Attached files
file | filename |
---|---|
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-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 |
EX-10.2 - EX-10.2 - NORTHROP GRUMMAN CORP /DE/ | v55417exv10w2.htm |
EXCEL - IDEA: XBRL DOCUMENT - NORTHROP GRUMMAN CORP /DE/ | Financial_Report.xls |
Exhibit 10.4
NORTHROP GRUMMAN CORPORATION
TERMS AND CONDITIONS APPLICABLE TO
2010 RESTRICTED STOCK RIGHTS
GRANTED UNDER THE 2001 LONG-TERM INCENTIVE STOCK PLAN
TERMS AND CONDITIONS APPLICABLE TO
2010 RESTRICTED STOCK RIGHTS
GRANTED UNDER THE 2001 LONG-TERM INCENTIVE STOCK PLAN
These Terms and Conditions (Terms) apply to certain Restricted Stock Rights
(RSRs)
granted by Northrop Grumman Corporation (the Company) to
in
2010. The date of grant of the RSR award is 2010 (the Grant Date). The number of
RSRs applicable to the award is . The date of grant and number of RSRs 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 the 2010 RSR award identified
above. 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 RSR 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 number of RSRs
subject to your award is subject to adjustment as provided herein. The RSR 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; Issuance of Shares. |
Subject to Sections 2 and 5 below, one hundred percent (100%) of the number of RSRs subject to
your award (subject to adjustment as provided in Section 5.1) shall vest upon the fourth
anniversary of the Grant Date.
Except as otherwise provided below, the Company shall pay a vested RSR within 90 days
following the vesting of the RSR on the fourth anniversary of the Grant Date. The Company shall
pay such vested RSRs 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 vested RSR to be paid in cash (subject
to tax withholding as provided in Section 6 below) will equal the Fair Market Value (as defined
below) of a share of Common Stock as of the date that such RSR became vested. No fractional shares
will be issued.
2. | Early Termination of Award; Termination of Employment. |
2.1 General. The RSRs subject to the award, to the extent not previously vested, shall
terminate and become null and void if and when (a) the award terminates in connection with a Change
in Control pursuant to Section 5 below, or (b) except as provided in Section 2.6 and in Section 5,
the Grantee ceases for any reason to be an employee of the Company or one of its subsidiaries.
2.2 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.
2.3 Salary Continuation. Subject to Section 2.2 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 2.2) 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 2.2,
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.
2.4 Sale or Spinoff of Subsidiary or Business Unit. For purposes of the RSRs 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 otherwise continue to be employed by the
Company after such event.
2.5 Continuance of Employment Required. Except as expressly provided in Section 2.6 and in
Section 5, the vesting of the RSRs subject to the award requires continued employment through the
fourth anniversary of the Grant Date as a condition to the
1
vesting of any portion of the award. Employment for only a portion of the vesting 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 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.
2.6 Death or Disability. If the Grantee dies or incurs a Disability while employed by the
Company or a subsidiary, the outstanding and previously unvested RSRs subject to the award shall
vest as of the date of the Grantees death or Disability, as applicable. RSRs vesting under this
Section shall be paid in the calendar year containing the 75th day (and generally will
be paid on or about such 75th day) following the earlier of (a) Grantees death or (b)
Grantees Disability. In the event of the Grantees death prior to the delivery of shares or other
payment with respect to any vested RSRs, the Grantees Successor shall be entitled to any payments
to which the Grantee would have been entitled under this Agreement with respect to such vested and
unpaid RSRs.
3. | Non-Transferability and Other Restrictions. |
3.1 Non-Transferability. The award, as well as the RSRs 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: (a) transfers to the Company; or (b) transfers pursuant to a qualified domestic
relations order (as defined in the Code). 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 RSRs 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 RSRs 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 the event of any adjustment, the Company will give
the Grantee written notice thereof which will set forth the nature of the adjustment.
5.2 Possible Acceleration on Change in Control. Notwithstanding the Companys ability to
terminate the award as provided in Section 5.3 below, the outstanding and previously unvested RSRs
subject to the award shall become fully vested as of the date 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, if 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 and if the termination occurs either within the Protected Period corresponding |
2
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, 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.
Payment of any amount due under this Section will be made within 90 days of the second
anniversary of the Grant Date.
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 outstanding and previously unvested RSRs subject to
the award shall vest fully and completely. 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 award shall terminate, subject to such acceleration
provisions, upon a Change in Control triggered by clause (iii) or (iv) of the definition thereof in
which 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. 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 RSRs; provided, however, that, the Committee may reinstate the original terms of the
award if the related event does not actually occur.
Payment of any amount due under this Section will be made within 90 days of the second
anniversary of the Grant Date.
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 RSRs, 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 at the flat
percentage rates applicable to supplemental wages).
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 RSRs.
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 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 Stock Plan System, the Plan, or any other applicable
3
rules shall be within the
absolute discretion of the Committee and shall be conclusive and binding on all persons.
8. | Plan; Amendment. |
The RSRs 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 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 govern.
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 vested RSRs 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 vested RSRs 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. For purposes of
this Section 9, the total number of shares of Common Stock the Grantee receives as payment for
vested RSRs 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:
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
4
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 at 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:
5
(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 including the date of the Change in Control. |
Successor means the person acquiring a Grantees rights to a grant under the Plan by will or
by the laws of descent or distribution.
6