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Form of Guarantee BY Systems of Litton Indenture

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EXHIBIT 10.12


GUARANTEE
---------
(NGSC of Litton 1991 Indenture Debt)


GUARANTEE dated as of April 3, 2001 (this "Guarantee") made by Northrop
--------- Grumman Systems Corporation, a Delaware corporation (formerly Northrop Grumman Corporation) ("Guarantor"), in favor of and for the benefit of The Bank of New
--------- York, as trustee (the "Trustee") for the Holders (as such term is defined in the
------- Indenture referred to below) of the 7.75% Debentures due 2026 and the 6.98% Debentures due 2036 (collectively, the "Securities") of Litton Industries, Inc.
---------- (the "Company").
-------


WHEREAS, the Company has entered into a Senior Indenture dated as of December 15, 1991 between the Company and the Trustee (as amended, modified and supplemented from time to time with respect to the Securities, the "Indenture").
--------- Capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture; and


WHEREAS, the Guarantor and the Company are both subsidiaries of Northrop Grumman Corporation (formerly NNG, Inc.); and


WHEREAS, in consideration for the guarantee of the Securities by the Guarantor, the Company has agreed to guarantee certain outstanding indenture debt of the Guarantor.


NOW, THEREFORE, in consideration of the foregoing, the Guarantor hereby agrees as follows:


SECTION 1. Guarantee; Limitation of Liability.
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(a) The Guarantor irrevocably and unconditionally guarantees as a primary obligor and not merely as a surety, to the Trustee and to each Holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the principal of and any premium and interest on such Security (including, in case of default, interest on overdue principal and interest) and including any additional interest required to be paid according to the terms of the Securities or the Indenture, when due, whether at stated maturity, upon redemption or repayment, upon declaration of acceleration or otherwise according to the terms of the Securities or the Indenture and the due and punctual performance of all other obligations of the Company to such Holder or the Trustee, all in accordance with the terms of the Securities and the Indenture (such obligations being the "Guaranteed Obligations"), and agrees to pay any and
---------------------- all expenses (including reasonable counsel fees and expenses) incurred by such Holder or the Trustee in enforcing any rights under this Guarantee. Without limiting the generality of the foregoing, the Guarantor's liability shall extend to all


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amounts that constitute part of the Guaranteed Obligations and would be owed by the Company to such Holder or the Trustee under the Securities or the Indenture but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company because it is the intention of the Guarantor, the Trustee and the Holders that the Guaranteed Obligations should be determined without regard to any rule of law or order that might relieve the Company of any portion of the Guaranteed Obligations.


(b) Notwithstanding anything to the contrary in this Agreement, the Guarantor hereby, and the Trustee and each Holder by accepting the benefits of this Guarantee, confirms that it is its intention that the guarantee by the Guarantor pursuant to this Guarantee together with each other guarantee by such Guarantor of Participating Indebtedness (as defined below) shall not constitute a fraudulent transfer or conveyance for purposes of any applicable provisions of Title 11 of the United States Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act, or any similar federal or state law. To effectuate the foregoing intention, the obligations of the Guarantor under this Guarantee and each other guarantee of Participating Indebtedness shall be limited, collectively, to such maximum amount as will, after giving effect to such maximum amount and all other liabilities of such Guarantor, contingent or otherwise, that are relevant under such laws, and after giving effect to any rights to subrogation, reimbursement, indemnification or contribution of such Guarantor pursuant to applicable law or pursuant to any agreement, result in the obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance. The Trustee and each Holder by accepting the benefits of this Guarantee confirms its intention that, in the event of a bankruptcy, reorganization or other similar proceeding of the Guarantor in which concurrent claims are made upon such Guarantor hereunder and under any other guarantee of Participating Indebtedness, to the extent such claims will not be fully satisfied, each such claimant with a valid claim against the Guarantor shall be entitled to a ratable share of all payments by such Guarantor in respect of such concurrent claims. For purposes of this Section l(b), "Participating Indebtedness" means any Indebtedness (as defined below) of the Company that is guaranteed by such Guarantor pursuant to a guarantee (i) the incurrence of which is not prohibited by the terms of the Indenture or any agreement governing any other Participating Indebtedness then outstanding (or, if so prohibited by the Indenture or any such agreement, is permitted as a result of a consent or waiver thereunder) and (ii) that contains a limitation of liability and confirmation of intention regarding ratability of payments on substantially the terms set forth in this Section l(b). "Indebtedness" means any indebtedness, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit and, to the extent not otherwise included, the guarantee by the Company of any indebtedness of any other Person.


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(c) Anything contained herein to the contrary notwithstanding, the liability of the Company in respect of the Securities guaranteed by the Guarantor hereunder shall not be limited by the terms of Section l(b).


SECTION 2. Guarantee Absolute. The Guarantor guarantees that the
------------------ Guaranteed Obligations will be paid or performed strictly in accordance with the terms of the Securities and the Indenture, re
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