AGREEMENT
1. PARTIES: The Parties to this Agreement are Xxxxx X. Xxxxxx, Xx. ("Xx.
Xxxxxx") and Xxxxxxxx Grumman Corporation ("Northrop Grumman" or the
"Company").
2. RECITALS: This Agreement is made with reference to the following facts:
2.1 Xx. Xxxxxx is currently a Corporate Vice President and President of
the Integrated Systems sector of Northrop Grumman. He has indicated
his desire to resign from employment as soon as practicable to pursue
other interests.
2.2 It is in the best interests of Northrop Grumman to offer a Retention
Incentive to retain Xx. Xxxxxx'x services for a period of time in
order to permit a smooth transition of his critical responsibilities.
2.3 It is also in the best interests of Northrop Grumman to offer Xx.
Xxxxxx xxxxxxxxx benefits in recognition of and compensation for his
many contributions to the Company, and to induce him to enter into
this Agreement.
2.4 Xx. Xxxxxx wishes to accept the Company's offer and enter into this
Agreement.
3. CONTINUED EMPLOYMENT; TERMINATION OF EMPLOYMENT: Xx. Xxxxxx agrees to
remain employed through January 11, 2002. During the remaining period of
his employment, Xx. Xxxxxx agrees to work diligently to insure a smooth
transition of his responsibilities and to complete a close out of 2001
activities for the Integrated Systems sector. Xx. Xxxxxx will separate from
employment on January 11, 2002. Following his separation from employment,
he will be eligible for all benefits he has accrued under the employee
benefit plans in which he participates. If Xx. Xxxxxx dies prior to
commencing his pension benefits under the Northrop Grumman Retirement Plan
and excess nonqualified pension plans, his surviving spouse shall be
entitled to pre-retirement survivor annuities under the terms of those
plans.
4. RETENTION INCENTIVE: In consideration of Xx. Xxxxxx'x continuing his
employment through December 11, 2001, he will be paid a Retention Incentive
in the amount of $825,000 no later than December 18, 2001. This incentive
is eligible compensation for pension calculation purposes.
5. SEVERANCE BENEFITS: Provided that Xx. Xxxxxx continues employment through
January 11, 2002 on the terms set forth above, the following benefits shall
be payable:
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A. Cash Severance: Within 30 days following his termination from
employment, Xx. Xxxxxx will be paid a cash severance payment of
$505,000, representing one year's base salary.
B. Early Retirement Subsidy Differential: Within 30 days following his
termination from employment, Xx. Xxxxxx will be paid an early
retirement subsidy differential in the amount of $2,400,000.
C. Retiree Medical: Following his termination from employment, Xx. Xxxxxx
shall be eligible for the Special Officer Retiree Medical Plan in
accordance with the terms of that Plan.
D. Accelerated Vesting of Certain Equity Grants: The following provisions
shall apply to Xx. Xxxxxx'x unvested equity grants notwithstanding
anything to the contrary in the grant certificates:
1. Restricted Stock Rights ("RSRs"): Upon Xx. Xxxxxx'x termination
from employment on January 11, 2002, 2,000 unvested RSRs granted
to him in November of 1999 shall accelerate and vest.
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2. Stock Options: Upon Xx. Xxxxxx'x termination from employment
on January 11, 2002, the following unvested stock options
which have previously been granted to him will accelerate
and vest:
Number of Unvested Options
Option Grant Date Strike Price Which Will Vest At Termination
----------------- ------------ ------------------------------
December 1998 $88.125 9,375
December 1998 $99.141 9,375
Xx. Xxxxxx shall have two years after his termination from
employment within which he may exercise his Northrop Grumman
stock options, after which the options will no longer be
exercisable.
3. Restricted Performance Stock Rights ("RPSRs"): In December
of 1998, Xx. Xxxxxx received a grant of RPSRs. Upon his
termination from employment on January 11, 2002, he will be
eligible to receive a pro-rata portion of the grant in the
amount of a target number of 5,000 shares for the 12/31/2001
period, 2,000 shares for the 12/31/2002 period and 2,000
shares for the 12/31/2003 period. These RPSRs shall become
payable in accordance with the terms of the XXXX xxxxx
certificate and the Guide to Administration of the Company's
Long-Term Incentive Stock Plan.
E. Relocation: Within 30 days following his termination from
employment on January 11, 2002, Xx. Xxxxxx will be paid a cash
payment of $250,000
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(grossed up for income tax purposes, such that Xx. Xxxxxx receives a
net of $250,000 after applicable tax withholding) for relocation
expenses.
F. Additional Benefits: Within 30 days following his termination from
employment on January 11, 2002, Xx. Xxxxxx shall be paid the lump sum
equivalent value of one year of his current car allowance and one year
of his current financial planning/tax preparation benefit, as well as
a payment of $50,000 to cover the cost of outplacement services.
6. 2001 BONUS: Provided that Xx. Xxxxxx remains employed through December 31,
2001, he shall receive a bonus under the Northrop Grumman Incentive
Compensation Plan ("ICP") for his performance during 2001, with the
calculation of this bonus to be made based upon normal ICP factors as
approved by the Compensation and Management Development Committee of the
Board of Directors as soon as administratively practical following the
February 2002 Board of Directors meeting.
7. NON-DISPARAGEMENT:
A. Xx. Xxxxxx agrees that, following his termination from employment, he
shall not issue or communicate any statement that may be critical or
disparaging of the Company, its products, services, officers,
directors or employees; provided, however, that the foregoing shall
not apply to
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truthful statements made in compliance with legal process or governmental
inquiry.
X. Xxxxxxxx Grumman agrees that, following Xx. Xxxxxx'x termination from
employment, the Company shall not issue or communicate any statement that
may be critical or disparaging of Xx. Xxxxxx; provided, however, that the
foregoing shall not apply to truthful statements made in compliance with
legal process, governmental inquiry or as required by legal filing or
disclosure requirements.
8. COOPERATION: Xx. Xxxxxx agrees that, during the two year period following his
termination from employment, he will reasonably cooperate with Northrop Grumman
requests for assistance in connection with serving as a witness or providing
information as to matters connected with his prior employment with Northrop
Grumman.
9. INDEMNIFICATION: Northrop Grumman agrees to indemnify Xx. Xxxxxx and hold him
harmless to the fullest extent permitted by law and under the By-laws of the
Company against and in respect to any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including attorney's fees), losses
and damages resulting from Xx. Xxxxxx'x good faith performance of his duties and
obligations with the Company. This agreement is in addition to Xx. Xxxxxx'x
rights under his current August 5, 1994 Indemnification Agreement with the
Company.
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10. COMPLETE RELEASE: In consideration of the severance benefits provided
herein, Xx. Xxxxxx does hereby acknowledge full and complete satisfaction of and
does hereby agree to release, absolve and discharge the Company, its subsidiary,
affiliated and related companies, past, present and future, and each of them, as
well as its and their employees, officers, directors and agents, past and
present, and each of them (collectively referred to as "Releasees"), from all
claims, causes of action, demands, damages or costs he may have against
Releasees on behalf of himself or others arising out of or relating to his
employment with the Company or the termination of such employment.
10.1 This waiver and release includes, but is not limited to, any rights,
claims, causes of actions, demands, damages or costs arising under
the Age Discrimination in Employment Act, which prohibits
discrimination in employment based on age, and retaliation; Title VII
of the Civil Rights Act of 1964, which prohibits discrimination in
employment based on race, color, religion, sex or national origin,
and retaliation; the Americans With Disabilities Act, which prohibits
discrimination in employment based on disability, and retaliation; or
any other federal, state or local laws or regulations which prohibits
employment discrimination or retaliation whether such claim is based
on an action filed by Xx. Xxxxxx or by any governmental agency.
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10.2 This waiver and release also includes, but is not limited to,
any rights, claims, causes of action, demands, damages or costs
arising under or in relation to the Company's employee handbook
and personnel policies, or any oral or written representations
or statements made by officers, directors, lawyers, employees or
agents of the Company, past and present, and each of them, or
under any state or federal law regulating wages, hours,
compensation or employment, or any claim for retaliation,
wrongful discharge, breach of contract, breach of the implied
covenant of good faith and fair dealing, constructive discharge,
intentional or negligent infliction of emotional distress,
intentional or negligent misrepresentation, or defamation.
10.3 This waiver and release also includes, but is not limited to,
any rights, claims, causes of action, demands, damages or costs
arising under or in relation to any severance plan, program or
arrangement.
10.4 This waiver and release also includes, but is not limited to,
any rights, claims, causes of action, demands, damages or costs
arising under the Federal False Claims Act.
10.5 This release covers both claims that Xx. Xxxxxx knows about and
those he may not know about. Xx. Xxxxxx expressly acknowledges
that this Agreement is intended to include all claims which he
does not know or
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suspect to exist in his favor at the time of his signature on this
Agreement, and this Agreement will extinguish such claims.
10.6 Notwithstanding anything to the contrary herein, this Agreement does
not waive or release (i) any rights or claims which Xx. Xxxxxx may
have under the Age Discrimination in Employment Act or other laws
which arise after the date on which he signs this Agreement; (ii) any
claims Xx. Xxxxxx may have for vested benefits under any Northrop
Grumman employee benefit plan; or (iii) any rights or claims Xx.
Xxxxxx may have for breach of this Agreement.
11. PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL: Xx.
Xxxxxx agrees and understands that he has been given a period of 21
calendar days from his receipt of this Agreement to review and consider
this Agreement before signing it. Xx. Xxxxxx further understands that he
may use as much of this review period as he wishes prior to signing; he can
sign this Agreement at any time prior to the expiration of the 21-calendar
day period. Xx. Xxxxxx is advised and encouraged to consult with his own
legal counsel prior to signing this Agreement.
12. RIGHT TO REVOKE AGREEMENT: Xx. Xxxxxx may revoke this Agreement within 7
calendar days of signing it. Revocation may be made by delivering a written
notice of revocation to Chief Human Resources Officer,
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Northrop Grumman Corporation, 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, XX
00000. For this revocation to be effective, written notice must be received
by the Chief Human Resources Officer no later than 5:00 pm PST on the
seventh calendar day after Xx. Xxxxxx signs this Agreement. If Xx. Xxxxxx
revokes this Agreement, it shall not be effective or enforceable, and Xx.
Xxxxxx will not receive the benefits described in this Agreement.
13. WITHHOLDING OF TAXES: The Company shall be entitled to withhold from any
amounts payable pursuant to this Agreement all taxes as legally shall be
required (including, without limitation, any United States federal taxes,
and any other state, city, or local taxes).
14. ENTIRE AGREEMENT: This Agreement sets forth the entire agreement between
the Parties hereto, and fully supersedes any and all discussions, prior
agreements or understandings between the Parties hereto pertaining to the
subject matter of this Agreement.
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15. GOVERNING LAW: This Agreement shall be interpreted and enforced in
accordance with the law of the State of Texas without regard to principles
regarding conflicts of law.
XXXXX X. XXXXXX, XX.
Dated: December 13, 2001 By: /s/ XXXXX X. XXXXXX, XX.
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NORTHROP GRUMMAN CORPORATION
Dated: December 22, 2001 By: /s/ J. XXXXXXX XXXXXXX
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