-19-
Exhibit 10(r)
AMENDED AND RESTATED
SPECIAL SEVERANCE PAY AGREEMENT
The Special Severance Pay Agreement entered into as of the
25th day of February, 1994 by and between Northrop Corporation, a
Delaware corporation, name changed to Northrop Grumman
Corporation (the "Company") and (the
"Employee"), in consideration of the mutual benefits to be
obtained from the amendments thereto contained herein, is hereby
amended and, as so amended, is restated for convenience of
reference and as so amended and restated is the "Agreement."
RECITALS
Employee is a key member of the Company's management team
and has been designated by the Compensation and Management
Development Committee (the "Committee") of the Board of Directors
(the "Board") of the Company as a key employee to whom the
protection of the Company's Special Severance Pay Plan (the
"Plan") are extended. The purpose of the Plan is to reinforce
and encourage the continued attention and dedication of employees
like Employee to their assigned duties without distraction in the
face of the potentially disturbing circumstances that arise from
the possibility of a change in control of the Company.
NOW, THEREFORE, in consideration of the mutual benefits to
be derived from this Agreement, including the continued
employment and rendition of services by Employee, it is agreed as
follows:
1. Company's Right to Terminate. No provision
contained herein shall affect the Company's ability to
terminate Employee's employment at any time, with or
without cause. Nothing in this Agreement shall in any
way require the Company to provide any Benefits prior
to a change in Control nor shall this Agreement ever be
construed in any way as establishing any policies or
requirements for severance benefits for Employee if he
terminates employment with the Company prior to a
change in control
2. Change in Control. Benefits provided herein shall
be payable only in the event there shall have occurred
a "Change in Control" as defined below, and Employee's
employment by the Company shall thereafter have been
terminated in accordance with Section 3 below. Each
event constituting a "Change in Control" as defined
below shall be considered a separate "Change in
Control" entitling Employee to the Benefits provided
herein if his employment by the Company shall have been
terminated in accordance with Section 3 below following
such "Change in Control." For purposes of this
Agreement a "Change in Control" shall be deemed to have
occurred if (i) there shall be consummated (x) any
consolidation or merger of the Company in which (A) the
Company is not the continuing or surviving corporation,
other than a merger in which the holders of the Common
Stock of the Company immediately prior to the merger
have the same proportionate ownership of common stock
of the surviving corporation immediately after the
merger, or (B) the Common Stock of the Company
outstanding immediately prior to the merger would
amount to less than 50% of the common stock of the
surviving corporation outstanding immediately after the
merger or (y) any sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the
assets of the Company, or (ii) the stockholders of the
Company approve a plan or proposal for the liquidation
or dissolution of the Company, or (iii) any "person"
(as defined in Sections 13(d) and 14(d) of the
Securities Exchange act of 1934, as amended (the
"Exchange Act"), but not including any trust
established pursuant to an employee benefit plan of the
Company, shall become the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of fifteen percent or more of the
Company's outstanding Common Stock, or (iv) during any
period of two consecutive years, a majority of the
directors of the Company shall cease to be "Continuing
Directors," as defined below. As used herein,
"Continuing Director" shall mean a person who was a
director of the Company at the beginning of any
specified two-year period and any person whose election
or nomination as a director during such period was
approved by two-thirds of the then Continuing
Directors.
3. Termination Following Change in Control. In the
event a Change in Control shall have occurred, Employee
shall be entitled to the Benefits provided in Section 4
hereof upon any termination of his employment with the
Company within the 30-month period following such
Change in Control except a termination of employment
(a) because of his death, (b) by the Company for
"Cause" or "Disability" or (c) by him other than for
"Good Reason."
(i) Disability. For the purposes of this
Agreement only, and for no other benefit program or
policy of the Company, termination for "Disability"
shall mean termination of Employee's employment because
of his absence from duties with the Company on a full-
time basis for 130 consecutive business days, as a
result of incapacity due to physical or mental illness,
unless he shall have returned to the full-time
performance of his duties within 30 days after "Notice
of Termination" (as described in (iv) below) is given
in connection with such absence.
(ii) Cause. Termination by the Company of
Employee's employment for "Cause" shall mean
termination within the 30-month period following a
Change in Control by reason of:
(A) the willful and continued failure
by Employee to substantially perform his duties
with the Company (other than any such failure
resulting from his incapacity due to physical or
mental illness), for a period of 30 or more days
after a written demand for substantial performance
is delivered to him by the Chief Executive Officer
(the "Officer") of the Company or the Committee,
which demand specifically identifies the manner in
which such Officer or the Committee believes that
Employee has not substantially performed his
duties.
(B) the willful engaging by Employee in
misconduct which is materially injurious to the
Company, monetarily or otherwise. For purposes of
this paragraph, no act, or failure to act, on
Employee's part shall be considered "willful"
unless done, or omitted to be done, by Employee
not in good faith and without reasonable belief
that his action or omission was not opposed to the
best interest of the Company.
Notwithstanding the foregoing, Employee shall not
be deemed to have been terminated for Cause unless and
until there shall have been delivered to Employee a
copy of a Notice of Termination from the Officer or the
Committee after reasonable notice to Employee and an
opportunity for him, together with his counsel, to be
heard before the Committee (or, if there be no such
Committee or such Committee delivers the Notice of
Termination, the Board), finding that, in the good
faith opinion of such Committee (or the Board), he was
guilty of conduct set forth above in clauses (A) or (B)
of the first sentence of this paragraph (ii) and
specifying the particulars thereof in detail.
(iii) Good Reason. Termination by Employee of his
employment for "Good Reason" shall mean the termination by
Employee of his employment within the 30-month period
following a Change in Control:
(A) if within the 30-month period following a
Change in Control, the Company reduces Employee's base
salary in effect immediately prior to the Change in
Control or as increased from time to time thereafter.
(B) if within the 30-month period following a
Change in Control, the Company, without the express
written consent of the Employee, requires Employee to
report to a location or be relocated anywhere in excess
of one hundred (100) miles of his present office
location, except for required travel on the Company's
business to an extent substantially consistent with his
present business travel obligations.
(C) if within the 30-month period following a
Change in Control, the Company has failed to maintain
in force plans providing benefits at least as
beneficial as, or substantially equivalent to, those
provided by any benefit or compensation plan,
retirement or pension plan, stock option plan, life
insurance plan, health and accident plan or disability
plan in which Employee is participating at the time of
a Change in Control or if the Company has taken any
action which would adversely affect Employee's
participation in or materially reduce Employee's
benefits under any of such plans or deprive him of any
material fringe benefit (without substituting a fringe
benefit substantially equivalent to such benefit)
enjoyed by him at the time of the Change in Control, or
if the Company fails to provide him with the number of
paid vacation days to which he would be entitled in
accordance with the Company's normal vacation policy in
effect at the time of the Change in Control.
(D) if within the 30-month period following a
Change in Control, the Company materially reduces
Employee's title, job authorities or responsibilities
in effect immediately prior to the Change in Control.
(E) if within the 30-month period following a
Change in Control, the Company fails to obtain the
assumption of the obligations contained in this
Agreement by any successor as contemplated in Section 5
hereof.
(F) if within the 30-month period following a
Change in Control, the Company purports to terminate
Employee's employment in a manner which is not effected
pursuant to a Notice of Termination satisfying the
requirements of paragraph (iv) below (and, if
applicable, paragraph (ii) above); and for purposes of
this Agreement, no such purported termination shall be
effective.
A termination of employment by Employee within the 30-month
period following a Change in Control shall be for Good
Reason if one of the occurrences specified in this paragraph
(iii) shall have occurred, notwithstanding that Employee may
have other reasons for terminating employment, including
employment by another employer which Employee desires to
accept.
(v) Date of Termination. "Date of Termination" shall mean:
(A) If Employee's employment is terminated for
Disability, thirty (30) days after Notice of
Termination is given (provided that Employee shall not
have returned to the performance of his duties on a
full-time basis during such thirty (30) day period),
(B) if Employee's employment is terminated
pursuant to paragraph (ii) above, the date on which the
Notice of Termination is given,
(C) if Employee's employment is terminated by the
Company for any other reason, the date on which a
Notice of Termination is given; provided that if within
thirty (30) days after any Notice of Termination is
given Employee notifies the Company that a dispute
exists concerning the termination, the Date of
Termination shall be the date on which such Notice of
Termination is given or the date on which the dispute
is finally determined, either by mutual written
agreement of the parties, or by a final judgment, order
or decree of a court of competent jurisdiction,
whichever shall provide Employee with the greater
dollar value of Benefits hereunder, and
(D) if Employee terminates his employment for
Good Reason, the date on which the Company receives
notice from Employee of such termination.
4. Certain Benefits Upon Termination. If, within the
30-month period following a Change in Control,
Employee's employment by the Company shall be
terminated (a) by the Company other than for Cause or
Disability or (b) by Employee for Good Reason, Employee
shall be entitled to each of the "Benefits" provided
below:
(i) the Company shall pay Employee: (a) his full
base salary through the Date of Termination, at the
rate in effect at the time Notice of Termination is
given, and (b) an additional amount representing the
prorated portion of any additional compensation for
which the employee would be eligible, but for his
termination, under any cash bonus or incentive
compensation plan maintained by the Company and
applicable to the period in which Employee's
termination occurs. The amount referred to under (b)
shall be determined by multiplying (A) the amount of
all such cash bonus or incentive compensation payments
made to Employee in respect of the last full calendar
year preceding Employee's termination, by (B) a
fraction representing the number of weeks elapsed from
the end of such calendar year to the Date of
Termination, divided by 52.
(ii) the Company shall pay as severance pay to
Employee after the Date of Termination, an amount equal
to 2.99 times Employee's full Base Amount as defined in
Section 280G of the Internal Revenue Code of 1986, as
amended (the Code), and the regulations adopted
thereunder in effect from time to time. Such severance
pay shall be paid to Employee in a cash lump sum within
30 days following the Date of Termination.
(iii) for a period not to exceed thirty-six (36)
months the Company shall, at its expense, arrange to
provide Employee with medical, dental and life
insurance benefits substantially similar to those which
Employee was receiving immediately prior to the Change
in Control or, if greater, those which Employee was
receiving on his Date of Termination. Notwithstanding
the foregoing, the Company shall not provide any
benefit otherwise receivable by Employee pursuant to
this Section 4(iii) to the extent that a substantially
similar benefit is actually received by Employee from a
subsequent employer during such period, and any such
benefit actually received by Employee shall be reported
to the Company.
(iv) the Company shall pay to Employee all
deferred and accrued bonus and vacation pay to which he
is entitled under the terms of the Company's pay
policies as in effect immediately prior to the Change
in Control or, if it results in greater vacation pay,
as in effect on Employee's Date of Termination.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 4 be reduced by any compensation
earned by Employee as the result of employment by another
employer after the Date of Termination, or otherwise.
Anything in this Agreement to the contrary notwithstanding, in
the event that the amount of any "parachute payments" provided to
Employee under this Agreement, when added to any other "parachute
payments" which Employee is entitled to receive from the Company,
would constitute an "excess parachute payment," such payments or
benefits should be reduced to the minimum extent necessary so
that no such amount payable or benefit provided to the Employee
shall constitute an "excess parachute payment"; provided,
however, that no such reduction shall be made if the net after-
tax benefit (after taking into account Federal, State, local or
other income and excise taxes) to the Employee as the result of
such payments or benefits without such reduction would exceed the
net after-tax benefit (taking all such taxes into account) to the
Employee of such payments or benefits if such reduction were
made. As used herein, the terms "parachute payment" and "excess
parachute payment" have the meaning set forth in Section 280G of
the Internal Revenue Code of 1986, as amended. If any payments
or benefits must be reduced by reason of this paragraph, such
reduction shall be made in the order and manner determined by
Employee, as soon as administratively practicable following
Notice of Termination.
5. Successors, Binding Agreement. The Company may amend or
terminate this Agreement by action of a majority of its
Continuing Directors (as defined in Section 2 hereof) at any
time prior to a Change in Control. In any event, this
Agreement shall terminate on the fifth (5th) anniversary
hereof unless a Change in Control has occurred. The Company
expressly waives any right to amend or terminate this
Agreement following a Change in Control and the Company
acknowledges that Employee shall have a binding and
irrevocable right to the Benefits set forth hereunder in the
event of a Change in Control. Any purported termination of
this Agreement following a Change in Control shall be
ineffective, and Employee shall not lose any right hereunder
for failing to contest such a purported termination.
(i) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise)to all or substantially all of the business and/or
assets of the Company, to expressly assume and agree to
honor this Agreement in the same manner and to the same
extent that the Company would be required to so honor if no
such succession had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such
succession shall be a violation of this Agreement and shall
entitle Employee to Benefits from the Company or such
successor in the same amount and on the same terms as
Employee would be entitle hereunder if he terminated his
employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall
mean the Company hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 5 or
which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. The
Company shall promptly notify Employee of any succession by
purchase, merger, consolidation or otherwise to all or
substantially all the business and/or assets of the Company
and shall state whether or not the successor has executed
the agreement required by this paragraph (i) and, if so,
shall make a copy of such agreement available to Employee.
(ii) This Agreement shall inure to the benefit of and be
enforceable by Employee and his personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Employee
should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there be no such designee,
to his estate.
(iii) The Company expressly acknowledges and agrees that
Employee shall have a contractual right to the Benefits
provided hereunder, and the Company expressly waives any
ability, if possible, to deny liability for any breach of
its contractual commitment hereunder upon the grounds of
lack of consideration, accord and satisfaction or any other
defense. In any dispute arising after a Change in Control
as to whether Employee is entitled to Benefits under this
Agreement, there shall be a presumption that Employee is
entitled to such Benefits and the burden of proving
otherwise shall be on the Company.
(iv) All Benefits to be provided hereunder shall be in
addition to any pension, disability, worker's compensation,
other Company benefit plan distribution, unpaid vacation or
other unpaid benefits that Employee has at his Date of
Termination.
6. Notice. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed: (i) if to
Employee, to his latest address as reflected on the records
of the Company, and if to Company: Northrop Corporation,
0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attn:
President, or to such other address as Company may furnish
to Employee in writing with specific reference to this
Agreement and the importance of the notice, except that
notice of change of address shall be effective only upon
receipt.
7. Miscellaneous. After a Change in Control, no rights of
Employee under this Agreement may be released, modified,
waived or discharged by Employee unless such release,
waiver, modification, or discharge is agreed to in writing
signed by Employee and a licensed attorney-at-law
representing Employee. No failure to enforce or waiver by
Employee at any time of any breach by the Company of, or
noncompliance with, any condition or provision of this
Agreement to be performed by the Company shall be deemed a
waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement
shall not supersede or in any way limit the rights, duties
or obligations Employee may have under any other written
agreement with the Company. The Company expressly waives
any right to deny liability hereunder on the basis that
Employee failed to submit a claim on a timely basis. The
validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of
California.
8. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
IN WITNESS WHEREOF, as of July , 1995 the parties have
executed this Agreement amending and restating the Special
Severance Pay Agreement originally dated as of February 25, 1994.
ATTEST: Northrop Grumman Corporation
__________________________ By_______________________
__________________________ ________________________
Employee
