of the
Grantees employer; all construed and interpreted consistent with the definition of Disability
set forth in Code Section 409A(a)(2)(C).
Fair Market Value is used as defined in the Plan; provided, however, the Committee in
determining such Fair Market Value for purposes of the award may utilize such other exchange,
market, or listing as it deems appropriate.
Good Reason means, without the Grantees express written consent, the occurrence of any one
or more of the following:
(i) | A material and substantial reduction in the nature or status of the Grantees authorities or responsibilities (when such authorities and/or responsibilities are viewed in the aggregate) from their level in effect on the day immediately prior to the start of the Protected Period, other than (A) an inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Grantee, and/or (B) changes in the nature or status of the Grantees authorities or responsibilities that, in the aggregate, would generally be viewed by a nationally-recognized executive placement firm as resulting in the Grantee having not materially and substantially fewer authorities and responsibilities (taking into consideration the Companys industry) when compared to the authorities and responsibilities applicable to the position held by the Grantee immediately prior to the start of the Protected Period. The Company may retain a nationally-recognized executive placement firm for purposes of making the determination required by the preceding sentence and the written opinion of the firm thus selected shall be conclusive as to this issue. | ||
In addition, if the Grantee is a vice president, the Grantees loss of vice-president status will constitute Good Reason; provided that the loss of the title of vice president will not, in and of itself, constitute Good Reason if the Grantees lack of a vice president title is generally consistent with the manner in which the title of vice president is used within the Grantees business unit or if the loss of the title is the result of a promotion to a higher level office. For the purposes of the preceding sentence, the Grantees lack of a vice-president title will only be considered generally consistent with the manner in which such title is used if most persons in the business unit with authorities, duties, and responsibilities comparable to those of the Grantee immediately prior to the commencement of the Protected Period do not have the title of vice-president. | |||
(ii) | A reduction by the Company in the Grantees annualized rate of base salary as in effect on the first to occur of the start of the Performance |
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Period or the start of the Protected Period, or as the same shall be increased from time to time. | |||
(iii) | A material reduction in the aggregate value of the Grantees level of participation in any of the Companys short and/or long-term incentive compensation plans (excluding stock-based incentive compensation plans), employee benefit or retirement plans, or policies, practices, or arrangements in which the Grantee participates immediately prior to the start of the Protected Period provided; however, that a reduction in the aggregate value shall not be deemed to be Good Reason if the reduced value remains substantially consistent with the average level of other employees who have positions commensurate with the position held by the Grantee immediately prior to the start of the Protected Period. | ||
(iv) | A material reduction in the Grantees aggregate level of participation in the Companys stock-based incentive compensation plans from the level in effect immediately prior to the start of the Protected Period; provided, however, that a reduction in the aggregate level of participation shall not be deemed to be Good Reason if the reduced level of participation remains substantially consistent with the average level of participation of other employees who have positions commensurate with the position held by the Grantee immediately prior to the start of the Protected Period. | ||
(v) | The Grantee is informed by the Company that his or her principal place of employment for the Company will be relocated to a location that is greater than fifty (50) miles away from the Grantees principal place of employment for the Company at the start of the corresponding Protected Period; provided that, if the Company communicates an intended effective date for such relocation, in no event shall Good Reason exist pursuant to this clause (v) more than ninety (90) days before such intended effective date. |
The Grantees right to terminate employment for Good Reason shall not be affected by the
Grantees incapacity due to physical or mental illness. The Grantees continued employment shall
not constitute a consent to, or a waiver of rights with respect to, any circumstances constituting
Good Reason herein.
Parent is used as defined in the Plan.
Plan means the Northrop Grumman 2001 Long-Term Incentive Stock Plan, as it may be amended
form time to time.
The Protected Period corresponding to a Change in Control of the Company shall be a period
of time determined in accordance with the following:
(i) | If the Change in Control is triggered by a tender offer for shares of the Companys stock or by the offerors acquisition of shares pursuant to such a tender offer, the Protected Period shall commence on the date of the initial tender offer and shall continue through and including the date of the Change in Control; provided that in no case will the Protected Period commence earlier than the date that is six (6) months prior to the Change in Control. |
(ii) | If the Change in Control is triggered by a merger, consolidation, or reorganization of the Company with or involving any other corporation, the Protected Period shall commence on the date that serious and substantial discussions first take place to effect the merger, consolidation, or reorganization and shall continue through and including the date of the Change in Control; provided that in no case will the Protected Period commence earlier than the date that is six (6) months prior to the Change in Control. |
(iii) | In the case of any Change in Control not described in clause (i) or (ii) above, the Protected Period shall commence on the date that is six (6) months prior to the Change in Control and shall continue through and include the date of the Change in Control. |
Retirement or Retire means that the Grantee terminates employment after attaining age 55
with at least 10 years of service (other than in connection with a termination by the Company or a
subsidiary for cause). In the case of a Grantee who is an officer of the Company subject
to the Companys mandatory retirement at age 65 policy, Retirement or Retire shall also include
as to that Grantee (without limiting the Grantees ability to Retire pursuant to the preceding
sentence) a termination of the Grantees employment pursuant to such mandatory retirement policy
(regardless of the Grantees years of service and other than in connection with a termination by
the Company or a subsidiary for cause).
Successor means the person acquiring a Grantees rights to a grant under the Plan by will or
by the laws of descent or distribution.
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