If you transfer to a different sector or business unit on or after January 1, 2005, your transition benefits will go with you — the lump sum payment option will be preserved for your SPP benefit for service through December 31, 2004 (and that benefit will reflect your eligible earnings up to the time you leave the company), you will still be eligible for the "greater of" benefit for the five-year transition period, and you will maintain your eligibility for the early retirement subsidy (factor of 9) under the Northrop Grumman Pension Program.

No, you will not necessarily lose your accrued benefit under the SPP if you are not vested as of December 31, 2004, as a result of the benefits transition. You continue to accrue vesting service through the date your employment with Northrop Grumman ends. As a result, you will receive an SPP benefit for your service prior to December 31, 2004 if you are vested in the plan when you leave the company.

If you are an SPP participant, you will become vested in the Northrop Grumman Pension Program when you earn five years of vesting service, which includes your vesting service through December 31, 2004. Once you become vested, you will be eligible to receive both your SPP benefit for service through December 31, 2004 and your cash balance benefit for service beginning January 1, 2005 (as well as the applicable transition benefits). The following examples illustrate just a couple of scenarios:

Example 1: An employee with two years of vesting service as of December 31, 2004 will be vested in the Northrop Grumman Pension Program after he or she earns three more years of vesting service.

Example 2: An employee with four years of vesting service as of December 31, 2004 will be vested in the Northrop Grumman Pension Program after he or she earns one more year of vesting service.

If you are a Synoptics employee actively participating in the Northrop Grumman Retirement Plan B as of December 31, 2004, you will become vested in the Synoptics plan benefit and the Northrop Grumman Pension Program cash balance benefit after meeting the vesting requirements of Northrop Grumman Retirement Plan B (50% after two years of employment; 100% after three years of employment). New employees hired on or after January 1, 2005, will become vested after five years of vesting service.

If you voluntarily leave Northrop Grumman prior to January 1, 2005 and are later rehired (on or after January 1, 2005), you will not be eligible for the five-year transition benefit or the early retirement subsidy (factor of 9), regardless of whether you were eligible for retirement at the time your employment originally ended.

If you voluntarily leave Northrop Grumman after December 31, 2004 and are rehired, you will be eligible for the five-year transition benefit and the early retirement subsidy in the following situations only:

• You are rehired within two years of your termination, and you were eligible for retirement when your employment ended originally, and you then continue working until you are eligible for retirement; OR
• You are rehired within two years of a layoff, and you then continue working until you are eligible for retirement.

Five-year transition benefits apply only for service earned between January 1, 2005 and December 31, 2009.