exv10w18






EXHIBIT 10.18




Severance Plan for




Elected and Appointed Officers of



Huntington Ingalls Industries



 









 




1. Purpose of Plan. The purpose of the Plan is to provide severance benefits for eligible
elected and appointed officers of Huntington Ingalls Industries, Inc. (the “Company”) who reside
and work in the United States. The terms of this Plan are effective as of the “Distribution Date”
defined in the Separation and Distribution Agreement among Northrop Grumman Corporation, the
Company and New P, Inc. (the “Distribution Date”) and conditioned upon such Distribution Date
occurring.



In all cases, no individual will be entitled to benefits under both this Plan and the Severance
Plan for Elected and Appointed Officers of Northrop Grumman Corporation (the “NGC Plan”) at the
same time or with respect to the same service.



For an individual (1) whose employment with NGC and its affiliates was terminated prior to the
Distribution, (2) who qualifies as an HII Retiree, and (3) who was eligible to receive a benefit
under the NGC Plan based on such termination, but who had not received all potential severance
benefits under the NGC Plan prior to the Distribution, any obligation to provide severance benefits
to such person, to the extent not paid prior to the Distribution, will transfer to the Company and
the Plan as of the Distribution. Thereafter, the Plan will provide any severance benefits due such
person, and no further severance benefits will be due under the NGC Plan. (The terms
“Distribution” and “HII Retiree” used in this paragraph have the meanings specified in the Employee
Matters Agreement among Northrop Grumman Corporation, New P, Inc. and the Company.)



2. Definitions. The terms defined in this section shall have the meaning given below:





	 	(a)	 	“Committee” means the Compensation Committee of the Board of Directors of the Company
or any successor to the Committee.
	 
	 	(b)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(c)	 	“Company” means Huntington Ingalls Industries, Inc.
	 
	 	(d)	 	“CPC” means the Corporate Policy Council.
	 
	 	(e)	 	“Disability” means any disability of an Officer recognized as a disability for
purposes of the Company’s long-term disability plan, or similar plan later adopted by the
Company in place of such plan.
	 
	 	(f)	 	“Key Employee” means an employee treated as a “specified employee” as of his
Separation from Service under Code section 409A(a)(2)(B)(i) of the Company or its
affiliate (i.e., a key employee (as defined in Code section 416(i) without regard to
paragraph (5) thereof)) if the Company’s stock is publicly traded on an established
securities market or otherwise. The Company shall determine in accordance with a uniform
Company policy which Officers are Key Employees as of each December 31 in accordance with
IRS regulations or other guidance under Code section 409A, provided that in determining
the compensation of individuals for this purpose, the definition of compensation in Treas.
Reg. § 1.415(c)-2(d)(3) shall be used. Such determination shall be effective for the
twelve (12) month period commencing on April 1 of the following year. Notwithstanding the
foregoing, Key Employees of the Company will be determined in accordance with the special
rules for spin-offs under Treas. Reg. §1.409A-1(i)(6)(iii), or any successor thereto, for
the period indicated in such regulation.
	 
	 	(g)	 	“Officer” means an elected or appointed officer of Huntington Ingalls Industries,
Inc. who resides and works in the United States.




 









 












	 	(h)	 	“Plan” means this Severance Plan for Elected and Appointed Officers of Huntington
Ingalls Industries, as it may be amended from time to time.
	 
	 	(i)	 	“Qualifying Termination” means any one of the following (i) an Officer’s involuntary
termination of employment with the Company, other than Termination for Cause or mandatory
retirement, or (ii) an Officer’s election to terminate employment with the Company in lieu
of accepting a downgrade to a non-Officer position or status. “Qualifying Termination”
does not include any change in the Officer’s employment status due to any transfer within
the Company or to an affiliate, or to a purchaser of assets or a portion of the business
of the Company or an affiliate in connection with the purchase, Disability, voluntary
termination or normal retirement.
	 
	 	(j)	 	“Release” means the Company’s Confidential Separation Agreement and General Release
as in effect at the time of the Officer’s termination of employment.
	 
	 	(k)	 	“Separation from Service” or “Separate from Service” means a “separation from
service” within the meaning of Code section 409A.
	 
	 	(l)	 	“Termination for Cause” means an Officer’s termination of employment with the Company
because of:






	 	(i)	 	The continued failure by the Officer to devote reasonable time and effort
to the performance of his duties (other than a failure resulting from the Officer’s
incapacity due to physical or mental illness) after written demand for improved
performance has been delivered to the Officer by the Company which specifically
identifies how the Officer has not devoted reasonable time and effort to the
performance of his duties;
	 
	 	(ii)	 	The willful engaging by Officer in misconduct which is substantially
injurious to the Company, monetarily or otherwise; or
	 
	 	(iii)	 	The Officer’s 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).




A Termination for Cause shall not include a termination attributable to:





	 	(i)	 	Bad judgment or negligence on the part of the Officer other than habitual
negligence; or
	 
	 	(ii)	 	An act or omission believed by the Officer in good faith to have been in or
not opposed to the best interests of the Company and reasonably believed by the
Officer to be lawful.




3. Eligibility Requirements.





	 	(a)	 	Benefits under the Plan are subject to the Company’s sole discretion and approval.
	 
	 	(b)	 	To be considered to receive benefits under the Plan an Officer must meet the
following conditions:






	 	(i)	 	The Officer must experience a Qualifying Termination that results in
termination of employment. If, before termination of employment occurs due to the
Qualifying Termination event, the Officer voluntarily quits, retires, or experiences
a Termination for Cause, the Officer will not receive benefits under this Plan.




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	 	(ii)	 	The Officer must sign the Release. The Company’s current Confidential
Separation Agreement and General Release is attached hereto as Exhibit A, however the
Company may amend and make changes to this agreement at any time (with such
amendments including, without limitation, any amendments that the Company may
determine to be necessary or advisable to help ensure that the agreement is
enforceable to the fullest extent permissible under applicable law at the time of the
Officer’s termination of employment).




4. Severance Benefits. Upon the Qualifying Termination of any eligible Officer, the terminated
Officer shall be entitled to the following benefits under the Plan: (a) a lump-sum severance cash
payment, (b) an extension of the Officer’s existing medical and dental coverage, (c) a prorated
annual cash bonus payment, and (d) certain other fringe benefits.





	 	(a)	 	Lump-sum Cash Severance Payment. The designated Appendix describes the lump
sum severance benefit available to the Officer.
	 
	 	(b)	 	Extension of Medical and Dental Benefits. The Company will continue to pay
its portion of the Officer’s medical and dental benefits for the period of time following
the Officer’s termination date that is specified in the designated Appendix. Such
continuation coverage shall run concurrently with COBRA continuation coverage (or similar
state law). The Officer must continue to pay his portion of the cost of this coverage
with after-tax dollars. If rates for active employees increase during this continuation
period, the contribution amount will increase proportionately. Also, if medical and
dental benefits are modified, terminated or changed in any way for active employees during
this continuation period the Officer will also be subject to such modification,
termination or change. Following the continuation period specified in the designated
Appendix the Officer will be eligible to receive COBRA benefits for any remaining portion
of the applicable COBRA period (typically 18 months) at normal COBRA rates. The
unreimbursed COBRA period (e.g., the period when the Officer must pay full COBRA rates in
order to receive COBRA benefits) starts the first day of the month following the end of
the continuation period specified in the designated Appendix.






Example: A Non-CPC Officer receives a layoff notice on June 15, 2011, and his last day of
work is June 30, 2011. The Officer’s 18-month COBRA period commences July 1, 2011. The
Officer will continue to receive medical and dental coverage from July 1, 2011 through June
30, 2012, as long as the Officer continues to pay the appropriate contribution. Full COBRA
rates will apply to the Officer from July 1, 2012 until the end of the remaining COBRA
period on December 31, 2012.


If the Officer is not covered by medical and dental benefits at the time of his termination, this
section 4(b) will not apply and no continuation coverage will be offered. No health or welfare
benefits other than medical and dental will be continued pursuant to the Plan, including but not
limited to disability benefits.



The medical and dental benefits to be provided or payments to be made under this section 4(b) shall
be reduced to the extent that the Officer is eligible for benefits or payments for the same
occurrence under another employer sponsored plan to which the Officer is entitled because of his
employment subsequent to the Qualifying Termination.



To the extent the benefits under this section 4(b) are, or ever become, taxable to the Officer and
to the extent the benefits continue beyond the period in which the Officer would be entitled (or
would, but for the Plan, be entitled) to COBRA continuation coverage if the Officer elected such
coverage and paid the applicable premiums, the Company shall administer such continuation of
coverage consistent with the following additional requirements as set forth in Treas. Reg. §
1.409A-3(i)(1)(iv):







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	 	(i)	 	Officer’s eligibility for benefits in one year will not affect Officer’s
eligibility for benefits in any other year;
	 
	 	(ii)	 	Any reimbursement of eligible expenses will be made on or before the last
day of the year following the year in which the expense was incurred; and
	 
	 	(iii)	 	Officer’s right to benefits is not subject to liquidation or exchange for
another benefit.




In the event the preceding sentence applies and the Officer is a Key Employee, provision of these
benefits after the COBRA period shall commence on the first day of the seventh month following the
Officer’s Separation from Service (or, if earlier, the first day of the month after the Officer’s
death).





	 	(c)	 	Company Performance Related Payment. The Officer will be eligible for a
severance payment equal to a pro-rata portion of the bonus he or she would have received
under the Company annual incentive plan in which he or she was a participant for the year
in which the Qualifying Termination occurred, in addition to the lump-sum cash severance
payment described in section 4(a). For this purpose, the pro-rated bonus (if any) will be
based on the applicable annual incentive plan payout formula, with any applicable
individual performance factor set at 1.00, prorated from the beginning of the performance
period (January 1st) to the Officer’s date of termination. The severance payment
contemplated by this Section 4(c) will be paid when the annual bonuses are paid to active
employees between February 15 and March 15 of the year following termination.
Notwithstanding anything to the contrary in this section 4(c), if the Officer’s bonus
opportunity for the fiscal year in which his or her termination occurs is covered by the
Company’s Incentive Compensation Plan (or similar successor bonus program designed to
comply with the performance-based compensation exception under Section 162(m) of the
Code), then the Officer’s severance payment pursuant to this section 4(c) shall not exceed
the maximum bonus the Officer would have been entitled to receive under the Company’s
Incentive Compensation Plan for that fiscal year, assuming the Officer had been employed
through the date bonuses are paid under such plan for that year, and otherwise calculated
under the terms of such plan based on actual performance for that fiscal year (but without
giving effect to any discretion of the plan administrator to reduce the bonus amount from
the maximum otherwise determined in accordance with such plan).
	 
	 	(d)	 	Other Fringe Benefits. All reimbursements will be within the limits
established in the Executive Perquisite Program. These perquisites will cease as of the
date of termination except for the following:






	 	(i)	 	Financial Planning. If an Officer is eligible for financial
planning reimbursement at the time of termination, the Officer will be reimbursed for
any financial planning fees as specified in the designated Appendix. For these
purposes, “financial planning reimbursement” includes any income tax preparation fee
reimbursement the Officer may be entitled to under the financial planning
reimbursement terms and conditions applicable to the Officer at the time of
termination. The financial planning (including income tax preparation fee)
reimbursements contemplated by the Appendices are subject to any other applicable
limitations that may apply under the financial planning reimbursement terms and
conditions applicable to the Officer at the time of termination (for example, and
without limitation, annual caps on amounts that may be used in connection with income
tax preparation). All such reimbursements pursuant to this section 4(d)(i) shall be
administered consistent with the following additional requirements as set forth in
Treas. Reg. § 1.409A-3(i)(1)(iv): (1) Officer’s eligibility for benefits in one year
will not affect Officer’s eligibility for benefits in any other year; (2) any
reimbursement of eligible




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	 	 	 	expenses will be made on or before the last day of the year following the year in
which the expense was incurred; and (3) Officer’s right to benefits is not subject to
liquidation or exchange for another benefit. In addition, no reimbursements shall be
made to an Officer who is a Key Employee for six months following the Officer’s
Separation from Service.
	 
	 	(ii)	 	Outplacement Service. The Officer will be reimbursed for the cost
of reasonable outplacement services provided by the Company’s outplacement service
provider for services provided within one year after the Officer’s date of
termination; provided, however, that the total reimbursement shall be limited to an
amount equal to fifteen percent (15%) of the Officer’s base salary as of the date of
termination. All services will be subject to the current contract with the provider,
and all such expenses shall be reimbursed as soon as practicable, but in no event
later than the end of the year following the year the Officer Separates from Service.






	 	(e)	 	Time and Form of Payment. The severance benefits under section 4(a) will be
paid to the eligible Officer in a lump sum as soon as practicable following the Officer’s
Separation from Service, but in no event beyond thirty (30) days from such date, provided
the Officer signs the Release within twenty one (21) days following the Officer’s
Separation from Service. Notwithstanding the foregoing, if the Officer is a Key Employee,
the lump sum payment shall be made on or within thirty (30) days after the first day of
the seventh month following the Officer’s Separation from Service (or, if earlier, the
first day of the month after the Officer’s death), provided the Officer signs the Release
within twenty-one (21) days following the Officer’s Separation from Service. This amount
will be paid after all regular taxes and withholdings have been deducted. No payment made
pursuant to the Plan is eligible compensation under any of the Company’s benefit plans,
including without limitation, pension, savings, or deferred compensation plans.




5. Limitation of Plan Benefits. Notwithstanding anything contained in this Plan to the contrary,
if upon or following a change in the “ownership or effective control” of the Company or in the
“ownership of a substantial portion of the assets” of the Company (each within the meaning of
Section 280G of the Code), the tax imposed by Section 4999 of the Code or any similar or successor
tax (the “Excise Tax”) applies, solely because of such transaction, to any payments, benefits
and/or amounts received by the Officer pursuant to the Plan or otherwise, including, without
limitation, any amounts received, or deemed received within the meaning of any provision of the
Code, by the Officer as a result of (and not by way of limitation) any automatic vesting, lapse of
restrictions and/or accelerated target or performance achievement provisions, or otherwise,
applicable to outstanding grants or awards to the Officer under any of the Company’s incentive
plans, including without limitation, any long-term incentive stock plan (collectively, the “Total
Payments”), then the Total Payments shall be reduced (but not below zero) so that the maximum
amount of the Total Payments (after reduction) shall be one dollar ($1.00) less than the amount
which would cause the Total Payments to be subject to the Excise Tax; provided that such reduction
to the Total Payments shall be made only if the total after-tax benefit to the Officer is greater
after giving effect to such reduction than if no such reduction had been made. If such a reduction
is required, the Company shall reduce or eliminate the Total Payments by first reducing or
eliminating any cash severance benefits, then by reducing or eliminating any accelerated vesting of
stock options, then by reducing or eliminating any accelerated vesting of other equity awards, then
by reducing or eliminating any other remaining Total Payments, in each case in reverse order
beginning with the payments which are to be paid the farthest in time from the date of the
transaction triggering the Excise Tax. The preceding provisions of this section 5 shall take
precedence over the provisions of any other plan, arrangement or agreement governing the Officer’s
rights and entitlements to any benefits or compensation.







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6. Offset for Other Benefits Received. The benefits under the Plan are in lieu of, and not in
addition to, any other severance or separation benefits for which the Officer is eligible under any
Company plan, policy or arrangements (including but not limited to, severance benefits provided
under any employment agreement, retention incentive agreement, or similar benefits under any
individual change in control agreements, plans, policies, arrangements and change in control
agreements of acquired companies or business units) (collectively, “severance plans”); provided
that if the Officer is otherwise entitled to receive benefits under the Plan and severance benefits
under the Huntington Ingalls Industries, Inc. Change-In-Control Severance Plan and/or a Huntington
Ingalls Industries, Inc. Special Agreement, benefits shall be paid under such Change-In-Control
Severance Plan and/or Special Agreement rather than under the Plan. If an Officer receives any
benefit under any severance plan, such benefit shall cause a corresponding reduction in benefits
under this Plan. If, despite any release that the Officer signs in connection with the Plan, such
Officer is later awarded and receives benefits under any other severance plan(s), any benefits that
the Officer receives under the Plan will be treated as having been received under those other
severance plans for purposes of calculating total benefits received under those other severance
plans (that is, benefits under those other severance plans will be reduced by amounts received
under the Plan).



7. Administration. The Plan shall be administered by the Chief Human Resources Officer of the
Company (the “administrator”). The administrator has sole and absolute discretion to interpret the
terms of the Plan, eligibility for benefits, and determine questions of fact. The administrator
may delegate any of his duties or authority to any individual or entity. Authority to hear appeals
has been delegated to the corporate Severance Plan Review Committee.



8. Claims and Appeals Procedures.



Claims Procedure. If an Officer believes that he or she is entitled to benefits under the
Plan and has not received them, the Officer or his authorized representative (each, a “claimant”)
may file a claim for benefits by writing to the Chief Human Resources Officer, in care of the
Company. The letter must state the reason why the claimant believes the Officer is entitled to
benefits, and the letter must be received no later than 90 days after the Officer’s termination of
employment, or 90 days after a payment was due, whichever comes first.



If the claim is denied, in whole or in part, the claimant will receive a written response within 90
days. This response will include (i) the reason(s) for the denial, (ii) reference(s) to the
specific Plan provisions on which denial is based, (iii) a description of any additional
information necessary to perfect the claim, and (iv) a description of the Plan’s claims and appeals
procedures. In some cases more than 90 days may be needed to make a decision, in which case the
claimant will be notified prior to the expiration of the 90 days that more time is needed to review
the claim and the date by which the Plan expects to render the decision. In no event will the
extension be for more than an additional 90 days.



Appeal of Denied Claim. The claimant may appeal a denied claim by filing an appeal with
the corporate Severance Plan Review Committee within 60 days after the claim is denied. The appeal
should be sent to the Severance Plan Review Committee c/o the Company. As part of the appeal
process the claimant will be given the opportunity to submit written comments and information and
be provided, upon request and free or charge, with copies of documents and other information
relevant to the claim. The review on appeal will take into account all information submitted on
appeal, whether or not it was provided for in the initial benefit determination. A decision will
be made on the appeal within 60 days, unless additional time is needed. If more time is needed,
the claimant will be notified prior to the expiration of the 60 days that up to an additional 60
days is needed and the date by which the Plan expects to render the decision. If the claim is
denied, in whole or in part, on appeal the claimant will receive a written response which will
include (i) the reason(s) for the denial, (ii) references to the specific Plan provisions on which
the






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denial is based, (iii) a statement that the claimant is entitled to receive, upon request and free
of charge, copies of all documents and other information relevant to the claim on appeal, and (iv)
a description of the Plan’s claims and appeals procedures.



If the claim is denied on appeal, the Officer has the right to bring an action under Section 502(a)
of the Employee Retirement Income Security Act of 1974, as amended. Any claimant must pursue all
claims and appeals procedures described in the Plan document before seeking any other legal
recourse with respect to Plan benefits. In addition, any lawsuit must be filed within six months
from the date of the denied appeal, or two years from the Officer’s termination date, whichever
occurs first.



9. Amendment. The Company (acting through the Committee) reserves the right at any time to
terminate or amend this Plan in any respect and without the consent of any Officer.



10. Unfunded Obligations. All benefits due an Officer or the Officer’s beneficiary under this Plan
are unfunded and unsecured and are payable out of the general funds of the Company. The Company,
in its sole and absolute discretion, may establish a trust associated with the payment of Plan
benefits, provided that the trust does not alter the characterization of the Plan as an “unfunded
plan” for purposes of the Employee Retirement Income Security Act, as amended. Any such trust
shall make distributions in accordance with the terms of the Plan.



11. Transferability of Benefits. The right to receive payment of any benefits under this Plan
shall not be transferred, assigned or pledged except by beneficiary designation or by will or under
the laws of descent and distribution.



12. Taxes. The Company may withhold from any payment due under this Plan any taxes required to be
withheld under applicable federal, state or local tax laws or regulations.



13. Gender. The use of masculine pronouns in this Plan shall be deemed to include both males and
females.



14. Construction, Governing Laws. The Plan is intended as (i) a pension plan within the meaning of
Section 3(2) of the Employee Retirement Income Security Act, as amended (“ERISA”), and (ii) an
unfunded pension plan maintained by the Company for a select group of management or highly
compensated employees within the meaning of Department of Labor Regulation 2520.104-23 promulgated
under ERISA, and Sections 201, 301, and 401 of ERISA. Nothing in this Plan creates a vested right
to benefits in any employee or any right to be retained in the employ of the Company. Except to
the extent that federal legislation or applicable regulation shall govern, the validity and
construction of the Plan and each of its provisions shall be subject to and governed by the laws of
the State of Delaware.



15. Severability. If any provision of the Plan is found, held or deemed to be void, unlawful or
unenforceable under any applicable statute or other controlling law, the remainder of the Plan
shall continue in full force and effect.










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Appendix for Corporate Policy Council (CPC) Officers



The following benefits shall apply for purposes of eligible Officers who are members of the CPC:





Section 4(a). Lump-sum Cash Severance Payment. The lump sum cash severance payment
shall equal one and one half (1.5) times the sum of (A) one year’s base salary as in effect on
the effective date of the Officer’s termination, plus (B) the Officer’s target annual bonus
established under the Company’s annual incentive plan in which he or she was a participant for
the fiscal year in which the date of termination occurs. No supplemental bonuses or other
bonuses will be combined with the Officer’s annual bonus for purposes of this computation.




Section 4(b). Extension of Medical and Dental Benefits. The Company will continue to
pay its portion of the Officer’s medical and dental benefits for eighteen months following the
Officer’s termination date.




Section 4(d)(i). Financial Planning. If the Officer is eligible for financial
planning reimbursement at the time of termination, the Officer will be reimbursed for any
financial planning fees incurred before his termination date. In addition, the Officer will
be reimbursed for the following financial planning fees incurred after his termination date:
(i) any fees incurred in the year in which the date of termination occurs, provided that the
total financial planning reimbursement for such year (including fees incurred before and after
the date of termination) shall not exceed $15,000 and (ii) any fees incurred in the year
following the year in which the date of termination occurs, provided that the total financial
planning reimbursement for such year shall not exceed $15,000.



 









 





Appendix for non-CPC Officers



The following benefits shall apply for purposes of eligible Officers who are not members of the
CPC:





Section 4(a). Lump-sum Cash Severance Payment. The lump sum cash severance payment
shall equal the sum of (A) one year’s base salary as in effect on the effective date of the
Officer’s termination, plus (B) the Officer’s target annual bonus established under the
Company’s annual incentive plan in which he or she was a participant for the fiscal year in
which the date of termination occurs. No supplemental bonuses or other bonuses will be
combined with the Officer’s annual bonus for purposes of this computation.




Section 4(b). Extension of Medical and Dental Benefits. The Company will continue to
pay its portion of the Officer’s medical and dental benefits for one year following the
Officer’s termination date.




Section 4(d)(i). Financial Planning. If the Officer is eligible for financial
planning reimbursement at the time of termination, the Officer will be reimbursed for any
financial planning fees incurred before his termination date. In addition, the Officer will
be reimbursed for the following financial planning fees incurred after his termination date:
(i) any fees incurred in the year in which the date of termination occurs, provided that the
total financial planning reimbursement for such year (including fees incurred before and after
the date of termination) shall not exceed $5,000 and (ii) any fees incurred in the year
following the year in which the date of termination occurs, provided that the total financial
planning reimbursement for such year shall not exceed $5,000.



 









 





Exhibit A




CONFIDENTIAL SEPARATION AGREEMENT

AND GENERAL RELEASE




	1.0	 	PARTIES: The parties to this Confidential Separation Agreement and General Release
(“Agreement”) are John Doe (“Mr. Doe”) and HUNTINGTON INGALLS INDUSTRIES, INC. (“HII” or “the
Company”).
	 
	2.0	 	RECITALS: This Agreement is made regarding the following facts:






	 	2.1	 	Mr. Doe is currently an appointed officer of HII.
	 
	 	2.2	 	In connection with his separation from employment with the Company, Mr. Doe has
been offered severance benefits under the Company’s Severance Plan for Elected and
Appointed Officers (the “Severance Plan”).
	 
	 	2.3	 	The Severance Plan requires that, to receive such benefits, an officer must
sign a Confidential Separation Agreement and General Release. This Agreement satisfies
this requirement.
	 
	 	2.4	 	Mr. Doe has decided to accept the Company’s offer of severance benefits and to
enter into this Agreement.






	3.0	 	CONSIDERATION: In exchange for Mr. Doe’s promise to abide by all of the terms of
this Agreement, the Company agrees to provide Mr. Doe the severance benefits specified in
section 4 of the Severance Plan in accordance with the terms of the Severance Plan, which
severance benefits include:






	 	3.1	 	Lump-sum Cash Severance. A payment equal to the sum of $_________,
less applicable withholding. This amount represents the total of [one] times the sum
of (i) Mr. Doe’s annual base salary of $________; and (ii) Mr. Doe’s target annual
bonus of $________ under the Company’s annual incentive plan in which Mr. Doe was a
participant. This amount will be paid to Mr. Doe in a lump sum in accordance with the
terms of the Severance Plan.
	 
	 	3.2	 	Pro Rata Bonus. A severance payment equal to a pro rata portion of the
bonus Mr. Doe would have received for the ____ performance year pursuant to the terms
of the Company’s annual incentive plan in which Mr. Doe was a participant, in addition
to the lump-sum cash severance payment described in Section 3.1. The bonus will be pro
rated from the beginning of the performance period (January 1) to Mr. Doe’s Separation
Date. For purposes of this severance payment, the pro rata bonus will be based on the
applicable annual incentive plan payout




 









 












	 	 	 	formula, with any Individual Performance Factor (IPF) for Mr. Doe set at 1.00. If
Mr. Doe is covered by the Incentive Compensation Plan (ICP), this severance
payment will not exceed the maximum bonus Mr. Doe would have earned under the ICP
had he remained employed. This severance payment will be paid when annual bonuses
are paid to active employees between February 15 and March 15, ____.
	 
	 	 	 	[Alternative Section 3.2 if termination occurs at year end: Mr. Doe will be paid
a bonus for calendar year _____ pursuant to the terms of the Annual Incentive Plan
(and not the Severance Plan), which will be based on the applicable incentive plan
payout formula, with the Individual Performance Factor for Mr. Doe set at no less
than 1.0. This bonus will be paid to Mr. Doe when annual bonuses are paid to
employees between February 15 and March 15, ____.]
	 
	 	3.3	 	Medical and Dental Coverage Continuation. Mr. Doe may elect to
continue his medical and dental coverage in effect as of the Separation Date (as
defined in Section 4.0 below) for [twelve] months, provided he pays his portion of the
cost of such coverage with after-tax dollars. The Company will continue to pay its
portion of the cost of Mr. Doe’s medical and dental benefits for the [twelve] month
continuation period. If rates for active employees increase during this continuation
period, Mr. Doe’s contribution will increase proportionately. Also, if medical and
dental benefits are modified or terminated for active employees during this
continuation period, Mr. Doe’s benefits shall be subject to this modification or
termination. Mr. Doe’s medical and dental benefits shall be reduced to the extent Mr.
Doe is eligible for benefits or payments for the same occurrence under another
employer-sponsored plan to which Mr. Doe is entitled because of his employment after
the Separation Date. This continuation coverage shall run concurrently with coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (or similar
state law coverage) and shall be in lieu of such coverage. Following the continuation
period, Mr. Doe shall be eligible to receive COBRA benefits for any remaining portion
of the applicable COBRA period at normal COBRA rates.
	 
	 	3.4	 	Other Fringe Benefits. Pursuant to the terms of the Executive
Perquisite Program for appointed officers (the “Program”), Mr. Doe will be reimbursed
for any eligible financial planning fees incurred during [year of Separation Date]
(regardless of whether such fees are incurred before or after the Separation Date) and
the immediately following year, subject to a maximum reimbursement for each year equal
to [$5,000]. Mr. Doe will be reimbursed for the cost of reasonable outplacement
services from the Company’s outplacement service provider during the one year period
following his Separation Date; provided, however that the total outplacement services
reimbursement shall be no greater than $______. All outplacement services will be
subject to the Company’s




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	 	 	 	current contract with the provider. The reimbursements provided for in this
Section 3.4 are subject to the terms and conditions of, and will be reimbursed to
Mr. Doe within the applicable time periods specified in, the Severance Plan.
Except as provided in this Section 3.4, all perquisites shall cease as of the
Separation Date.
	 
	 	3.5	 	Not Pension Eligible Compensation. [If alternative Section 3.2 is
used: Except for the bonus provided in Section 3.2,] None of the consideration or
payments made pursuant to the Severance Plan and specified in this Agreement shall be
eligible as compensation under any Company retirement, pension or benefit plan.






	4.0	 	SEPARATION FROM EMPLOYMENT: Mr. Doe’s employment will be terminated by the Company
effective _________. This shall be his Separation Date.
	 
	5.0	 	COMPLETE RELEASE: In exchange for the consideration described in Section 3, Mr. Doe
RELEASES the Company from liability for any claims, demands or causes of action (except as
described in Section 5.5). This Release applies not only to the “Company” itself, but also to
all HII subsidiaries, affiliates, related companies, predecessors, successors, its or their
employee benefit plans, trustees, fiduciaries and administrators, and any and all of its and
their respective past or present officers, directors, agents and employees (“Released
Parties”). For purposes of this Release, the term “Mr. Doe” includes not only Mr. Doe
himself, but also his heirs, spouses or former spouses, domestic partners or former domestic
partners, executors and agents. Except as described in Section 5.5, this Release extinguishes
all of Mr. Doe’s claims, demands or causes of action, known or unknown, against the Company
and the Released Parties, based on anything occurring on or before the date Mr. Doe signs this
Agreement.






	 	5.1	 	This Release includes, but is not limited to, claims relating to Mr. Doe’s
employment or termination of employment by the Company and any Released Party, any
rights of continued employment, reinstatement or reemployment by the Company and any
Released Party, claims relating to or arising under Company or Released Party dispute
resolution procedures, claims for any costs or attorneys’ fees incurred by Mr. Doe, and
claims for severance benefits other than those listed herein. Mr. Doe acknowledges and
agrees that payment to him of the benefits set forth in this Agreement will fully
satisfy any rights he may have for benefits under any severance plan of any of the
Released Parties.
	 
	 	5.2	 	This Release includes, but is not limited to, claims arising under the Age
Discrimination in Employment Act, the Family and Medical Leave Act, the Employee
Retirement Income Security Act, the False Claims Act, Executive Order No. 11246, the
Civil Rights Act of 1991, and 42 U.S.C. § 1981. It also includes, but is not limited
to, claims under 




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	 	 	 	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; any laws prohibiting discrimination in
employment based on veteran status; any applicable state human rights statutes
including the [insert applicable state law, such as: California Fair Employment
and Housing Act, which prohibits discrimination in employment based on race,
religious creed, color, national origin, ancestry, physical disability, mental
disability, medical condition, marital status, sex, age, or sexual orientation];
and any other federal, state or local laws, ordinances, regulations and common
law, to the fullest extent permitted by law.
	 
	 	5.3	 	This 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 personnel
policies or employee handbooks of the Company and any Released Party, or any oral or
written representations or statements made by the Company and any Released Party, past
and present, or any claim for wrongful discharge, breach of contract (including any
employment agreement), breach of the implied covenant of good faith and fair dealing,
intentional or negligent infliction of emotional distress, intentional or negligent
misrepresentation, or defamation.
	 
	 	5.4	 	[California version:]
	 
	 	 	 	Mr. Doe waives and gives up all rights he may have under Section 1542 of the
California Civil code, which provides as follows:






A general release does not extend to claims which the
creditor does not know or suspect to exist in his or her
favor at the time of executing the release, which if
known by him or her must have materially affected his or
her settlement with the debtor.




	 	 	 	Notwithstanding the provisions of Section 1542, Mr. Doe agrees that his Release
includes claims which he did not know of or suspect to exist at the time he signed
this Agreement, and that this Release extinguishes all known and unknown claims.
	 
	 	 	 	[Alternative outside CA:]
	 
	 	 	 	[This Release includes both known and unknown claims. Mr. Doe agrees that this
Release includes claims he did not know or suspect to exist at the time he signed
this Agreement, and that this Release extinguishes all known and unknown claims.]
	 
	 	5.5	 	However, this Release does not include any rights Mr. Doe may have:




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	 	 	 	(1) to enforce this Agreement and his rights to receive the benefits
described in Section 3 of this Agreement; (2) to any indemnification rights Mr.
Doe may have for expenses or losses incurred in the course and scope of his
employment; (3) to test the knowing and voluntary nature of this Agreement under
The Older Workers Benefit Protection Act; (4) to workers’ compensation benefits;
(5) to earned, banked or accrued but unused vacation pay; (6) to rights under
minimum wage and overtime laws; (7) to vested benefits under any pension or
savings plan; (8) to continued benefits in accordance with COBRA; (9) to
government-provided unemployment insurance; (10) to file a claim or charge with
any government administrative agency (although Mr. Doe is releasing any rights he
may have to recover damages or other relief in connection with the filing of such
a claim or charge); (11) to claims that cannot lawfully be released; (12) to any
rights Mr. Doe may have for retiree medical coverage; (13) to any rights Mr. Doe
may have with respect to his existing equity grants under the Company’s Long Term
Incentive Stock Plan; or (14) to claims arising after the date Mr. Doe signs this
Agreement.






	6.0	 	ARBITRATION: If either the Company or Mr. Doe decides to sue the other over the
enforceability of this Agreement, or for violating this Agreement, all such claims will be
determined through final and binding arbitration, rather than through litigation in court, in
accordance with Huntington Ingalls Industries, Inc. Corporate Procedure H103A. If the Company
or Mr. Doe wants immediate relief, before the arbitration is finished, then either party may
go to a court with jurisdiction over the dispute, and ask the court for provisional injunctive
or other equitable relief until the arbitrator has issued an award or the dispute is otherwise
resolved. Any court with jurisdiction over the dispute may enter judgment on the arbitrator’s
award. Notwithstanding the provisions of H103A, the Company and Mr. Doe agree that the
prevailing party in the arbitration shall be entitled to receive from the losing party
reasonably incurred attorneys’ fees and costs incurred in enforcing this Agreement, except in
any challenge by Mr. Doe to the validity of this Agreement under the Age Discrimination in
Employment Act and/or Older Workers Benefit Protection Act.
	 
	7.0	 	CONFIDENTIALITY:






	 	7.1	 	Mr. Doe agrees that he will keep the terms and fact of the Agreement completely
confidential, and that he will not disclose any specific information regarding the
terms and conditions of the Agreement to anyone other than his spouse, domestic
partner, attorney, or accountant, except as necessary to enforce the Agreement, to
comply with the law or lawful discovery, in response to a court order, or for tax or
accounting purposes.
	 
	 	7.2	 	Should Mr. Doe choose to disclose the terms or fact of this Agreement to his
spouse, domestic partner, attorney, or accountant, Mr. Doe agrees 




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	 	 	 	that he will advise
them that they will also be under an obligation to keep
the terms and fact of this Agreement completely confidential.
	 
	 	7.3	 	Despite this confidentiality obligation, Mr. Doe, his legal counsel, his spouse
or domestic partner, and his accountant are permitted to: (1) disclose the terms or
the fact of this Agreement when required to do so by law, by any court or
administrative agency (including state or federal taxing authorities), and by any
tribunal of appropriate jurisdiction; and (2) provide truthful testimony about Mr.
Doe’s employment with the Company or the Company’s business activities to any
government or regulatory agency, or in any court proceeding.






	8.0	 	RETURN OF COMPANY PROPERTY: Mr. Doe agrees to return any and all property and
equipment of the Company and any Released Party that he may have in his possession no later
than the Separation Date, except to the extent this Agreement explicitly provides to the
contrary.
	 
	9.0	 	FULL DISCLOSURE: Mr. Doe acknowledges that he is not aware of, or has fully
disclosed to the Company any matters for which he was responsible or came to his attention as
an employee, which might give rise to any claim or cause of action against the Company and any
Released Party. Mr. Doe has reported to the Company all work-related injuries, if any, that
he has suffered or sustained during his employment with the Company and any Released Party.
Mr. Doe has properly reported all hours he worked.
	 
	10.0	 	NO UNRESOLVED CLAIMS: This Agreement has been entered into with the understanding
that there are no unresolved claims of any nature which Mr. Doe has against the Company. Mr.
Doe acknowledges and agrees that except as specified in Section 3, all compensation, benefits,
and other obligations due Mr. Doe by the Company, whether by contract or by law, have been
paid or otherwise satisfied in full.
	 
	11.0	 	WITHHOLDING OF TAXES: The Company shall be entitled to withhold from any amounts
payable or pursuant to this Agreement all taxes as legally shall be required (including,
without limitation, United States federal taxes, and any other state, city or local taxes).
	 
	12.0	 	ADVICE OF COUNSEL; PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT: The Company
encourages Mr. Doe to seek and receive advice about this Agreement from an attorney of his
choosing. Mr. Doe has twenty-one (21) calendar days [Alternative: forty-five (45) calendar
days. Note: If this alternative is used, add attachments re program eligibility factors,
selection information, and job titles and ages of employees selected/not selected] from his
initial receipt of this Agreement to review and consider it. Mr. Doe understands that he may
use as much of this review period as he wishes before signing this Agreement. If Mr. Doe has
executed this Agreement before the end of such review period, he represents and agrees that he
does so voluntarily and of his
own free will.




6









 












	13.0	 	RIGHT TO REVOKE AGREEMENT: Mr. Doe may revoke this Agreement within seven (7)
calendar days of his signature date. To do so, Mr. Doe must deliver a written revocation
notice to [fill in name, title and address.] Mr. Doe must deliver the notice to [name] no
later than 4:30 p.m. [PT] on the seventh calendar day after Mr. Doe’s signature date. If Mr.
Doe revokes this Agreement, it shall not be effective or enforceable, and Mr. Doe will not
receive the benefits described in Section 3 of this Agreement.
	 
	14.0	 	DENIAL OF WRONGDOING: Neither party, by signing this Agreement, admits any
wrongdoing or liability to the other. Both the Company and Mr. Doe deny any such wrongdoing
or liability.
	 
	15.0	 	COOPERATION: Mr. Doe agrees that, for at least two (2) years following the
Separation Date, he will reasonably cooperate with Company and any Released Party regarding
requests for assistance by serving as a witness or providing information about matters
connected with Mr. Doe’s prior employment with the Company or any Released Party. The Company
or the Released Party requesting assistance shall reimburse Mr. Doe for any travel costs he
incurs in connection with his cooperation, in accordance with its travel cost reimbursement
policy for active employees.
	 
	16.0	 	NON-SOLICITATION AND NON-DISPARAGEMENT:






	 	16.1	 	By Mr. Doe: For a period of one year following the Separation Date,
Mr. Doe shall not, directly or indirectly, through aid, assistance, or counsel, on his
own behalf or on behalf of another person or entity (i) solicit or offer to hire
[Alternative outside CA: , or hire,] any person who was within a period of six months
prior to the Separation Date employed by the Company, or (ii) by any means issue or
communicate any public statement that may be critical or disparaging of the Company,
its products, services, officers, directors, or employees; provided that the foregoing
shall not apply to any truthful statements made in compliance with legal process or
governmental inquiry.
	 
	 	16.2	 	By the Company: For a period of one year following the Separation
Date, the Company shall not by any means issue or communicate any public statement that
may be critical or disparaging of Mr. Doe, provided 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.






	17.0	 	SEVERABILITY: The provisions of this Agreement are severable. If any part of this
Agreement, other than Section 5, is found to be illegal or invalid and thereby unenforceable,
then the unenforceable part shall be removed, and the rest of the Agreement shall remain valid
and enforceable.




7









 








	18.0	 	SOLE AND ENTIRE AGREEMENT: This Agreement, together with relevant
provision of the Severance Plan, expresses the entire understanding between the Company and
Mr. Doe on the matters it covers. It supersedes all prior discussions, agreements,
understandings and negotiations between the parties on these matters, except that any
writing between the Company and Mr. Doe relating to protection of Company trade secrets or
intellectual property shall remain in effect.
	 
	19.0	 	MODIFICATION: Once this Agreement takes effect, it may not be cancelled or changed,
unless done so in a document signed by both Mr. Doe and an authorized Company representative.
	 
	20.0	 	GOVERNING LAW: This Agreement shall be interpreted and enforced in accordance with
the laws of the State of [Delaware], without regard to rules regarding conflicts of law.
	 
	21.0	 	ADVICE OF COUNSEL; VOLUNTARY AGREEMENT:
	 
	 	 	MR. DOE ACKNOWLEDGES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS, CONFER
WITH COUNSEL, AND CONSIDER ALL OF THE PROVISIONS OF THIS AGREEMENT BEFORE
SIGNING IT. HE FURTHER AGREES THAT HE HAS READ THIS AGREEMENT
CAREFULLY, THAT HE UNDERSTANDS IT, AND THAT HE IS VOLUNTARILY
ENTERING INTO IT. MR. DOE UNDERSTANDS AND ACKNOWLEDGES THAT THIS AGREEMENT
CONTAINS HIS RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.





	 	 	 	 	 	 	 	 
	 	
	Date: 	 	 	By: 	 	
	 	
	Date: 	 	 	By: 	 	
	 	 	 	 	 	Huntington Ingalls Industries, Inc.	
	 	
	 	 	 	 	 	Title:	 	







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